Why would anyone believe America is broke?

[ProudLefty]

"By Joseph N. DiStefano

Is the United States really "broke," as Speaker of the House John A. Boehner (R., Ohio) keeps telling us?

"Wrong," reports David J. Lynch of Bloomberg L.P.:

* Investors are still buying two-year U.S. Treasury notes, which yield less than 1 percent interest, a sign that traders, investors, and bankers believe the United States is more likely than any other nation to pay its bills.

* Americans pay lower taxes to the national government, as a percentage of gross domestic product (GDP), than they have since 1950: just $1 of every $7.

Yes, the deficit is huge, and the national debt is soaring. But the tax bite in the United States is lower than in the rich nations of Europe and Asia, and more like Mexico or Chile. Our soaring debt load is still lower than the debt of most of our rivals.

So what's the problem? The United States has cut tax rates faster than it has cut spending on the wars in Iraq and Afghanistan, and on health-care subsidies for retirees and poor people.

The nation could (and should, and will in time have to) pay its bills faster, Lynch concludes. It just prefers to borrow, at today's cheap rates, instead of forcing deep budget cuts - or boosting anyone's taxes. That would be deeply unpopular with Boehner's Congress. ..."

http://www.philly.com/philly/columnists/joseph-distefano/20110308_PhillyDeals__Is_the_U_S__broke__Not_so__he_says.html

This idea that America is broke is just more fear-mongering from a party that knows that to win, it has to terrify voters. They've terrified voters with fears of Sharia Law in the US, gay marriage, gays in the military, terrorists at every bus stop, and invasions of illegal aliens.

Its all about terrifying those who can't be bothered with thinking.

 

[Gipper]

"By Joseph N. DiStefano

Is the United States really "broke," as Speaker of the House John A. Boehner (R., Ohio) keeps telling us?

"Wrong," reports David J. Lynch of Bloomberg L.P.:

* Investors are still buying two-year U.S. Treasury notes, which yield less than 1 percent interest, a sign that traders, investors, and bankers believe the United States is more likely than any other nation to pay its bills.

* Americans pay lower taxes to the national government, as a percentage of gross domestic product (GDP), than they have since 1950: just $1 of every $7.

Yes, the deficit is huge, and the national debt is soaring. But the tax bite in the United States is lower than in the rich nations of Europe and Asia, and more like Mexico or Chile. Our soaring debt load is still lower than the debt of most of our rivals.

So what's the problem? The United States has cut tax rates faster than it has cut spending on the wars in Iraq and Afghanistan, and on health-care subsidies for retirees and poor people.

The nation could (and should, and will in time have to) pay its bills faster, Lynch concludes. It just prefers to borrow, at today's cheap rates, instead of forcing deep budget cuts - or boosting anyone's taxes. That would be deeply unpopular with Boehner's Congress. ..."

http://www.philly.com/philly/columnists/joseph-distefano/20110308_PhillyDeals__Is_the_U_S__broke__Not_so__he_says.html

This idea that America is broke is just more fear-mongering from a party that knows that to win, it has to terrify voters. They've terrified voters with fears of Sharia Law in the US, gay marriage, gays in the military, terrorists at every bus stop, and invasions of illegal aliens.

Its all about terrifying those who can't be bothered with thinking.

Oh my. The mind of liberals.

It has been proven over and over the most the stinking progressives can take out of our economy in taxation is around 18-20%...NO MATTER what the F**K the TAX RATE IS. Why do you insist in believing in FANTASIES?

And, of course you would love an economy like those in Europe with its permanently high unemployment, high government dependence, and low GDP growth. We are well on the way to that wonderful existence thanks to Big Ears.

You claim the Rs are fear mongering. Most absurd. The government debt has exploded under your Messiah and you chose to ignore it. And, the fear mongering is ALL on your side. Claiming the Rs want to kill grandma and stave the kiddies...no doubt you believe that LIE too.

 

[ThisTooShallPass]

Hmmm.

