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Mungwater

Went to a panel discussion about the debt last night

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My school had a panel with three economists to discuss the national debt, without going into many specifics cause I'm on my phone.. We are totally screwed.

 

Basically all of them said that the entitlements and old people are going to kill us, that it's all a giant ponzi scam. We are even worse off than Greece in some economic indicators.

 

They even said that every developed country is broke, every single one

 

It's going to really suck for all of us, and unless someone decides to raise taxes 20% and cut all entitlements 40%, we are toast

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If you ran the government like a business that had to use GAAP, we'd have over 200 trillion in unfunded liabilities.

 

It was insane

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Did any of those experts have an opinion of what to do about that pesky 'old people' problem?

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If you ran the government like a business that had to use GAAP, we'd have over 200 trillion in unfunded liabilities.

 

It was insane

For all the liberal creative writing and science majors out there, GAAP stands for Generally Accepted Accounting Principals. Not the creative counting and imaginary numbers that you guys like to use. :D

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Did any of those experts have an opinion of what to do about that pesky 'old people' problem?

Part of the Fiscal Cliff negociations was to raise the FICA age a couple years to offset costs and due to people living and working longer. Harry Ried and Obama laughed it off and dismissed it upon arrival.

 

Newbie, the truth is that both parties are to blame for this mess. We can point fingers at Bush's wars and Obama's budgets and hell it probably goes back further than that. However the fact remains that Obama is the current President and the Democrats control the Sentate. And they have YET to take this (spending cuts and entitlement reform) seriously.

 

There are two things pissing me off right now. The Redneck right who are screaming for second amendment rights thinking the gov't is going to come into their homes and take away all their guns and the liberal elite who scoff at debt and deficit and refuse to talk about spending cuts.

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Another thing was our deficit to GDP, yeah it was over 100% in the fifties, but that was due to short term liabilities from WWII, we had a chance to pay that down, now ours is a perpetual liability.

 

They also said that there isn't one politician who would recognize this because it would cost them their job

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They also said that there isn't one politician who would recognize this because it would cost them their job

And this is the conundrum we are in. To 'fix' this means cuts and changes. And if you touch medicare the AARP will put out commercials against you. If you touch unemployment the other side will put out commercials saying you don't care about the middle class. If you touch tax deductions then some other group will rail against you.

 

What is needed is a somebody willing to jump on a grenade to save us from ourselves. A President or highly touted politician with clout who will do the right thing knowing it will probably cost him his job, but years later the smart people will look back and say "That was the guy that saved us". We need somebody will balls.

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American debt is in US dollars. We can inflate our way out of this mess. If we sustain 10-15% inflation for 15 years we can work our way out of debt. A high inflation rate provides a secondary benefit in that it makes US goods cheaper to foreign economies. So during this 15 years of sustained inflation we are going to be making goods for chinese consumption. We are going to flip-flop roles with them.

 

 

 

 

Yes our economic situation is ugly, but it is hardly end of the world.

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American debt is in US dollars. We can inflate our way out of this mess. If we sustain 10-15% inflation for 15 years we can work our way out of debt. A high inflation rate provides a secondary benefit in that it makes US goods cheaper to foreign economies. So during this 15 years of sustained inflation we are going to be making goods for chinese consumption. We are going to flip-flop roles with them.

 

 

 

 

Yes our economic situation is ugly, but it is hardly end of the world.

 

Then we also need to raise interest rates to keep up

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Yes our economic situation is ugly, but it is hardly end of the world.

That is why the American people voted for four more years of massive debt. :thumbsup:

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Then we also need to raise interest rates to keep up

 

Interest rates are only raised to slow down inflation, we want to keep rates lot to encourage inflation.

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American debt is in US dollars. We can inflate our way out of this mess. If we sustain 10-15% inflation for 15 years we can work our way out of debt. A high inflation rate provides a secondary benefit in that it makes US goods cheaper to foreign economies. So during this 15 years of sustained inflation we are going to be making goods for chinese consumption. We are going to flip-flop roles with them.

 

 

 

 

Yes our economic situation is ugly, but it is hardly end of the world.

 

Wrong!

 

Why the U.S. can't inflate its way out of debt

By Jeanne Sahadi, senior writerMarch 23, 2010: 4:05 PM ET

 

 

NEW YORK (CNNMoney.com) -- It's dawning on people that getting a handle on burgeoning U.S. debt will be a long and hard process.

