ArtK78 Posted January 10, 2014 Report Share Posted January 10, 2014 Where are you getting your information? A quick google search tells me that debt/GDP is at an all time high, other than the world war 2 debts, which were paid down by 1960 or so. That includes higher than world war 1 and the great depression. Most projections seem to show debt/GDP continuing to increase, with a few showing it steady. All businesses operate some revolving debt. But it must be kept to a reasonable percentage of revenue. Same goes for governments. Greece, Spain, Ireland .. bad things do happen when debt gets out of control. So Art, how high is too high?Sorry. I was wrong about that. The debt increased so much during the Bush years that it is higher now as a percentage of GDP than at anytime since WWII. But even that doesn't bother me. And the debt is projected to decline (slightly) over the next 6-10 years as a percentage of GDP. Not because the debt will decline. The US is not operating at a surplus. But the GDP is expected to increase at a faster rate than the increase in the debt. And that is typically the case, except when the US is engaged in military operations. How high is too high? Interesting question. No one really knows. But the US, with its enormous ability to produce goods and services, is in a better position to weather a large debt than the countries that you cited. Comparing the financial practices of businesses or individuals to national government is an absurdity. Businesses and individuals do not have the ability to tax or wage war. Those differences, among others, makes any comparison absurd. States and localities typically must have balanced budgets, so any comparison between them and the national government is also highly inappropriate. Personally, I don't lose any sleep over the national debt of the US. Quote Link to comment Share on other sites More sharing options...
billw55 Posted January 10, 2014 Report Share Posted January 10, 2014 Sorry. I was wrong about that. The debt increased so much during the Bush years that it is higher now as a percentage of GDP than at anytime since WWII.Are you sure? This chart at wikipedia shows a noticeable decline in the later Clinton years, a small increase under Bush, and a steep increase after Obama came into office. Of course you can argue that this latest increase should be blamed on the recession, and not on Obama. Then again, you can blame the (much smaller) bump in the Bush years on 9/11 and our responses. In any case, it does not seem accurate to say that debt/GDP increased significantly under Bush. But even that doesn't bother me. And the debt is projected to decline (slightly) over the next 6-10 years as a percentage of GDP. Not because the debt will decline. The US is not operating at a surplus. But the GDP is expected to increase at a faster rate than the increase in the debt. And that is typically the case, except when the US is engaged in military operations. How high is too high? Interesting question. No one really knows. But the US, with its enormous ability to produce goods and services, is in a better position to weather a large debt than the countries that you cited. Comparing the financial practices of businesses or individuals to national government is an absurdity. Businesses and individuals do not have the ability to tax or wage war. Those differences, among others, makes any comparison absurd. States and localities typically must have balanced budgets, so any comparison between them and the national government is also highly inappropriate. Personally, I don't lose any sleep over the national debt of the US.Yes, government is different. Yes, we can carry debt better than most nations. But eventually, there is a level that is unsustainable and/or harmful. I don't know what that level is, but I don't want to find out by reaching it. Quote Link to comment Share on other sites More sharing options...
32519 Posted January 10, 2014 Report Share Posted January 10, 2014 How high is too high? Interesting question. No one really knows. But the US, with its enormous ability to produce goods and services, is in a better position to weather a large debt than the countries that you cited.As a % of GDP, the USA looks good versus the United Kingdom. Check out this List of Countries by External Debt. Quote Link to comment Share on other sites More sharing options...
barmar Posted January 10, 2014 Report Share Posted January 10, 2014 Yes, government is different. Yes, we can carry debt better than most nations. But eventually, there is a level that is unsustainable and/or harmful. I don't know what that level is, but I don't want to find out by reaching it.I vaguely remember my 8th or 9th grade Social Studies teacher telling us that the definition of a "nation" is that they can essentially have unlimited debt. They can print money, they can raise taxes, they decide their own credit limit. Government debt is definitely necessary to the economy. How many things are tied to US Treasury rates? When someone wants the "safest" investment, they buy US bonds. Where would they go if we stopped selling bonds? Quote Link to comment Share on other sites More sharing options...
32519 Posted January 10, 2014 Report Share Posted January 10, 2014 Here is another very interesting read, Political debates about the United States federal budget. Quote Link to comment Share on other sites More sharing options...