* Investors are still buying two-year U.S. Treasury notes, which yield less than 1 percent interest, a sign that traders, investors, and bankers believe the United States is more likely than any other nation to pay its bills.

As the last several years have demonstrated, people are not necessarily economically rational.

* Americans pay lower taxes to the national government, as a percentage of gross domestic product (GDP), than they have since 1950: just $1 of every $7.

Yes, the deficit is huge, and the national debt is soaring. But the tax bite in the United States is lower than in the rich nations of Europe and Asia, and more like Mexico or Chile. Our soaring debt load is still lower than the debt of most of our rivals.

The historical maximum amount of GDP that can be taxed (per Hauser's law) is around 19.5%. That means we can extract perhaps half a trillion extra in taxes.

That still leaves $1.2 billion or so to cut from last year's deficit.

Moreover, when people say "America is broke," they are talking about another noteworthy phenomenon. The economy sucks, and even so the only thing that has been sustaining it is massive suffusions of government debt. Cut the deficit and tax receipts fall along with GDP. This actually reduces the effectiveness of tax hikes and will require further budget slashing.

This is indeed a very serious problem.

 

[BigRob]

"By Joseph N. DiStefano

Is the United States really "broke," as Speaker of the House John A. Boehner (R., Ohio) keeps telling us?

"Wrong," reports David J. Lynch of Bloomberg L.P.:

* Investors are still buying two-year U.S. Treasury notes, which yield less than 1 percent interest, a sign that traders, investors, and bankers believe the United States is more likely than any other nation to pay its bills.

* Americans pay lower taxes to the national government, as a percentage of gross domestic product (GDP), than they have since 1950: just $1 of every $7.

Yes, the deficit is huge, and the national debt is soaring. But the tax bite in the United States is lower than in the rich nations of Europe and Asia, and more like Mexico or Chile. Our soaring debt load is still lower than the debt of most of our rivals.

So what's the problem? The United States has cut tax rates faster than it has cut spending on the wars in Iraq and Afghanistan, and on health-care subsidies for retirees and poor people.

The nation could (and should, and will in time have to) pay its bills faster, Lynch concludes. It just prefers to borrow, at today's cheap rates, instead of forcing deep budget cuts - or boosting anyone's taxes. That would be deeply unpopular with Boehner's Congress. ..."

http://www.philly.com/philly/columnists/joseph-distefano/20110308_PhillyDeals__Is_the_U_S__broke__Not_so__he_says.html

This idea that America is broke is just more fear-mongering from a party that knows that to win, it has to terrify voters. They've terrified voters with fears of Sharia Law in the US, gay marriage, gays in the military, terrorists at every bus stop, and invasions of illegal aliens.

Its all about terrifying those who can't be bothered with thinking.

You have a point, technically as long as someone gives you credit you are not broke....

That said, at some point that credit come due, and since we have no way of paying it back at this point, it is like we are in a car speeding towards a brick wall, and we are telling ourselves we are OK because we have not hit the wall yet.

In that small snapshot we are technically OK, but we are still speeding towards the wall with no brakes and no steering.

 

[ProudLefty]

Oh my. The mind of liberals.

It has been proven over and over the most the stinking progressives can take out of our economy in taxation is around 18-20%...NO MATTER what the F**K the TAX RATE IS. Why do you insist in believing in FANTASIES?

And, of course you would love an economy like those in Europe with its permanently high unemployment, high government dependence, and low GDP growth. We are well on the way to that wonderful existence thanks to Big Ears.

You claim the Rs are fear mongering. Most absurd. The government debt has exploded under your Messiah and you chose to ignore it. And, the fear mongering is ALL on your side. Claiming the Rs want to kill grandma and stave the kiddies...no doubt you believe that LIE too.

You make the assertion that "... Europe with its permanently high unemployment, high government dependence, and low GDP growth. ..."

Care to back it up? Most of northern Europe has a stronger employment record, over decades, than we do. There are strong government/industry/union interactions, a reasonably high GDP growth rate, and acceptable tax burdens. Even southern European countries are growing more stable as time passes.

