Debt will rise to 90% of GDP by 2020

[nonlnear]

Oh we have plenty of money

http://img.search.com/thumb/c/c1/Co...nts_of_the_United_States_money_supply.svg.png

Notice how the top chunk (M3) ends in 2006? We will never know how large the money supply is. That's one of many key policy issues that Obama and Bush are one and the same on. Neither one of them wants anyone to know just how fast the presses are rolling.

That's not inflationary, don't worry, your dollar isn't losing value. How did they dump all that new money into the system, hmmm, i'd say mortgages but that market has been stable so who knows. Not a big fan of fractional banking either, but they were given the constitutional authority to 'create' new money...

The distinction between fractional and full reserve banking only has significance when your money is backed by assets. For fiat currency keeping reserves is fundamentally meaningless because the reserves are stacks of single page fairy tales. Best to do away with the charade entirely and save yourself the warehouse space.

 

[Alistar7]

Notice how the top chunk (M3) ends in 2006? We will never know how large the money supply is. That's one of many key policy issues that Obama and Bush are one and the same on. Neither one of them wants anyone to know just how fast the presses are rolling.

The distinction between fractional and full reserve banking only has significance when your money is backed by assets. For fiat currency keeping reserves is fundamentally meaningless because the reserves are stacks of single page fairy tales. Best to do away with the charade entirely and save yourself the warehouse space.

Not a fan of fiat currency either, every one has eventually failed.

Found a thread from 2004 where I offered the same suggestion of buying silver based on it's market fundamentals alone, but also as a hedge against the declining value of the US dollar, its overproduction, & how all that new money was being pumped into the system through credit/mortgages which were going to bring down the global market.

Looks like I was way off :0

http://forums.anandtech.com/showthread.php?t=1428458&highlight=silver

 

[nonlnear]

Not a fan of fiat currency either, every one has eventually failed.

So has every non-fiat currency. Counting failures in the history books leads to some serious selection bias errors. Also it's all in your definition of failure. Fiat currencies are a resounding success for some.

Asset backed currencies are not a panacea. All currency derives its usefulness from the same underlying principle: the hope that someday you will find a person selling something you want who will want that note or coin enough to transact with you. Gold is just as useless as paper in a post apocalyptic world. The only real benefit to asset backed currencies was that they were a mechanism to depoliticize the size of the money supply in a time when a fiat currency could not be protected from the whim of a monarch. We have a bit more of a firewall between the money supply and the executive these days (although that's debatable) so that benefit is not as important.

For all my snide remarks about fiat currencies I'm not 100% against them. In fact given the choice I would not abolish them at all. There is a different way to open the currency market up to choice between asset backed and fiat currency, and it doesn't require torching the Fed or destabilizing the creditors of the national debt. I'd rather not derail the thread right now though...

 

[Alistar7]

So has every non-fiat currency. Counting failures in the history books leads to some serious selection bias errors. Also it's all in your definition of failure. Fiat currencies are a resounding success for some.

Asset backed currencies are not a panacea. All currency derives its usefulness from the same underlying principle: the hope that someday you will find a person selling something you want who will want that note or coin enough to transact with you. Gold is just as useless as paper in a post apocalyptic world. The only real benefit to asset backed currencies was that they were a mechanism to depoliticize the size of the money supply in a time when a fiat currency could not be protected from the whim of a monarch. We have a bit more of a firewall between the money supply and the executive these days (although that's debatable) so that benefit is not as important.

For all my snide remarks about fiat currencies I'm not 100% against them. In fact given the choice I would not abolish them at all. There is a different way to open the currency market up to choice between asset backed and fiat currency, and it doesn't require torching the Fed or destabilizing the creditors of the national debt. I'd rather not derail the thread right now though...

I'm more concerned about our creditors ability to exert diplomatic & policy influence/control over our executive branch due to our dependence on them for financing our debt.

The only apocalyptic event I was forecasting was financial. I can cover both though, put half your money in silver, the other half in guns & ammo

 

[nonlnear]

I'm more concerned about our creditors ability to exert diplomatic & policy influence/control over our executive branch due to our dependence on them for financing our debt.