 

So if lawmakers can't agree on a credible plan, some have suggested that the country could just "inflate its way" out of its fiscal ditch.

 

The idea: Pursue policies that boost prices and wages and erode the value of the currency.

 

The United States would owe the same amount of actual dollars to its creditors -- but the debt becomes easier to pay off because the dollar becomes less valuable.

 

That's hardly a good plan, say a bevy of debt experts and economists.

 

"Many countries have tried this and they've all failed," said Mark Zandi, chief economist at Moody's Economy.com.

 

It's true that inflation could reduce a small portion of U.S. debt. The International Monetary Fund (IMF) estimates that in advanced economies less than a quarter of the anticipated growth in the debt-to-GDP ratio would be reduced by inflation.

 

But the mother lode of the country's looming debt burden would remain and the negative effects of inflation could create a whole new set of problems.

 

For starters, a lot of government spending is tied to inflation. So when inflation rises, so do government obligations, said Donald Marron, a former acting director of the Congressional Budget Office (CBO), in testimony before the Senate Budget Committee.

 

"[W]e have an enormous number of spending programs, Social Security being the most obvious, that are indexed. If inflation goes up, there's a one-for-one increase in our spending. And that's also true in many of the payment rates in Medicare and other programs," he said.

 

Inflation would also make future U.S. debt more expensive, because inflation tends to push up interest rates. And the Treasury will have to refinance $5 trillion worth of short-term debt between now and 2015.

 

"[The debt's] value could go down for a couple of years because of surprise inflation. But then ... the market's going to charge you a premium interest rate and say 'you fooled us once but this time we're going to charge you a much higher rate on your three-year bonds,'" Marron said.

 

The Treasury is increasing the average term of its debt issuance so it can lock in rates for a longer time and reduce the risk of a sudden spike in borrowing costs. But moving that average higher won't happen overnight. And, in any case, short-term debt will always be part of the mix.

 

Another potential concern: Treasury inflation-protected securities (TIPS), which have maturities of 5, 10 and 20 years. They make up less than 10% of U.S. debt outstanding currently, but the Government Accountability Office has recommended Treasury offer more TIPS as part of its strategy to lengthen the average maturity on U.S. debt.

 

The higher inflation goes, of course, the more the Treasury will owe on its TIPS.

 

Just last week, the CBO noted that interest paid on U.S. debt had risen 39% during the first five months of this fiscal year relative to the same period a year ago. "That increase is largely a result of adjustments for inflation to indexed securities, which were negative early last year," according to the agency's monthly budget review.

 

What's more, the knock-on effects of inflation are not pretty. A recent report from the IMF outlined some of them: reduced economic growth, increased social and political stress and added strain on the poor -- whose incomes aren't likely to keep pace with the increase in food prices and other basics. That, in turn, could increase pressure on the government to provide aid -- aid which would need to keep pace with inflation.

 

 

 

My link

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That is why the American people voted for four more years of massive debt. :thumbsup:

Perhaps we should take the voting away from the American people and just ask you. You seem to have all the answers. Actually, on second thought, you never have any answers. You just say MK Ultra and Cloward-Piven. And misquote people. So, nevermind. I think it's best we leave it the way it is.

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1. Was this a balanced panel? I'm not trying to discredit you here, I'm just trying to get a sense of whether this was meant to be impartial or if it was essentially a Tea Party rally.

 

2. Did they offer any solutions, or did they say it was beyond all hope?

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1. Was this a balanced panel? I'm not trying to discredit you here, I'm just trying to get a sense of whether this was meant to be impartial or if it was essentially a Tea Party rally.

 

2. Did they offer any solutions, or did they say it was beyond all hope?

 

I left the brochure in my office, but it wasn't a partisan show at all. They bashed everybody, I wish I remembered their names. They talked very very little of politics and focused on the economics of it.

 

They were all in agreement that this started long time ago, we really avoided a recession and possible depression in 2000.

 

The big takeaway was we need to raise taxes and cut entitlements. But that has little to no chance in happening. Imagine of you went to a doctor and you have cancer, "we can make you comfortable and you'll probably die in ten years or we can make you extremely uncomfortable and wait ten years.."