So, I seriously question that you can back up your assertion.

 

[ProudLefty]

You have a point, technically as long as someone gives you credit you are not broke....

That said, at some point that credit come due, and since we have no way of paying it back at this point, it is like we are in a car speeding towards a brick wall, and we are telling ourselves we are OK because we have not hit the wall yet.

In that small snapshot we are technically OK, but we are still speeding towards the wall with no brakes and no steering.

If we are using analogies, here's one for you.

First though, can we agree that when a treasury bond comes due, all the owner of that bond can receive for it is US dollars. Not gold, not silver, not bushels of wheat, not a campsite in a national park. Just US dollars.

Now, for the analogy: You pay your bills with special checks. The special checks are drawn on your own private bank, and they can only be redeemed from your private bank in the form of either another, fresh check, or in currency with your own face as the image on the front of the YourAll dollars. Everyone loves YourAll dollars and YourAll checks.

OK. so what happens when they don't love your dollars anymore? Do you have to give them gold? nah. You agreed to give them YourAll dollars, so you give them YourAll dollars. Now, they know this, so they never really quite dare be the one that destroys the credibility of their own YourAll dollars.

In other words, no one wants the US dollar to fail catastrophically, especially the Chinese. So, keep your wits about you, don't let the fruitcakes scare you.

 

[BigRob]

If we are using analogies, here's one for you.

First though, can we agree that when a treasury bond comes due, all the owner of that bond can receive for it is US dollars. Not gold, not silver, not bushels of wheat, not a campsite in a national park. Just US dollars.

Now, for the analogy: You pay your bills with special checks. The special checks are drawn on your own private bank, and they can only be redeemed from your private bank in the form of either another, fresh check, or in currency with your own face as the image on the front of the YourAll dollars. Everyone loves YourAll dollars and YourAll checks.

OK. so what happens when they don't love your dollars anymore? Do you have to give them gold? nah. You agreed to give them YourAll dollars, so you give them YourAll dollars. Now, they know this, so they never really quite dare be the one that destroys the credibility of their own YourAll dollars.

In other words, no one wants the US dollar to fail catastrophically, especially the Chinese. So, keep your wits about you, don't let the fruitcakes scare you.

I agree no one wants to see the dollar fail catastrophically, but at some point no one will continue to buy your debt...especially at such low rates. This will result in being forced to offer higher rates, which ultimately will result in an inability to pay the interest without printing more dollars.

That just devalues the currency even further, and ultimately the dollar itself becomes worthless.

 

[ProudLefty]

I agree no one wants to see the dollar fail catastrophically, but at some point no one will continue to buy your debt...especially at such low rates. This will result in being forced to offer higher rates, which ultimately will result in an inability to pay the interest without printing more dollars.

That just devalues the currency even further, and ultimately the dollar itself becomes worthless.

That would be true if we let the current trend continue. That is what really surprises me about the Republican responses.

I would think the wealthy would be tugging on Republican shirt tails and telling them to back off. I mean, who has the more to lose than the wealthy if the dollar becomes worthless, eh?

Actually there is a whole Mexican standoff sort of approach to this problem that most economists understand. A 2% to 2.5% inflation rate, using the rule of 72, means that things double every 30 years or so, which is a manageable scenario. From the standpoint of the very wealthy, they also understand, or should, that a rising standard of living for everyone provides them with customers, so they do better, too. Who is "everyone" in that sentence? Why, the whole entire fargin' world, thats who.

 

[dogtowner]

Even Obama's money people admit that our current state is unsustainable. And the rastings organizations have said emphatically so. We haven't crossed the line that we can't pay our debt service but are you waiting for that to declare we're up the creek ?

 

[BigRob]

That would be true if we let the current trend continue. That is what really surprises me about the Republican responses.

I would think the wealthy would be tugging on Republican shirt tails and telling them to back off. I mean, who has the more to lose than the wealthy if the dollar becomes worthless, eh?

