Economic Collapse is Inevitable

• QuakerOats

  isadore;1327566 wrote:and gosh what built up this enormous debt? the tax policy favoring tax cuts for the rich has brought on this situation, the policies of reagan and bush. Now we have a President with the guts to turn around this destructive policy.

  Completely false. The debt was built up due to skyrocketing spending, even a 5th grader can read the chart.
• ernest_t_bass

  

  Footwedge;1328441 wrote:Great article...but why the tie in to Obama? The article describes the pattern of behavior since Lincoln. Don't for a minute think that Obama invented the economic collapse, Like your Carlin video clearly indicates....it is not the politicians for they are simply the puppets of the true anti-Christs.

  
  Illuminati?
• QuakerOats

  BoatShoes;1327574 wrote:about 100% of GDP. Plenty of countries have recovered from much larger debts as a percentage of gdp and believe it or not the doomsdayers were around in those days too.

  You cannot recover from such debt burdens when spending is completely out of control. We all know that. Comparing our debt with our GDP makes for nice talking points, but the GDP does not belong to the government. You need to compare the government's budget with the debt, which is about $2.8 trillion in revenue vs. $16.2 trillion in debt. You then see it is becoming nearly impossible to fund such a debt and pay its daily bills, especially once interest rates begin to rise. An equivalent picture would be Joe Homeowner making $100,000 a year, but taking out a $600,000 mortgage, with a floating rate --- basically unaffordable and not re-payable, especially when rates rise, and especially when your household is continuing to borrow even more - 42 cents of every dollar spent. It is an untenable situation.
  
  This is one of the reasons why the Fed is now artificially holding down rates because we would be in even further fiscal chaos. Ultimately the printing presses will have churn out horrific amounts of dollars and the middle class will become extinct due to inflation which is the most cruel and insidious form of taxation. Some on here are proponents of continuing to inflate this bubble as opposed to dealing in truth; the destruction will lay at their feet.
• isadore

  QuakerOats;1328479 wrote:Completely false. The debt was built up due to skyrocketing spending, even a 5th grader can read the chart.

  no i am correct, problem of debt created by Reagan and Bush II era tax cuts that buried us. now we begin to fix the problem by increasing taxes on the rich.
• QuakerOats

  isadore;1328541 wrote:no i am correct, problem of debt created by Reagan and Bush II era tax cuts that buried us. now we begin to fix the problem by increasing taxes on the rich.

  Are you just lying to yourself, or are you lying to us in an attempt to deliberately misinform people?
• isadore

  QuakerOats;1328607 wrote:Are you just lying to yourself, or are you lying to us in an attempt to deliberately misinform people?

  gosh a ruddies from the end of world war 2 to the reagan presidency the national debt was decreasing as a proportion of gdp. then came the reagan tax cut leading to a rapid increase in growth of debt in relation to gdp. Clinton stopped that trend by raising taxes on the rich. But then Bush II catastrophically returned to tax cuts skewed to the rich and the debt took off, now our only hope is to tax the rich.
• Classyposter58

  

  ccrunner609;1328220 wrote:What we have is a congress that is not capable of getting aything done because our president is a horrible leader.

  This. That's the difference between him and Abe Lincoln, just watch that movie. How on Earth did he get that amendment to pass? Nobody really believed it was a good idea or possible while ending the war. Obama just doesn't have the leadership to get things done, that's my problem with him. Healthcare was it mostly
• sleeper

  

  ccrunner609;1329069 wrote:Isidore do you realize that the tax on the rich willl only generate 8 days of government revenue? How in the hell is that going to solve a $16 trillion dollars debt?
  
  What else do you suggest your african american president do?

  Only 8 days? Might need to tax them more.
• pmoney25

  

  isadore;1328652 wrote:gosh a ruddies from the end of world war 2 to the reagan presidency the national debt was decreasing as a proportion of gdp. then came the reagan tax cut leading to a rapid increase in growth of debt in relation to gdp. Clinton stopped that trend by raising taxes on the rich. But then Bush II catastrophically returned to tax cuts skewed to the rich and the debt took off, now our only hope is to tax the rich.

