US has officially run out of money the rich are scrambling ways to take from the poor

Here are some facts:

There are 1.7 Trillion US Dollars in circulation, including in banks. The national debt is 16.4 Trillion.

If the US suddenly printed money to cover the debt, the dollar value would drop by approximately 1/16th.

The ideal situation to resolve debt is for the US to grow revenue to cover its cost of operations.

The US can withstand temporary revenue dips by borrowing, but it is not a long-term solution especially if the US is living artificially above its means.

The US can decrease the amount of borrowing, by printing some money and incurring some inflation.

The US debt ceiling is merely a way to encourage congress to not spend the money it doesn't have, but the debt ceiling is largely a meaningless entity and has little impact on the government spending behaviour.

As borrowing increases it becomes less-and-less likely the US will increase revenue so much that it will be able to pay it off, this will cause the lenders to become hesitant to lend more money (this is already happening).

the US will have no choice but to either print more money and incur inflation, or to increase revenue (either economically or by "thieving" foreign wealth in its illegal wars).

If the rate of inflation due to money printing exceeds the interest rate on the debt, the US could start paying back with interest money less valuable than what it borrowed. For example, borrow $100, use it to buy $100 worth of goods, interest is 2%, inflation is 2%, the net payout has the same value as if there was 0% interest, 0% inflation. Interest 2% with 3% inflation and the US held and used money more valuable than the money it gave back in the future. However all of the inflation would merely chop the US Dollar by 1/16 in value ultimately, albeit slowly, and it would not be a good return on investment by its lenders.

Psychologically this could cause the lenders (China, etc.) to be tolerable of the US wars of aggression, because those wars (if they are profitable to the mongering nation) would make it more likely debt is paid (though I disagree... I think it only justifies negligible spending behaviour).

The bottom line is that the US MUST increase revenue to compensate for the inevitable decline in US dollar value due to debt.

The US makes approximately $4 Trillion each year in revenue, and so its debt is currently 4 times its yearly revenue (imagine if you had so much debt).

 

Good thing I didn't vote for Obama then, not being a US citizen.

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So introducing money into the economy will take generations to have a any affect? Are you listening to yourself?

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This is gibberish.

 

This is also gibberish...

 

Manageable? The interest payments on that debt are 6% of the annual government budget, and that is likely to double since interest rates are unusually low right now.
Do you really want to risk it? What about the debt crisis in the euro zone? Why is the USA getting into more and more debt? They are behaving like irresponsible teenagers with a credit card; the rates are low at first, but then then everything spirals out of control.

 

For the millionth time, you cannot talk about macroeconomics like a house hold budget.

 

Wrong. Your solution, so far, is to print more money, but that will decrease the dollar value by 1/10th. As such it will decrease US wealth and spending power in the world by 1/10th. This is because the US debt is currently just under 10 times the US amount of "printed" currency. Increasing liquidation 10x to cover the debt also decreases the money value by approximately 10x.

That is hardly a get-out-of-jail free card. The US has no choice but to reign in spending habits and to increase revenue.

Why isn't it doing this? It is struggling on both ends of the solution.

If its rate of borrowing exceeds its ability to pay it back, the lenders will recognize (at some critical threshold) that the US bonds have negative return value (because the US cannot pay it back without money printing causing inflation to exceed the interest rate gain on return) and they will STOP LENDING, forcing the US to print money, decrease wealth power, OR become belligerent, default on the loans, incur retribution, or to need to steal foreign nations' wealth for repayment help, or some combination of those phenomenon.

If the direction of the US spending/borrowing behaviour does not sustain itself, it is a guarantee that those situations I mentioned WILL occur. So... It is NOT the "no big deal" situation you are painting.

 

Lol 17 trillion dollars isn't repayable....

Government doesn't instead to pay anything down anyway...

Just keep robbing from our kids, it's ok...lol

 

As usual, you have no idea how things work. Come back when you're willing to actually look into the issue yourself, or at least view my explanations with some shred of objectivity and don't just parrot what you hear on talk radio.

 

You should read through this thread again. Printing more money is what's done when a country has to default on a loan and its bonds become worthless so it can no longer rely on that source of income. Which the US will not be doing in the foreseeable future.

Reigning in spending habits doesn't work during a recession. Government spending cannot decrease to deal with the down turn.

 

Wrong! The US Government MUST reign in spending irregardless of economic condition, especially during a recession, and it should find ways to produce jobs and increase revenue WITHOUT incurring more debt, such as by confiscating wealth of the more evil of US entities or the ones who have caused the biggest problems such as Freddie Mac and Fannie Mae for example.

Look at the debt that the United States has incurred during this recession it is predominately based on government waste, irresponsible/unnecessary spending, and war mongering. You cannot justify THAT debt in regards to economic condition. And the debt that IS justifiable could have been attained by nationalizing the banks whose irresponsibility damaged the US condition, INSTEAD of bailing them out. This would have ended billions of dollars of CEO tax-payer funded payments and put the money to better use actually benefitting the US common people, and all these virtues would have minimized US debt.

