Why the Us will fail -> Japan is now 1 quadrillion yen in debt

[JEDI]

http://money.cnn.com/2013/08/09/news/economy/japan-debt-quadrillion/index.html?iid=Lead

1,008.6 trillion yen. In U.S. dollars, it's $10.5 trillion

Japan has more debt as a percentage of GDP than any other developed nation.
Japan's gross public debt is projected to hit 230% of GDP by 2014 after years of sustained deficits.


Japan is proof that you cant borrow and spend your way into prosperity.

The US is only ~100% of GDP in debt.
but i dont see 2016 elections helping the debt any.

 

[Bowfinger]

I don't see how your article supports your premise at all: "Japan's debt shows why the U.S. will fail" (paraphrased). Japan's debt to GDP ratio is over double ours, yet Japan has not failed. It's only been cautioned that it must do a better job of reducing debt. So how does that translate into the U.S. failing? If anything, it would suggest the U.S. can double its debt without dire consequences. I'm not suggesting that's a smart course of action, of course, but your article supports that conclusion much more than the impending doom of America.

 

[Jaskalas]

The suggestion is that ours will be equally out of control.

 

[Bowfinger]

The suggestion is that ours will be equally out of control.

Our annual deficit is falling. We have a long, challenging road ahead, but we're trending in the right direction.

 

[Doc Savage Fan]

Instead of reducing spending, Japan continues with their 'stimulus' efforts in an attempt to spend their way to prosperity. So far it's not working out very well as Japan's current GDP to Debt ratio is now at 230%!

 

[sunzt]

Instead of reducing spending, Japan continues with their 'stimulus' efforts in an attempt to spend their way to prosperity. So far it's not working out very well as Japan's current GDP to Debt ratio is now at 230%!

How does a rising GDP to debt ratio any indication of failure in their stimulus efforts, especially since it just started within the last year? Don't you understand stimulus implies higher GDP/debt when it first starts?

Regardless, they couldn't "cut their way" to prosperity either since they already were headed into a deflation death spiral.

 

[Bowfinger]

Instead of reducing spending, Japan continues with their 'stimulus' efforts in an attempt to spend their way to prosperity. So far it's not working out very well as Japan's current GDP to Debt ratio is now at 230%!

Sorry, that's a nonsensical comment. Clearly, spending borrowed money increases debt. No rational person expects otherwise. The question is whether that spending is having a positive effect on the economy, or perhaps more accurately, a sufficient positive effect on the economy. Show us how Japan's economy is doing and we then have a basis for discussing whether the stimulus borrowing was worthwhile.

 

[Doc Savage Fan]

Sorry, that's a nonsensical comment. Clearly, spending borrowed money increases debt. No rational person expects otherwise. The question is whether that spending is having a positive effect on the economy, or perhaps more accurately, a sufficient positive effect on the economy. Show us how Japan's economy is doing and we then have a basis for discussing whether the stimulus borrowing was worthwhile.

You have to service your debt...historically the US has seen stimulus multipiers in the range of .4 to .6 for stimulus spending and -1.1% multiplier for tax increases to service debt. On a long-term basis stimulus spending stifles GDP growth and adversely affects GDP/Debt ratios.

Time will tell with Japan...but so far the results suck.

 

[nehalem256]

Instead of reducing spending, Japan continues with their 'stimulus' efforts in an attempt to spend their way to prosperity. So far it's not working out very well as Japan's current GDP to Debt ratio is now at 230%!

It actually looks like things were improving or holding steady until 2008.

 

[Attic]

http://money.cnn.com/2013/08/09/news/economy/japan-debt-quadrillion/index.html?iid=Lead

1,008.6 trillion yen. In U.S. dollars, it's $10.5 trillion

Japan has more debt as a percentage of GDP than any other developed nation.
Japan's gross public debt is projected to hit 230% of GDP by 2014 after years of sustained deficits.


Japan is proof that you cant borrow and spend your way into prosperity.

The US is only ~100% of GDP in debt.
but i dont see 2016 elections helping the debt any.

If we keep improving (Read: Manipulating ) our GDP numbers our debt to GDP may never ever go much above 100%.

Its all covered by those who fudge the numbers with their goal seeking instead of reality seeking methodologies.

 

[DCal430]

FACT:

Rich well off countries have the highest debt to income ratios.

Poor and impoverish countries have the lowest debt to income ratios.

Now tell me, do you want a high or low ratio.

For nations, debt it a sign of wealth.

