US Debt

[TXduckdog]

If this is true......."By the end of 2019, according to the administration's budget numbers, our federal debt will reach $23.3 trillion—as compared to $11.9 trillion today. To put it in perspective: U.S. federal debt was equal to 61.4% of GDP in 1999; it grew to 70.2% of GDP in 2008 (under the Bush administration); it will climb to an estimated 90.4% this year and touch the 100% mark in 2011, after which the projected federal debt will continue to equal or exceed our nation's entire annual economic output through 2019."

Does it mean this: "The U.S. has long served as the world's "indispensable nation" and the dollar's primary role in the global economy has likewise seemed to testify to American exceptionalism. But the passivity in Washington toward our dismal fiscal future, and its inevitable toll on U.S. economic influence, suggests that American global leadership is no longer a priority and that America's money cannot be trusted."

Is this good or bad?

What are the implications of an extremely weak dollar in the global economy?

What about the risk of inflation or hyper-inflation.

Why would we want to do this to our economy and country?

[dnf777]

I think it's very bad.
I'm not sure how you can borrow your way out of debt.
I wish that ANY of the presidential contenders would have addressed this.

Mr. Obama says we need to spend this money to prevent a collapse of the economy. Is it 'preventing' or 'postponing' a collapse? I certainly hope the former.

There are some noble causes we're aiming for, such as universal healthcare. But now may not be the time. Maybe the country should do just like we did in college when we couldn't afford healthcare.....just have to do without and work on making it to where you CAN afford it, hopefully someday soon.

[Franco]

The current administration is setting us up for an epic financial meltdown.

They are banking on enough Americans are drinking their Kool Aide, really don't care or don't care enough to want to know.

We are committing financial suicide.

[dnf777]

Yeah, and this nice blip we're getting in the market, although looks nice for the IRAs, really does NOTHING to calm fears of what may lie ahead.

My hope for salvation of our economy is that OTHER countries and currencies will suffer a bigger meltdown than our dollar, leaving us "relatively" strong in the world. Everyone looks to China as a potential financial superpower, but if we fail, who's gonna buy all those plastic toys and electronics?

While a 'green' economy is nice, it's a false one. Nobody MUST buy windmills and efficient dishwashers. This leading the world with green technology is nice when things are good and the world has money to spend on things like saving the planet, but otherwise, they'll burn stacks of dollar bills to heat their homes if a cord of wood cost a million dollars.

[YardleyLabs]

If this is true......."By the end of 2019, according to the administration's budget numbers, our federal debt will reach $23.3 trillion—as compared to $11.9 trillion today. To put it in perspective: U.S. federal debt was equal to 61.4% of GDP in 1999; it grew to 70.2% of GDP in 2008 (under the Bush administration); it will climb to an estimated 90.4% this year and touch the 100% mark in 2011, after which the projected federal debt will continue to equal or exceed our nation's entire annual economic output through 2019."

Does it mean this: "The U.S. has long served as the world's "indispensable nation" and the dollar's primary role in the global economy has likewise seemed to testify to American exceptionalism. But the passivity in Washington toward our dismal fiscal future, and its inevitable toll on U.S. economic influence, suggests that American global leadership is no longer a priority and that America's money cannot be trusted."

Is this good or bad?

What are the implications of an extremely weak dollar in the global economy?

What about the risk of inflation or hyper-inflation.

Why would we want to do this to our economy and country?

Actually, by the end of the Bush administration, national debt was closer to 75% of GDP and is growing rapidly as debt mounts and GDP actually shrinks (growth is estimated at -0.8% in real dollars as of 6/30 but is now probably closer to zero).

