US Elections 2012 Part I: The Primaries/Caucus

[Vallen Chaos Valiant]

Originally Posted by Mr. DJ

John Bradshaw Layfield on US spending and the deficit

You know the crazy thing? The comment section has people saying "it would be fine because economy would improve from having no government", never-mind that with no government comes zero taxes, which means zero tax income...

Are people watching Fox News really that retarded? How do they even manage to learn to read or write?

Right now, GOP is counting on hypothetical impossible growth from tax cuts. While Democrats are counting on debt deduction via monetary inflation.

Super inflation will destroy the world economy, but it would work. Though technically it is not much better than a default. So GOP doesn't have a solution, while the Democrats have a solution that isn't much better than doing nothing.

Why? Because both sides know that they can't actually take the topic seriously and still get elected. In this, USA is no different from Greece. Greece wants to stay in the Euro, but also don't want austerity. This impossible situation is caused by democracy; by those who vote not being in the position to make reasonable demands.

Seriously though...

Empires actually go broke surprisingly often. This happened ALL the time through out history. How did old kings and emperors deal with it?

Well, simple really; powerful nations have, well, power. This means unlike Greece, who would have nothing left if they default, USA can convert some of their political might into actual currency. This means telling people "no, I am not paying you back, what are you going to do about it huh?"

This is why lending money to blue blooded aristocrats was a bad idea in the medieval days. They are more likely to refuse to pay. And this is the almost certain future of the USA.

Soviet Russia did it. They are still around aren't they? Though they aren't the Soviets any more of course. They paid the price by no longer being as powerful. And that's really the path America HAS to take, eventually. Relinquish power and respect. (The sooner they do it, the more power and respect that they will have at hand to cancel debts. Time is not America's friend.)

[Mr. DJ]

Originally Posted by Vallen Chaos Valiant

Are people watching Fox News really that retarded? How do they even manage to learn to read or write?

The main problem is that FOX News is the most watched over all else...though they do have nuggets of truth, just they're coated with tabloid like entertainment.

Originally Posted by Bri

He has a fair point that both tax increases and expenditure cuts are necessary for a balanced budget, but the rest is just the usual fear mongering.

Especially on size of the tax increases necessary. Quite a bit of fiddling with definitions and numbers to make it all look scary.

I believe JBL has a firm grasp on things, and he actually manages to make fair points w/out having to shout over people. But like any man, can be inaccurate. Probably my bias speaking, I've developed a lot of respect for the man, becoming a self made millionaire as a private investor before hitting his peak in pro wrestling.

[GDB]

Originally Posted by Anh_Minh

Or you never know. Maybe all those deficit problems will be solved in some controlled, peaceful way.

Finance summit where everyone wipes everyone else's debts, but in exchange must work together to balance each others budgets. Let's make it happen.

Originally Posted by Vallen Chaos Valiant

You know the crazy thing? The comment section has people saying "it would be fine because economy would improve from having no government", never-mind that with no government comes zero taxes, which means zero tax income...

And no government means no money, period. What good is that dollar in your pocket without a government to give it value? Hard to have an economy without money.

Originally Posted by Vallen Chaos Valiant

Are people watching Fox News really that retarded?

Yes. Yes they are.

Originally Posted by Vallen Chaos Valiant

Well, simple really; powerful nations have, well, power. This means unlike Greece, who would have nothing left if they default, USA can convert some of their political might into actual currency. This means telling people "no, I am not paying you back, what are you going to do about it huh?"

Tell that to enough people and they group up and beat the shit out of you.

Originally Posted by Vallen Chaos Valiant

And that's really the path America HAS to take, eventually. Relinquish power and respect. (The sooner they do it, the more power and respect that they will have at hand to cancel debts. Time is not America's friend.)

Yeah, that'll fly well with the GOP. America not #1? Blasphemy, you communist.

[Vallen Chaos Valiant]

Originally Posted by GDB

And no government means no money, period. What good is that dollar in your pocket without a government to give it value? Hard to have an economy without money.

That's the interesting thing with "taxes".

Because one major factor with the worth of the US banknote, is that you can pay taxes with it. Or use them to pay for government services.

But if there are no government services and no taxes to pay, then the US dollar would all of a sudden lose that function. And money that loses function, loses value.

"Government backed" money is "backed" by having the government willing to take them as payment. So zero government = zero backing.