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I left the brochure in my office, but it wasn't a partisan show at all. They bashed everybody, I wish I remembered their names. They talked very very little of politics and focused on the economics of it.

 

They were all in agreement that this started long time ago, we really avoided a recession and possible depression in 2000.

 

The big takeaway was we need to raise taxes and cut entitlements. But that has little to no chance in happening. Imagine of you went to a doctor and you have cancer, "we can make you comfortable and you'll probably die in ten years or we can make you extremely uncomfortable and wait ten years.."

 

That's a little fatalistic, don't you think? If we did substantial across-the-board tax increases and slashed benefits tomorrow, we could probably get out of this relatively quick. Now the reality is that you need to make gradual shifts in that direction rather than an overnight sea change, or else you risk putting the economy into a tailspin. But point is: I doubt America is totally doomed to fail no matter what.

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Perhaps we should take the voting away from the American people and just ask you. You seem to have all the answers. Actually, on second thought, you never have any answers. You just say MK Ultra and Cloward-Piven. And misquote people. So, nevermind. I think it's best we leave it the way it is.

:lol: I guess I hit a nerve. :banana:

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Did any of those experts have an opinion of what to do about that pesky 'old people' problem?

 

Soylent Green.

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And this is the conundrum we are in. To 'fix' this means cuts and changes. And if you touch medicare the AARP will put out commercials against you. If you touch unemployment the other side will put out commercials saying you don't care about the middle class. If you touch tax deductions then some other group will rail against you.

 

What is needed is a somebody willing to jump on a grenade to save us from ourselves. A President or highly touted politician with clout who will do the right thing knowing it will probably cost him his job, but years later the smart people will look back and say "That was the guy that saved us". We need somebody will balls.

 

The only way this will happen is if said politician pretends to be someone else to get elected and then completely changes his/her stance once elected. I wouldn't hold my breath.

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That's a little fatalistic, don't you think? If we did substantial across-the-board tax increases and slashed benefits tomorrow, we could probably get out of this relatively quick. Now the reality is that you need to make gradual shifts in that direction rather than an overnight sea change, or else you risk putting the economy into a tailspin. But point is: I doubt America is totally doomed to fail no matter what.

 

They said even if we did that, it would take years. Wasn't just us, it's everybody. When I get back to my office I can forward their names and the names of their books, it was a really interesting night

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Why doesn't anyone mention government waste? If we got rid of all waste and corruption we would be running a $1+ Trillion surplus. :wall:

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:lol: I guess I hit a nerve. :banana:

:lol:

 

The same nerve that gnats hit when they're flying around me.

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Why doesn't anyone mention government waste? If we got rid of all waste and corruption we would be running a $1+ Trillion surplus. :wall:

Wells sure, but the issue is one man's trash is another mans treasure. That's the whole problem. What you deem as waste some other person thinks is noble and needed. Thats the whole rub.

 

If everyone agreed on what was waste then this topic would be easy peasy lemon squeezy.

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Part of the Fiscal Cliff negociations was to raise the FICA age a couple years to offset costs and due to people living and working longer. Harry Ried and Obama laughed it off and dismissed it upon arrival.

 

Newbie, the truth is that both parties are to blame for this mess. We can point fingers at Bush's wars and Obama's budgets and hell it probably goes back further than that. However the fact remains that Obama is the current President and the Democrats control the Sentate. And they have YET to take this (spending cuts and entitlement reform) seriously.

 

There are two things pissing me off right now. The Redneck right who are screaming for second amendment rights thinking the gov't is going to come into their homes and take away all their guns and the liberal elite who scoff at debt and deficit and refuse to talk about spending cuts.

 

It goes WAY farther back than that. The baby boomers started turning 65 a few years ago. The Ponzi scheme had to crash at some point.

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It goes WAY farther back than that. The baby boomers started turning 65 a few years ago. The Ponzi scheme had to crash at some point.

 

That's a big part of it, when they took that generations money and gave it to the old folks they said "we will take this and give you even more later" do that over forty years and it's easy to see why we're broke

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That's a little fatalistic, don't you think? If we did substantial across-the-board tax increases and slashed benefits tomorrow, we could probably get out of this relatively quick. Now the reality is that you need to make gradual shifts in that direction rather than an overnight sea change, or else you risk putting the economy into a tailspin. But point is: I doubt America is totally doomed to fail no matter what.

