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I am just wondering if a government can ever run out of money. Can the U.S. ever hit the bottom or would no one ever collect the money that there owed. I mean if china were decide to collect on the @ trillion some odd dollars that their owed couldn't the U.S. just say no.

For the moment, it's not in China's best interest to try an bankrupt us any further, despite what the media and Tom Clancy's ghost writers would have you believe. We still pour so much money into their economy through Nike sweatshops and the like.

We could just say no, but there would be other repercussions. We'd lose tons of credibility and the like, and that may be enough for China to declare war.

The smart thing to do would be to give them Utah when they come to collect. We kill two birds with one stone. It settles our debt with China, and we get rid of all the crazy Mormons.

No.

You can just print more.

Of course by printing more money you end up devaluing the currency and causing inflation.
That = bad.

A crazy, zany idea would be that the US govt and its citizens actually live within their means (and stop pork barreling) for a decade and pay off some of the ridiculous debt.
Of course that would have a flow on effect and the economy would stagnate, China would grind to a halt without the US buying rubbish and getting loans from them, and the 2 countries combined would stuff the world economy for a generation.

You're so crazy far in debt now that you are damned if you do and damed if you don't.

youbedead wrote:I am just wondering if a government can ever run out of money. Can the U.S. ever hit the bottom or would no one ever collect the money that there owed. I mean if china were decide to collect on the @ trillion some odd dollars that their owed couldn't the U.S. just say no.

National finance doesn't work like personal finance, government can't just run out of money. As Waaagh_Gonads pointed out, you can just print more money, but you can also tax more, or borrow domestically.

The issue with deficit spending isn't that you might run out of money, it's that long term spending on consumption goods draws money away from investment and hurts national growth.


People also make the mistake of looking at an issue like this purely in terms debt, forgetting the other side of the ledger entirely. Once the capital stock of the country is taken into account (all the housing, roads, telecommunications and so on) is totalled, there's actually about $200,000 in assets per US citizen.

sebster wrote:

youbedead wrote:I am just wondering if a government can ever run out of money. Can the U.S. ever hit the bottom or would no one ever collect the money that there owed. I mean if china were decide to collect on the @ trillion some odd dollars that their owed couldn't the U.S. just say no.

National finance doesn't work like personal finance, government can't just run out of money. As Waaagh_Gonads pointed out, you can just print more money, but you can also tax more, or borrow domestically.

The issue with deficit spending isn't that you might run out of money, it's that long term spending on consumption goods draws money away from investment and hurts national growth.


People also make the mistake of looking at an issue like this purely in terms debt, forgetting the other side of the ledger entirely. Once the capital stock of the country is taken into account (all the housing, roads, telecommunications and so on) is totalled, there's actually about $200,000 in assets per US citizen.

The reasons i was asking is because much of the anti government rhetoric is we can't pay for this, if we are already trillions of dollars in debt and still functioning then what damage could it possibly cause

Waaagh_Gonads wrote:No.

You can just print more.

Of course by printing more money you end up devaluing the currency and causing inflation.
That = bad.

A crazy, zany idea would be that the US govt and its citizens actually live within their means (and stop pork barreling) for a decade and pay off some of the ridiculous debt.
Of course that would have a flow on effect and the economy would stagnate, China would grind to a halt without the US buying rubbish and getting loans from them, and the 2 countries combined would stuff the world economy for a generation.

You're so crazy far in debt now that you are damned if you do and damed if you don't.

Isn't england on par with the U.S. in debt as a percentage of GDP?

youbedead wrote:The reasons i was asking is because much of the anti government rhetoric is we can't pay for this, if we are already trillions of dollars in debt and still functioning then what damage could it possibly cause

Yeah, it's basically a long term drag on economic growth, where the debt isn't used to increase productivity. Long term US growth will be negatively impacted if the deficit isn't brought under control.

But it's a fallacy to think the current budget woes can be controlled by stopping spending on something that really is a basic function of government. Bringing the budget into line is based more on a realistic level of military spending and bringing the level of porkbarrelling under control.


