National Debt Clock Overflowed, Extended By a Digit 696
hackingbear writes "The National Debt Counter, erected in 1989 when the US debt was 'merely' a tiny $2.7 trillion, has been moving so much that it recently ran out of digits to display the ballooning figure: $10,150,603,734,720, or roughly $10.2 trillion, as of Saturday afternoon. To accommodate the extra '1,' the clock was hacked: the '1' from "$10.2" has been moved left to the LCD square once occupied solely by the digital dollar sign. A non-digital, improvised dollar sign has been pasted next to the '1.' It will be replaced in 2009 with a new clock able to track debt up to a quadrillion dollars, which is a '1' followed by 15 zeros. That should be good enough for a few more months at least, I believe." Adds reader MarkusQ, "I know Dick Cheney has assured us that 'Deficits don't matter' but I can't help wondering if we should be fixing the problem rather than the sign."
Math says it bad, but not quite AS bad (Score:5, Insightful)
First of all, 2.7 in 1989 are worth more than the same amount in 2007. Inflation calculator says 2.7 trillion in 1989 equal 4.6 trillion in 2008.
Secondly, what's really important is the debt-per-capita ratio, and the US population has increased. In 1989 the US population was 246 million; in 2008, it's 305 million.
That means, that in 2008 dollars equivalent, the per-capita debt in 1989 was $18,000, while in 2008, the per capita debt is $32,000.
Yes, we do owe more. But we "only", per capita and in equivalent monetary value, owe about 80% more, as opposed to 370% more, as the original numbers would make you believe.
That's good value! (Score:3, Insightful)
For 2007, the Bulletin of the Atomic Scientists listed the U.S. with about 5,400 total nuclear warheads.
So that means each warhead is worth about $1,879,741,432 each.
Re:Math says it bad, but not quite AS bad (Score:4, Insightful)
Re:Clock can run in reverse. (Score:3, Insightful)
"When the budget had a surplus back in Clinton years,"
What struck me most about those times were all the optmistic projections of surplus. There may or may not have been an actual surplus at the time, but even that is questionable when it turns out all these years that the whole basis of wealth and money was questionable.
So maybe there was a surplus, but in what? Real dollars?
Re:Clock can run in reverse. (Score:3, Insightful)
Actually, the debt never went down under the Clinton administration.
http://www.letxa.com/articles/16 [letxa.com]
Re:As Feynman said ... (Score:3, Insightful)
Reagan was the one who set us on this path. It should be named after him.
Re:Math says it bad, but not quite AS bad (Score:5, Insightful)
Re:Clock can run in reverse. (Score:3, Insightful)
it wasn't the war that ended the surplus, it was the .com bubble collapsing. And it was only a surplus if you include FICA contributions.
Re:Here's to hope (Score:1, Insightful)
If you really think the big O and his compatriots in Congress are going to lower government spending, think again.
The idiot Republicans spent like that because they wanted people to think "they cared". Their spending was a poor imitation of Democrats.
In January, you will have the real deal and they can't save money by gutting the military like Clinton did.
Re:Cheney is right.... (Score:5, Insightful)
that might be true if our society weren't so dependent on global trade. but if our trade partners suddenly cut all economic relations with us our domestic economy would collapse. we depend on other nations for manufacturing, investments, and imports/exports.
we might be able to raid other countries for their oil, but we can't use military coercion to force other countries to import our goods or manufacture our raw materials. and since our trade relations with other nations are generally good for us, bad for them, if we're no longer an economic superpower, i imagine most of the developing nations we exploit would cut their ties with us and just nationalize the resources we've hijacked from them like Venezuela has done.
i mean, if we don't have money to lend other nations, the IMF & World Bank would cease to be relevant. and without the power and influence of the IMF/World Bank, we wouldn't be able to dictate the domestic policies of other nations anymore. so 3rd world nations who've allowed us to privatize their industries and open up their markets to us would cease to allow themselves to be exploited.
and quite frankly, we need them more than they need us. many American-based corporate conglomerates would tank if our globalization policies were reversed. WalMart and other retailers wouldn't have cheap sweatshop made goods to sell. Monsanto would lose most of their profits made from selling developing nations GMO seeds every planting season. and 38% of Microsoft's annual revenue comes from sales outside of the U.S. heck, Hollywood makes more money from foreign ticket sales than from the domestic box office ($12 billion a year versus $9 billion).
if our money was certainly no good internationally, or if countries like China decided to collect on our debts, we would be royally screwed.