Everyone's up in arms about a reduction to spending growth that's scheduled to happen in a few days. The fiscal cliff, which would still have produced one of the largest deficits in this country's history, had everyone acting like it was the apocalypse.

 

We just can't afford to continue these yearly trillion dollar deficits. Every single dollar borrowed now is a dollar (plus interest) sucked out of future economies. We've nearly at the point where the baby boomers are going to be retiring en masse, hurting production and requiring massive government expenditures.

 

Massive changes will hurt the economy now. But long term, is that any worse than not having 20, 25 trillion available to us because we already spent it?

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The big takeaway was we need to raise taxes and cut entitlements.

Now there's two of us. :pointstosky:

 

D@mn it's nice to not be alone on this.

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Everyone's up in arms about a reduction to spending growth that's scheduled to happen in a few days. The fiscal cliff, which would still have produced one of the largest deficits in this country's history, had everyone acting like it was the apocalypse.

 

We just can't afford to continue these yearly trillion dollar deficits. Every single dollar borrowed now is a dollar (plus interest) sucked out of future economies. We've nearly at the point where the baby boomers are going to be retiring en masse, hurting production and requiring massive government expenditures.

 

Massive changes will hurt the economy now. But long term, is that any worse than not having 20, 25 trillion available to us because we already spent it?

 

Stop thinking rationally about this...you have to think like a politician about it.

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The big takeaway was we need to raise taxes and cut entitlements.

and cut defense spending, and foreign aid, and govt employee hiring freezes/pay cuts/lower pensions, etc., and tax exemptions for corporations, and farm subsidies, right? Not just entitlements, right?

 

Any serious solution will include all these things and probably more.

 

This is what makes me think your panel was just tea partiers with their usual axe to grind.

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and cut defense spending, and foreign aid, and govt employee hiring freezes/pay cuts/lower pensions, etc., and tax exemptions for corporations, and farm subsidies, right? Not just entitlements, right?

 

This is what makes me think your panel was just tea partiers with their usual axe to grind.

 

They really weren't, they were for all non-funded liabilities to go away, which is mainly entitlements.

 

ETA: the only time politics even got mentioned besides your usual "when so and so was in office". Was the guy who said "I voted for Obama twice but he doesn't understand it, and Romney didn't understand it either"

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Wells sure, but the issue is one man's trash is another mans treasure. That's the whole problem. What you deem as waste some other person thinks is noble and needed. Thats the whole rub.

 

If everyone agreed on what was waste then this topic would be easy peasy lemon squeezy.

 

No I am talking about the waste within every program. We could keep all of our programs if we cut the waste within them.

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They really weren't, they were for all non-funded liabilities to go away, which is mainly entitlements.

but no cuts to other spending? :wacko:

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They really weren't, they were for all non-funded liabilities to go away, which is mainly entitlements.

 

Well maybe we could fund some of those things if we eliminated some of the others. Like Foreign Aid should be zero. We have no money to give out to anyone, so the fact that we are borrowing to give money to other countries is mind numbing. "Entitlements" is exacerbating the problem but it's not the only place where cuts need to occur.

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and cut defense spending, and foreign aid, and govt employee hiring freezes/pay cuts/lower pensions, etc., and tax exemptions for corporations, and farm subsidies, right? Not just entitlements, right?

 

Any serious solution will include all these things and probably more.

 

This is what makes me think your panel was just tea partiers with their usual axe to grind.

Well, yeah, but in the grande scheme of things entitlements is projected to be like 60% of the whole she-bang. And none of them is long term solvent on the current path.

 

All those things you mention are great and should be part of a grand plan, but entitlements is the coup-de-gras.

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and cut defense spending, and foreign aid, and govt employee hiring freezes/pay cuts/lower pensions, etc., and tax exemptions for corporations, and farm subsidies, right? Not just entitlements, right?

 

Any serious solution will include all these things and probably more.

 

This is what makes me think your panel was just tea partiers with their usual axe to grind.

 

 

This.

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Well, yeah, but in the grande scheme of things entitlements is projected to be like 60% of the whole she-bang. And none of them is long term solvent on the current path.

 

All those things you mention are great and should be part of a grand plan, but entitlements is the coup-de-gras.

 

When we say "entitlements", are we talking about goverment pensions? Or is that just SS, Medicare, unemployment, etc.?

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