There's also a bigger issue that you can't afford your current healthcare system, as there are few systems in place to control costs. The result is a system that costs up to twice as much of GDP as elsewhere in the world There's a fair argument that the HCR bill doesn't do enough to control that (pharmaceuticals are outrageously expensive in the US but nothing in the bill addresses that in any real way). Oh the healthcare debate that should have happened.

ShumaGorath wrote:

Waaagh_Gonads wrote:No.

You can just print more.

Of course by printing more money you end up devaluing the currency and causing inflation.
That = bad.

A crazy, zany idea would be that the US govt and its citizens actually live within their means (and stop pork barreling) for a decade and pay off some of the ridiculous debt.
Of course that would have a flow on effect and the economy would stagnate, China would grind to a halt without the US buying rubbish and getting loans from them, and the 2 countries combined would stuff the world economy for a generation.

You're so crazy far in debt now that you are damned if you do and damed if you don't.

Isn't england on par with the U.S. in debt as a percentage of GDP?

http://en.wikipedia.org/wiki/List_of_countries_by_public_debt

Shuma wrote:Isn't england on par with the U.S. in debt as a percentage of GDP?

United Kingdom. UNITED. fething. KINGDOM! How hard is it to get right? Come on Shuma, you're an educated man - you should be better than that.

Hence why they are now talking about a national sales tax to reduce some of the deficit. The last time i remember reading about the US budget being balanced IIRC was when Jackson was in office. Andrew Jackson balanced the deficit and like others have said the economy became stagnant. Now this is a different age than in Jacksons presidency but i have a feeling it would be much worse.

Clinton ran a significant surplus for a few years.

I doubt it's possible to balance the budget nowadays. The world is a lot bigger and more complicated.

Running a surplus allows some of the debt to be paid off.

The US is a bit different from the rest of the world. The US dollar (along with the Euro, Pound, Yen and a few other currencies) is a primary means of foreign exchange. Everyone will accept US dollars as payment. If need be, the US can "just make more" and the world markets will continue to accept it as hard currency. Now, the US can't keep this up forever - eventually markets will stop accepting dollars and then the US will have to balance the books.

Smaller countries - like Argentina or Iceland can (and have) actually run out of cash at a national level.

Albatross wrote:

Shuma wrote:Isn't england on par with the U.S. in debt as a percentage of GDP?

United Kingdom. UNITED. fething. KINGDOM! How hard is it to get right? Come on Shuma, you're an educated man - you should be better than that.

I think the biggest issue is that I don't care.

The only reason that the government ran at a surplus in the 1990s was because he borrowed funds from the Social Security Trust Fund.

Everyone will except our debt as long as we are able to pay our interest payments.

ShumaGorath wrote:

Albatross wrote:

Shuma wrote:Isn't england on par with the U.S. in debt as a percentage of GDP?

United Kingdom. UNITED. fething. KINGDOM! How hard is it to get right? Come on Shuma, you're an educated man - you should be better than that.

I think the biggest issue is that I don't care.

Nah, I recon North America has a bigger debt than the UK.

corpsesarefun wrote:

ShumaGorath wrote:

Albatross wrote:

Shuma wrote:Isn't england on par with the U.S. in debt as a percentage of GDP?

United Kingdom. UNITED. fething. KINGDOM! How hard is it to get right? Come on Shuma, you're an educated man - you should be better than that.

I think the biggest issue is that I don't care.

Nah, I recon North America has a bigger debt than the UK.

For pure currency certainly, though as a percentage of our economic power it's actually quite similar. That said THE UNITED KINGDOM is probably going to start paying theirs off or at least lowering the speed at which they plunge into debt before the u.s. That does depend on a few odd factors though, and the current weakness and angst in the eurozone economy could well cause them their issues to exacerbate.


Automatically Appended Next Post:

Pipboy101 wrote:The only reason that the government ran at a surplus in the 1990s was because he borrowed funds from the Social Security Trust Fund.