Re:Press Your Luck (Score:3, Insightful)
...except as a country we're taking it about that seriously, and we're all losing.
Another Republican "Victory" (Score:5, Insightful)
What "fiscal conservatives"!
But wait, the debt has grown insanely under every single Republican president in the last 40 years.
How could that be?
The Republicans aren't fiscally conservative at all. Every single republican president has spent like a drunken sailor and GWB is the worst of the lot.
The only thing more stupid than Tax and Spend is Spend and Spend.
Re:As Feynman said ... (Score:5, Insightful)
Yeah, but Cheney was the one dumb enough to draw the "Reagan proved deficits don't matter" conclusion from Reagan's actions.
We need engineers in government, not politicians and lawyers. They don't have any respect for what happens when you ignore science and mathematical facts and press on as if they didn't matter.
The Logic of Failure....
Debt (Score:4, Insightful)
If I owe you a hundred dollars, I have a problem.
If I owe you a hundred billion dollars, you have a problem.
Re:Absolute number tells us nothing (Score:3, Insightful)
A lot of countries have debts greater than a year's GDP. I think that even less than a year's GDP is a problem, as you suggest. If the economy is growing, we can afford to pay for today's stuff next year, but what happens when the growth turns out to be unsustainable?
In the US, it's a problem of reigning in entitlements, as well as reigning in stuff like military spending, and the same for pork barrel spending, but there aren't enough courageous legislators that are willing to do all that, and the same goes for voters that are willing to give up things like that in order to pay down the debt. I am worried that there will come a time when habits like that simply can't continue and there would be a pretty hard crash as a result. A little bitter medicine now might prevent utter calamity later, but as a society where so many are acclimated to debt and having everything now won't understand that until it's too late.
Re:Absolute number tells us nothing (Score:3, Insightful)
Yes, but the GDP is bullshit. It makes societal harms into positives (Hurrican Gabby hits and causes $5 BILLION damage, that ADDS to the GDP). Another common scenario is a foreign car bought in the US at a dealership, because the transaction is in the US, it, again, adds to the GDP. Peter Schiff and many others put forth arguments much better than mine, go google it. It is a feel-good measure put out by the government in the same fashion the offical inflation figure is (which hardly accounts for real inflation).
The point is, you need to stack the deficit against some other number that isn't complete nonsense. Perhaps trade deficits. Japan has a huge national debt (3x ours in terms of GDP), but it can keep going purely because it makes so much stuff and good trade balances. OTOH, our industry has been exported, we hardly make anything to export anymore.
Economics should not be hard, at least the basics. Consider the country as a huge household. You have debts and you produces things. It should make sense that an economy, to stay healthy has to overproduce and underconsume. A farmer cannot expect to thrive if he eats all his harvest of wheat in his own household PLUS has borrow to consume other people's harvests. A farmer is best off when he underconsumes (only part of the crop is internally consumed and the rest exported).
Japan is like a high swinging professional living way beyond his means but because he brings home the big bucks from clients, can keep paying the increasingly large minimal balances on his credit card - though that will come to an end. America, OTOH, is more like a blue collar worker - can't afford a smaller debt to begin because he doesn't have a high paying job.
Please don't compare the GDP, after Truman we still had a huge manufacturing base left over from WW2 and were exporting to the world. We don't have that anymore. A farmer's household cannot stand for long if he consumes his entire crop for himself and that of his neighbors on credit. That's what we, as a nation, have been doing and it won't work forever.
Re:Conservative government? (Score:3, Insightful)
Socialism requires the government to help and assist those with less money.
Giving the super wealthy more money is not socialism.