The US does NOT NEED to incur debt in recession, and also the debt it DOES incur is NOT JUSTIFIED by the recession. The path to US Salvation is VERY clearly illuminated, but the GREED and FINANCIAL GLUTTONY of the US elite has caused them to waver on their path like drunken idiots!

 

And govt spending cannot increase perpetually. The arguments in this country are not about cutting spending, they are about slowing the growth of future spending.

Speaking of govt bonds, who's buying those bonds? The last numbers I saw say the fed is buying 70%. Hardly a ringing endorsement from lenders around the world. And what debt we can sell seems to be more a factor of being the favorite horse in the glue factory.

You seem caught up in "more govt spending in recession", when our reality is "more govt spending no matter what, forever". When you look at what the costs of entitlements and debt service are heading for, it becomes obvious that it is simply unsustainable.

 

Mayans: Another failed tropical civilization.

 

Mayans: Another failed tropical civilization.

Marshal says:
The US will be blessed, to have survived as long as the Mayan civilization did.

 

We spent very little in 1938 compared to 1944. That was my entire point. You have failed to prove that we would not have had the same benefit spending that much money elsewhere in the economy. There is nothing special about defense spending that makes our economy grow any faster than other forms of spending.

 

This is nonsensical and absolutely none of this is true, lol.

 

Skinny when Obama took office 1/5 of the population worked for state federal and local governments. It is higher now. We spend almost fifty ercent of GDP on governance in the US. In fact we spend more on governance in this country than the entire GDP of all but one or two countries.

 

That's not true at all. We've actually had the largest reduction of government employees in decades. Even Bush and Reagan were big time on big Government. Obama by all means has been the biggest fiscal conservative we have seen in 6 decades. Not by his choice of course.

 

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I have showed you what a heavy public presence has already done to our economy. Federal, city, state and county governments are broke trying to pay those high wages and benefits. They are over five trillion in debt with unfunded pension and health care liabilities. Your idea is to keep hiring more government workers to bring on a stronger economy. This isn't liberalized Europe where people pay out almost half their earnings in taxes to have government take care of them. We create more jobs through private enterprise. I have already stated several ways to bring in more business into this country, or start up more jobs with companies alredy here. That is how you stimulate an economy like ours, not making more government jobs we can't afford. Your only looking at tax dollars government workers would be paying in and not looking at tax dollars spent on them in wages and benefits. Your not spending tax dollars when business hires and they in turn are paying tax dollars. Quite a difference there. Understand we are not like Europe.

 

And yet the economic say otherwise.

So rather than the simple, trite and true method of selling bonds for revenue and incurring a deficit (which is relatively harmless and I wish people would stop scaremongering even after the reality of the situation has been explained to them) they should set an unacceptable precedent for wealth confiscation? Of financial institutions? During a recession?

This is purely speculation. It's very rare that a government enacts something that is expensive yet completely pointless, government waste and warmongering are separate problems altogether and the military is not a sink hole because it is an active economic agent. It buys assets and employs people, it doesn't just suck up money to kill people. I don't agree with the America's foreign policy, or any interventionist policies, but "it caused a national deficit!" is not one of the arguments against it.

What part of this very simple fact don't you understand: when revenue decreases, government can't cut spending the way a private institution does, and it can't burden the economy with more tax? You haven't even disagreed with this you're just referring to numerous right wing talking points that have no bearing on reality.

Agreed, but the US government is largely in bed with the financial elite. It's a natural function of capitalism that the state corrects for bad business models, allowing profit to be sought without concern for things like whether or not things work in the long term.

 

There are some us who call for a restoration of sane taxation. When the guy in my avatar was US president, the top bracket tax was 91-92%.

 

"Can't afford" ? Well, who ever COULD afford ANYTHING when we all Kiss the Ass of the Ruling (super-rich) Class with some of the lowest taxes on them in our history. Since Mr. Movie Star tax (28%) Ronald Reagan was in charge, we haven't had a sane tax rate on the rich. Sure, we "can't afford", but that's only because we're deliberately doing something else we can't afford >> pandering to the rich, with abnormally low tax rates.

 

Get off of it, Reagan raised taxes as many times or more than he lowered them. You want to get mad at tax cuts. In the 1950's the rich was paying 91%, the Democrats cut them 21%, down to 70% in 1965, how come your not complaining about that?

http://www.data360.org/dsg.aspx?Data_Set_Group_Id=475

No, we can't afford to create more government jobs when we already have 5 trillion dollars in unfunded government pensions and health care now. How hard is that for some people to understand? We need private sector jobs, not more government funded ones.

 

How does a country with made up money run out of made up money?

 

Just stop. You have no idea what you're talking about. I never said a heavy public sector presence was an inherently good thing, only that you can't decrease spending or increase taxes to deal with a recession, something you have made no attempt to refute.

You also haven't showed any inherent problem with a heavy public sector, presence, not that it's relevant anyway. Overspending isn't a ubiquitous problem.

 

What the heck are you talking about when you say a heavy public sector presence if your not talking about a lot of government jobs?