Yeah, that'll fly well with the GOP. America not #1? Blasphemy, you communist.

Well, I still think China is not quite ready to take over just yet. So even if the USA default in the near future it will still be the sole world power. Never mind the fact that China would be just as weakened by the debt cancellations. America would still be ahead.

[DonQuigleone]

The only problem with the US defaulting is that the banks are so leveraged, that the default on all treasury bonds would basically destroy the global financial system.

[Vallen Chaos Valiant]

Originally Posted by DonQuigleone

The only problem with the US defaulting is that the banks are so leveraged, that the default on all treasury bonds would basically destroy the global financial system.

The Treasury bonds will gone down in value one way or another because they can't be paid back. They can either do it by defaulting or by inflation. I guess the political easier way is by inflation.

[DonQuigleone]

Originally Posted by Vallen Chaos Valiant

The Treasury bonds will gone down in value one way or another because they can't be paid back. They can either do it by defaulting or by inflation. I guess the political easier way is by inflation.

Ultimately it's the same thing, yes, but at least with inflation it's not a sudden shock.

[Vallen Chaos Valiant]

Originally Posted by DonQuigleone

Ultimately it's the same thing, yes, but at least with inflation it's not a sudden shock.

And as many already know, inflation is also a flat tax increase on all citizens. One that hurts the poor more than most. So inflation is also another type of austerity.

[Ledgem]

Originally Posted by Sugetsu

Obama is being attacked from so many angles by special interests and big money it is scary. It makes you think if he will still manage to get reelected.

- Citizens united.
- Filler buster.
- Movies.
- Voter suppression.
- Union busting.
- Cnn and fox news.

To name a few... and I am not even including racists and birthers.

CNN attacking Obama? Many of the comments on CNN's articles accuse CNN of shilling for Obama. I happen to think that they have more articles that favor Obama than not, but they include a few that are critical as well. It's a decent enough mix.

But I agree, the amount of money flowing Romney's way is pretty disconcerting. Even though we don't know all of the players who are throwing in money, the names that have been revealed aren't particularly surprising and their agendas are also pretty clear.

I'm also a bit disturbed that so many Americans have turned into partisan hacks themselves. I think that every American should be a bit curious about Romney's reason for not wanting to release more than two years' worth of tax returns. It doesn't have to be an issue that makes or breaks the election, but come on - "you're not guilty if you have nothing to hide," right? However, the standard response that I hear from "conservatives" is that "it doesn't matter; where are Obama's college transcripts to prove that he was an American citizen?"

Seriously?

Originally Posted by Mr. DJ

I believe JBL has a firm grasp on things, and he actually manages to make fair points w/out having to shout over people. But like any man, can be inaccurate. Probably my bias speaking, I've developed a lot of respect for the man, becoming a self made millionaire as a private investor before hitting his peak in pro wrestling.

I have a question about this. I admit that economics isn't an area that I have much understanding in (aside from how to balance my own household budget), but how is it that we went from running a surplus as recently as 2001, and now in the year 2012 we're suddenly in unrecoverable territory? Particularly since the latest government surplus before 1998 was in 1969? It's true that Social Security payouts have increased, but Social Security, Medicare, and Medicaid are not new government programs. They've been with us for quite some time, actually. So, what has changed?

[Mr. DJ]

Pretty much everything that caused us to have a surplus, went in reverse. Though there are those that say we never really had a surplus.

[Ledgem]

Originally Posted by Mr. DJ

Pretty much everything that caused us to have a surplus, went in reverse. Though there are those that say we never really had a surplus.

I suppose so. I read a bit more on this, and it seems that the surplus allowed the government to pay down the public debt (but didn't pay it off completely, I guess?) while the federal debt continued to grow. I didn't realize that there was a difference between the two.

[Mr. DJ]

yeah, our total debt is ridiculously high

[Vallen Chaos Valiant]

Originally Posted by Mr. DJ

Pretty much everything that caused us to have a surplus, went in reverse. Though there are those that say we never really had a surplus.

America once made everything people wanted to buy. So the consumer culture was working fine as people buy local products. This is self-reinforcing. But now China makes everything. You know it is bad when you couldn't even buy locally if you wanted to. I once ran around a shop over and over to get a toy for my niece, trying to find something that isn't made in China. I managed to locate a toy truck that was made in Canada... But later I realised the toy bricks that was packaged with the truck was from China.