Winstonm Posted January 10, 2014 Report Share Posted January 10, 2014 Where are you getting your information? A quick google search tells me that debt/GDP is at an all time high, other than the world war 2 debts, which were paid down by 1960 or so. That includes higher than world war 1 and the great depression. Most projections seem to show debt/GDP continuing to increase, with a few showing it steady. All businesses operate some revolving debt. But it must be kept to a reasonable percentage of revenue. Same goes for governments. Greece, Spain, Ireland .. bad things do happen when debt gets out of control. So Art, how high is too high? People continually make this unfounded assumption that an analogy using private or corporate debt as a proxy for a nation and its debt can in some way be used to describe the government/debt relationship when the truth is that they are not even related. The proper actions concerning debt for a family of four has no bearing whatsoever on the proper actions of a nation and its borrowing. Quote Link to comment Share on other sites More sharing options...
ArtK78 Posted January 10, 2014 Report Share Posted January 10, 2014 Are you sure? This chart at wikipedia shows a noticeable decline in the later Clinton years, a small increase under Bush, and a steep increase after Obama came into office. Of course you can argue that this latest increase should be blamed on the recession, and not on Obama. Then again, you can blame the (much smaller) bump in the Bush years on 9/11 and our responses. In any case, it does not seem accurate to say that debt/GDP increased significantly under Bush.Obama inherited a disaster from Bush. The immediate effect of the fix to the economy was a continuation of the increase of the debt in excess of the rise in GDP. That is now behind us, and has been for some time. Quite frankly, while I am reasonably sure that the eventual success of Obamacare will be a large part of President's Obama legacy, his fix of the economic disaster left to him by Bush should also be viewed very well in the light of history. Quote Link to comment Share on other sites More sharing options...
kenberg Posted January 10, 2014 Report Share Posted January 10, 2014 Yes, government is different. Yes, we can carry debt better than most nations. But eventually, there is a level that is unsustainable and/or harmful. I don't know what that level is, but I don't want to find out by reaching it. Not for the first time, you and I are in agreement. Having some concern over debt does not make me a member of the Tea Party nor, I think, does it make me an idiot. Republicans are making mistake if they marginalize everyone who fails to adhere to Tea Party dogma. Democrats are making a mistake if they marginalize everyone who is concerned about debt, entitlements and budgets. There is an election coming up and it will be interesting to see which party is interested in trying to appeal to me. Quite possibly, the answer will be neither one of them, they will both opt for ideological purity. Quote Link to comment Share on other sites More sharing options...
billw55 Posted January 10, 2014 Report Share Posted January 10, 2014 Having some concern over debt does not make me a member of the Tea Party nor, I think, does it make me an idiot. I know how you feel. It seems that anyone who is the least bit bothered by it must be ridiculed as an ignorant rube. Meanwhile they go on thinking that any amount of debt at all is perfectly ok, for lots of fancy economic reasons. Plus, some 8th grade teacher says so. And anything bad that happens is Bush's fault anyway, so who cares what we do? Republicans are making mistake if they marginalize everyone who fails to adhere to Tea Party dogma. Democrats are making a mistake if they marginalize everyone who is concerned about debt, entitlements and budgets. There is an election coming up and it will be interesting to see which party is interested in trying to appeal to me us. Quite possibly As sure as the sun rises in the east, the answer will be neither one of them, they will both opt for ideological purity.Fixed. Quote Link to comment Share on other sites More sharing options...
barmar Posted January 10, 2014 Report Share Posted January 10, 2014 When quoting my teacher I didn't intend to suggest that it's a good idea to keep running the debt infinitely. But a default would be of our own causing -- there's no creditor out there who's going to call a bunch of huge notes at once. No one is going to foreclose on Yosemite National Park. It would only happen because Congress makes an arbitrary decision to stop allowing the debt to increase. There's no magic amount of debt that's "too high". There are economic priorities, and paying down the debt is not at the top of it. For private individuals, the best financial advice you can give them is often to clean up their credit card debt. But that's not a good analogy to the government. First of all, credit cards charge huge rates -- it's almost impossible to get enough return on anything to keep up with it. Conversely, government bonds have extremely low interest rates. It would be nice if we could solve the problems that have higher priority than the debt. In fact, I suspect if we addressed them, a side effect would be that we would reduce our deficity. So we shouldn't worry about the debt itself, just work on improving the economy and the debt will take care of itself. Quote Link to comment Share on other sites More sharing options...
