As our national debt grows and our dollar weakens

[nick1985]

..how will we continue to buy goods overseas? Our dollars will buy less and less goods as our national debt climbs, and everyone knows we can no longer produce things in America anymore.

When we have a largely devalued currency and no industrial backbone to produce for ourselves, what will be America's next course of action?

Do you feel we are on this path? Do you feel we are just fine financially?

 

[dullard]

When our national debt grows and our dollar weakens

Give us a rough estimate of when this might happen. I'll accept even a decade range, but I'd perfer you give a year when you think it is realistic to happen.

 

[nick1985]

Give us a rough estimate of when this might happen. I'll accept even a decade range, but I'd perfer you to have some guts and give a year when you think it is realistic to happen.

Sensing some hostility.

http://www.usdebtclock.org/


Its tough to say, its bound to be a slow decline IMO. I'd say within the decade our nation will be feeling the squeeze of a devalued currency.

 

[IceBergSLiM]

how hard do you think it would be to start producing shit again?

 

[dullard]

Sensing some hostility.

http://www.usdebtclock.org/

Its tough to say, its bound to be a slow decline IMO. I'd say within the decade our nation will be feeling the squeeze of a devalued currency.

Sorry, I didn't mean to sound hostile. I'll edit it to sound less severe.

I ask for two reasons. (1) It is hard to answer your question without that information. Suppose that happens in 50 years. Do I even care? (2) Some P&N posters keep saying that the debt will grow and the dollar will weaken soon, but then turn around and claim that no one ever said such a thing. I simply wanted to get some evidence of people saying that.

 

[nick1985]

how hard do you think it would be to start producing shit again?

I dont know. I mean, you cant just click your heals and have a strong industrial nation in an instant. I really just dont know.

 

[marincounty]

We'll start another war?

 

[nick1985]

Sorry, I didn't mean to sound hostile. I'll edit it to sound less severe.

I ask for two reasons. (1) It is hard to answer your question without that information. Suppose that happens in 50 years. Do I even care? (2) Some P&N posters keep saying that the debt will grow and the dollar will weaken soon, but then turn around and claim that no one ever said such a thing. I simply wanted to get some evidence of people saying that.

Well you have me on the record:

Our debt will climb, there is no end in sight to quelming our increasing debt, and with increased debt comes a devalued dollar.


I admit, it is hard to answer. More of a prediction thread than anything I suppose...I just see this country on a track to financial ruin. I hope I'm wrong.

 

[Dissipate]

Well you have me on the record:

Our debt will climb, there is no end in sight to quelming our increasing debt, and with increased debt comes a devalued dollar.


I admit, it is hard to answer. More of a prediction thread than anything I suppose...I just see this country on a track to financial ruin. I hope I'm wrong.

Did you see the official dollar collapse thread here: http://forums.anandtech.com/showthread.php?t=2054916

Not to degrade the topic but this is kind of a repost.

 

[IceBergSLiM]

Well you have me on the record:

Our debt will climb, there is no end in sight to quelming our increasing debt, and with increased debt comes a devalued dollar.


I admit, it is hard to answer. More of a prediction thread than anything I suppose...I just see this country on a track to financial ruin. I hope I'm wrong.

devalued compared to what?

 

[Andrew1990]

We'll start another war?

In all reality, that may be one of the best options in my eyes....

but not a conflict, but a real war. It seems whenever the USA is in a Major War(Revolution, Civil, WW1, WW2) we always come out ahead and have a booming period.



Of course the hippies dont want to do that because they believe that not one person should risk their lives for anything and just remain sheeple.

 

[JohnOfSheffield]

You could always apply to become part of the EMU, however, since your economy hasn't been good enough to even get close for the last 5 years they probably wouldn't accept you.

Greece is in the shitter because they need to adjust to the EMU rules, all in all, they have less of a debt than the US will have in the next 20 years regardless of what happens now.

Thing is, the EMU was good at tightening things up for nations within it, the US just ran with debt when you had the chance to fix your finances and now that you're in the shitter, you are REALLY in the shitter.

Even if things change, you'll still be in the shitter while the rest of the world is free to spend.

You do realise who is to blame for that?

 

[yllus]

Give us a rough estimate of when this might happen. I'll accept even a decade range, but I'd perfer you give a year when you think it is realistic to happen.

There's some overlap here with a thread I made some weeks ago entitled, The Economist graphs what has contributed to the U.S. federal deficit (wars, TARP...). Here are some relevant bits that should help frame the argument for this thread.

Deficits past and future: A tale of two charts

Have a look at the chart below (of debt held by the public as a share of GDP), which is taken from the Congressional Budget Office's report on the long-term budget outlook.

That massive increase there at the end is due to two things: growth in spending on Medicare and Medicaid, and growth in interest payments on the debt. But the real problem is Medicare and Medicaid. By about 2070, spending on Social Security, Medicare, and Medicaid alone will outstrip revenues.

 

[JohnOfSheffield]

In all reality, that may be one of the best options in my eyes....

but not a conflict, but a real war. It seems whenever the USA is in a Major War(Revolution, Civil, WW1, WW2) we always come out ahead and have a booming period.



