One Economic Chart That You Should Permanently Burn Into Your Memory...

The Members of the European market are required to keep debt no more the 3 percent of GDP and we are worried about them?
With our debt to GDP; I guess we wouldn't be welcome there

Originally posted by proximo

Originally posted by Come Clean

Originally posted by __rich__
If I owe you 10 grand, I have a problem.

If I owe you 10 million, YOU have a problem.


So, the USA owes Japan and China a few trillion.

THEY have the problem.

That's what I say!

Maybe someone can answer this for me. How does a family of five life change if we actually pay off the debt? What benefit will that family of five seen once the debt is paid off?

I kind of think like Reagan....deficits don't matter....to us! It matters to other people.

Well - deficits don't matter until they do. They don't matter till people are no longer willing to lend the US government money -
[edit on 25-7-2010 by proximo]

That's the problem though. They don't lend us money. They buy our securities. Basically, they buy our IOU's. Then we print money based on those securities.

This government is too big to fail. The entire world would crumble in one fail swoop if we failed. Cargo ships of money would come our way if the rest of the world thought we would fail.

But if we decided to default on our IOU's then the rest of the world would just have to adjust. They can't live unless we live.

But you never answered my question. If the debt was paid off how does that affect ME personally. Last time I checked, the government has never came after me about the national debt.

Originally posted by Mister1k
I don't think it takes a rocket scientist,or a economic major, a picture is worth a thousand words ,in this case, this picture, is worth a hella of a lot more.
www.usdebtclock.org...
I am still trying to figure out how a workforce of 138 million can sustain almost 310 million U.S citizens. The Math doesn't seem to be working for the US. I personally don't think it ever will. And if this is any indication of the rest of the state of affairs of the rest of the world,it seems to me,historically the only way to get out of the mess, like before, is genocide. The tools in which we achieve it matters not. We have seen it before WWI,WWII. WE all know whats coming. The Titanic is sinking!!! and there are not enough lifeboats. Mister

Let's keep it real though. Two unfunded wars and a stock market crash has drained our national wealth. Let's not forget about the medicare reimbursement that wasn't paid for.

What you are talking about is pennies on the dollar. What I am talking about is dollars on the pennies. For every penny we spend on food stamps we spend a dollar on two wars.

Food stamps and education for illegals is not the problem. Health care and national defense is the REAL problem.

Originally posted by __rich__

Originally posted by Come Clean

Originally posted by __rich__
If I owe you 10 grand, I have a problem.

If I owe you 10 million, YOU have a problem.


So, the USA owes Japan and China a few trillion.

THEY have the problem.

That's what I say!

Maybe someone can answer this for me. How does a family of five life change if we actually pay off the debt? What benefit will that family of five seen once the debt is paid off?

I kind of think like Reagan....deficits don't matter....to us! It matters to other people.

As long as we have food, clothing, and shelter, the rest are just numbers.

If you think about it in basic economics terms then we have a debit balance.

But they have a credit balance. If we default then they default. What is China gonna do? Attack us? We have more nukes than them.

Guys...we are too big to fail.

Japan and China won't ever get paid until we decide to pay them. And if they cut us off then we cut them off. This is a global economy folks.

That's a fact!

Instead of the cold war we would have a finance war.

Originally posted by Surfrat
The Members of the European market are required to keep debt no more the 3 percent of GDP and we are worried about them?
With our debt to GDP; I guess we wouldn't be welcome there

You misunderstand.

European Union States are not allowed annual deficit SPENDING over 3% of GDP. The graph on page one is not an annual spending chart, its a consolidated total outstanding treasury graph.. which naturally is over GDP as it's total spending over numerous years.

Though we are well over 3% deficit spending this year, so the EU of course wouldn't want us lol.. but we are not 300+ percent.

It should also be said that every country lies about their GDP and every European country lies about their Deficit Spending to GDP.

Also America's Debt to GDP is larger than 300% because the graph indicates total outstanding debts (Treasury) and does not consider pledges, which alone probably total over 100% of GDP, it does not include financing programs not funded by the Treasury, the Reserve programs, which are another 100-200% of GDP.

It takes forensic accounting to discover the true debt levels of Nations, because every Nation lies it's arse off to convince everyone else to buy her debts.

And as I said on the last page, high debt levels is not indicative of a collapsing economy or collapsing Nation or is it in any way an indicator of financial health.

Originally posted by Come Clean

Originally posted by proximo

Originally posted by Come Clean

Originally posted by __rich__
If I owe you 10 grand, I have a problem.