As one of those "wealthy" I can tell you that I would weather a dollar collapse far better than the average Joe. It is far easier for me to invest in foreign markets, and buy other various currencies (and make good money from a dollar collapse depending on how it played out) than it would be for a lot of people.

As for the trend, what are you seeing to show us that the trend will not continue?

Actually there is a whole Mexican standoff sort of approach to this problem that most economists understand. A 2% to 2.5% inflation rate, using the rule of 72, means that things double every 30 years or so, which is a manageable scenario. From the standpoint of the very wealthy, they also understand, or should, that a rising standard of living for everyone provides them with customers, so they do better, too. Who is "everyone" in that sentence? Why, the whole entire fargin' world, thats who.

So it is your assertion we will simply inflate our way out of 14 trillion dollar deficit?

 

[ProudLefty]

As one of those "wealthy" I can tell you that I would weather a dollar collapse far better than the average Joe. It is far easier for me to invest in foreign markets, and buy other various currencies (and make good money from a dollar collapse depending on how it played out) than it would be for a lot of people.

As for the trend, what are you seeing to show us that the trend will not continue?



So it is your assertion we will simply inflate our way out of 14 trillion dollar deficit?

My point isn't that you would weather a storm better than others. My point is: Why have the storm at all? Its not necessary.

As to buying other currencies... bad move. You need scarce commodities. Art, Jewels, real estate, precious metals, food producing activities, and rare collectibles.

My assertion is that we are not in serious trouble. We are having a game run on us, and we are being suckered by it.

My assertion is that if the wealthy want to stay wealthy they best take care of their flock. The wealthy need an active and well-off middle class. If it means paying a few more dollars in taxes to get through the storm, so what.

My assertion is that a modest inflation rate is the lubrication that eases the pain of modest errors and mistakes in the market place. Because the interest rate reflects the real interest rate Plus inflation, the wealthy are protected, and the middle class can make a go of it over lifetime.

In other words, it was all working pretty well up until the GW team "fixed" it for us.

 

[BigRob]

My point isn't that you would weather a storm better than others. My point is: Why have the storm at all? Its not necessary.

I would rather not have a storm either, but we cannot spend money into oblivion and expect no consequences.

As to buying other currencies... bad move. You need scarce commodities. Art, Jewels, real estate, precious metals, food producing activities, and rare collectibles.

I think that depends how bad such a storm would actually be.

My assertion is that we are not in serious trouble. We are having a game run on us, and we are being suckered by it.

What game is that?

My assertion is that if the wealthy want to stay wealthy they best take care of their flock. The wealthy need an active and well-off middle class. If it means paying a few more dollars in taxes to get through the storm, so what.

The CBO has estimated income tax levels would have to rise to 90% on those making $200,000 or more a year and it still wouldn't even balance the budget...this is not about "pay a little more in taxes."

My assertion is that a modest inflation rate is the lubrication that eases the pain of modest errors and mistakes in the market place. Because the interest rate reflects the real interest rate Plus inflation, the wealthy are protected, and the middle class can make a go of it over lifetime.

What is your idea of a modest inflation rate?

In other words, it was all working pretty well up until the GW team "fixed" it for us.

I am not sure what to take from this exactly. Be a little more specific?

 

[ProudLefty]

OK. Here's my opinion, based on experience and history. I tried to find links to back me up but my Goo-fu is technically classified as "sucky."

Think of the consequences of an inflation rate between 2% and 2.5% as a target. Using the rule of 72, we would recognize that this means a dollar doubles about every 30 to 35 years.

This is a typical working life for most couples, and is about the life of most home mortgages, right?

Lets say you have money to lend to finance that couple's mortgage, and you want a fair return which is a modestly higher-than-prime-rate-of interest, plus the inflation rate. You are happy with that return, but of course you worry about the equity position too, since what good is getting the interest if you lose the principle, right?

So, what does that modest inflation rate do for the parties to that home purchase.

What does it do for you as the lender? Over the life of the mortgage the home rises in value, the payments become easier for the buyers to make, and your risk as the lender drops off dramatically after the first 5 years. Thats a great outlook for you, eh? A good, solid, 30 year investment with little risk during the past 25 years.

