Posted: 11/9/2004 6:44:36 PM EDT
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Sis wants to ask a question - here it is. How much will each American with expendable income have to pay in order to pay off the deficit in 20 years? Not taking into account international money due. Also we are assuming that the defecit has stopped growing - add in the fact that she is NOT an economist, so she would appreciate the education. Now assume the opposite of all of the above ( international money, dececit fluctuation, etc. ) ARF - Experts of all flavors educating the masses one at a time. 
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Our current monetary system is based on fiat currency. Ever dollar is borrowed from the Federal Reserve System - a private corporation. From the minute we borrowed the 1st dollar, interest starting accruing. We know owe every dollar we ever borrowed, PLUS interest. That interest is payable in Federal Reserve Notes - which we'll have to borrow to pay off the interest. Look at it this way - I invent "Paul money". I loan you $100 Pauls. From the minute I loan them to you, you owe me $100 pauls plus interest, we'll call it $102 pauls. If you hand me the $100 pauls back, I will ask you for $2 pauls for the interest. Well you don't have any pauls, you'll have to borrow those from me. Hence, it's a vicious circle. Get a book called The Creature from Jeckell Island for the whole scoop on what a scam the Federal Reserve System is |
You are probably thinking of the debt, not the deficit...the deficit (or surplus) is the amount over (or under) the total revenue spent by Congress each fiscal year (October 1 thru September 30). The debt is the accumulated deficit over the years, plus Treasury bondholders' equity and the interest upon it, and some miscellaneous other stuff. The debt probably can never be paid off, but it doesn't have to be...as long as there is enough revenue to service the interest on the debt, it can be "rolled over" indefinitely. The Congress could theoretically "monetize" the debt and cancel it, but that would be disastrous for the US and world economies, because it would basically pull the rug out from under the Treasury securities...a really, really bad idea. Hope this helps... |
The FedGov has been in debt since (before) the day the Declaration of Independence was signed - lol. The current National Debt really began it's continuous upward spiral near the start of WW2. I've got the hard data stashed from some previous research, back in a moment. |
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IamtheNRA hit on a key point - most folks badly confuse the two - Debt and Deficit. Here's a link to the historical data on the Debt - www.whitehouse.gov/omb/budget/fy2004/pdf/hist.pdf Year in Millions Growth 1939 1940 $50,696 <-----$50 Billion 1941 $57,531 13.48% 1942 $79,200 37.66% 1943 $142,648 80.11% 1944 $204,079 43.06% 1945 $260,123 27.46% 1946 $270,991 4.18% 1947 $257,149 -5.11% 1948 $252,031 -1.99% 1949 $252,510 0.19% 1950 $256,853 1.72% 1951 $255,288 -0.61% 1952 $259,097 1.49% 1953 $265,963 2.65% 1954 $270,812 1.82% 1955 $274,366 1.31% 1956 $272,593 -0.65% 1957 $272,252 -0.13% 1958 $279,666 2.72% 1959 $287,465 2.79% 1960 $290,525 1.06% 1961 $292,548 0.70% 1962 $302,928 3.55% 1963 $310,324 2.44% 1964 $316,059 1.85% 1965 $322,318 1.98% 1966 $326,496 1.30% 1967 $340,445 4.27% 1968 $368,585 8.27% 1969 $365,789 -0.76% 1970 $380,921 4.14% 1971 $408,176 7.16% 1972 $435,936 6.80% 1973 $466,291 6.96% 1974 $483,893 3.77% 1975 $541,925 11.99% 1976 $628,970 16.06% 1977 $706,398 12.31% 1978 $776,604 9.94% 1979 $829,467 6.81% 1980 $909,041 9.59% 1981 $994,828 9.44% 1982 $1,137,315 14.32% <-----$1.1 Trillion 1983 $1,371,660 20.61% 1984 $1,564,586 14.07% 1985 $1,817,423 16.16% 1986 $2,120,501 16.68% 1987 $2,345,956 10.63% 1988 $2,601,104 10.88% 1989 $2,867,800 10.25% 1990 $3,206,290 11.80% 1991 $3,598,178 12.22% 1992 $4,001,787 11.22% 1993 $4,351,044 8.73% 1994 $4,643,307 6.72% 1995 $4,920,586 5.97% 1996 $5,181,465 5.30% 1997 $5,369,206 3.62% 1998 $5,478,189 2.03% 1999 $5,605,523 2.32% 2000 $5,628,700 0.41% 2001 $5,769,881 2.51% 2002 $6,198,401 7.43% The left rails about the "Balanced Budget" of the Clinton second term - but it was accomplished on the backs of our military. If you go look up the Annual budget numbers / breakouts for the last 25 years, your'll get a real sharp lesson in the fact that government spending in all categories EXCEPT Defense soared during the Clinton administration. The Federal Debt went UP by $1.6 Trillion dollars during the Clinton Administration EDIT - Clinton slowed the rate of growth of the Debt, but di NOT pay it down any - EDIT Both Presidents Bush have nothing to brag about in this regard, either. |