 

[Attic]

Sorry, that's a nonsensical comment. Clearly, spending borrowed money increases debt. No rational person expects otherwise. The question is whether that spending is having a positive effect on the economy, or perhaps more accurately, a sufficient positive effect on the economy. Show us how Japan's economy is doing and we then have a basis for discussing whether the stimulus borrowing was worthwhile.

Spending improves economies in the short term, but the flip side of that coin is equally important. One of Japans current solutions, which realists called years ago, is to double their consumption tax. That may or may not hurt the economy, but more than likely it will hurt it. Omen of what's to come here in the states, though if you look at the rate folks are taxed in all forms, we are already substantially higher than we were 30 years ago.

Spending is a solution until something has to be done about the problems it's caused, and then the solution to the problem created from spending is spending. This is so often the case that its not hard to see why some argue against beginning with spending as the solution to fiscal issues. Often the spending has already been the "solution" a number of times. See stimulus 1 and 2 in the states and very likely another 500b+ stimulus package inbound.

Obviously Japan is in pretty deep, so most likely they have to keep printing massive yen to get inflation going. Issue their is the current massive printing hasn't had the effect intended.

 

[fskimospy]

If we keep improving (Read: Manipulating ) our GDP numbers our debt to GDP may never ever go much above 100%.

Its all covered by those who fudge the numbers with their goal seeking instead of reality seeking methodologies.

Why did you link to Zerohedge? Does anyone actually take that website seriously?

It's just a clearinghouse for ultra-right economic thought and crazy conspiracy theories where people can avoid accountability by not using their names. I did like their most recent idea that the crash of gold was a great time to BUY MORE GOLD (which of course was followed by further crashing). I feel sorry for anyone who is foolish enough to follow their investment advice.

 

[Attic]

Why did you link to Zerohedge? Does anyone actually take that website seriously?

It's just a clearinghouse for ultra-right economic thought and crazy conspiracy theories where people can avoid accountability by not using their names. I did like their most recent idea that the crash of gold was a great time to BUY MORE GOLD (which of course was followed by further crashing). I feel sorry for anyone who is foolish enough to follow their investment advice.

Didnt want to hunt further for the images that the article touches on. Fact is we woke up with an extra 550b in our GDP after we recently revised how we calculate GDP, 530b of which was due to definitional changes. That's not new money to be taxed, or that wasn't already in the economy, it was just creatively accounted for to put it mildly.

Zerohedge has to be pruned, like every reporting outlet, but its got some good info and consolidates a lot of what the MSM would never touch.

 

[s0me0nesmind1]

FACT:

Rich well off countries have the highest debt to income ratios.

Poor and impoverish countries have the lowest debt to income ratios.

Now tell me, do you want a high or low ratio.

For nations, debt it a sign of wealth.

You're an idiot. Debt is a sign that they are trusted to pay it back. Fin. Thats it. That's all. It doesn't mean prosperity. It means risk ratio. When you fall into the well of "We were trusted" and turn it into "exploiting" - all you are doing is making the fall 20x harder.

Which is going to hurt you more - getting kicked out of an apartment, or having $200k in student loans that will never go away attached to you?

 

[fskimospy]

Didnt want to hunt further for the images that the article touches on. Fact is we woke up with an extra 550b in our GDP after we recently revised how we calculate GDP, 530b of which was due to definitional changes. That's not new money to be taxed, or that wasn't already in the economy, it was just creatively accounted for to put it mildly.

Zerohedge has to be pruned, like every reporting outlet, but its got some good info and consolidates a lot of what the MSM would never touch.

Why is it creatively accounted for? If the old method for calculating GDP was underestimating actual GDP, why would shifting it to a new calculation not be accurately representing new money? Are you claiming they are specifically changing the calculation in order to overstate economic growth? If so, what part of their calculations? Be specific.

I find Zerohedge to be wrong so often that it is hard to take anything they write seriously. They also seem to be utterly unwilling to re-examine their position even when it leads to disastrous financial results.

 

[Attic]

Why is it creatively accounted for? If the old method for calculating GDP was underestimating actual GDP, why would shifting it to a new calculation not be accurately representing new money? Are you claiming they are specifically changing the calculation in order to overstate economic growth? If so, what part of their calculations? Be specific.

I find Zerohedge to be wrong so often that it is hard to take anything they write seriously. They also seem to be utterly unwilling to re-examine their position even when it leads to disastrous financial results.

Not ecomic growth, since the revisions go back to 1929, just output as measured by GDP. If we can define in 500 billion into our GDP through a revision to its measurment, it does have the beneficial effect of lowering our debt to GDP ratio.

