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Debt Ceiling of America.

Discussion in 'The Breakroom' started by jeeves3443, Aug 1, 2011.

  1. jeeves3443

    jeeves3443 Loaded Pockets

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    Can anyone who is more enlightened on these subjects, or anyone that's been paying better attention than I, explain what's been going on, why it's been happening, and the ramifications of such an action being passed into law?

    Who's at fault? If there's blame to be laid.
    Why is it such a controversial subject?
    Why is it happening in the first place?

    I'm hoping to hear from Jon especially on this one, if he has time.
    Of course, all are welcome to post their input, so long as it's on topic. If it is a rant, please make it well thought out, and based in fact. Also, try to make it 'good.'
    No spewing of bable or uninformed/ignorant remarks/theories.

    Thanks,
    Jeeves.
     
  2. CatherineM
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    CatherineM Loaded Pockets

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    I may live in Canada now, but I am an American citizen, still pay taxes to the IRS every year, and vote in St. Pete, just so you don't think I don't have a player in this game.

    Our basic problem is that the US spends more than it makes, so it has been living on credit for too long. They max out the federal credit card so to speak, and instead of getting a part time night job to raise more money, or getting rid of cable and cell phone to cut costs, they keep calling their credit card company to get their credit limit increased so they can use cash advances on one credit card to pay the minimum payments on the rest of their maxed out credit cards. The fight happened because the Republicans (cut the cable and cell phone gang) controls the House, and the Democrats (raise more money) control the Senate and White House. Neither side is happy with the bill that got passed, so that is actually a good thing in my view. I think they learned two things this week, that the US tax payer wants this stuff to get fixed, and that they will have to come up with a bipartisan solution.

    Bottom line for me is that you can't borrow your way out of debt, and the US government isn't in the job of inventing businesses and jobs. If we are waiting for the government to fix the economy or make things easier, it is going to be a long wait. Part of preparation for me is to be debt free.
     
  3. fshram76

    fshram76 Loaded Pockets

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    Good analogy Catherine! Basically the issue and cause of the problem is separate from the debt crisis as far as the step needed to be done at this moment in time. The government could have had it voted on based simply on the need to extend credit to pay bills. Fine that is one hurdle solved so they could get to the meat and potatoes of the issue.

    The issue like Catherine said is spending; while it is necessary for the country to run they I am sure can find some cuts that makes sense. At the same time spending by the government is usually what ignited jobs in the past and could with out question could do the same today if handled properly and not influenced by lobbyists and bad programs.

    The second thing to any debt or spending issue no matter if you are talking government or personal debt is that you have to have an income. The governments income is taxes. While most people feel this is taboo and can understand that but being I was an economist for 15 years I see the positives in it.

    If you have debt at home you can lower your spending, make more money by getting a new job, selling your stuff, or work an extra shift. Lastly you can do both by cutting your expenses and increase your income.

    The best and fastest way is the 3rd plan. Doing both will get us where we need to be in the most expedient manner.

    Now I am not saying hammer the heck out of people with taxes but if we taxed the top earners in this country even just 1% that would help more than doing nothing.

    Above all the personal taxes the government could change I think it i more important to get some of these huge companies like G.E. to pay some corporate taxes. G.E. made over 15 billion in profit last year and actually had a tax benefit from the U.S. Treasury for 3 billion and change. All of this because of loop holes in the system that they need to make their money.

    Now if we should tax anyone in this country it is these large companies that are making so much. The little guy like us pays taxes so why should they not have to. Cutting tax write offs on private jets and things were brought up but never changed or put into writing.

    I am not a Dem or a Republican, I have my own opinion on so many things that I do not find myself on one team or the other. I just think that in this time of economic peril that the government should make tough decisions and stick to them if they really think that the issue is that serious. Saying not to add more animals to the list of endangered species is the dumbest thing I heard out of all this in an effort to save on spending.

    If that is what these bone heads are bringing to the table I am not optimistic for the outlook of this issue.

    Overall I think spending should be cut and taxes(government income) should be lifted some how.

    That is just my opinion; I studying this for a long time and think it is a simple theory to understand. Most people follow these theories/rules at home, lets let the congress do the same....

    Spend less and earn more = better debt situation

    Or if they refuse to cut spending we should as a forum/organization get a grant to buy our members a edc gadget :)

    That is all I got, any questions or ideas I am open for it!
     