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Also note that running the Government at a deficit is hardly the Root Of All Evil that Democrats make it out to be. In any healthy economy, there's a natural business cycle. The economy (in terms of growth, overall production, and other measures) goes up and down all the time due to various factors. In a totally free economy, the variations can be extreme. Current Government policy is to use the Government to dampen the business cycle (whether this is a good idea is debatable). If the economy is slow, you cut taxes and/or increase spending in order to artificially stimulate the economy (while running the Government at a deficit). If the economy is running strong, you raise taxes and/or cut spending to slow it down (running the Government at a profit/surplus). So an economic recession naturally leads to deficits and debts. They don't mean that the President at the time is stupid or evil or anything. Likewise, economic booms lead to surpluses and paying off the debts incurred during recessions. Surpluses don't mean that the President at the time is smart or a great planner or anything. |
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Yeah! I'm an economist, and my education finally has meaning on this board! Here's the deal. The deficit is a combination of many things so complex that I don't have space to explain it all here (not even sure I understand every part of it). Under Clinton, it was projected that we would have a massive budget surplus. The idea, of course, was that this could be used towards paying down the National Debt. The problem was that it was merely projected, and never actually materialized due to the dot-com bubble that busted. Let me go back a bit. Whether or not we have a surplus or deficit depends on how much money is going out and how much money is coming in, naturally. What is the money coming in? It's taxes. Some of those taxes come from private individuals like you and me. A lot of those taxes come from corporations. During the dot com bubble, tons of money was being spent, both by individuals and by companies. This meant that the government had tons of taxes coming in, due to little or no effort on the part of the government. With that flood of money, Clinton was able to spend more, and still come out in the black. It's always easy to look good on the balance when your drowning in money. Well, then the dot com bubble popped, and the economy tanked hard. The massive surplus that Clinton was supposedly "creating" for our country went up in smoke. Truth is, when Clinton left office, that surplus was already gone for all real purposes. This meant that Pres. Bush inherited a deficit from the Clinton administration. So what's the cure? Stimulate the economy and get that money flowing again. Bush wisely pushed for tax cuts. Why is that wise? It gave consumers more money to spend. That spending gave companies an excuse to get production going and spend money themselves on capital and employees. Basically, the tax breaks were a sort of jump-start for corporations (where the big money is for gov. taxes). It's taken a little longer than hoped (companies are real paranoid after the dot com fiasco) but businesses are finally starting to come around again. So, getting back to the original question about the deficit, the answer is to stimulate businesses to invest in capital and employees. The more growth there is in the business sector, the more big money the government will see in corporation taxes. As corporations expand and hire employees, consumers have more money, and the government receives consumer taxes too. Getting back to Pres. Bush's budget. As the US economy gets going, the US deficit will shrink (more money coming in verses money going out). When it comes to the national debt, I agree that we should work to cut it down to a more manageable level. You don't want it to totally go away, it gives the US a credit rating very similar to your personal credit rating only for countries instead of individuals. The US has an AWESOME credit rating. The best in the world. Anyway, to cut down on the national debt, we need to stimulate the national economy to get those taxes coming in. As I said before, Pres. Bush is already taking logical steps to jumpstart the economy. When thinking of government funds, think of your home town. Towns with lots of homes but no business often struggle with a lack of funding (from taxes) for their budget. Once businesses move in, the real money starts flowing to the local city. Imagine the benefits that one Walmart can give to a bedroom community in taxes! This is why Bush is trying to get the business sector going. The liberal elitests complain that Bush is a friend of big business. They should be praising that fact! Big businesses play a large part in moving the economy. Of course, small businesses help too, especially as they grow into big businesses. |
The Federal Reserve Bank. The collateral for the loan is the future earnings of every single American. We ran into trouble when we went off the gold standard. I think that we will have a horrible, horrible economic crash when the system comes crashing down. When this will happen, who knows. I'm sure America will recover from it quickly enough though, since freedom manages to solve anything that is thrown at it :) |