Everyone will except our debt as long as we are able to pay our interest payments.

Well that and he presided over one of the longest periods of economic expansion in american history, had much higher taxes than any president that has followed, cut military spending drastically as compared to what we spend today, and the healthcare industry hadn't quite flipped out as badly as it has in the last decade. I think the biggest thing though is the higher taxrate during a time of economic boom. Thats how you pay debts.

Shuma FTW! I'm sorry KillKrazy but he's right and look at the era, the reason that Clinton ran that surplus is because of the dot-com bubble and nothing to do with him except the closing of military installations and hiking of taxes, I can turn off my heat and electricity too and have more spending money. I think Clinton was an excellent president with poor taste in women because he held this country together and didn't see that expansion as a chance to Feth everything up.

As for the rest of you who say that government spending is nothing like personal finance your over simplification to justify what you don't understand is what makes this seem like more of a complex situation then it is.

- Surplus spending equals growth of economy and more debt. Say we borrow $10 Million to pay for a public works project, say a simple bridge across a body of water to enable people to go to work faster, and products to ship faster.

-Debt is NEVER paid back in full, so you only pay a fraction of what you borrow at any given time. This means that of the $10 Million you borrowed one year you pay back $500,000 every year after that for a century; and yes that probably is what our interest rate looks like 8-O.

- Growth in the economy means growth of GDP. The publics works project gave a an anual surplus of $100,000,000.

- As long as the growth of your GDP out paces the growth of the payments you have to make on your loans then you are in the green. The reoccuring cost of the loan payments is less then the boost it gave to our economy.

So you see youbedead as long as the outcome of the deficit spending is more profitable then the cost of not doing it, because keep in mind if you decide not to do something then the money you could have made should be factored as a cost, then there is nothing wrong with it. This is how the big boys play.

The nay sayers are too afraid to gamble on these projects, they would rather we "live within our means" instead of being proactive in developing our economy. Yes the US doesn't make the correct call everytime, yes our healthcare is broken (although this is a private cost in the US so is not a factor in our national wealth) and our political system is geared so that only the wealthey can get elected. There is waste and there is inefficency at every level of our bloated government. But as long as we elect capable leaders and not morally self rightious ones, who make the right bets; people that are not bound by some laws from ancient exilarchal cannon that do not care about our prosparity as a people.

The contributers have us on the porkbarrel comment although I doubt ANY of them know how bad it truley is or even WHY it is done (hint it is only marginally motivated by personal greed) but that's another discussion for another time.

ComputerGeek01 wrote:
As for the rest of you who say that government spending is nothing like personal finance your over simplification to justify what you don't understand is what makes this seem like more of a complex situation then it is.

No, you have that backwards. Government spending has nothing in common with personal finance. When you attempt to draw parallels between the two you are attempting to simply a complex thing, which can lead to oversimplification.

ComputerGeek01 wrote:
- Surplus spending equals growth of economy and more debt. Say we borrow $10 Million to pay for a public works project, say a simple bridge across a body of water to enable people to go to work faster, and products to ship faster.

No, not necessarily. Not all spending projects are worthwhile. They all produce, at the very least, temporary stimulus but that doesn't necessarily translate into sustained growth.

ComputerGeek01 wrote:
So you see youbedead as long as the outcome of the deficit spending is more profitable then the cost of not doing it, because keep in mind if you decide not to do something then the money you could have made should be factored as a cost, then there is nothing wrong with it. This is how the big boys play.

The trouble being that revenue projections aren't based on the advice of time travelers.

ComputerGeek01 wrote:
yes our healthcare is broken (although this is a private cost in the US so is not a factor in our national wealth)

No, that's wrong. The nation is not the same thing as the state, or the public sector.


\

See Dakka is good for the brain

I are edumacated by dakka

I still like the idea of selling Utah.

I quite like the idea of selling Scotland. Or Wales.

ShumaGorath wrote:

Albatross wrote:

Shuma wrote:Isn't england on par with the U.S. in debt as a percentage of GDP?