And which executive do you imagine wants to be free from foreign influence? Both parties seem hell bent on using the quasi-Constitutional supremacy of international treaties to subvert liberty. Do you think they actually resent foreign influence being wielded by creditors? You can't protect a codependent victim from their abuser until they stop wanting to be codependent. You have to either let nature take its course or drag them away kicking and screaming. Best to plan to enjoy the ride while this country is sold out one treaty and one overreaching SCOTUS ruling at a time...

There are profoundly valuable lessons to be learned from the US of A, but I don't believe there is legitimate hope to actually implement them while that acronym represents a viable institution. If only I were a cynic my world would be much simpler! My big problem is I rejected the notion that I could make the world into the one I wanted it to be. The tides of history really are beyond the control of 99.999...% of individuals (and even the ones who are viewed by history as transformational are often more accidental than they seem in hindsight). My dislike for the world's political system is unlikely to change it so I've found ways to simply enjoy the ride without being too... affected.

The only apocalyptic event I was forecasting was financial. I can cover both though, put half your money in silver, the other half in guns & ammo

If that's what you're really looking at then land is another mandatory piece of your portfolio.

 

[soccerballtux]

Jeez people. This thread (as typical) has become serious Fail.

There is a funny (ha-ha) convergence of semantics, ignorance of facts and circular fallacy going on in this thread based upon a trash piece by the Washington Times.

1) The Net Federal Public Debt in 2020 at worst should be less than $15 trillion, or around 65% of the 2020 GDP $23-$24 trillion.

2) The Washington Times projection of debt under Obama started with 'Net Federal Public Debt' that did not include intergovernmental debt and Federal 'financial assets'.

3) In what was clearly an effort to smear the Obama Administration, the Washington Times for 2020 added back the intergovernmental debt and projected Federal 'financial assets' which 'skewed' the period in question by more than 30%.


I'll say this once so you can feel free to ignore it: Of the projected $9-$10 trillion of expected total Federal debt over the next 10 years, over 30% of the total will be interest we pay to ourselves, and money that we 'borrow' from the trust funds. Two examples:

Example #1
Current "Intergovernmental" debt principle: $4.5 trillion
Accrued interest @ 3.5% / compounded over 5 years: $1.35 trillion

It's that simple.

How do we 'pay' the interest? With Treasury paper, of course.


Example #2

Old Age and Survivors Insurance Trust Fund: Projected Surpluses

FY2010 . . . . . $106 billion
FY2011 . . . . . $123 billion
FY2012 . . . . . $144 billion
FY2013 . . . . . $159 billion
FY2014 . . . . . $169 billion
FY2015 . . . . . $180 billion

That's $879 billion. For a single fund.


So. What do you want to do? Even a 'Phd' can figure this one out.

Do we add $879 billion (plus compounded interest) to the Federal Debt?

Do yah like the idea of a 'lockbox,' now ?

If adopted in 2000 it would have saved over $2 trillion plus interest on the Old Age and Survivors Insurance Trust Fund alone, and generated substantial cash flow that could have been used to fund more infrastructure improvements (without obligating the Federal gov't to repay the principle and interest!).

Oh.

And to the guy questioning the need for substantial infrastructure improvements in the United States ..... the American Society of Civil Engineers disagrees with you.





--

Al Gore is insane.
Insane people sometimes have good ideas. The lockbox was a great idea.

Don't worry guys, I am becoming disenfranchised with Republicans,
but conservatives are still way better than democrats.

I support the lockbox idea.

 

[charrison]

Al Gore is insane.
Insane people sometimes have good ideas. The lockbox was a great idea.

Don't worry guys, I am becoming disenfranchised with Republicans,
but conservatives are still way better than democrats.

I support the lockbox idea.

The problem with the lockbox is no one ever described what the lockbox looked like.

Was the money going to be buried in the whitehouse back yard, thus removing that money from the economy?

Was it going into govt bonds, which basically what it is now?

Invested in private funds, but how do keep the govt from picking winner and losers here...

the lockbox is a nice concept, but far more difficult to implement.

 

[Alistar7]

And which executive do you imagine wants to be free from foreign influence? Both parties seem hell bent on using the quasi-Constitutional supremacy of international treaties to subvert liberty. Do you think they actually resent foreign influence being wielded by creditors? You can't protect a codependent victim from their abuser until they stop wanting to be codependent. You have to either let nature take its course or drag them away kicking and screaming. Best to plan to enjoy the ride while this country is sold out one treaty and one overreaching SCOTUS ruling at a time...

