Originally Posted by John Harper
Yes, but how is that affecting the debt which is just under 18 trillion dollars and climbing?Oh, and the federal deficit is lower than it's been in years.
Yes, but how is that affecting the debt which is just under 18 trillion dollars and climbing?Oh, and the federal deficit is lower than it's been in years.
Bucket, you are confusing deficit with debt. The deficit can be manipulated using "fuzzy numbers", the debt cannot and is a result of running high deficits among other things...
Federal budget deficits have been the norm under the last several administrations (Republican and Democrat), with or without the Great Recession, the Afghanistan/Iraq wars, etc. Remember our hero, Dick Cheney, when he famously stated "deficits don't matter," back in 2000??
A balanced federal budget is a nice idea, but not very practical in times of economic distress, war, or national disasters. Don't forget we borrowed for the Afghanistan/Iraq debacle, not a dime of taxes raised to pay for it.
John
Last edited by John Harper; 10-31-2014 at 12:34 PM.
Keep borrowing money EVERY YEAR ? Hey John, read this below and comment.
DR
http://davidstockman...interest-rates/
By Michael Snyder
I know that headline sounds completely outrageous. But it is actually true. The U.S. government is borrowing about 8 trillion dollars a year, and you are about to see the hard numbers that prove this. When discussing the national debt, most people tend to only focus on the amount that it increases each 12 months. And as I wrote about recently, the U.S. national debt has increased by more than a trillion dollars in fiscal year 2014.
But that does not count the huge amounts of U.S. Treasury securities that the federal government must redeem each year. When these debt instruments hit their maturity date, the U.S. government must pay them off. This is done by borrowing more money to pay off the previous debts. In fiscal year 2013, redemptions of U.S. Treasury securities totaled $7,546,726,000,000 and new debt totaling $8,323,949,000,000 was issued. The final numbers for fiscal year 2014 are likely to be significantly higher than that.
So why does so much government debt come due each year?
Well, in recent years government officials figured out that they could save a lot of money on interest payments by borrowing over shorter time frames. For example, it costs the government far more to borrow money for 10 years than it does for 1 year. So a strategy was hatched to borrow money for very short periods of time and to keep “rolling it over” again and again and again.
This strategy has indeed saved the federal government hundreds of billions of dollars in interest payments, but it has also created a situation where the federal government must borrow about 8 trillion dollars a year just to keep up with the game.
So what happens when the rest of the world decides that it does not want to loan us 8 trillion dollars a year at ultra-low interest rates?
Well, the game will be over and we will be in a massive amount of trouble.
I am about to share with you some numbers that were originally reported by CNS News. As you can see, far more debt is being redeemed and issued today than back during the middle part of the last decade…
2013
Redeemed: $7,546,726,000,000
Issued: $8,323,949,000,000
Increase: $777,223,000,000
2012
Redeemed: $6,804,956,000,000
Issued: $7,924,651,000,000
Increase: $1,119,695,000,000
2011
Redeemed: $7,026,617,000,000
Issued: $8,078,266,000,000
Increase: $1,051,649,000,000
2010
Redeemed: $7,206,965,000,000
Issued: $8,649,171,000,000
Increase: $1,442,206,000,000
2009
Redeemed: $7,306,512,000,000
Issued: $9,027,399,000,000
Increase: $1,720,887,000,000
2008
Redeemed: $4,898,607,000,000
Issued: $5,580,644,000,000
Increase: $682,037,000,000
2007
Redeemed: $4,402,395,000,000
Issued: $4,532,698,000,000
Increase: $130,303,000,000
2006
Redeemed: $4,297,869,000,000
Issued: $4,459,341,000,000
Increase: $161,472,000,000
The only way that this game can continue is if the U.S. government can continue to borrow gigantic piles of money at ridiculously low interest rates.
And our current standard of living greatly depends on the continuation of this game.
If something comes along and rattles this Ponzi scheme, life in America could change radically almost overnight.
In the United States today, we have a heavily socialized system that hands out checks to nearly half the population. In fact, 49 percent of all Americans live in a home that gets direct monetary benefits from the federal government each month according to the U.S. Census Bureau. And it is hard to believe, but Americans received more than 2 trillion dollars in benefits from the federal government last year alone. At this point, the primary function of the federal government is taking money from some people and giving it to others. In fact, more than 70 percent of all federal spending goes to “dependence-creating programs”, and the government runs approximately 80 different “means-tested welfare programs” right now. But the big problem is that the government is giving out far more money than it is taking in, so it has to borrow the difference. As long as we can continue to borrow at super low interest rates, the status quo can continue.
But a Ponzi scheme like this can only last for so long.
It has been said that when the checks stop coming in, chaos will begin in the streets of America.
The looting that took place when a technical glitch caused the EBT system to go down for a short time in some areas last year and the rioting in the streets of Ferguson, Missouri this year were both small previews of what we will see in the future.