If I owe you 10 million, YOU have a problem.


So, the USA owes Japan and China a few trillion.

THEY have the problem.

That's what I say!

Maybe someone can answer this for me. How does a family of five life change if we actually pay off the debt? What benefit will that family of five seen once the debt is paid off?

I kind of think like Reagan....deficits don't matter....to us! It matters to other people.

Well - deficits don't matter until they do. They don't matter till people are no longer willing to lend the US government money -
[edit on 25-7-2010 by proximo]

That's the problem though. They don't lend us money. They buy our securities. Basically, they buy our IOU's. Then we print money based on those securities.

This government is too big to fail. The entire world would crumble in one fail swoop if we failed. Cargo ships of money would come our way if the rest of the world thought we would fail.

But if we decided to default on our IOU's then the rest of the world would just have to adjust. They can't live unless we live.

But you never answered my question. If the debt was paid off how does that affect ME personally. Last time I checked, the government has never came after me about the national debt.

First off there is no such thing as to big to fail - that is BS anything can fail.

Second the rest of the world only cares about us if they need us. We are far from the only country in trouble and I do expect a huge worldwide depression.

The government does come after you to pay the debt - what do you think taxes are for?

Buying our bonds is lending us money. We have auctions where we put bonds up for sale, if no one buys them we cannot create money without inflation. The only reason countries are willing to loan us money is because of the governments ability to tax its citizens, our tax dollars are going to pay interest on the debt right now, almost 5% of our budget is to pay interest right now. This is with the interest rates at historical lows, when the rates double or triple as they are extremely likely to do that becomes a much bigger portion of our expenses.

We may very well default on the outstanding debt, in fact one could argue it's almost unavoidable, but if we do it is going to take a very long time before anyone will be willing to loan us money again.

Even if we do decide to default and completely stop paying interest that does NOT solve our problems in the least if we can not make up the 1.7 trillion plus dollars we are currently spending yearly more than we are taking in. By the way it is very likely to be even more as the stock market will crash further killing the economy, and profit which is all that is taxable crashes with it.

So lets look at how the government is spending its money



So tell me looking at that chart what spending is going to be cut so that they can basically cut our spending in half that will leave social security, medicare, and medicaid in tact. It can't be done.

Again the government is using the equivalent of credit card advances for buying groceries. The problem is not that the US gov cannot say screw you I'm not paying my debt - the problem is they will not have the income they lost to meet their current expenses (ie social security, medicare, etc.)

How does that not effect you?

I think by now most people have a pretty good idea that we're screwed financially, and more.

But the question that needs to be answered is WHY...

Originally posted by queenannie38
reply to post by highlyoriginal

 

you know why it's this way, don't you?

WAR

the government spends over 54% of the Federal budget EVERY year on military, defense, homeland security, etc.

[atsimg]http://files.abovetopsecret.com/images/member/c41543aad2eb.jpg[/atsimg]


To me this chart looked more like this.
Advisor: "Mr. President, our debt has reached the Great Depression Peak."
George Bush: "What do you suggest?"
Advisor: "We go ahead with your plan to attack Iraq,
to distract the people and fortify our position on the international arena,
as a force of global military might and dominance."
George Bush: "Yes, we'll do that,
talk to my speech writer,
I like the sound of that".

which are all nice words for making war on foreign soils.

they sure are.

When the goin' gets tough, the tough get goin'.

When my daughter's family lost their unemployment, they moved in with me. I'm looking for work, but I can at least get some of my social security to get by. My mortgage is in preforeclosure, my wife has been going through breast cancer, and so forth.

However, to put a bright spin on it, my son-in-law came up with a great idea (finally) that will make us all rich if we handle it right, and will create hundreds of jobs.

Just use your imagination. Now is a great time to hire people. You can get some very high quality employees for less. It's a great time to start a business.

We will. Eventually, you will see us in your neighborhood.

And I will get my house out of preforeclosure.

Keep your chin up. Think of a great idea.

When we look at all the figures, from where the debt economy has been going for years, to the way the specific meltdown occured and was carried out, to what's looming on the horizon, how isn't this deliberate?

But to propose that's the case, there has to be a "why" they would do it. The simple answers of "greed" or "power" are lackluster to address the scale we're enduring.

This trend has been accelerating almost directly in line with accelerating technological change and the ever increasing collective power of the computers of those at the commanding heights. I've yet to see the question asked: with increasing computer power and quality of techniques why aren't 'we' getting better at sustainable economics?