It's a completely different type of wasteful spending. If the bush years were actually socialist then everybody would have benefited and lower income Americans would have seen an improvement--seeing as things have just gotten harder and worse off it's insulting to socialism, as flawed as it is, to call taking from the poor to give to the rich as a socialist agenda.
Re:Cheney is right.... (Score:5, Insightful)
If China got pissed and cut off all exports to us... their economy would implode. And the people would hold the communist party accountable--revolution would be in the streets and China would become be under new management by the end of the month.
The US is integral to the world market. This is a classic shoot your face to spite your nose situation.
Re:Another Republican "Victory" (Score:5, Insightful)
"Republican" faction of the American Party:
Borrow and Spend
"Democrat" faction of the American Party:
Tax and Spend
Re:Cheney is right.... (Score:5, Insightful)
To me it would be business as usual, with one less "customer".
Agree with your general point, but it's not quite that trivial...the US is a big customer.
Re:Clock can run in reverse. (Score:5, Insightful)
it wasn't the war that ended the surplus, it was the .com bubble collapsing. And it was only a surplus if you include FICA contributions.
Bullshit.
The surplus was ended by Bush and cronies deciding to spend it all on a huge, unnecessary tax refund, most of which went to the extremely rich.
Deficits DON'T matter. (Score:4, Insightful)
I'm a god hating, baby aborting, marx reading liberal.
Deficits don't matter. Rather, the existence of a deficit doesn't. Having a deficit and a debt we CAN PAY BACK is a GOOD thing. It means our credit rating is great and that we can extend ourselves in times of crises and be a financial powerhouse in the world.
however, when we're struggling to pay our principle much less the interest, then that's a different story all together.
Re:Wrong (Score:3, Insightful)
oh yes, ignoring that... it could all be paid off in a mere 10 years if every family (ignoring the ones who are truly at the poverty line, and ignoring that the truly wealthy can stand to pay much, much more) were to pay $8.6k/year? Sounds doable. Never gonna happen, of course.
Don't forget that's the public debt only, it comes on top of any other debts they might have. According to wikipedia the average household income in the US is about 50k so that's 17% of the income. Less taxes, cost of living and the interest on private debt (some 140k average I believe, about 80% in mortgage) I don't think there's 8.6k left over just like that.
Re:The debt did go down (Score:2, Insightful)
Which is NOT what is shown on the debt clock.
And which also does not mean that this isn't a serious problem. Look up the former GAO head Dave Walker's "wake up tour".
When the interest paid on the national debt is nearing the budget of the US military, (which is larger than all the world's militaries COMBINED), there is a problem. (and the problem isn't that we're not spending enough on the military).
The GDP is not all that matters. The US economy will not grow itself out of this.
I can say with a fair amount of certainty that this problem will (or is now) going to blow up in our face.
Americans do not vote on fiscal responsibility, and will not tighten their belts. Politicians will be forced to spend beyond the government's income, or be cast/barred from office.
Clinton had a budget surplus, only in his last year in office, the surplus was handed to W, with the advice to pay some amount of the debt. W decided that it was best to give it back to the American people, and followed through by ringing up a half trillion more to the debt for every year in office.
I don't believe either candidate has balanced books (surplus) on their agenda, we will find out what happens to a debtor nation.
It's rather remarkable how the fed can bail out the banking system with more red ink of it's own.
10 trillion in debt, and where did the money to bail out banks come from? Borrowed! Genius!
We're in trouble people.
Re:Cheney is right.... (Score:5, Insightful)
I think alot of people on here (I am assuming americans) overestimate how big of an exporter they really are in actual goods. You guys seem to forget the manufacturing parts of american business have been outsourced overseas for years now with Wall St being (quote Ralph Nayder) nothing more than a gambling casino.
Is the rest of the world slaves to USA then (Score:4, Insightful)
If USA owes this foolish amount of money, but no-one dares to ask for it back because of the military and economic power - then USA effectively owns the world, and might as well just declare itself debt free, and carry on living off the backs of its slaves.
The rest of us aren't going to do anything about it.