kenberg Posted January 10, 2014 Report Share Posted January 10, 2014 I vaguely remember my 8th or 9th grade Social Studies teacher telling us that the definition of a "nation" is that they can essentially have unlimited debt. They can print money, they can raise taxes, they decide their own credit limit. Government debt is definitely necessary to the economy. How many things are tied to US Treasury rates? When someone wants the "safest" investment, they buy US bonds. Where would they go if we stopped selling bonds? I am certaily interested in safety, I am even more interested in simplicity. I have no interest in complex risky schemes to double or triple my wealth so that I can have a great bash in fifteen years on my ninetieth birthday. But I own no government bonds and I am not sure I know anyone who does. When I was very young, we bought War Bonds. That was different. At the elementary school we were encouraged to bring in small amounts of money and eventually get a bond, i think they were as small as ten bucks. A different time. Quote Link to comment Share on other sites More sharing options...
Vampyr Posted January 10, 2014 Report Share Posted January 10, 2014 I also do not expect the immanent collapse of the United States. Is 'immanent' a Freudian slip? Perhaps in your heart you believe that collapse in inherent in the system. Quote Link to comment Share on other sites More sharing options...
kenberg Posted January 10, 2014 Report Share Posted January 10, 2014 Is 'immanent' a Freudian slip? Perhaps in your heart you believe that collapse in inherent in the system. Just me being careless. Although I guess Freud would reject that explanation as a matter of principle. In high school I scored in the 35th percentile on the test we took in clerical speed and accuracy, So I think that it's a good bet to go with carelessness. Quote Link to comment Share on other sites More sharing options...
Vampyr Posted January 10, 2014 Report Share Posted January 10, 2014 Where are you getting your information? A quick google search tells me that debt/GDP is at an all time high, other than the world war 2 debts, which were paid down by 1960 or so. That includes higher than world war 1 and the great depression. Most projections seem to show debt/GDP continuing to increase, with a few showing it steady. All businesses operate some revolving debt. But it must be kept to a reasonable percentage of revenue. Same goes for governments. Greece, Spain, Ireland .. bad things do happen when debt gets out of control. So Art, how high is too high? I suppose there must be a level at which 100% of revenue is used to service the debt. That would be too high. Quote Link to comment Share on other sites More sharing options...
mike777 Posted January 11, 2014 Report Share Posted January 11, 2014 I suppose there must be a level at which 100% of revenue is used to service the debt. That would be too high. but what is that? again vamp you seem to not care...really over and over in your posts you say spend other peoples money Quote Link to comment Share on other sites More sharing options...
Vampyr Posted January 11, 2014 Report Share Posted January 11, 2014 but what is that? again vamp you seem to not care...really over and over in your posts you say spend other peoples money I'm not sure what you mean. Is it that I believe in a single-payer healthcare system? I don't remember commenting on anything else of a financial nature. My post above was tongue-in-cheek. About whether I care, I don't really know enough; I prefer to leave the caring or not caring to people with far better economic knowledge than I have. Quote Link to comment Share on other sites More sharing options...
Al_U_Card Posted January 11, 2014 Author Report Share Posted January 11, 2014 Just a quick two-part question. At 12.3 trillion national debt, who is the money owed to and where did they get the money that they loaned out, in the first place? Thanks. Quote Link to comment Share on other sites More sharing options...
kenberg Posted January 11, 2014 Report Share Posted January 11, 2014 Just a quick two-part question. At 12.3 trillion national debt, who is the money owed to and where did they get the money that they loaned out, in the first place? Thanks. Although I am pretty sure that this isn't your point, this has got me to wondering if "ordinary folks", whoever they are, still buy government bonds. My parents bought them, some of them in my name. My uncle would sometimes send me a $25 bond, quite a bit in the 1940s, on my birthday. They, the bonds not my uncle and parents, matured sometime when I was in graduate school if I remember correctly. Do people still do this? It seems like an historical relic, like making Mayday cards and baskets in elementary school to bring home to our mothers. Maybe I am just out of touch. Back to the intent of the thread. Vamp's note may have been tongue-in-cheek, but in fact I think that yearly interest payments on the national debt is significant, some $222 billion, according to Pew:http://www.pewresear...ou-should-know/And this is with the interest rates held lower than I expect are sustainable.Actually the Treasury site at http://www.treasuryd.../ir_expense.htm says interst payments for the last three months of 2013 totaled 127 billion which is a considerably more than 222 if extrapolated to twelve months. So the numbers vary with the source, what else is new? No doubt they are measuring different things. As with so many things, a full understanding including all of the details requires a full-time commitment, if it can be achieved at all. But it seems fair enough to say that large debt implies large interest payments and large interest payments can have a restraining effect on what the government can do to help the economy, fund defense, promote education and the general welfare. None of this means that we need to join the Tea Party, not at all. I'm not up for boarding ships and throwing tea overboard, not literally and not metaphorically. But the debt is a problem. Quote Link to comment Share on other sites More sharing options...