Technology should be helping us, but instead it's the true motive of what we're witnessing. Technology is the answer to these tough questions, and the AGI Manhattan Project is at the heart of it all:
agimanhattanproject.com...

War is good for economies.

Even small ones, like Iraq.. it ended the recession we were in at the time.

Sad as it is.

In fact, I highly suspect to end this depression we will go to war with someone just as we did to Iraq.

Originally posted by Come Clean
Maybe someone can answer this for me. How does a family of five life change if we actually pay off the debt? What benefit will that family of five seen once the debt is paid off?

There are many ways to answer this question, and some in this thread have already taken a crack at it. I'll add my two cents. Rather than look at what happens if debt is reduced, let's look at what history has shown is likely to happen if debt *ISN'T* reduced.

This happens, foreigners will decide the US is too much of a credit risk, and they will stop buying US bonds or demand higher interest rates. This will drive up interest rates across the board and also weaken the dollar, making goods more expensive through inflation.

The upshot for you: Suddenly feeding, clothing, medicating, insuring, entertaining, and sheltering your family of five gets a LOT more expensive. As well as doing anything else. If you want to take out a loan to buy a house or car, or send your kids to college, both the absolute cost and the interest rates will be much higher. And the government might raise taxes and cut services to compensiate -- you will be paying higher taxes on everything and at the same time you will be getting fewer and worse services. Oh, and granny's social security check will be worthless so she will have to come and move in with you or starve to death. Suddenly your family of five becomes a family of six, seven, or more and you have even less money to pay for a box of freaking cornflakes, heating in the winter, and gas the old rusty clunker you can't afford to replace.

And that's just for starters. There are other ugly implications but that should be enough to chew on for now.

That doesn't sound like much fun, does it?



[edit on 7/26/10 by silent thunder]

Originally posted by IgnoranceIsntBlisss
I think by now most people have a pretty good idea that we're screwed financially, and more.

But the question that needs to be answered is WHY...

I vote for simple human greed, incompetence, and short-term thinking.

Imagine you have a drink. It makes you feel good, so you have another one. Then you have another. And so on. You realize that if you stop drinking you will have a hangover. You know the more you drink, the worse the hangover is going to be when it gets there, but you just keep saying, "well, I'll think about that later. Barkeep, pour me another one." Suddenly 3 days have gone by, you haven't eaten or slept, you can barely remember your own name, you have a bar tab the size of an ancient scroll, and your liver looks like Swiss cheese. But what the hell, in for a penny in for a pound, right...so, barkeep, pour me another.

This has been the basic approach to economics on all levels -- personal, corporate, and national -- for at least the last 40 years. Whether its a tapped-out homeowner getting a shady second mortgage, a company using fancy accounting to add "expected future profits" now and thus boost stock prices temporarily for the next quarter, or Uncle Sam ramming another truckload of bonds down the market's throat, it's the same basic principle. Enjoy now, think about consequences later.

Some day this has to end, right? It can end in lots of ways, but none of them will be pleasant. And the longer it goes on, the worse it gets.





[edit on 7/26/10 by silent thunder]

reply to post by highlyoriginal


I just want to apologize for re-posting a thread that was already made - I did make it clear in the original OP that I was aware of this, I just re-posted in the correct section with the source origin and full information (which the other thread did not have).

Regardless, sorry for the double thread/post.

I'm glad there we a lot of responses though, this is definitely a subject effecting the whole world, not just the US and the USD.

If the USD fails and other economies who use it as well are not prepared for it's failure, they will crash right along with us - although China has so much gold they will be okay no matter what happens I believe.

Originally posted by silent thunder
I vote for simple human greed, incompetence, and short-term thinking.

It's LONG term thinking my friend. The longest terms one could imagine: indefinite lifespans:

I remember about 2 years ago, the US Accountabilities office posted a video on Youtube, I'll see if I can find it and add it later, but they were warning that the government would not be able to afford both it's interest payments and social security programs and that something needed to be done. AND that was BEFORE Obama's big bailout plan where they borrowed another $700billion...

Originally posted by queenannie38
reply to post by highlyoriginal

 

you know why it's this way, don't you?

WAR

the government spends over 54% of the Federal budget EVERY year on military, defense, homeland security, etc.

which are all nice words for making war on foreign soils.

i'm going to cut and paste a post i made in another thread, because it's relevant here, too, and if i just link to it, not many will see the information.
but here's the link to the thread, as well.