Re:Another Republican "Victory" (Score:1, Insightful)
So what should we conclude from the Republicans almost passing the balanced budget amendment? What can we conclude that the Republican congress gave us the first budget surplus in 30 years?
Re:Signed Binary FTW (Score:3, Insightful)
Freighteningly, $10,000,000,000,000 does not even come close to covering the expected costs of SS, Medicare, Medicaid, ...
Sure, it may not cover the expected costs if we continue with the benefits promised today, it will work out just fine if we drastically cut benefits. Just wait until the baby boomers die out in large enough numbers so that their voting bloc is not longer so powerful. Then we will see substantive cuts to entitlement programs.
Re:Clock can run in reverse. (Score:3, Insightful)
Re:Exccept.... (Score:3, Insightful)
If it were an extremely asymmetric war, where it'd be the military up against Joe Sixpack, the effectiveness of smart missiles and the JSF are vastly reduced. Used overseas, sure, the public here doesn't care as much, but using weapons like those on our own people, where American families would be the collateral damage, would be extremely detrimental to the military and their side's cause.
Re:Math says it bad, but not quite AS bad (Score:5, Insightful)
Take a temporal trip. The average family enjoyed a better standard of living in 1970 than in 2008, even though the average family income, adjusted for inflation, was lower. There was more likely a stay at home parent, and the amount of non-disposable income (that is, income not spent on "necessities" - health care, mortgage, daycare for kids, education, car, etc. - was much less than today. Today, two incomes are required for many families to enjoy a middle class lifestyle. This may sound like an OK thing at first, but once you start reasoning through the implications - higher chance for loss of income, less family time, etc., it is clear that today's middle class families are far less secure than those a generation ago.
Re:Conservative government? (Score:3, Insightful)
Re:Cheney is right.... (Score:4, Insightful)
When one of your customers purchases more than 1/5 of everything you sell, it's not "just one customer" anymore.
China could certainly do without the US, but they would have a few hard years recovering. I don't see them taking that risk.
But it doesn't really matter in the context of this discussion, because China won't ask for their money back for the same reason. It's like a nuke - the most important fact is that you have one, so actually using one is silly (because then you no longer have one, and you've pissed someone off very badly). If anything, I think that Chinese will happily invest even more into the US economy while it's in bad shape - to help it recover sooner (too big a market to lose, once again), but also to establish a bigger foothold for themselves in the US.
And then, give it 40-50 more years, and you'll see how the Sino-American Alliance is to be born.
I agree. (Score:3, Insightful)
We should be fixing the problem. All we need to do is cut spending and increase taxes.
I, for one, wish you luck getting elected on this platform.
Re:Cheney is right.... (Score:5, Insightful)
You're in for a shock. The end result of the current financial problems is China waking up to the fact that it doesn't need to lend the Americans money so they buy its crap - its own consumers can instead of saving money to be loaned to Americans, buy crap themselves.
Yes, the Chinese economy is going to collapse along with the US economy.
However, they have the production base (that America shipped over there...) and a large population, and India is a big importer of Chinese goods already.
The US has consumer debt with no capital investment to show for it, crumbling infrastructure, and a production base smaller than it once was.
Also, when it comes to poor people rioting and killing the rich people and destroying yet more infrastructure - China has more experience with dealing with that (in a way one would hope America wouldn't deal with it).
So China will recover faster, and will be the new engine of the world economy - both production and consumption...
The US is a drain on the world economy (that's what a trade deficit is - historically you ran a trade deficit in order to invest in capital works, so you could pay the money back later, the US has instead invested in flat screen TVs and vacations), the sooner it is cut off the better for the rest of the world.
Yes, short term is will tank the whole world economy - but it has to be done at some point. And right now there's enough motivation to pull the trigger - it's pretty obvious that money loaned to the US isn't getting paid back with dollars worth anything close to what the ones loaned were worth.
Re:Exccept.... (Score:3, Insightful)
Don't forget that the US Military are still a part of the US Population. If there were a civil war, it wouldn't be "population vs armed forces", it'd be "some people in the armed forces plus civilians vs other people in the armed forces possibly plus other civilians".