  4. fshram76

    fshram76 Loaded Pockets

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    Oh another form of income to help with all this could be the military. They could sell all the abandoned air bases, forts, testing areas, old equipment, planes, etc. that they have not done anything with in years. For example, the Air Force base in Rantoul, IL is sitting there collecting dust and the buildings and museum there are rotting to peices. At lease sell the land to be used for another reason. Just another thought and maybe a simpler way to raise some money and give back on an investment the government has made in the past. I am sure some 100 year old bases and other government properties have appreciated a couple pennies since then; even in the real estate bubble burst ;)
     
  5. Monocrom

    Monocrom Loaded Pockets

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    Answers to each question in order:

    1- The President and all of the career politicians in both houses of Congress who have spent so much time on the Hill that they have lost touch with reality.

    2- It's like fixing a leaking dam by putting a young Dutch girl in front of it, and having her plug up the leak with her finger. In the very short run, it's a stop-gap measure that doesn't actually fix the huge problem. Or, it's like borrowing money from Steve. He insists on 5% interest in three months. Three months later, you borrow the money (including the 5%) from Paul; in order to pay back Steve. But Paul isn't so nice. He wants 10% interest on the loan after three months. Another three months go by. You borrow money from Tim, in order to pay back Paul. You make sure to borrow the dollar amount plus the 10% that Paul insisted on. Now Tim is a bit of a cold-blooded business man. Tim wants 20% after three months . . .

    Increasing the debt ceiling means that Congress has approved borrowing the dollar amount, plus Tim's 20% from Allen. Problem is, Allen is a real S.O.B., and will lend ALL the money needed to pay off Tim. But Allen wants 50% interest after three months. But no worries, after three months, instead of actually doing something to reduce the crippling debt in America; Congress will likely raise the debt ceiling again by approving a bill to borrow money from Barry the Loan Shark. Barry will want 100% interest. But why worry about that now when that'll be another three months away.

    3- Human Greed and rampant Corruption on the Hill.

    Hope I was able to answer your questions in a satisfactory manner.
     
  6. jeeves3443

    jeeves3443 Loaded Pockets

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    Perfect so far.

    Thanks guys. Keep the thoughts flowing.
    The ones that wont close the thread of course. Har har.
     
  7. CatherineM
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    CatherineM Loaded Pockets

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    Some of those sites are sitting because they would cost more to clean up than they would make in sales. Lots of bases are full of buried toxins. If the US government came up before a bankruptcy trustee, it would have to sell off national forests before old bases.
     
  8. vegassprky
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    vegassprky Loaded Circuits

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    Yea the govt was a little loose on enviormental concerns back in the day!! I would like a national forest for a back yard!
     
  9. CatherineM
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    CatherineM Loaded Pockets

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    fshram-Thanks for the compliment. My college AgEcon professor would be proud.
     
  10. Kilted1

    Kilted1 Loaded Pockets

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    We all knew they were going to raise the debt limit. Not doing so would represent too great of a paradigm shift for government to wrap it's tiny little brain around. Not that it was necessarily the right thing to do, but we all knew it was going to happen. If we didn't believe it, the whole country would have called in sick and gone shopping today to spend what little money they had while it was still worth something. All the bickering between the Republicrats and Demoblicans is about 90% show to justify their jobs to the proletariat.

    **further explanation deleted due to late hour and lack of sufficient brainwidth to make sense of it** Go watch the first 20 minutes of Zeitgeist, it explains it all quite well.
     
  11. vegassprky
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    Gonna get my SS at least!! Just started that!
     
  12. JonSidneyB
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    This is one of the things I planned on covering in this thread.

    http://edcforums.com/showthread.php/74519-Robinson-Crusoe

    They are a lot of things that are interrelated.

    The problem is in a few short paragraphs covering all the 300 and 400 level classes so that the points I want to make are able to be presented.

    The news can only brush over this stuff and toss out buzz words. A bit of background is needed to get to some parts of the issues.
     
  13. phill

    phill Loaded Pockets

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    1, essentially Congress. The Republican budget passed 3 months ago meant the debt ceiling had to be raised, but they held it hostage in order to renegotiate the budget and in doing so bring America to the bring of a default, which would involve the lowering of the countries credit worthiness and cause a huge knock on effect to pretty much every world market, plus at the heart of it cause America to pay even more back in debt repayments.