  Clinton did raise income tax however he did lower the capital gains tax for the rich. So maybe it was his fault.
• isadore

  ccrunner609;1329069 wrote:Isidore do you realize that the tax on the rich willl only generate 8 days of government revenue? How in the hell is that going to solve a $16 trillion dollars debt?
  
  What else do you suggest your african american president do?

  Gosh a ruddies the large majority of American people want it. Doing during the Clinton Administration lead to a budget surplus.
  http://blogs.wsj.com/washwire/2012/07/16/obama-tax-hike-proposal-gains-supporters/
  Coupling it with raising the taxes on capital gains and the estate taxes can move us toward solving our deficit problems.
  
• BoatShoes

  fan_from_texas;1327949 wrote:Interesting--thanks. It seems that most of those situations are tied to massive defense expenditures for a major war.
  
  I'm not sure that France post-WWI is a helpful example: their ongoing budgetary issues were partially eased by reparations/exploitation of German resources. When that stopped, the French economy was so weak they weren't able to effectively mobilize and didn't last long against the Wehrmacht in round 2. I'm not sure if that's a good example to point to--unless we think a good outcome for the US is dramatically cutting spending to the point of being overrun by another power within two decades.
  
  Re USA post-WWII, that's also a unique situatoon. We didn't suffer much in the war while the rest of the world was hollowed out, giving us a bit of an unrealistic advantage in exporting/growing. I don't see that as a realistic outcome here.
  
  I'm not convinced that a 100% ratio is fatal, but we do need to make longterm changes to the revenue/spending imbalance.

  A couple of points;
  
  First, with regard to the United States following WWII and the "World in Ruins" idea, aside from the Marshall Plan, there really wasn't all that much trade. For the most part we provided goods and services to ourselves following years of rationing, etc. for the war effort. Personally, I think there's a chance something like this can happen again as people have hunkered down in the Great Recession and its aftermath. You're starting to see some good things on the housing front along this idea.
  
  As far as the UK and France not being good examples...the argument in this thread is that the economic collapse is coming because we have an allegedly large national debt and an untenable fiscal gap. None of these countries with their own currency who had larger debts racked up for whatever reason experienced a horrific economic collapse. It is not likely that Canada is going to be driving tanks down Pennsylvania Ave. anytime soon so I think that isn't a concern (and really only points to the idea that we should've saved during the good economic times rather than running large deficits then in my opinion).
  
  The long run fiscal picture is problematic but it's all about health care costs and just shifting those costs onto beneficiaries as the Paul Ryan Budget/Voucherization calls for does nothing about cost-control beyond a claim that "competition" will improve efficiency. I might buy that if that hadn't proved false in the Medicare Advantage experiment which is less efficient than regular Medicare.
  
  Below is a graph of basically welfare spending that isn't medicare and medicaid...It's really high right now as a percentage of gdp (as it always is during recessions per the graph) and it's on it's way down. This is a large drain on our near term deficits but these costs aren't going to harm us in the long run as the long run is all about exploding health care costs which are going to wreck the economy whether they're born by the gubmint or beneficiaries.
  
  
  
  
  So, with as it pertains to our near term deficits, like our French and British Bretheren, we've seen a sharp rise in emergency spending. Our emergency was a depressed economy whereas they had to fight wars. Like building tanks is no longer needed when a War ends, we won't spend as much on food stamps when we get back to full employment.
  
  Additionally, on the economic collapse issue, where is the evidence that the bond vigilantes are going to attack or hyperinflation is going to happen? The wall street journal editorial page has been sounding the alarm for half a decade. Yet, this is what we see with regard to expected future interest rates for sovereign countries who have borrowed in their own currency.
  
  
  
  I mean the United States has a political party in control of the House in which half of its members think defaulting is a good idea and yet investors are willing to pay us to take their money. I just don't see a scenario...considering the wide range of fiscal policies used by these countries in the graph...in which the United States is punished by bond vigilantes (and even if we were it would cause the dollar to depreciate and be expansionary due to more competitive exports).
  