Of course the hippies dont want to do that because they believe that not one person should risk their lives for anything and just remain sheeple.

Yeah, start another war you can't win.

That will be awesome.

There is a reason for Einsteins comment (i don't know how WWIII will be fought but WWIIII will be fought with sticks), no nuclear power can start a world war these days, those days are over.

 

[dullard]

..how will we continue to buy goods overseas? Our dollars will buy less and less goods as our national debt climbs, and everyone knows we can no longer produce things in America anymore.

When we have a largely devalued currency and no industrial backbone to produce for ourselves, what will be America's next course of action?

Do you feel we are on this path? Do you feel we are just fine financially?

I agree that we will eventually go onto that path. But, I also think that we are just fine financially. They are not mutually exclusive.

First of all, our debt has been growing more or less for decades. We've been just fine. A person can easilly handle debt that is 3 to 4 times his/her income. Think of a person making $100k/year, he can afford a $300k house. It may be wiser to choose a cheaper house if possible, but a $300k house is quite doable. As a country, I believe the same cutoff should hold. Our debt is still less than one year's GDP. It is theoretically possible to pay off the national debt entirely in one year and still have money to spare. Thus, I think we are still fine financially.

We do have a lot to worry about with debt. There is no reason that debt should be accelerating as much now that we seem to be out of this recession. The health care bill passed yesterday is a strong step to ending medicare, now we need to finish it off AND fix social security. If we can do those two things, then the debt will not spiral out of control.

As for the dollar weakening, I just don't see that happening much in the near future. Five years ago today, $1 bought 0.75 Euros. Three years ago today, $1 bought 0.75 Euros. One year ago today, $1 bought 0.74 Euros. Right now, $1 buys 0.74 Euros. I just don't see the dollar weakening YET. We just went through a major recession and the dollar didn't budge (it did waver but it went right back).

However, the dollar WILL weaken eventually. No superpower stays in power forever. That is why I asked "when" above. Although I think it is more on a 50-year time frame, I'll use your 10 year date for my post.

In 10 years, we'll have to do some rearrangments to our life. We will still have abundant natural resources in 10 years. We'll still have one of the highest educated populations in 10 years. But, when that dollar weakens, we'll have trouble buying cheap Chinese imports. Our businesses will be helped. They can export again profitably and they would have far less international competition for their products. Manufacturing can and will return. But, in exchange, we can't have cheap (cheap in price and often in quality) gadgets and clothing. We as a country will be shipping our goods overseas and not keeping them. Our citizens will have to do with less. Myself, I don't think I'll be too harmed by this, but some people will be in for quite a shock.

But, that can't happen forever either. A country cannot ship all of its goods forever. Each trade surplus we have will strengthen our dollar back. It'll be painful, but we'll get through it stronger.

 

[StageLeft]

In all reality, that may be one of the best options in my eyes....

but not a conflict, but a real war. It seems whenever the USA is in a Major War(Revolution, Civil, WW1, WW2) we always come out ahead and have a booming period.



Of course the hippies dont want to do that because they believe that not one person should risk their lives for anything and just remain sheeple.

If a hippie is a person who thinks it's not worth seizing other people's kids to fire guns as a way to stimulate the economy, guilty as charged.

JohnOfSheffieldThat's quite funny what you wrote, normally you use less sarcasm in your posts, though. Europe is pretty heftily fvcked, too. Last year I think it was the Bank of England for the first time in a few hundred years started literally printing money; "quantitative easing". "Tightening" not found.

Anyway if all countries--and indeed all Western powers are--terrible with their budgets and debt hungry consumer whores, then really they ought in many cases to simply devalue against each other. The lower nations such as China can pick up some slack though, and the first world will lose some quality of life as the world's dump nations pick it up. It's going to obviously be a long time (hundred years? Never?) before China is the place to live over the US, though, or other 1st world nations.

 

[Hacp]

As for the dollar weakening, I just don't see that happening much in the near future. Five years ago today, $1 bought 0.75 Euros. Three years ago today, $1 bought 0.75 Euros. One year ago today, $1 bought 0.74 Euros. Right now, $1 buys 0.74 Euros. I just don't see the dollar weakening YET. We just went through a major recession and the dollar didn't budge (it did waver but it went right back).

Didn't Europe go through a major recession as well?

 

[ShawnD1]

Do you feel we are on this path? Do you feel we are just fine financially?

The great thing about not being the worst is that you get to look at other countries fail and see why it failed. Britain's debt is huge. Wait until Britain fails and watch what they do to fix it.

 

[Slew Foot]

I agree that we will eventually go onto that path. But, I also think that we are just fine financially. They are not mutually exclusive.

First of all, our debt has been growing more or less for decades. We've been just fine. A person can easilly handle debt that is 3 to 4 times his/her income. Think of a person making $100k/year, he can afford a $300k house. It may be wiser to choose a cheaper house if possible, but a $300k house is quite doable. As a country, I believe the same cutoff should hold. Our debt is still less than one year's GDP. It is theoretically possible to pay off the national debt entirely in one year and still have money to spare. Thus, I think we are still fine financially.