And there is no way that we will be able to “grow” our way out of this problem.
As the Baby Boomers continue to retire, the amount of money that the federal government is handing out each year is projected to absolutely skyrocket. Just consider the following numbers…
-Back in 1965, only one out of every 50 Americans was on Medicaid. Today, more than 70 million Americans are on Medicaid, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.
-When Medicare was first established, we were told that it would cost about $12 billion a year by the time 1990 rolled around. Instead, the federal government ended up spending $110 billion on the program in 1990, and the federal government spent approximately $600 billion on the program in 2013.
-It is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.
-At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years. That comes to approximately $328,404 for every single household in the United States.
-In 1945, there were 42 workers for every retiree receiving Social Security benefits. Today, that number has fallen to 2.5 workers, and if you eliminate all government workers, that leaves only 1.6 private sector workers for every retiree receiving Social Security benefits.
-Right now, there are approximately 63 million Americans collecting Social Security benefits. By 2035, that number is projected to soar to an astounding 91 million.
-Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.
-The U.S. government is facing a total of 222 trillion dollars in unfunded liabilities during the years ahead. Social Security and Medicare make up the bulk of that.
Yes, things seem somewhat stable for the moment in America today.
But the same thing could have been said about 2007. The stock market was soaring, the economy seemed like it was rolling right along and people were generally optimistic about the future.
Then the financial crisis of 2008 erupted and it seemed like the world was going to end.
Well, the truth is that another great crisis is rapidly approaching, and we are in far worse shape financially than we were back in 2008.
Don’t get blindsided by what is ahead. Evidence of the coming catastrophe is all around you.
http://theeconomicco...-dollars-a-year
I don't disagree with any of that!!!!! What I do disagree with is, the notion that some people think the only way to balance something is, to first cut your revenue and then cut your spending to match your revenue. Do you realize how much you would have to cut to make that a reality. There really would be rioting in the streets if they did. Do I favor what their doing now, Heck No!!!!!!!! The article is right, you can't do that forever and it really is a Ponzi scheme!!!!! So what is there left to do, (Get your tomatoes ready to throw at me) you raise your revenue by increasing tax's by various means. You then also cut spending to more reasonable levels. (I haven't seen the sky fall on us yet by the sequester cuts) That's the only way for us to get away from this Ponzi scheme we have now!!!!!Keep borrowing money EVERY YEAR ? Hey John, read this below and comment.
http://davidstockman...interest-rates/
By Michael Snyder
I know that headline sounds completely outrageous. But it is actually true. The U.S. government is borrowing about 8 trillion dollars a year, and you are about to see the hard numbers that prove this. When discussing the national debt, most people tend to only focus on the amount that it increases each 12 months. And as I wrote about recently, the U.S. national debt has increased by more than a trillion dollars in fiscal year 2014.
But that does not count the huge amounts of U.S. Treasury securities that the federal government must redeem each year. When these debt instruments hit their maturity date, the U.S. government must pay them off. This is done by borrowing more money to pay off the previous debts. In fiscal year 2013, redemptions of U.S. Treasury securities totaled $7,546,726,000,000 and new debt totaling $8,323,949,000,000 was issued. The final numbers for fiscal year 2014 are likely to be significantly higher than that.
So why does so much government debt come due each year?
Well, in recent years government officials figured out that they could save a lot of money on interest payments by borrowing over shorter time frames. For example, it costs the government far more to borrow money for 10 years than it does for 1 year. So a strategy was hatched to borrow money for very short periods of time and to keep “rolling it over” again and again and again.
This strategy has indeed saved the federal government hundreds of billions of dollars in interest payments, but it has also created a situation where the federal government must borrow about 8 trillion dollars a year just to keep up with the game.
So what happens when the rest of the world decides that it does not want to loan us 8 trillion dollars a year at ultra-low interest rates?
Well, the game will be over and we will be in a massive amount of trouble.
I am about to share with you some numbers that were originally reported by CNS News. As you can see, far more debt is being redeemed and issued today than back during the middle part of the last decade…
2013
Redeemed: $7,546,726,000,000
Issued: $8,323,949,000,000
Increase: $777,223,000,000
2012
Redeemed: $6,804,956,000,000
Issued: $7,924,651,000,000
Increase: $1,119,695,000,000
2011
Redeemed: $7,026,617,000,000
Issued: $8,078,266,000,000
Increase: $1,051,649,000,000
2010
Redeemed: $7,206,965,000,000
Issued: $8,649,171,000,000
Increase: $1,442,206,000,000
2009
Redeemed: $7,306,512,000,000
Issued: $9,027,399,000,000
Increase: $1,720,887,000,000
2008
Redeemed: $4,898,607,000,000
Issued: $5,580,644,000,000
Increase: $682,037,000,000
2007
Redeemed: $4,402,395,000,000
Issued: $4,532,698,000,000
Increase: $130,303,000,000
2006
Redeemed: $4,297,869,000,000
Issued: $4,459,341,000,000
Increase: $161,472,000,000
The only way that this game can continue is if the U.S. government can continue to borrow gigantic piles of money at ridiculously low interest rates.