    2, its controversial because some parts of the Republican House want to make everything the government does controversial. The debt ceiling has been raised over 100 times in the past. The biggest problem is that the 14th Amendment means the country cant default on its debt, but the country also has to spend according to a budget as outline in 1, this creates leverage which those irresponsible House Republicans used to push their agenda onto the wheels of government. And note their agenda, the vast majority (over 2/3) of Americans want a part revenue increase part spending reduction solution and yet the end result, depending on what the super committee reports, will possibly be spending reduction only.

    3, The big issue in play is that you have a large part of both chambers of Congress and the White House and the majority of the country who want to have a mainstream solution to the problem of the deficit and the national debt. But a minority of Austrian Economists think government is always a problem so they just want the system to burn and having the nation default is a good way to destroy that nation. Of course the Dems are terrible at negotiating because they give ground every single time and the extremist right of the Republican party doesnt, mix in that the mainstream Republicans are fearful of the extremists and you get the situation where - despite the opinions of 99.99% of economists that it would be grossly harmful - you end up near the cliff face potentially toppling over into default.

    3b, In the end the ceiling got raised, the Republicans kept revenue increases off the table unless the super committee reports back that they should happen - and given the "gang of six" reported that its pretty likely they will in December so this hasnt gone away yet, Obama got the ceiling off the table until 2013, at which point it will likely go round again and the Dems get to be half of the super committee trying to get revenue increases back on the agenda like the country wants. Finally the extremists in the Tea Party didnt get the system to burn, but they did get a bunch more cuts immediately, ironically less than Obama was giving a few weeks ago, and later cuts in December regardless of how it goes.

    3c, It was mostly kabuki theater and the ceiling was gonna go up regardless, but sides got to make noise and they all got a bone to take back to their constituents to get a pet on the head.
     
  14. scríbhneoir
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    scríbhneoir Uber Prepared
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    There were those who predicted all that has happened up to this point, and they were correct. They are predicting now what is going to happen, and it isn't pretty. And they will be correct again. Many people--maybe most, I would venture, do not understand the role of the Federal Reserve (and Congress' complete failure to do its job and follow the Constitution with regard to our nation's money) in the destruction of the dollar and the mess we now find ourselves in. The Austrian economists, followers of Mises, were and are right. For detailed explanations of what has happened--and it hasn't happened just over the past few years--I would recommend reading Peter Schiff, mises.org, the Bastiat Society, Jim Sinclair, Marc Faber, Jim Rogers, Murray Rothbard, Gary North, Tom Woods, Lew Rockwell, and of course, Ron Paul, just for starters. Contrary to what the media tells us, the country has defaulted before, and the world didn't end. The country would not have defaulted had the debt ceiling not been raised. The Federal Reserve would have printed more money to cover its debt, which translates to the cruelest tax of all, inflation. It is coming. The debt deal will add $7 trillion to our nearly $15 trillion now. There were no real cuts, just a slow down of spending. And did you know? The recent "one-time audit" of the Fed revealed that between 2007 and 2010, the Fed secretly gave $16 trillion in emergency loans to US and foreign banks. "Last year, the gross domestic product of the entire U.S. economy was $14.5 trillion." Here's the story: www.rawstory.com/rs/2011/07/21/audit-fed-gave-16-trillion-in-emergency-loans/. They are kicking, once again, the can down the road, and when "it" happens, it will be so much worse that what we would have experienced had they let the banks who made bad deals fail in 2007-2008. The best thing to do is to be as self-reliant as possible, with as little debt as possible, and not count on pensions, social security (a big Ponzi scheme), etc. Gold hit $1662 today. The dollar has lost over 95% of its value since the creation of the Fed in 1913. The dollar has lost over 50% of its value over the past three years. Gold is worth more because the dollar is worth less. All fiat currencies fail. All. So all the political posturing about the debt deal is just a cartoon. But the "joke" is on the middle class, which is going to be wiped out.
     
  15. phill

    phill Loaded Pockets

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    Lots of countries have ran huge debts with no problem. Japan has a 200% debt to GDP and has better living standards and earnings than us Brits. As for Britain, its debt after WW2 was around 300% debt to GDP and was only paid off in 2001.

    Austrians and the pseudo intellectuals at Mises.org arent proven right. By definition they cant be due to the way macro economics works. Its easy to throw out numbers like "the dollar has lost 95% of value since 1913, but since 1913 the US economy and the amount of wealth in the nation has exploded.

