I'm currently reading a book on investing and came across a section that has much relevance to alot of things we talk about around here. It's about the National debt. What I gathered from the section & found informative: The national debt is made up of Treasury bills, notes & bonds. Although the national debt is growing at unprecedented rates, it is still shrinking as a percentage of GDP (gross domestic product). The inherent problem with reducing the national debt is that the only two solutions are unpopular, raising taxes and/or reducing spending. Also increasing the problem, public officials have the tendency to increase spending when taxes increase - thus not reducing the debt at all. The national deficit creates economic problems because all other bond issuers - corporations, municipalities, or even foreign governments - must compete with the US government for investors dollars. So when the government must raise interest rates to attract investors, all other bond issuers must raise their rates to remain competitive. (US backed bonds are considered the least risk & thus offer the lowest interest rates - other entities would have to keep their rates above US bonds'). The concern is that the defecit could grow larger than the pool of investors & that higher interest rates by the US government could cause corporations & even local government agencies to go bankrupt, due to having to pay much higher rates of interest on their debt. Because the world has never seen a deficit of this magnitude, no one knows what will happen.
I think this is misleading because the GDP is somewhat irrelevent to the national debt. The only true amount that matters is the government's ability to pay off the debt. This amount, tax revenue, comes from the GDP but is only a small portion of it. I doubt that the national debt is shrinking as a percentage of tax revenue. However, the GDP growing faster than the national debt is a good sign that were things to get bad enough, there would be the economic resources to pay it off. It just means that we'd all (or our kids' kids) get screwed & have enormous taxes levied on us to pay for the mistakes of others.
or we would be provided with less government services, which might be a good thing, in that we would have to get private industry to do things instead, which would do it better and more efficiently. plus, when we rack up debt, are we not building an infrastructure and investing in our future that future generations should have to help pay for? why should i get free use of all the things built before i was born? if i have to pay down the debt that was racked up before i came along, then is that so bad, because surely i am using the government services that money provided for. if ebrp goes into debt building schools and roads, then isnt it fair for the kids who went to those schools to wind up paying for it eventually? for example, i use billions of dollars worth of my local public transportation system. i dont think it was stupid of previous generations to run up debts building these things. why should i get it for free? anyways, i think we are gonna be so rich in the future that it doesnt matter how much debt we run up. we all live like kings compared our great grandparents. our grandkids will live like kings compared to us, we might as well leave them some debt for all the work we are doing. obviously i have no clue what i am talking about. i really only think that we shouldnt just assume anyone knows when they are talking about debt as if it is a given that it is bad. i am not convinced either way, and i think it is far too complex for the average person to be convinced that debt hurts us. maybe the US should use every bit of credit it can get so that we can build as much crap for the futue as possible.
Yes, good idea. Unfortunately, I doubt it will happen. Am I in the twilight zone? Is martin saying government spending is good? Is this not the exact opposite of what you just said? Everything is relative. Sure we'll all be relatively rich by today's standards, but the debt will still be huge by there standards. :thumb: :hihi:
ideal: government does almost nothng and costs almost nothing. second best: government spends like crazy and goes wildly into debt, but never raises taxes. i dunno what happens when they cant borrow any more, nor do i really care. worst: government taxes and spends, crippling the economy. now we pay way too much in taxes. we should pay whatever it costs to maintain security and educate kids and that is about it. less damn social programs. no zillion dollar free-trade hating farm subsidies. no ridiculous socialist old people insurance. if we are rich what do we care about debt? the only thing that can keep us from being richer and richer is taxes.
i dont understand why the government racking up debt and going bankrupt would keep private citizens from being rich. why cant the government just stop providing services when they are in debt? i dont understand why that is bad. still do not understand. lets say for instance the government is totally bankrupt. they have to kill the entire dept of agriculture. good. i am happy. they have to kill the department of health and human services. i am glad. the DEA goes out of business. fantastic. we can no longer afford to imprison non-violent drug offenders. awesome. the FCC can no longer regulate broadcasts. awesome. we can no longer have any of these: * Administration for Children and Families (ACF) * Administration for Native Americans * Administration on Aging (AoA) * Administration on Developmental Disabilities * Administrative Committee of the Federal Register * Advisory Council on Historic Preservation * African Development Foundation * Agency for Healthcare Research and Quality (AHRQ) * Agency for International Development * Agency for Toxic Substances and Disease Registry * Agricultural Marketing Service * Agricultural Research Service * Agriculture Department (USDA) * AMTRAK (National Railroad Passenger Corporation) * Arthritis and Musculoskeletal Interagency Coordinating Committee * Arthritis and Musculoskeletal Interagency Coordinating Committee and this is just the start of the alphabetical list. also the rest of the As and most of the Bs and the rest of the alphabet. it goes on and on. good riddance. i just noticed the USDA is on my list. oh no, without them who will make the food pyramid and advise me on what to eat?
It's not a matter of whether they can or cannot - they won't. Without government, there's nobody to enforce laws or contracts. There's no one to provide public services like roads & no protection, aka military. Surely you are attempting to be the devil's advocate by implying that no government is necessary. A capitalist society cannot function without government.
courts, the military, cops, schools, i am sure they can fund those without raising taxes. but all those other agencies i listed, plus a zillion others, i hope they all go bankrupt. i am not playing devils advocate. i think it would be great if a huge portion of the government ceased operating and fell apart. they should. right. but a capitalist society doesnt need a dept of agriculture. or a federal postal system. i could probably fill a few pages with agencies we do not need and in fact actively hurt us. lets go into debt until nobody will invest in the government anymore and we literally cannot afford to provide anything except the most basic services. dont need: Agriculture, Commerce, Energy, Interior, Transportation, Environmental Protection, Health/Human Services, HUD, Food/Nutrition programs, Labor Department, Soc. Sec. Admin etc. if we go really deeply into dept, it would be sweet if those all died. i hope we get into 100 times the debt we currently have, so we really cant afford any of that.
Yes, it would be great if the government quit financing these operations. That doesn't mean that huge amounts of debt is a good thing, just that it stands a chance of serving your purpose.
