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There is no debt crisis!

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posted on Jul, 29 2011 @ 08:16 AM
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Here is an interesting discussion with Robert Pollin (of the PERI institute) who has actually crunched the numbers and concludes that, in real-world terms, there is no debt crisis.

Here is a brief summary of the observations expressed by Mr. Pollin:

In a nutshell, because of historically low interest rates on government treasury bonds, the actual size of the payments due are also very manageable, and do not constitute a crisis. So, even if the debt (the amount of money owed) is at a high since WWII (which was at a whopping 110% of GDP compared to today's 50%), the actual money which has to be payed out is at a historic low.

Example: Your mortgage is for $100 000 and your interest rate is at 1%, the actual payments you must make are for $1000 dollars a year. As compared to the average interest rate over the last 60 years which was 10%, which would make your obligated payment $10 000 for the same loan. (In government terms, the mortgage represents treasury bonds.)

Of course, the idea is to also pay down the initial capital to eventually pay off the loan, which Mr. Pollin does not ignore, but, in real-world terms, you are not in a crisis as long as the actual payment you must make are manageable for you.

I'm sure that listening to the interview will make more sense than my attempt to explain it...



An point of interest raised by Mr. Pollin concerned the level of inflation. He shows that, apart from commodities (which are victims of market speculation, prices have actually been going down.

However, these commodities include oil and food, definitely essential expenses for the majority of households wouldn't you say! In this case, the math just doesn't reflect the reality in real-world terms, in my humble opinion.

Enjoy and discuss.

the Billmeister


edit on 29-7-2011 by Billmeister because: (no reason given)




posted on Jul, 29 2011 @ 08:25 AM
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You don't consider Slavery due to economic Tyranny a crisis?
Because that's been happening for a while. Getting worse and worse.

Also if you look at the current situation in Greece, Europe and the US and throw in the looming food crisis then you got yourself a recipe for disaster my friend.

Sorry but that's just the way it is.

edit on 26/10/2010 by TechUnique because: (no reason given)



posted on Jul, 29 2011 @ 08:39 AM
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Your right OP..

No crisis yet, but (always a but)
if they do not get things under control NOW
there WILL BE a crisis very soon...

We do not want that, they need to stop taxing
and spending NOW!!



posted on Jul, 29 2011 @ 08:43 AM
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reply to post by Billmeister
 




There is no debt crisis!


Have you seen the price of a pound of ground beef? Not steak, not even a fatty old pork roast, but lowly hamburger?

I keep trying to tell my wallet that it is full... but all it does is belch out pennies where there used to be dollars, lol.



posted on Jul, 29 2011 @ 08:43 AM
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No matter if you were able to gather up every dollar ever created you could never pay-off the loan. This is just the way the system is designed.

Perpetual Servitude

How is it with all the information available today on how the Federal Reserve with the help of Congress has constructed this ponzie scheme the citizens are still able to be fooled.
edit on 29-7-2011 by brokedown because: (no reason given)



posted on Jul, 29 2011 @ 08:44 AM
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reply to post by TechUnique
 


These are the opinions and observations of Mr. Pollin.

My stance is that the so-called crisis is manufactured, and being perpetuated in order to guarantee that the financial powers continue to fill their bank accounts at the expense of quality of life to the average, tax-paying citizen.

However, there is no real-world crisis, because this could be all be ended with the flick of a pen if politicians actually acted in the interest of their citizens and stopped bowing down to the para-national financial powers that be.

the Billmeister



posted on Jul, 29 2011 @ 08:46 AM
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reply to post by redoubt
 


These are the observations of Mr. Pollin... I guess I will go back and make that even clearer in the OP.

You must have missed this part, where I added my 2¢ worth:



An point of interest raised by Mr. Pollin concerned the level of inflation. He shows that, apart from commodities (which are victims of market speculation, prices have actually been going down.

However, these commodities include oil and food, definitely essential expenses for the majority of households wouldn't you say! In this case, the math just doesn't reflect the reality in real-world terms, in my humble opinion.



the Billmeister



posted on Jul, 29 2011 @ 08:49 AM
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Originally posted by Billmeister
reply to post by redoubt
 


These are the observations of Mr. Pollin... I guess I will go back and make that even clearer in the OP.

You must have missed this part, where I added my 2¢ worth:



An point of interest raised by Mr. Pollin concerned the level of inflation. He shows that, apart from commodities (which are victims of market speculation, prices have actually been going down.

However, these commodities include oil and food, definitely essential expenses for the majority of households wouldn't you say! In this case, the math just doesn't reflect the reality in real-world terms, in my humble opinion.



the Billmeister


Yeah, I saw that but... I'm only on my second cup of coffee and...
Have you see what a pound of Maxwell House costs????

Don't fret. I read you. Was just unloading my 2 cents... which is now worth about a plug nickle.

the Billpayer



posted on Jul, 29 2011 @ 09:24 AM
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Originally posted by Billmeister
Example: Your mortgage is for $100 000 and your interest rate is at 1%, the actual payments you must make are for $1000 dollars a year. As compared to the average interest rate over the last 60 years which was 10%, which would make your obligated payment $10 000 for the same loan. (In government terms, the mortgage represents treasury bonds.)


The difference between 1% and 10% is not 10 times as your post describes, it's a lot less than that. For instance, using your 100k loan example and assuming a 30 year fixed rate loan, at 1% your payments would be 321.64. At 10% they would be 877.57. That's a big difference to be sure, but in reality the historical interest rates versus today's rates are not 10% apart, it's less than that, maybe 5%. So while it helps that we have low interest rates, it's not as big a factor as that. Also, we can't count on low interest rates sticking around forever. If our bond rating gets downgraded which at this point looks extremely likely, interest rates will immediately go up. They'll have to go up to entice people into investing at the higher risk rating.



posted on Jul, 29 2011 @ 09:38 AM
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reply to post by SavedOne
 


The interest example was "tweaked" to reflect the treasury bond market, and not a real home mortgage loan situation.

As the interviewee points out, the government remains at the mercy of interest rates, but even an immediate spike would not have immediate repercussions, as the payment obligations are tied in for 2, 5 or 10 years.

That said, and it is emphasized in the interview, the actual deficit situation absolutely must be dealt with if any solution is to be reached. The point of the interviewers statistics however, show that there is no immediate crisis, that is a stress on the U.S. to make its obliged payments nor is there the risk of a crisis for at least the next 2-3 years even in the worst case interest rate hike scenario.

the Billmeister



posted on Jul, 29 2011 @ 11:19 PM
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hmmmm so over 14 trillion in debt is not a crisis... Yet it is the largest debt in any countrys history... Hmmm yep definaltly not a crisis.. I dont agree with that guys observations



posted on Jul, 30 2011 @ 04:26 AM
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Originally posted by redoubt
Have you seen the price of a pound of ground beef? Not steak, not even a fatty old pork roast, but lowly hamburger?

I keep trying to tell my wallet that it is full... but all it does is belch out pennies where there used to be dollars, lol.


What does a pound of beef have to do with the United States Treasury's ability to meet its obligations in terms of securities and interest?

While connected, indirectly, it is not an indication of a "debt crisis". The current situation will have ramifications but your rising costs in the market (such as beef) is due to increased government regulation and increased government involvement in private markets.



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