Whine & Cheese

Yes. Deficit and debt are also two different things.My point is that we are already in too deep. Even if we eliminated the yearly deficit,(1.5 trillion most recently) and paid 500 billion towards reducing the debt, we would have to do both of these things for fifty years in a row.It aint gonna happen that way. We likely will inflate the debt away.

Do you understand what "inflate the debt away" means?

Not entirely. I searched and found this from The Economist Magazine....(in a blog)Repress, then inflate and it appears that people agree that it wouldn't be easy and likely would destroy much of the savings of private citizens.Its a lot easier to suffer all at once and get it over with than it is to pay a debt for fifty years.

Yet from today's news:

quote:

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The $1.1 trillion deficit is the smallest deficit figure both in nominal terms and as a percentage of the economy since the Great Recession.

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Neither the debt or the deficit are really major problems. The problem is we continue to fail to invest and spend stupidly.

Let's test your comprehension of government-scale finance issues. In too deep to who? Please be specific. Please note that if your answer is "the Chinese", you should be aware that for every dollar of US debt owned by foreign companies, we own 82 cents in foreign debt. If I owe you ten dollars and you owe me eight, how much money do I actually owe you?

I am far from an expert in US economics but I am pretty sure that your "facts" are not quite as you are interpreting them. As I understand the numbers the US government currently borrows about 40 cents of every dollar it spends. That is what the deficit is. Is that what you meant?I think everyone agrees that the deficit needs to be reduced. But many, including I, would argue that taking extreme austerity measures to do so in the midst of a recession (or near recession) is counterproductive. I think this is a conflation of deficit with debt. With some very rough figures - Personal income in the US is about 13 Trillion per year. The budget deficit is about 1.3 Trillion. The national debt is about 14 Trillion.So if you taxed everyone 100% for a year (ignoring the other consequences of that) you wouldn't clear the overall debt. Is that what you meant?In general national debt should be looked at more like a long term mortgage than something that needs immediate payment. You wouldn't worry that you cannot pay a 140,000 dollar mortgage with a 130,000 dollar yearly income would you?I don't think the facts you cite are as scary as they first seem.

There's only a deficit because, every year, Congress arranges that there be one:If Congress decides to sit on its hands in 2012, there will be almost no deficit in 2013. Under the law there's no budget deficit; Congress keeps changing the laws for that year to extend tax cuts and enact the yearly "Doc fix."

Then say goodbye to that pension you were hoping to retire on. It would be inflated away.

Yes I know. Social Security would be gone, too.Thus I suppose we cant inflate the debt away. What we need to do is prevent the rest of the world from adopting a new global reserve currency for trade apart from the US Dollar. If they sink us, it would destroy our recovery. Gas would cost a fortune. Taxes would go up up up.Edited by Phat, : No reason given.

In a technical US specific legal sense you are no doubt correct. But the reason the US has a budget deficit is ultimately the same reason any other nation can be said to have a budget deficit. Namely because the government is spending more than it is taking in.Whether one believes that austerity (i.e. reducing expenditure) or the more Keynesian approach of promoting growth (and thus increasing revenue) is the best long term solution to this - Depends. But I think most economists agree that the US deficit needs to come down eventually if the economy is to be sustainable.

HUH?Do you know what "reserve currencies" are?Why would it matter in what currency trade is conducted?

The best way to handle that, is to adopt sensible economic policies. But that's not easy to do when members of the Grand Old lunatic Party block just about everything sensible.

yes. We alone can print money to cover our debts. Other countries must first convert to dollars and then make sure their own currency is sound.IMF discusses plan to replace dollar as reserve currency - Feb. 10, 2011Edited by Phat, : No reason given.

We can print all the dollars we want, but what does that have to do with either the debt or deficit?Other nations get to decide what they think the dollar is worth and if we just print money then guess what they do?

I heard a fact today, it said you're right about the fact that I appreciate the good life the US of A has afforded me.These brits won't get it because they're too busy being socialists.- Oni