There are profoundly valuable lessons to be learned from the US of A, but I don't believe there is legitimate hope to actually implement them while that acronym represents a viable institution. If only I were a cynic my world would be much simpler! My big problem is I rejected the notion that I could make the world into the one I wanted it to be. The tides of history really are beyond the control of 99.999...% of individuals (and even the ones who are viewed by history as transformational are often more accidental than they seem in hindsight). My dislike for the world's political system is unlikely to change it so I've found ways to simply enjoy the ride without being too... affected.

If that's what you're really looking at then land is another mandatory piece of your portfolio.

Comfortably situated within a few miles of agricultural areas & the largest global supply of fresh water, im good thanks.

China has us by the cajones. While we could devastate them with our military power & reach they have already won the war. Our politicians only care about their own political career, & the SCOTUS has been transformed into just another branch of the two major political parties.

You are right that virtually no individual can alter the world into what they would prefer, all you can do is understand & adapt to the one in which you live.

 

[heyheybooboo]

Al Gore is insane.
Insane people sometimes have good ideas. The lockbox was a great idea.

Don't worry guys, I am becoming disenfranchised with Republicans,
but conservatives are still way better than democrats.

I support the lockbox idea.

Yup. And we play on his Internet - LOL

The problem with the lockbox is no one ever described what the lockbox looked like.

Was the money going to be buried in the whitehouse back yard, thus removing that money from the economy?

Was it going into govt bonds, which basically what it is now?

Invested in private funds, but how do keep the govt from picking winner and losers here...

the lockbox is a nice concept, but far more difficult to implement.

The 'lock-boxed' funds should be loaned to state and local gov'ts for significant infrastructure improvements --- not operating costs.

Interest on the loans fixed at 10-yr bond rate. Principle and interest payments generate future cash flow for the trust funds --- major infrastructure projects pump up tax receipts.

The actual savings would be greater than listed because we will not be paying interest to ourselves for the IOUs.

Comfortably situated within a few miles of agricultural areas & the largest global supply of fresh water, im good thanks.

China has us by the cajones. While we could devastate them with our military power & reach they have already won the war. Our politicians only care about their own political career, & the SCOTUS has been transformed into just another branch of the two major political parties.

You are right that virtually no individual can alter the world into what they would prefer, all you can do is understand & adapt to the one in which you live.

China needs us much more than we need them. Our trade imbalance with China is around $18 billion a month --- their GDP is roughly 30% the size of ours with a population that's almost 5x our size.

What they 'sell' us is far from 'strategic' We could throw up barriers though the WTO on their 'state support' of industry, slap a duty here and there, and hurt them a lot more than they could hurt us.

Our trade imbalance with Mexico and Canada is roughly half that of China. But they sell us oil --- we need that.

Here is more than you will ever want to know about U.S. International Trade in Goods and Services




--

 

[Alistar7]

Yup. And we play on his Internet - LOL










China needs us much more than we need them. Our trade imbalance with China is around $18 billion a month --- their GDP is roughly 30% the size of ours with a population that's almost 5x our size.

What they 'sell' us is far from 'strategic' We could throw up barriers though the WTO on their 'state support' of industry, slap a duty here and there, and hurt them a lot more than they could hurt us.

Our trade imbalance with Mexico and Canada is roughly half that of China. But they sell us oil --- we need that.

Here is more than you will ever want to know about U.S. International Trade in Goods and Services




--

In a time of peace yes we are dependent on each other, but we need them far more than they need us due to our dependence on the sheer amount of our debt that they finance. This has nothing to do with the trade imbalance, & they can find other markets, like India/EU, that can pick up the slack if we were to reduce what we import. You also have to consider they would have no problem letting their economy or citizens suffer far beyond what would be accepted within the US.

 

[werepossum]

I do agree that Obama policies does increase debt I'd say substantially. All that rescue packages, job bills and now this health bill. God all that debt.

But I have a question, do you guys honestly believe if we do it the republican way, then we will keep under budget every year and our financial system will be as sound as a rock, I mean no more recessions, market crashes and no more debt? the medicare will be balanced and health cost will be lowered?

Sorry, but to answer that we need to know if you mean what Republicans say or what Republicans do.