I don't live in the US, never have, and never intend to; but from what I've seen, I do now think it's at least a possibility, which is both scary and sad. There's a lot of great people in that country - it's just a shame there's also so many that aren't. Extreme corruption in your political system, the core values of the country being eroded, and so many people that are either too stupid or too ignorant (or both) to care. People need to learn from history, and meanwhile the rest of the world needs to pay close attention there to learn from the present - the US isn't the only country going down this slippery slope, it's just one of the most noticeable.
Currently, I live in a country that has gone down slippery slopes before, and almost lost everything for it. Mostly, the people remember, and are informed and cautious. Those who aren't are forcibly reminded when needs be. I'm hoping that this should be a good place to be should the worst happen through the coming years.
It's not that simple (Score:5, Insightful)
It's not that simple.
1. For a start, it would work that way if the USA were the only market in the world. I do believe that China can also sell to Europe, or to its own damn citizens. I don't think the Chinese would revolt if they could buy good computers instead of exporting them.
The USA survived pretty well by selling its best stuff locally instead of exporting it all, didn't it?
Anyway, the USA has, what, 5% of the world's population? There's a whole other 95% who could buy that stuff.
2. Whatever advantage there may be in selling to the USA, would disappear overnight if the USA decided not to pay, which is (I believe) what the GP was getting at. The whole deficit scheme is, basically, borrowing money from those countries in exchange for their products. If the USA decided to just pocket some trillions of dollars overnight, on the justification that, basically, "our dogs are bigger than the tax collectors'", it would find itself a much less attractive market. Equally overnight.
3. The whole lopsided market situation exists because countries are made to export their raw materials for cents and have to buy high-tech stuff for thousands of dollars. Or, ridiculously enough, lately manufacture that high-tech stuff themselves in their own sweatshops, sell it to themselves, and send the profits to some overseas corporation.
Basically think: you want new shoes. So I send you my permit to raise your own pig, slaughter it yourself, tan its skin, and make your own gloves. Only now you have to pay me for the gloves. I'll even pay you back a few cents for the leather, 'cause that's raw materials and dirt cheap, and charge you lots for the gloves.
And you can't just say "fuck you, buddy" because there are some international treaties and that forbid you from using my patented design and my "Le Moraelin Haute Couture" label. Oh, and to add insult to injury, you designed that design for me too, but I patented it, 'cause I'm the big international corporation with teh moneyz.
And while for gloves that's just a matter of being a fashion victim, for a lot of other stuff it's less black and white.
That's the shit end of the imperialism stick, that those countries get. Mostly because we, the western world, promise to give them a black eye one way or another, if they don't abide by that kind of an arrangement.
Far from being some kind of great help that China would be foolish to cut off, it's a very disadvantageous system for China and a lot of other countries. If they threw it off, their economy wouldn't implode, and their standard of living would go up overnight. Again, they have a billion of their own people to sell that stuff to, instead of selling it to 300 million foreigners. Other than an artifficial financial and trade system imposed on them saying that it's better to sell to an American than to 4 Chinese, there is no real reason why that is so.
_If_ the western world decided to just plunder the existing debts, that might just be the excuse they're waiting for, to get out of that system.
Re:Exccept.... (Score:3, Insightful)
Outside of that minor quibble, I agree with your sentiments completely. If the populace is not armed, it's comparatively easy for the military to take control under a rouge government's orders -- about all the populace can do is meekly be herded and live in fear. By allowing the populace to be armed, even with vastly inferior arms as compared to the government, the military must approach each "situation" with lethal force as there may be a bunch of folks in the neighborhood with high powered hunting rifles. While many "follow orders" military personnel would probably accept "herding" defenseless citizens, when they have to blow the brains out of yet another person who looks and believes a lot like their mother, father, brother, sister, neighbor, pastor etc, they are much more likely to at least refuse to follow orders and, hopefully, switch sides.