[Vexx]

Maybe if we actually *had* a conservative party...

http://www.nytimes.com/2012/08/22/opinion/friedman-we-need-a-conservative-party.html

[DonQuigleone]

Originally Posted by Vallen Chaos Valiant

America once made everything people wanted to buy. So the consumer culture was working fine as people buy local products. This is self-reinforcing. But now China makes everything. You know it is bad when you couldn't even buy locally if you wanted to. I once ran around a shop over and over to get a toy for my niece, trying to find something that isn't made in China. I managed to locate a toy truck that was made in Canada... But later I realised the toy bricks that was packaged with the truck was from China.

One thing to note here, most of the money from the sale of goods doesn't go to China, it goes to the US company that designed it and owns the brand. The "smart" high paying work is done in the US, the "stupid" low paying work is done in China. Most of the money from the sale goes to the US. It's a bit like Tropical Fruit, as you know the average farmer in South America gets maybe a 10th of the sale price(if he's lucky...) for his produce.

Not much consolation for all the displaced factory workers though.

[Bri]

Originally Posted by Ledgem

I suppose so. I read a bit more on this, and it seems that the surplus allowed the government to pay down the public debt (but didn't pay it off completely, I guess?) while the federal debt continued to grow. I didn't realize that there was a difference between the two.

Public debt is pretty much the main indicator for a country's debt. For the US it sits around 100% of GDP, which is high but not dramatic. As a rule of thumb 60-80% is considered healthy and sustainable. Basically it's comparable to a mortgage for an individual.

The federal deficit is more worrying as it stands around 8.6% of GDP in 2011, which is very high. Comparable to a monthly imbalance between expenses and costs for an individual. The shortage is added to the debt. Rule of thumb is below 3% is healthy.

Note that debt can decline even with a deficit as it is expressed as a percentage of GDP. A country can simply outgrow it's dept, which is the healthy option. The other way is through inflation but that is at the expense of the major debt holders:social security funds, pension funds, mutual funds, China and Japan.


As for the causes of this budget shortfall:
*Economic downturn: including lower than expected tax revenues (main source of income government) and greater safety net spending due to recessions and financial crises since 2000.
*Bush era tax cuts
*Wars in Iraq and Afghanistan and greater military expenditure
*More interest payments to service growing debt
*Obama stimulus package to jump start economy after 2008 financial crisis.

[Bri]

Originally Posted by Ledgem

I suppose so. I read a bit more on this, and it seems that the surplus allowed the government to pay down the public debt (but didn't pay it off completely, I guess?) while the federal debt continued to grow. I didn't realize that there was a difference between the two.

Public debt is pretty much the main indicator for a countries debt. For the US it sits around 100% of GDP, which is high but not dramatic. As a rule of thumb 60-80% is considered healthy and sustainable. Basically it's comparable to a mortgage for an individual.

The federal deficit is more worrying as it stands around 8.6% of GDP in 2011, which is very high. Comparable to a monthly imbalance between expenses and costs for an individual. The shortage is added to the debt. Rule of thumb is below 3% is healthy.

Note that debt can decline even with a deficit as it is expressed as a percentage of GDP. A country can simply outgrow it's dept, which is the healthy option. The other way is through inflation but that is at the expense of the major debt holders:social security funds, pension funds, mutual funds, China and Japan.


As for the causes of this budget shortfall:
*Economic downturn: including lower than expected tax revenues and greater safety net spending due to recessions and financial crises since 2000.
*Bush era tax cuts
*Wars in Iraq and Afganistan and greater military expenditure
*More interest payments to service growing debt
*Obama stimulus package to jump start economy after 2008 financial crisis.

[Ithekro]

It's true that Social Security payouts have increased, but Social Security, Medicare, and Medicaid are not new government programs. They've been with us for quite some time, actually. So, what has changed?

The amount of the population that would be using these programs as oppose to paying into them changed when the first waves of the World War II babies and then the Baby Boomers started to retire these last few years. Some retired earlier than others, but the first waves of Baby Boomers have reached 65.

[DonQuigleone]

The only consolation is that the Echo boomers are now of earning age.

[Ithekro]

But how many are actually earning as much as the Baby Boomers to balance the scale? How many are without work or underemployed?