The current budget forecasts estimate that debt will grow as a percentage of GDP for the balance of this year and then begin to stabilize, beginning to decline as a percentage of GDP by 2012. That is based on about a 4% growth rate, which may be unrealistic. The first priority needs to remain stabilizing the economy so that it can grow without the constant stimulus of governmental and consumer deficits. The 14000 DOW was clearly the product of just such an over-stimulation and I suspect that we will not see that level again based on real growth for many years. Ultimately growth in private production based on US employment is the only way to achieve a healthy US economy. Growth in business profits from foreign production and sales may be good for the businesses and good for the world economy, but they do little for ours.

The question is how to get to the desired economic outcome while minimizing pain for our own citizens. Ultimately, their impact of globalization is that there will be an equalization of real wages across countries in the world where wages are measured as a percentage of the value of goods and services produced. Today, I suspect that Americans still earn more in real wages than their counterparts in countries throughout Asia and possibly some other parts of the world. If that is true, there will continue to be some painful adjustments over time. At least part of our strategy should be to encourage growth in real wages in other countries since the alternative is shrinkage in our own.

[Goose]

Remember what John Maynard Keynes said:

"Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."

Keynes was a fabian socialist just like Obama and so many democrats in Congress and this is what they want. They want to overturn society and Obama wants to be the first post-American President. This is what they want.

As Jim Rogers is so fond of saying, "The best advice of any kind that I can give you is to teach your children and grandchildren Chinese."

We live in Cuba now.

[dnf777]

Remember what John Maynard Keynes said:

"Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."

Keynes was a fabian socialist just like Obama and so many democrats in Congress and this is what they want. They want to overturn society and Obama wants to be the first post-American President. This is what they want.

As Jim Rogers is so fond of saying, "The best advice of any kind that I can give you is to teach your children and grandchildren Chinese."

We live in Cuba now.

Interesting post. You may enjoy a book by Naomi Wolff, "The End of America", where she compares recent events and trends to other countries that evolved (devolved) from democracies to 'other than democracies'. Even though she is liberal, I bet liberals read the book and point to Bush and say, "see! it's happening"......while republicans will point at Obama and say the same thing.

[TXduckdog]

[QUOTE=YardleyLabs;512229]Actually, by the end of the Bush administration, national debt was closer to 75% of GDP and is growing rapidly as debt mounts and GDP actually shrinks (growth is estimated at -0.8% in real dollars as of 6/30 but is now probably closer to zero).

The current budget forecasts estimate that debt will grow as a percentage of GDP for the balance of this year and then begin to stabilize, beginning to decline as a percentage of GDP by 2012. That is based on about a 4% growth rate, which may be unrealistic. The first priority needs to remain stabilizing the economy so that it can grow without the constant stimulus of governmental and consumer deficits. The 14000 DOW was clearly the product of just such an over-stimulation and I suspect that we will not see that level again based on real growth for many years. Ultimately growth in private production based on US employment is the only way to achieve a healthy US economy. Growth in business profits from foreign production and sales may be good for the businesses and good for the world economy, but they do little for ours.

The question is how to get to the desired economic outcome while minimizing pain for our own citizens. Ultimately, their impact of globalization is that there will be an equalization of real wages across countries in the world where wages are measured as a percentage of the value of goods and services produced. Today, I suspect that Americans still earn more in real wages than their counterparts in countries throughout Asia and possibly some other parts of the world. If that is true, there will continue to be some painful adjustments over time. At least part of our strategy should be to encourage growth in real wages in other countries since the alternative is shrinkage in our own.



In the first quote....they are whistling past the graveyard. By their own admission this admin is saying the debt will stabilize "equal to or exceed 100% of GNP through 2019!!!!

The second quote....I know how to accomplish that....it's very simple.....SLASH TAXES ON INCOME AND CAPITAL....it worked for Reagan in the 80's...it wil work now.

We're in a multi-trillion dollar deficit, unemployment is almost 10% and the admin is talking about slashing bonuses?? Where's the job creation...where is the tax cuts for smal to middle size companies.

Obama, et al, are the modern day Nero....fiddling(or maybe diddling) while Rome burns.