You don't have to be able to beat your own military, you just have to make them kill you to make them turn from the evil side. And, of course, existing civilian arms only need to stave off the government for a few months -- the people who designed/built/best understand the government's weapons are largely US civilians, many of whom would decide their allegiances are not to some bland oath they took to a "government by name" but to the cause of freedom and democracy. These civilians know the weak spots of the government weapons and also know how to build weapons.
Re:Cheney is right.... (Score:5, Insightful)
Which is why the Chinese economy is stronger.
What would the difference be if instead of shipping those goods to the US, China instead dumped them in the ocean?
The US wouldn't have those goods. And china wouldn't have yet more IOUs from the United States. We pay them with dollars, they exchange them for treasuries (or equities when we let them) in order keep the yuan artificially low.
I think the Chinese could do without essentially worthless IOUs (like the US can afford to pay its debts) a lot more than the US can do without imports (of clothes, food, etc, etc).
And of course China doesn't have to dump them in the ocean, they can sell them to their own people - who will be much richer than Americans once their currency stops being artificially surpressed.
Of course there's plenty of pain in the middle - but since the US is about to have a very severe recession these events might be forced on China anyway.
Surely you can see that the consumer half of the producer/consumer relation is the less important half. Anyone can buy and watch a TV, it takes actual industry to be able to make one. Chinese people can start consuming much more easily than American people can start producing - if that trade stops.
Re:Cheney is right.... (Score:2, Insightful)
What do you think happens if tomorrow China sells all its US dollar reserves to buy yuan or euros or whatever? And sells it's US treasury holdings as well?
Yes, China loses a stack of money - since the value of those two things plummets. But they must know by now that those things aren't worth so much anyway - and being first to cash out is a big win.
The US collapses the next day. Since oil is now $10,000 a barrel (or 80 euro), food is equally too expensive to afford.
Of course the US might just decide to go to war over such a thing, but the military is stretched pretty thin already, and they'll have to be paid in something other than US dollars...
Analogies can be misleading (Score:2, Insightful)
I think analogies are great, because they can be such effective argumentative tools. The other great thing about them is that they can be awfully misleading, because they'll trigger all sorts of unrelated or inappropriate (to the actual argument) intuitions.
Keep in mind that the relationship between a taxpayer, a country, and the government is much more complicated than that between a patron, a bar, and a barkeeper.
First off, I don't consider myself a "customer" of the US government. In my opinion, this isn't how a citizen-government relationship should work.
Next, it's misleading to use beer as the analogous good for government services. We can safely consider beer to be some kind of luxury good, and not a necessity. But what the government provides is in most cases very necessary for us. Water or food or shelter might have been more appropriate here.
This is related to my third point, which is that the richest man in the group can't opt out so easily. Setting up shop in another country isn't as easy as going to another bar, nor will you get the same beer in one place as the next.
And finally, our individual prosperity is in large part dependent on the system and opportunities either created by or opened up by the government. A drinker and his bartender don't have that sort of dynamic, sadly.
Perhaps there are some truths to your argument, but I don't like this analogy at all.
As an Australian (Score:3, Insightful)
As an Australian I can only Marvel at America's national debt. You've all given up on the hope of ever paying it off, which is simply astounding.
The national debt is completely inevitable (Score:5, Insightful)
If your money is created from nothing at the point of a loan [slashdot.org] and you want to inflate the money supply then you also have to increase the (exponentially growing) debt at the same time.
Now, if you want the "economy" to grow then clearly you have to increase the supply of money faster [wikipedia.org] than the interest on the debt which is consuming credit, or you get a recession.
Whether the debt is public debt, private debt or corporate debt, is irrelevant. The debt must be created. Or at least, it will be until you run out of people willing or able [realtytimes.com] to take on and service the debt, then the system collapses. Doesn't this requirement for perpetual growth sound like something else [wikipedia.org]?
It is a predictable exponential function and therefore has a doubling time, so yes, you could create a "law" about it.
The national debt, the credit crunch, the stockmarket crisis are all the inevitable result of the way your money is created [wikipedia.org]... Long may it continue.