What does it do for the community? Home owners feel closer to a community than renters. Homeowners are more stable in the community than renters who are moving in and out. That means more involvement, and a better community for everyone.

Finally, what does it do for the couple? It gives them a family center, a place to raise children, and a place to focus their energies for their own well-being. As pay raises come along, they have more money and can fix up the place, add a room, get some nice landscaping, and generally enhance the value of their home. The home develops significant equity for them, and that equity can bridge them through a rough patch, a bad illness, or a disaster. At the end of their working lives they have a home more or less paid for, worth twice what they paid for it, and probably more besides, if they worked on it.

Consider the same scenario with 0% inflation. Any little hiccup during that 35 years and the whole thing comes tumbling down.

Now, if this does not make sense to you, blame the messenger for not getting the message right. But this is the way American economics has been run from the 1930s to the 2000s. Maybe a lot longer.

 

[steveox]

I believe were going broke cause liberals cant balance a budget.The Spend ,spend,spend and then they Tax,,Tax,,Tax. Then they do this

 

[Openmind]

Oh my. The mind of liberals.

It has been proven over and over the most the stinking progressives can take out of our economy in taxation is around 18-20%...NO MATTER what the F**K the TAX RATE IS. Why do you insist in believing in FANTASIES?

And, of course you would love an economy like those in Europe with its permanently high unemployment, high government dependence, and low GDP growth. We are well on the way to that wonderful existence thanks to Big Ears.

You claim the Rs are fear mongering. Most absurd. The government debt has exploded under your Messiah and you chose to ignore it. And, the fear mongering is ALL on your side. Claiming the Rs want to kill grandma and stave the kiddies...no doubt you believe that LIE too.

Come on, Gipper, be honest.
You know that the government debt had already exploded under Bush, and that the reason it got even higher is because we were on that trend, we are now paying for the "spend now and save later" that Bush started.
Second, who was the first to talk about "death panels?" It wasn't the liberals!
The only people calling Obama the Messiah have always been Republicans.

And the economy in Europe is doing just fine, at least as fine as we are. Their GDP as a whole is larger than ours!
In fact, you may be interested in reading this article by Reuters:

Who wins in U.S. vs Europe contest?
Feb 12, 2010 09:43 EST
inShare.Bernd Debusmann | economy | EU | Europe | U.S.
In these days of renewed gloom about the future of Europe, a quick test is in order. Who has the world’s biggest economy? A) The United States B) China/Asia C) Europe? Who has the most Fortune 500 companies? A) The United States B) China C) Europe. Who attracts most U.S. investment? A) Europe B) China C) Asia.

The correct answer in each case is Europe, short for the 27-member European Union (EU), a region with 500 million citizens. They produce an economy almost as large as the United States and China combined but have, so far, largely failed to make much of a dent in American perceptions that theirs is a collection of cradle-to-grave nanny states doomed to be left behind in a 21st century that will belong to China.

Another source of information re: GDP of Europe vs the US is Wikepedia (the EU has a GDP of over 16,000, the US is under 15,000).

And their people take a lot more vacation, have a lot more fun on a daily basis, and do not fall through the cracks as easily as we do (due to universal healthcare, child benefits, labor laws, prolongued unemployment, etc. . .)

I can totally understand that you don't like Obama, that you are a Republican and you want the Republicans to win the next election. No problem with that! But, escaping from reality, and looking at the situation through deforming glasses is not going to do any good. If you want to change the situation, if you want a Republican to be the next POTUS, focus on electing a viable candidate in the primary election. Beating on Obama is not going to do that! Just look at history, both Reagan and Clinton had approval rating LOWER than Obama at this time in their presidency. And still they won a second term.

It is now delusion and hatred that will move your cause forward. It's clarity of mind, honesty, and a good plan.

Just throwing concepts that are not true only complicates the issue. Then people do not address what NEEDS to be address, because they live in lala land!