Al_U_Card Posted January 11, 2014 Author Report Share Posted January 11, 2014 That is a lot of interest to pay to have so little interest in who receives the payment and where they obtained the funds to loan out in the first place. The question still stands. Who are they and where did the reserves (that are costing us so dearly) originate? Quote Link to comment Share on other sites More sharing options...
barmar Posted January 11, 2014 Report Share Posted January 11, 2014 Just a quick two-part question. At 12.3 trillion national debt, who is the money owed to and where did they get the money that they loaned out, in the first place? Thanks.People who bought savings bonds and treasury bonds, institutions that bought treasury bonds (banks, mutual funds, insurance companies, pension funds), and other countries (China is our biggest creditor, right?). Where did they get all the money? From their wages, revenues, or returns on other investments. Quote Link to comment Share on other sites More sharing options...
Al_U_Card Posted January 11, 2014 Author Report Share Posted January 11, 2014 People who bought savings bonds and treasury bonds, institutions that bought treasury bonds (banks, mutual funds, insurance companies, pension funds), and other countries (China is our biggest creditor, right?). Where did they get all the money? From their wages, revenues, or returns on other investments. This helps So, the US Treasury basically prints up "securities" and then sells them to "creditors", right? (Which other countries, including my own, also do?) Quote Link to comment Share on other sites More sharing options...
blackshoe Posted January 12, 2014 Report Share Posted January 12, 2014 1835 was the only time the US had a zero national debt. Shortly after that the country went into the longest depression in the nation's history. Planet Money discussed this in 2011.This certainly proves that having no debt causes depressions. Quote Link to comment Share on other sites More sharing options...
blackshoe Posted January 12, 2014 Report Share Posted January 12, 2014 I vaguely remember my 8th or 9th grade Social Studies teacher telling us that the definition of a "nation" is that they can essentially have unlimited debt. They can print money, they can raise taxes, they decide their own credit limit.They can, yes. Doesn't mean they should. Actions have consequences. Even nations don't get free money. Government debt is definitely necessary to the economy. How many things are tied to US Treasury rates? When someone wants the "safest" investment, they buy US bonds. Where would they go if we stopped selling bonds?You're basically arguing that government debt is necessary because you can't imagine a society without it. Sorry, but that's a silly argument. US bonds are considered safe because the US has never (so far) defaulted on its debt. What happens when we do? That the US has the largest and most powerful "economic engine" the world has ever seen does not mean that we can continue on our present course indefinitely. Quote Link to comment Share on other sites More sharing options...
blackshoe Posted January 12, 2014 Report Share Posted January 12, 2014 Obama inherited a disaster from Bush. The immediate effect of the fix to the economy was a continuation of the increase of the debt in excess of the rise in GDP. That is now behind us, and has been for some time. Quite frankly, while I am reasonably sure that the eventual success of Obamacare will be a large part of President's Obama legacy, his fix of the economic disaster left to him by Bush should also be viewed very well in the light of history.Are you arguing that Bush caused this economic disaster, or that he failed to fix it? Either way, what precisely did Obama do to fix it? Or is it simply that it somehow got fixed on Obama's watch? Quote Link to comment Share on other sites More sharing options...
blackshoe Posted January 12, 2014 Report Share Posted January 12, 2014 No one is going to foreclose on Yosemite National Park.It would be ridiculous to suggest that anyone can foreclose on Yosemite National Park - unless you know of some mortgage holder on that property that I've never heard of. Quote Link to comment Share on other sites More sharing options...
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