  In the long term we have to get health care costs under control and Obamacare (an idea created by Republicans and to the right of Richard Nixon's healthcare plan) is starting to do that.
  
  This idea that the welfare state must be attacked is a ruse by fake deficit scolds who starved the beast for the very purpose of getting to this point where we're all told we need it to be cut in my opinion. I mean CNBC is running it's "Rise Above" campaign basically cheerleading for slashing social security (which is not causing budget problems) in the name of fiscal sanity and then they run Kudlow, the king of starve the beast, every night. lol.
  
  Personally I think letting inflation rise to around the levels of Ronald Reagan's second term would be the best thing for economic growth/unemployment in the short term and would also ease our real debt burden and I don't really think that would be that painful (does anybody remember the 80's being terrible?) For all this talk of "Helicopter Ben" the FED has basically treated is target rate as a ceiling rather than a target.
  
  With a brief inflation-lead unemployment drop and some help toward our debt burden being inflated away, we could get serious about the long-run fiscal concerns doing more to control healthcare costs like giving Medicare the power to bargain for lower prices as opposed to voucherizing it and making it weaker because if there is one thing big-government health insurance programs do well is cost-control.
• BoatShoes

  QuakerOats;1328492 wrote:You cannot recover from such debt burdens when spending is completely out of control. We all know that. Comparing our debt with our GDP makes for nice talking points, but the GDP does not belong to the government. You need to compare the government's budget with the debt, which is about $2.8 trillion in revenue vs. $16.2 trillion in debt. You then see it is becoming nearly impossible to fund such a debt and pay its daily bills, especially once interest rates begin to rise. An equivalent picture would be Joe Homeowner making $100,000 a year, but taking out a $600,000 mortgage, with a floating rate --- basically unaffordable and not re-payable, especially when rates rise, and especially when your household is continuing to borrow even more - 42 cents of every dollar spent. It is an untenable situation.
  
  This is one of the reasons why the Fed is now artificially holding down rates because we would be in even further fiscal chaos. Ultimately the printing presses will have churn out horrific amounts of dollars and the middle class will become extinct due to inflation which is the most cruel and insidious form of taxation. Some on here are proponents of continuing to inflate this bubble as opposed to dealing in truth; the destruction will lay at their feet.

  This post contains all of the WSJ scare tactics that have proven false over the last half-decade and it brings the lulz.
  
  1. Where is the evidence that interest rates are going to rise (and even if this happened it would be expansionary as the dollar would depreciate and make exports more competitive).
  
  2. Inflation is projected to run below the target rate for several years which is actually hurting us. Allowing inflation to run at Ronald Reagan levels would not destroy the middle class. On the contrary, it would be expansionary in the near term and ease the debt burden you complain about.
  
  3. A crucial difference between your homeowner and Uncle Sam is that Uncle Sam can always pull dollars out of his pocket that he gets from his Uncle Fed to pay his creditors.
  
  4. The Homeowner doesn't have assets and net worth many orders of magnitude greater than his debt that he owes like Uncle Sam.
  
  5. The real interest rate is below zero and that is why inflation is not taking off when Uncle Ben turns on the presses.
• BoatShoes

  Classyposter58;1328722 wrote:This. That's the difference between him and Abe Lincoln, just watch that movie. How on Earth did he get that amendment to pass? Nobody really believed it was a good idea or possible while ending the war. Obama just doesn't have the leadership to get things done, that's my problem with him. Healthcare was it mostly

  This is interesting but the Democrats that Lincoln was able to convince were on the same moral side as Lincoln. For today's republican party, the taxation/budget issues are moral issues. Republicans don't want the producers giving up any more for the taker's to take and we need to stop the takers from being able to take. That's why social security and food stamps are being talked about so much by Republicans in the budget negotiations even though they aren't problematic in the long run budget picture...they reward takers rather than producers, etc.
  