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It is a very complicated question your friend asks. I am not of the opinion that we can shrug our shoulders and say the debt is no big deal as long as we can make the interest payments. Try that strategy with a credit card and you will probably die with a net worth around zero. The government can get away with it for much longer, though because its interests rates are lower than your credit card. Anyways, rather than explain it myself, any aspiring economist should spend lots of time on the Grandfather Ecnonomic Reports. He writes on various aspects of America's fiscal policy. That hotlink points to his section on the national debt that should tell your friend what she wants to know. The site is very good and written for an audience of intelligent laymen. The author includes lots of pictures, graphs and shit to illustrate his points. So go check it out, and follow the links around his site. And since this is a gun board and many people here are cheerleaders for George Bush and seem to love the idea of war with 1/2 of the Middle East, consider this portion from that above referenced web page:
All I can say is I hope your man Bush doesn't screw the pooch and encourage our wars to escalate far beyond what we can handle. -Nick Viejo. |
drunk ass econ200 student: who cares? |
But we will have to pay to service the interest on the debt. Where will that $$ come from, Let me ask this question a different way: Where does the government get their revenues from? Taxes. The more we owe, the higher the interest, the more of our tax dollar goes to servicing the interest(and less goes to paying off the the principle). We get that money from taxes, and since the US has such an abismal savings rate, we have to either borrow that money from another country(ie: France, Germany, China etc...another contry who has higher savings rates than we do). Of course, we could just print more dollars...hmm...more dollars in circulation mans...our dollar is worth LESS, That's called devaluing our currency. If our currency is worth less, then other countries' currencies (ie Euro) will be worth more... so they come and spend their money here to buy things they like (Hopefully! That is, if they don't go spend their money elsewhere...) ...like Rockerfeller Center, Penn Station....oh wait the Japanese did that in the 80's ...nevermind, let's just deny the problem ever exists. Go Bush Tax Cuts, Woo hoo!!!! |
| Your sister's questions is actually more of a financial question. However, to answer some of the misgivens here about Clinton lowering the growth rate of the Debt , he did it by changing the interest structure of the bonds. His Treasury secretary got ot of short and medium term bonds into long term bonds. Thus, they were able to cook the books using the lower payments (but more of) of the long term bonds. |
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not going to bother with your tired whinge about war with the Middle East, other than to say they've been waging (a mostly ineffective) Jihad against the West for ~30yrs. As for the quoted question - YES, I will say we DON'T need that capacity - a Total War of the WW@ variety, with the long lead-times and total mobilization of the workforce of this nation WILL NEVER HAPPEN AGAIN. Any such existential threat is going to be over in a (nuclear) FLASH. You also apparently bought the huge lie about our military resources being 'stretched to the limit'. Gawdamned nonsense. We've got a serious Jihad being waged against the west, with Jihadist leaders financing WMD programs and flatly stating they will kill us at the first opportunity. We HAVE to stop them. That requires the toppling of their regimes / nations / infrastructure. Better to wage WAR, than spend the same money on AMBULANCES. Almost TWO YEARS of the 'wars escalating beyond what we can handle' (or add whatever shitbird LLL meme in its place), and we've lost ONE-THIRD the number of US CIVILIANS murdered in the opening salvo. We'll wage the next decade of counter-jihad, until Syria, Iran, Saudi Arabia - ALL o fthe Sharia / Wahabist freaks are toppled - and we'll do it with half our country whinging about it, one arm tied behind our collective backs, all while are Economy continues to outperform any other Western Industrialized Nation (right NOW, even now), even while our private enterprise soars into low-earth orbit, even while our space probes trundle across the face of Mars, even while almost our entire population remains TOTALLY UNIMPACTED by the military effort. |
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btw, to all in general - a firearms board with plenty of strict-Constitutionalists, Libertarian cranks, and short-wave listeners and undergoing a wave of Dem  s looking for ANY opportunity to bash America or the Bush Administration is NOT the place where you will get a good-quality discussion on US Economics.