    There are two main competing schools of thought. One is Austrian and it believes a return to the era of the great depression is good for an economy. The other is Keynesian and it believes through various mechanisms you can reduce the peak to peak amplitude of economic growth. Neither is wholly incorrect, however the vast majority of mainstream thinking and attempt at scientific understanding of macro economics is found in the Keynesian school whereas Austrian economics rejects the use of mathematics in describing the nature of economies - hence the majority of Mises pseudo intellectual writings and the people who subscribe to such thinking articulate complex models based around overly simplistic analogies.

    The reality as it stands is Austrians subscribe to negativity and pessimism, so when the economy takes a huge slump its easy for them to gain traction and credibility. There will always be Ron Pauls asking silly questions to Bernakes like whether gold is money (oh, and its not btw) long after the economy has rebounded and the debt been repaid just as has happened in every other country that had major debts in its history.
     
  16. scríbhneoir
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    We will have to agree to disagree. I would hardly say that the Austrians are pseudo intellectuals anymore than I would say that the Keynesians are pseudo intellectuals. They are different theories, but one is failing us terribly. Gold is money. It is not a silly question. Has been for over 6000 years, and central banks all over the world (China, India, Russia) are buying it up, some for the first time in decades (like Korea) to protect themselves. Otherwise they might buy diamonds, or corn, or oil. It isn't just "tradition" that makes gold the go-to metal. The dollar is toast. Japan has no economy. It is referred to as a "z-" economy. There is no growth. You cannot spend your way out of debt, and no one wants the depression we are entering, expected to last for 20 years, the result of an incredibly loose money policy and attempts to control what cannot be controlled. It is now out of control. Bernanke and the Fed are out of bullets. Ugly inflation is coming. Correction: It is here, if you've bought any groceries. A truly free market works. We do not and have not had that for a while. We have crony capitalism. Britain sold its gold. I'd hardly say it has a great economy. Greece is undergoing a quiet bank run right now. Spain, Portugal, Italy, and Ireland are on the ropes. Pensions in Ireland have been raided. Geithner has tapped into some of the US pensions. There will always be ups and downs in the economy, no matter what "theory" is practiced, but the downs prior to the creation of the Fed were short lived. I'll take two years of bad over decades of extended misery any day. As for negativity and pessimism, Dr. Paul is one of the most optimistic humans I can think of. He believes in liberty for all. We all just have to get off the couch and educate ourselves. We've been way too complacent for way too long, thinking that everything will just keep on going. As Gerald Celente says, "When the people have nothing to lose, they lose it." I fear that time is closer than many wish to believe.
     
  17. Froley

    Froley Loaded Pockets

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    We are paying for failure to heed Eisenhower's warning against the Military Industrial complex. We will take hot lunches away from school children but build burger kings at bases in Iraq.
     
  18. phill

    phill Loaded Pockets

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    I call Austrians pseudo intellectuals mainly because of the general lack of peer reviewed work the entire movement produces.

    Oh and gold isnt money. If gold were money then why isnt bacon money? Or oil? Or steel? Or milk? Gold is a traded commodity, but the mere act of trading something doesnt make it money otherwise pretty much everything in the world is money. You correctly noted that if gold magically disappeared stuff like diamonds would be stored just the same as gold is by central banks - its just a convenient way to park a large sum of money for a long time.

    Oh and another point id pick up on, food prices are inflating greatly right now mainly due to weather causing failing crops and the ever increasing world population. Its connection to the dollar is basically zilch because America grows and consumes most of its own food itself.
     
  19. scríbhneoir
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    Utah thinks differently, as do some other states considering similar legislation:

    [FONT=Times New Roman, Times, serif]The Utah Legal Tender Act was signed into law by Governor Herbert last month. “Good monetary policy is an important part of a healthy and prosperous economy,” said Senator Mike Lee. He and other Republicans also introduced legislation to eliminate federal capital gains taxes on gold and silver coins. “Since the Federal Reserve Act of 1913, the dollar has lost approximately 98% of its value. This bill is an important step towards a stable and sound currency whose value is protected from the Fed’s printing press.” from here.[/FONT]

    The debt deal is a wash. And we citizens are the ones getting the dirt dumped on us.
     
  20. vegassprky
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    Is'nt gold valued in dollars or other types of currency? And again I say if the stuff hits the fan money, gold, diamonds and the same type of so called now valuables won't be worth nadda! Lead wil be the new currency! Food, water and the neccesities of life will be what has real value! JMHO