  They are not in the same moral universe as President Obama. It is much harder to persuade folks to repudiate their moral philosophy than to get them to repudiate their party and vote in line with their moral philosophy.
• jhay78

  

  isadore;1328057 wrote:what is obvious, is that Republican tax and economic policy beginning with reagan put us into our present situation. now our first African American President is solve the problem if Republican greed and intransigence does not block him. And start with raising tax on the rich.

  isadore;1328541 wrote:no i am correct, problem of debt created by Reagan and Bush II era tax cuts that buried us. now we begin to fix the problem by increasing taxes on the rich.

  I know this will matter little to you, but despite Reagan's tax cuts, revenues to the government nearly doubled from 1980-1988. Plus GDP growth during that time makes Obama's (I mean, our first African-American president's) "recovery" look amateurish.
• fan_from_texas

  BoatShoes;1329272 wrote:First, with regard to the United States following WWII and the "World in Ruins" idea, aside from the Marshall Plan, there really wasn't all that much trade. For the most part we provided goods and services to ourselves following years of rationing, etc. for the war effort. Personally, I think there's a chance something like this can happen again as people have hunkered down in the Great Recession and its aftermath. You're starting to see some good things on the housing front along this idea.

  Coming out of WWII, we had something like 50% of the existing factories in the entire world, greater productive efficiencies, strong and technically skilled stocks of manpower, technology far exceeding the rest of the world (with the exception of Germany, which wasn't exactly well-poised to compete), etc. We don't possess those advantages now, so I'm still not sure that listing post-WWII USA as an example of a country that rebounded well from high debt ratios is fair. We're in a much tighter competitive landscape without all of those advantages.
  

  As far as the UK and France not being good examples...the argument in this thread is that the economic collapse is coming because we have an allegedly large national debt and an untenable fiscal gap. None of these countries with their own currency who had larger debts racked up for whatever reason experienced a horrific economic collapse. It is not likely that Canada is going to be driving tanks down Pennsylvania Ave. anytime soon so I think that isn't a concern (and really only points to the idea that we should've saved during the good economic times rather than running large deficits then in my opinion).

  I'm not worried about Canada so much as China, but it's a fair point to say that in a multi-polar world with nukes, we don't face quite the same risks that, say, France or GB did in 1938. That said, there are good reasons to think that the era of US hegemony will be coming to an end, and our far-flung bases a la GB 1815-1880 will be scaled back. I don't view this as particularly problematic--and we've done a good job pulling down defense spending as a % of GDP as compared to Cold War era years--but I think we have some steps to take to get our fiscal house in order before things spiral out of control.
  

  Additionally, on the economic collapse issue, where is the evidence that the bond vigilantes are going to attack or hyperinflation is going to happen? The wall street journal editorial page has been sounding the alarm for half a decade. Yet, this is what we see with regard to expected future interest rates for sovereign countries who have borrowed in their own currency.

  Generally agree. Of course, bond vigilantes never show up until they do, and then it's too late. We're benefiting from being a world reserve currency where the rest of the world (or at least Europe) is far more screwed up than we are, driving down our interest costs. We're not in good shape; we're in better shape relative to Europe. That doesn't strike me as something to hang out hat on.
  
  Regardless, inflating our way out is a silly idea (we borrow too much on a short-term basis to have much of a good impact). We'll have to get growth somehow or run the risk of a Japanese lost decade. I'm still pretty positive about the future of America, and I'm optimistic that we'll get a grand bargain to resolve the fiscal cliff. But I find it odd when people act like there aren't huge problems coming down the road over the next 10-30 years.
• isadore

  jhay78;1329542 wrote:I know this will matter little to you, but despite Reagan's tax cuts, revenues to the government nearly doubled from 1980-1988. Plus GDP growth during that time makes Obama's (I mean, our first African-American president's) "recovery" look amateurish.