Re:non-digital dollar sign (Score:4, Insightful)
Now remember this: THE EXCHANGE RATE MEANS NOTHING. Think about it.....if the the exchange rate meant something, then the US economy would be doing about 106 times better than the Japanese economy right now, but it's not.
The only thing that really matters is the change and general direction of the exchange rate (and even that isn't entirely accurate, since it is possible for both sides to experience inflation at the same time, which is essentially what is happening right now, with the Euro dropping in value against the dollar). So once again, the Euro being at 1.35 of the dollar means very little by itself, despite the fact that two months ago the Euro was 1.6 times the dollar.
Eh. We're all gonna be livin' on the streets soon, so who cares?
Re:Cheney is right.... (Score:3, Insightful)
There's an old saying, oft quoted during the S&L scandal (Hello Senator McCaine!) that goes something like this: When you owe the bank ten thousand dollars, you have a problem. When you owe the bank a hundred million dollars, the bank has a problem.
In this case, China is the bank.
Re:Exccept.... (Score:4, Insightful)
People from other countries like to avoid being murdered by the American military too; perhaps at some point in the future, the American soldier might extend his circle of care to included mothers, fathers, brothers, sisters and neighbours from other countries too?
Re:The debt did go down (Score:3, Insightful)
In the same sense as your mortgage not being a worry because house prices are going up?
Re:Exccept.... (Score:3, Insightful)
According to dictionary.com, 'insurgent' is defined as:
"a person who rises in forcible opposition to lawful authority, esp. a person who engages in armed resistance to a government or to the execution of its laws; rebel."
Do *you* think it's the right choice of word to describe someone who's defending their country against an invading army? hint: your army. Do you use another word when you're not posting onto a forum which is read by non-americans ? or have you honestly been brainwashed to believe that iraqies have no legitimate right to defend their own country against the american aggressor?
Re:Clock can run in reverse. (Score:1, Insightful)
Agreed. Social Security taxes are very regressive.
This is really just an accounting trick so that the long term planning for the Baby Boomers' retirement is separate from the shorter term federal budget. Otherwise this would make governments in power as the Baby Boomers retire look fiscally irresponsible as large deficits are incurred when Social Security pays out.
Do you have a better suggestion for "someplace safe" than government bonds? The Social Security trust fund earns interest on money borrowed by the government just like anyone else who lends money to the government.
Actually, there was a budget surplus without any caveats [factcheck.org]. If you check the data [cbo.gov] from the CBO, they have one column showing deficits/surpluses including Social Security (and the Postal Service) and another column excluding them. Including Social Security, there were surpluses from 1998 to 2001. Excluding Social Security, there were surpluses in 1999 and 2000.
As for the overall debt, I tend to prefer something like the debt to GDP ratio. Charts like this one [zfacts.com] show how damaging Reaganomics has been.
Re:Clock can run in reverse. (Score:2, Insightful)
What a load of crap. If you want to do an analogy, do it right:
Suppose that every day, ten men go out for beer and get the following (numbers not accurate, but I don't pretend to have a PhD in economy):
The first man get no beer
The second man get 1 beer
The third man get 1 beer
The fourth man get 1 beer
The fifth man get 2
The sixth would get 3.
and so one until:
The tenth man (the greediest) get 50 beers.
Furthermore, the tenth man owns the bar.
Then the bill for all ten comes, bla bla bla.
Re:Cheney is right.... (Score:5, Insightful)
Indeed, China's earnings from exporting goods and services stands at ~25% of GDP, the US accounts for less than half of that. This is good for the economy here in Australia, not so good for the economy in the US. As for China, if the US stopped importing from them tomorrow their growth rate of ~10% would make up for the loss in ~1yr.
It's also interesting to note that China lifted it's ban on buying and selling gold 2-3yrs ago (when oil & gold abruptly started climbing). For a while the government encoraged China's middle class to put some of their savings into the traditional 'rainy day' plan of hoarding gold in the form of trinkets. The middle class really didn't need much encouraging, China's new retail gold market drove the gold price up for the first 6-12 months of it's operation.
Disclaimer: Even though it was concieved by Newton I am not calling for a return to the gold standard.