Problem with that is that you look at Debt vs GDP, as opposed to debt vs tax revenue. Your way of thinking implies that the government makes every citizen a slave for a year, if that happens, expect the guns to come out.

Off the top of my head, debt is around 14 trillion, which is about the same as gdp, tax revenues are around 2.5 trillion, so the debt is more like 6 times income, which would be like the government trying to buy a 600K house on that same 100k income.

 

[dullard]

Didn't Europe go through a major recession as well?

Yes. Our economy is so much more of a global economy. The idea of a major currency skyrocketting or plummetting gets harder the more global it gets. But the Euro behaved much like the dollar. The Yuan is pegged to the dollar and thus barely moved. The dollar strengthened against the pound. The dollar weakened slightly against the yen, but nothing earth shattering. What is left of real importance? I guess Brazil did well.

 

[Acanthus]

Well you have me on the record:

Our debt will climb, there is no end in sight to quelming our increasing debt, and with increased debt comes a devalued dollar.


I admit, it is hard to answer. More of a prediction thread than anything I suppose...I just see this country on a track to financial ruin. I hope I'm wrong.

The dollar doesn't devalue based on debt alone.

There are a crapton of relative factors, but the big two are the perceived value of the dollar... and if we print more money.

Financial reforms on derivatives will put a stop on the "electronic money bubble" that is created from banks circumventing their capital requirements.

We haven't made any real moves to devalue our currency.

The CPI and PPI have been falling hard lately. It's hard to start crying inflation at this point.

 

[bamacre]

In all reality, that may be one of the best options in my eyes....

but not a conflict, but a real war. It seems whenever the USA is in a Major War(Revolution, Civil, WW1, WW2) we always come out ahead and have a booming period.

Of course the hippies dont want to do that because they believe that not one person should risk their lives for anything and just remain sheeple.

Why people think going to war is good for the economy is beyond me. How can it be? How can spending our resources on bombs and tanks instead of things we could actually use be good for our economy?

 

[dullard]

Problem with that is that you look at Debt vs GDP, as opposed to debt vs tax revenue. Your way of thinking implies that the government makes every citizen a slave for a year, if that happens, expect the guns to come out.

Off the top of my head, debt is around 14 trillion, which is about the same as gdp, tax revenues are around 2.5 trillion, so the debt is more like 6 times income, which would be like the government trying to buy a 600K house on that same 100k income.

I'll give you that method (and people say I never let others win in online debates). I do agree that we'd be up in arms and wouldn't work for pennies on the dollar.

Debt is 12.6 trillion, revenues are about 2.25 trillion. Making the ratio 5:1. But, that is in a down year. Under Clinton federal revenue was up to 21% of GDP. Due to the Bush and Obama tax cuts, federal revenue is now only 16% of GDP. If we returned to the tax that we had under Clinton, the debt to tax revenue would be close to 4:1. That is still a managable ratio. But, we need to tackle long term entitlements to keep us in the proper ratio. SS really must be fixed.

 

[Fenixgoon]

I agree that we will eventually go onto that path. But, I also think that we are just fine financially. They are not mutually exclusive.

First of all, our debt has been growing more or less for decades. We've been just fine. A person can easilly handle debt that is 3 to 4 times his/her income. Think of a person making $100k/year, he can afford a $300k house. It may be wiser to choose a cheaper house if possible, but a $300k house is quite doable. As a country, I believe the same cutoff should hold. Our debt is still less than one year's GDP. It is theoretically possible to pay off the national debt entirely in one year and still have money to spare. Thus, I think we are still fine financially.

the person who buys a 300k house also doesn't pay interest only if they intend on keeping said house, which is exactly what we're doing.

how do you suppose we pay off our debt? GDP doesn't actually stipulate the amount of cash on hand (at least AFAIK). that's one thing i don't like about it as an economic indicator, but there's really nothing else to go by.

i only see the govt paying off debt, and its yearly income is in the 2-3T range.

 

[JohnOfSheffield]

If a hippie is a person who thinks it's not worth seizing other people's kids to fire guns as a way to stimulate the economy, guilty as charged.

JohnOfSheffieldThat's quite funny what you wrote, normally you use less sarcasm in your posts, though. Europe is pretty heftily fvcked, too. Last year I think it was the Bank of England for the first time in a few hundred years started literally printing money; "quantitative easing". "Tightening" not found.

Anyway if all countries--and indeed all Western powers are--terrible with their budgets and debt hungry consumer whores, then really they ought in many cases to simply devalue against each other. The lower nations such as China can pick up some slack though, and the first world will lose some quality of life as the world's dump nations pick it up. It's going to obviously be a long time (hundred years? Never?) before China is the place to live over the US, though, or other 1st world nations.

Son, England isn't part of the EMU, if we were our currency would be Euros.

Reading posts and comprehending what they say is something you should concentrate on before you try to responding to them.

Yeah, we're in bad shape, mostly because of our ties to nations in the shitter.