  reagan began the process of burying us in debt to give tax breaks to the rich and corporations. monetary policy was responsible for any growth in that period. using tools that were exhausted during the bush presidency by alan greenspan.
  here is how reagan and bush buried us
  What do the statistics show us
  Well from 1972 to 1980 revenue from federal income collected nearly tripled from 94.7 billion to 244 billion And corporate income tax went from 32.1 billion to 64.6 billion
  From 1981 to 1989 personal income tax 285.9 billion to 445.5 bilion and corporate income tax from 61.1 to 103.2 billion.
  2001 with Bush 994.3 personal. 151 corporate, 2009 915 .3 personal, 138.. Corporate
  http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=203
  1973-1981 national debt went from 35.6% of gdp to 32.5. Thanks to fair tax rates on the rich.
  1981-1989 national debt went from 35.6% to 53.1 thanks to tax cuts for the rich
  1989-1993 53.1 tio 66.1% continued tax breaks for the rich.
  1993-2001 66.1 to 56.4 thanks to raising taxes on the rich.
  2001-2009 56.4 to 84.2 thanks to tax cuts to the rich.
  Problem continues to the present because those tax breaks are still there.
  http://en.wikipedia.org/wiki/History_of_the_United_States_public_debt
• jhay78

  

  fan_from_texas;1329585 wrote: But I find it odd when people act like there aren't huge problems coming down the road over the next 10-30 years.

  I'm sure I'm not the only one who finds it odd that the very folks mocking us for being Chicken Littles and warning about impending collapse are the same ones who said if we didn't pass TARP and bail out GM then we were for sure stone-cold-lead-pipe locks for another Depression.
• believer

  

  jhay78;1329759 wrote:I'm sure I'm not the only one who finds it odd that the very folks mocking us for being Chicken Littles and warning about impending collapse are the same ones who said if we didn't pass TARP and bail out GM then we were for sure stone-cold-lead-pipe locks for another Depression.

  And let us not forget the infamous $780 billion Porkulus Sammich that was supposed to lower the unemployment rate and save us all from financial ruin.
  
  But when Keynesian disciples cry "the sky is falling" to justify spending money we don't have, we're supposed to buy-off on the magnanimous genius of it all.
• queencitybuckeye

  believer;1329794 wrote:
  But when Keynesian disciples cry "the sky is falling" to justify spending money we don't have, we're supposed to buy-off on the magnanimous genius of it all.

  That's good. Equally as brilliant is the notion that if there is someone out there willing to lend us money, it's an indication that the economy is healthy.
• believer

  

  queencitybuckeye;1329797 wrote:That's good. Equally as brilliant is the notion that if there is someone out there willing to lend us money, it's an indication that the economy is healthy.

  True. The Chi-coms apparently believe it.
• gut

  Boatshoes makes some good points, but the naivete is that this can continue into perpetuity (much less at the accelerated pace under Obama).
• Pick6

  

  ccrunner609;1329905 wrote:People like isidore arent very smart since they think that taxing is hte way to go. Its about cutting spending. If Obama was a good enough president he would pass a budget and set a path to balance.

  I'd reckon it has to be a mixture of both. Our taxes really aren't anything. We could live in the UK and have ~50% tax rate.
• isadore

  ccrunner609;1329921 wrote:and that is why they are the UK and we are the USA. Why would we want to be them? Its not a revenue problem. We pay plenty of money into the system. the government is a terribly inefficient business.

  Gosh a ruddies what do we see over the last three decades? We cut taxes and get ever increasing deficits. Then Clinton raises taxes on the rich and we get a surplus. Then Bush tax cuts plunge us deeper into the whole. But of course the acolytes for the rich and haters of our First African American president will always oppose the taxes needed.
• jhay78

  

  isadore;1329976 wrote:Gosh a ruddies what do we see over the last three decades? We cut taxes and get ever increasing deficits. Then Clinton raises taxes on the rich and we get a surplus. Then Bush tax cuts plunge us deeper into the whole. But of course the acolytes for the rich and haters of our First African American president will always oppose the taxes needed.

  I know I don't want to live in a society where "the taxes needed" to get to a balanced budget hovers somewhere around $1.2 trillion. How many rich people do you think there are in America?
• isadore

  jhay78;1330019 wrote:I know I don't want to live in a society where "the taxes needed" to get to a balanced budget hovers somewhere around $1.2 trillion. How many rich people do you think there are in America?

  maybe you should try another society, the large majority of American people want higher taxes on the rich. wealthy can afford it.