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I was just reading an story today, how a weak US dollar would be good for increased manufacturing in the USA. |
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Rayra, Before you call us cranks, or dismiss us strict constitutionalists, please tell us where the money to pay the fed funds rate comes from, and please explain how it's anything other than a mathematical certainty we will reach a point where default is the only option without fundamental monetary reform. Any system that requires continuously, exponentially increasing inputs to avoid collapse will reach that point eventually. I've never met anybody who truly understood the system who wasn't mad as hell, except the traitorous fools who prefer to use that knowledge for profit at our expense. Leisure, That's true as far as it goes, all else being equal a weaker dollar benefits our balance of trade, but the dollar has fallen dramaticallt the last few years and our current account deficit has continued to mount. Actually no FRN at all would instantaneously eliminate our trade deficits entirely, which would be a very good thing. Our economy was much stronger when we settled the current account in hard commodities, we only started running deficits after we stopped doing that. |
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Blackjack, Debt cannot be repaid, once debt exists it can only be transferred, rolled over, or defaulted on either by printing the money or through bankruptcy. Some fall for the arguement that the debt can be rolled over forever, but it only works if interest rates can be forced continuously lower, because debt must continously increase to maintain a constant money supply. We've averaged 82 basis points per year in rate cuts since the current monetary regime stabilized under Paul Volcker in '81. When we get ahead of the slope we boom, behind we bust(recession) like clockwork. Interest rates are currently lower than the rate of inflation, which is highly inflationary and the only reason things look as good as they do at the moment. The cost of money and credit is arbitrary and they can stimulateas much economic activity as they wish for now. Maybe we'll just run at 0% for the rest of eternity and everything will be fine, but somehow I doubt it. |
Oh, one more thing...If our currency is worth less, it takes us longer to service the interest on our debt. Go Bush Tax Cuts, Woo hoo!!!! Chop chop, tax cuts, cut taxes, Yippee! Eventually, you're gotta haveta sleep in the bed you make, buddy! Reality sucks, don't it? Have a nice day!  |
Why would we ever want to pay off the debt? It isn't that big (way less than annual GDP) compared to many other countries. Many economists and finance people want a certain amount of government debt out there because the T-Bills are useful as a basic investment instrument. PS. This country can handle a 200 billion a year defecit forever. That's because the economy grows enough that a 200 billion defecit is grown out of ever year. The much larger problem than the current defecit is looming Social Security payments. GunLvr |
I don't claim to understand this on a high level. But, what you are saying sounds crazy. If the economy grows quickly, then more revenue gets collected, because the tax paying base grows. If you allow taxes to become too confiscatory, you de-stimulate business, and tax revenue goes down as you slip into recessions and depressions. At least that's how it happened during the 80's. And, I understand that debt and deficits went up during the 80's, but that was due to increased government spending, not because tax revenue decreased. If I'm incorrect, please educate me. |
No, you are EXACTLY CORRECT. Individuals paying income taxes don't stimulate economic growth. Individuals INVESTING THE MONEY THEY KEEP spurs economic growth. Economic growth is what keeps us able to pay for all the ridiculous social programs that Slv2fun supports. If economic growth slows, the revenue increase slows. Reagan doubled the size of the treasury by cutting taxes significantly. John F. Kennedy did the same thing. |