United Kingdom. UNITED. fething. KINGDOM! How hard is it to get right? Come on Shuma, you're an educated man - you should be better than that.

I think the biggest issue is that I don't care.

Cool. It just won't help you to only mention England when attempting to compare the national debts of the USA and UK, is all. That's like comparing the national debts of New York and France.

sebster wrote:People also make the mistake of looking at an issue like this purely in terms debt, forgetting the other side of the ledger entirely. Once the capital stock of the country is taken into account (all the housing, roads, telecommunications and so on) is totalled, there's actually about $200,000 in assets per US citizen.

But is China (which has been handing out the loans to finance the spending binge by the developed world) going to accept 3000,000 homes and the new jersey turnpike in restitution?

I think Californias debt on its own could be compared to other countries.

sebster wrote:

youbedead wrote:I am just wondering if a government can ever run out of money. Can the U.S. ever hit the bottom or would no one ever collect the money that there owed. I mean if china were decide to collect on the @ trillion some odd dollars that their owed couldn't the U.S. just say no.

National finance doesn't work like personal finance, government can't just run out of money. As Waaagh_Gonads pointed out, you can just print more money, but you can also tax more, or borrow domestically.

The issue with deficit spending isn't that you might run out of money, it's that long term spending on consumption goods draws money away from investment and hurts national growth.


People also make the mistake of looking at an issue like this purely in terms debt, forgetting the other side of the ledger entirely. Once the capital stock of the country is taken into account (all the housing, roads, telecommunications and so on) is totalled, there's actually about $200,000 in assets per US citizen.

Ask Argentina this question, or Zimbabwe, the Weimar Republic.

Frazzled wrote:

sebster wrote:

youbedead wrote:I am just wondering if a government can ever run out of money. Can the U.S. ever hit the bottom or would no one ever collect the money that there owed. I mean if china were decide to collect on the @ trillion some odd dollars that their owed couldn't the U.S. just say no.

National finance doesn't work like personal finance, government can't just run out of money. As Waaagh_Gonads pointed out, you can just print more money, but you can also tax more, or borrow domestically.

The issue with deficit spending isn't that you might run out of money, it's that long term spending on consumption goods draws money away from investment and hurts national growth.


People also make the mistake of looking at an issue like this purely in terms debt, forgetting the other side of the ledger entirely. Once the capital stock of the country is taken into account (all the housing, roads, telecommunications and so on) is totalled, there's actually about $200,000 in assets per US citizen.

Ask Argentina this question, or Zimbabwe, the Weimar Republic.

Or the united states during and following world war two (otherwise known as the start of a tremendous economic boom). It's funny how these comparisons seem to be pretty BS. The current global situation has no clear and easy historical comparison.

A brilliantly different animal and joyous wrong example.
http://traxel.com/deficit/deficit-percentage.png

Sure it does. Its creates a hyperinflationary environment. Our stat lines are reaching the same as Argentina before their inflationary period.

Sure it does. Its creates a hyperinflationary environment. Our stat lines are reaching the same as Argentina before their inflationary period.

Argentina also didn't bouey the global economy and didn't have sizable foreign nations buying it's debt to maintain their own currencies. The parallels aren't particularly accurate or useful.

If the eggheads were predicting hyperinflation, you'd see the market behaving accordingly.

They're not, and that's why it isn't. Generally higher inflation in a couple years, sure, depending on how the Fed manages things. Picking the right time to tighten will be tricky.

Frankly, a lot of the doomsday stuff we heard 12 months ago proved to be wrong, thanks to the efforts of the Bush and Obama administrations. Some mistakes were made, but BOTH administrations need to be given some credit for us getting through this the way we have. And we'll get through and address higher deficits as well.

You mean doomsday stuff like 10% unemployment, and the fact that my clients can now price debt more cheaply than the full faith and credit of the US?

Unemployment hit 10.8% in 1982. It hit 9.5% in the 1957-1958 recession.

You have a very loose definition of "doomsday."