The revisions sought to better meaure value in our economy that has purportedly shifted to creating intangible assets rather than producing physical goods. So we've added economic output via of better accounting for the arts... I just call it BS and note that other countries do not creatively account for their GDP in this manner, so we also lose ability to accurately gauge our economic output to other countries.

 

[fskimospy]

Not ecomic growth, since the revisions go back to 1929, just output as measured by GDP. If we can define in 500 billion into our GDP through a revision to its measurment, it does have the beneficial effect of lowering our debt to GDP ratio.

The revisions sought to better meaure value in our economy that has purportedly shifted to creating intangible assets rather than producing physical goods. So we've added economic output via of better accounting for the arts... I just call it BS and note that other countries do not creatively account for their GDP in this manner, so we also lose ability to accurately gauge our economic output to other countries.

But clearly the real question in this case should simply be "is the new method more accurate than the old"? If it is, we aren't magically lowering our debt/GDP ratio, we are correcting a wrong and artificially high debt/GDP ratio. If it's not, I would like to know what aspects of the most recent adjustment you believe to be inaccurate.

 

[Acanthus]

Instead of reducing spending, Japan continues with their 'stimulus' efforts in an attempt to spend their way to prosperity. So far it's not working out very well as Japan's current GDP to Debt ratio is now at 230%!

Interestingly enough, they have been able to avoid a deflationary spiral with their debt spending but they have had pretty much two decades of stagflation.

They have a hauntingly similar situation to ours when it comes to real estate bubbles.

 

[Attic]

But clearly the real question in this case should simply be "is the new method more accurate than the old"? If it is, we aren't magically lowering our debt/GDP ratio, we are correcting a wrong and artificially high debt/GDP ratio. If it's not, I would like to know what aspects of the most recent adjustment you believe to be inaccurate.

100% agree. Certainly comes down to are we more accurately, or not, measuring GDP. I'm happy to side with the idea that we are more accurately gauging GDP with the recent revisions. We are now accounting for R&D that goes into a film for instance as a net output going towards GDP, this occurs regardless of the films revenue.

If you can clearly explain what they've done to GDP to show how it more accurately reflects true GDP output I'm open to your interpretation. From the multiple articles I've read I've taken the distinct impression it filters down to double counting more than anything else as well as creatively accounting for the arts and R&D (specifically R&D distinctly given value outside of what that R&D generates in the end product for which it was undertaken).

 

[fskimospy]

100% agree. Certainly comes down to are we more accurately, or not, measuring GDP. I'm happy to side with the idea that we are more accurately gauging GDP with the recent revisions. We are now accounting for R&D that goes into a film for instance as a net output going towards GDP, this occurs regardless of the films revenue.

If you can clearly explain what they've done to GDP to show how it more accurately reflects true GDP output I'm open to your interpretation. From the multiple articles I've read I've taken the distinct impression it filters down to double counting more than anything else as well as creatively accounting for the arts and R&D (specifically R&D distinctly given value outside of what that R&D generates in the end product for which it was undertaken).

I mean the BEA has everything you could possibly want to know about it here:
http://www.bea.gov/national/an1.htmp

I think treating R&D as intellectual property that can be used in a number of different ways outside of just an end product makes perfect sense. I was baffled that we ever counted it in any other way, frankly.

 

[MixMasterTang]

FACT:

Rich well off countries have the highest debt to income ratios.

Poor and impoverish countries have the lowest debt to income ratios.

Now tell me, do you want a high or low ratio.

For nations, debt it a sign of wealth.

Australia actually has a very low debt to gdp ratio. http://www.tradingeconomics.com/australia/government-debt-to-gdp

 

[gevorg]

US can just print more dollars and inflate the debt away. The debt is too big to payoff otherwise. China and other slave colonies will have to suck it.

 

[UglyCasanova]

The Fix.

 

[Fern]

I don't see how your article supports your premise at all: "Japan's debt shows why the U.S. will fail" (paraphrased). Japan's debt to GDP ratio is over double ours, yet Japan has not failed. It's only been cautioned that it must do a better job of reducing debt. So how does that translate into the U.S. failing? If anything, it would suggest the U.S. can double its debt without dire consequences. I'm not suggesting that's a smart course of action, of course, but your article supports that conclusion much more than the impending doom of America.

No, I don't the Japanese example suggests that.

I don't think it 'suggests' much for other countries' purposes.

From what I've read the vast majority of Japan's debt is funded internally by its citizens, presumably out of patriotism, thus ensuring a ready market for its huge debt at very low rates. I don't think any other country could count on that.

Fern