------------------------
Originally posted by queenannie38
Worldwide, the annual cost for military "defense" is $1000 billion - that is 1 trillion dollars.

Last year, in 2009, the U.S. spent $742 billion on the military.

That's 75% of the total global expenditure.

This comes out to around $12 billion a month.

If you ask a representative of government how much of we-the-people's money is going for defense, depending on who you ask, you will get a variety of answers. These answer are more often than not in the form of percentages.

Such as:
4% of the GNP (gross national product) is spent on "National Security"
Oh, okay, well, that's not so bad, is it?

But even percentages can be startling:
54% of the Federal Budget = 4% of the GNP

What does the GNP have to do with Federal Military Spending, anyway?

Gross National Product (GNP) is the market value of all goods and services produced in one year by labor and property supplied by the residents of a country.

source

Federal Budget:

During FY 2009, the federal government collected approximately $2.1 trillion in tax revenue. Primary receipt categories included individual income taxes (43%), Social Security/Social Insurance taxes (42%), and corporate taxes (7%). Other types included excise, estate and gift taxes. Tax revenues have averaged approximately 18.3% of gross domestic product (GDP) over the past 40 years, generally ranging plus or minus 2% from that level.

source

US Military Budget at Wiki provides an in-depth breakdown of this spending.

The U.S. average national unemployment rate is 9.7 percent. Only those who are actively looking for work are included in this statistic. Among Black Americans, the rate is 15.5 percent and Latinos, 12.4 percent, according to the Bureau of Labor Statistics.

The Congressional Budget Office predicts that unemployment will remain almost unchanged in 2011, about 9.5 percent.

Many families have been surviving on small, weekly unemployment checks provided for 26 weeks by their state government, and an additional 73 weeks by the federal government. The first group of unemployed to run through both benefits hit that point Jul. 1, and today about a million people are receiving no assistance at all. About nine million more are still receiving unemployment payments.

Congress is considering extending federal assistance for another 20 weeks. The House approved the legislation, but the Senate did not. Congress left town for its holiday break until mid-July without passing the legislation.

In the Senate the issue fell almost precisely along party lines, with all but one Democrat for extending the benefit, and all but two Republicans against it, saying the 34- billion-dollar cost was not worth adding to the federal deficit.

source

According to the Department of Labor:

The average weekly unemployment insurance check is $292.
That's $1168 a month and $14,016 a year.

As of June, 2010, the national unemployment rate was 9.5%.
(but remember, this is only those who are actively looking for jobs who are registered with the DOL - an alternate way of counting puts it near 20%.)

The number of INITIAL unemployment claims for the week ending July 3, 2010 was 454,000.

President Obama's call last year for "shared sacrifice" doesn't extend to federal employees, at least based on the details of his administration's 2010 budget released this week.

At a time when the official unemployment rate is nearing double digits, and 6.35 million people are receiving unemployment benefits, the U.S. government is on a hiring binge.

Executive branch employment — 1.98 million in 2009, excluding the Postal Service and the Defense Department — is set to increase by 15.6 percent for the 2010 fiscal year. Most of that is thanks to the Census Bureau hiring 102,000 temporary workers, but not counting them still yields a net increase of 2 percent in one year.

There's little belt-tightening in evidence in Washington, D.C.: Counting benefits, the average pay per federal worker will leap from $72,800 in 2008 to $75,419 next year.

Meanwhile, according to Forbes' layoff tracker, there have been 558,087 layoffs since November 2008 at large public companies; even local school districts aren't immune. That's just a sliver of the total unemployed, which government data estimate to be 8.6 percent of the workforce, or an alternate method of reckoning that counts discouraged workers puts at 20 percent.

Some of the Feds' hiring increases have been stunning. If you look at the four-year period from 2006 to 2010, the number of Homeland Security employees has grown by 22 percent, the Justice Department has increased by 15 percent, and the Nuclear Regulatory Commission can claim 25 percent more employees. (These figures assume that Congress adopts Mr. Obama's 2010 budget without significant changes.)

source

there is no solution other than to quit war.
plain and simple
it gains nothing for anyone and it is death.
it will be the death of us, if we don't put a stop to it.

but it has to be a peaceful end or else it will not be an end but rather just a pause or a temporary break.

P
E
A
C
E

reply to post by mnemeth1


Great assessment - just posted this to my FB page.

(I typically use it for jokes or political rantings, not much else - news that everyone should know about.