And our current standard of living greatly depends on the continuation of this game.
If something comes along and rattles this Ponzi scheme, life in America could change radically almost overnight.
In the United States today, we have a heavily socialized system that hands out checks to nearly half the population. In fact, 49 percent of all Americans live in a home that gets direct monetary benefits from the federal government each month according to the U.S. Census Bureau. And it is hard to believe, but Americans received more than 2 trillion dollars in benefits from the federal government last year alone. At this point, the primary function of the federal government is taking money from some people and giving it to others. In fact, more than 70 percent of all federal spending goes to “dependence-creating programs”, and the government runs approximately 80 different “means-tested welfare programs” right now. But the big problem is that the government is giving out far more money than it is taking in, so it has to borrow the difference. As long as we can continue to borrow at super low interest rates, the status quo can continue.
But a Ponzi scheme like this can only last for so long.
It has been said that when the checks stop coming in, chaos will begin in the streets of America.
The looting that took place when a technical glitch caused the EBT system to go down for a short time in some areas last year and the rioting in the streets of Ferguson, Missouri this year were both small previews of what we will see in the future.
And there is no way that we will be able to “grow” our way out of this problem.
As the Baby Boomers continue to retire, the amount of money that the federal government is handing out each year is projected to absolutely skyrocket. Just consider the following numbers…
-Back in 1965, only one out of every 50 Americans was on Medicaid. Today, more than 70 million Americans are on Medicaid, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.
-When Medicare was first established, we were told that it would cost about $12 billion a year by the time 1990 rolled around. Instead, the federal government ended up spending $110 billion on the program in 1990, and the federal government spent approximately $600 billion on the program in 2013.
-It is being projected that the number of Americans on Medicare will grow from 50.7 million in 2012 to 73.2 million in 2025.
-At this point, Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years. That comes to approximately $328,404 for every single household in the United States.
-In 1945, there were 42 workers for every retiree receiving Social Security benefits. Today, that number has fallen to 2.5 workers, and if you eliminate all government workers, that leaves only 1.6 private sector workers for every retiree receiving Social Security benefits.
-Right now, there are approximately 63 million Americans collecting Social Security benefits. By 2035, that number is projected to soar to an astounding 91 million.
-Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.
-The U.S. government is facing a total of 222 trillion dollars in unfunded liabilities during the years ahead. Social Security and Medicare make up the bulk of that.
Yes, things seem somewhat stable for the moment in America today.
But the same thing could have been said about 2007. The stock market was soaring, the economy seemed like it was rolling right along and people were generally optimistic about the future.
Then the financial crisis of 2008 erupted and it seemed like the world was going to end.
Well, the truth is that another great crisis is rapidly approaching, and we are in far worse shape financially than we were back in 2008.
Don’t get blindsided by what is ahead. Evidence of the coming catastrophe is all around you.
http://theeconomicco...-dollars-a-year
Last edited by etucker1959; 10-31-2014 at 08:30 PM.
The easiest way is through economic growth. Tax revenues will grow, and you will gradually eliminate debt, given prudent spending.
BTW, the national debt as a percentage of GDP (Gross Domestic Product) is actually lower than times in the past. Think of it as having a credit card. As long as the balance is manageable compared to your income, it's actually very logical financially. You have credit when needed, so it helps build wealth.
Would you all like me to teach you about global finance, economics, and spending? I studied under your supply side hero, Dr. Arthur Laffer, while attending USC business school in the 1980's. You can pay me $200 each and I'll give anyone a basic understanding of how the financial world really works.
John
Last edited by John Harper; 11-01-2014 at 06:47 AM.
Your missing the Elephant in the room John. And that Elephant is called the interest rate on your credit card. The interest rate on the US debt is at an historical low and far below the historical average. The Fed has exchanged our debt into short term obligations that must be continually rolled over. When and it really is a matter of when and not if is when do rates go up and the house of cards starts falling apart. How many basis points is the tipping point? If we were at the historical average now it would be game over. I have no need to pay you $200 for a lesson, before I retired my hourly consulting rate was $400 your far to cheap if your really that good.
Last edited by DEVOREFLYER; 11-01-2014 at 07:24 AM.
I figure most of the members here can't afford your rates, and I happily teach high school students for far less, as a second career. Someone has to impart critical thinking skills to our youth, they won't learn that here, obviously.
I've seen interest rates near 20% in the late 1970's, and we survived that. As long as our nation is a "going concern" and keep debt ratio in check, things will be fine. As for the long run, remember what Keynes said, "in the long run, we'll all be dead." And so will you and I.
John
Last edited by John Harper; 11-01-2014 at 10:50 AM.
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