Re:Clock can run in reverse. (Score:3, Insightful)
I guess about as real as the subsequent deficit dollars. So stop posting and start working for those imaginary interest payments you owe your Chinese loan shark.
Re:Cheney is right.... (Score:2, Insightful)
There's an old saying, oft quoted during the S&L scandal (Hello Senator McCaine!) that goes something like this: When you owe the bank ten thousand dollars, you have a problem. When you owe the bank a hundred million dollars, the bank has a problem.
In this case, China is the bank.
Oh yeah, so just because you owe the bank a hundred million dollars, you think the bank will just keep on lending you more?!? Eventually the bank will decide to just cut its losses. I mean lets face it, is there any chance of the debt EVER being paid off?
No.
So the $100,000,000 is soon to increase to $200,000,000. Personally if I were the bank I'd just cut my losses... better to lose $100M than $200M
Re:Another Republican "Victory" (Score:5, Insightful)
So in the slightly longer run the Republicrats are a 'Spend and Tax' party while the Democritans are a 'Tax and Spend' party.
Re:What's the solution? (Score:5, Insightful)
It's this type of stupid story that the media JUST LOVE to splatter about. They don't understand that they are CAUSING the mess. Guess what? NOTHING HAS CHANGED IN ICELAND. The farmer still grows his stuff. The geothermal energy is still coming from the ground. The snow is still white and cold. Nothing is different except the assumed value of a few sheets of paper.
The problem is that those sheets of paper are extremely important nowadays. If you have a mortgage, the ownership of your house is regulated by those sheets of paper. If something goes wrong, you suddenly find yourself without a home.
Lots of consumption and production is not local anymore. We import lots of stuff, and depend on exports to pay for it. And we need sheets of paper to figure out who gets what.
Without the global economy this crisis wouldn't have been nearly as big a problem, but we fucked up our global economy to the point that sheets of paper are more important than actual production.
But we produce everything we need to exist, food, housing, medicine.
The US doesn't produce all the oil it currently uses. Without the sheets of paper, most people won't be able to drive cars, and it's back to horse and carriage again.
So, again, I ask, what's the problem? If I'm hungry, can I get food? Yes.
Unless you don't have money to pay for it. Not everybody works on a farm.
If I need a place to stay, is there one? Yes.
Unless you just lost your home because you can't afford your mortgage anymore.
Buy local
Buying locally is a very good idea, but it's not how our global economy is organised at the moment.
Anyway, these are not bad times if you are smart and not stupid and buy into their stupid panic stories.
These are very good times if you are smart and have sufficient means to take advantage of the situation. Average Joe who can't afford his mortgage because his employer can't afford to pay him because the bank won't lend them any money, could be in serious trouble.
I'm not saying there's trouble for everybody (personally I'm not worried at all), but some people are in very real problems.
Re:As an Australian (Score:3, Insightful)
As an Australian I can only Marvel at America's national debt. You've all given up on the hope of ever paying it off, which is simply astounding.
The real problem comes when their moneylenders give up all hope of it ever getting paid off, because then the US can't lend any money anymore.
Heh. No. (Score:3, Insightful)
Heh. Nobody is arguing that, but that's exactly the crap artifficial system that other countries are forced to adhere to... even when it's against their interests.
The thing is, money is just an abstraction to make the system work smoother. Go back to reading even, say, Adam Smith: the "wealth" of a nation is measured by how well the goods it gets match the needs and desires of its citizens. That's why you live better in the USA than they do in China. You get some of China's goods too, to match _your_ needs.
That system actually does very little for China, though. They get to export some goods to match _your_ needs instead of using them to match their own citizens' needs, i.e., instead of raising their own standard of living.
Even then, it would be a fair trade if they used the dollars they get, to buy things they need more. But the whole trade defficit scheme means they don't. In that relationship, the USA gets more and China gets some IOUs. As in, "I Owe You goods worth this many dollars." If the rest of the world actually tried to cash in those trillions of dollars, the value of the dollar would go down by an order of magnitude or more. Because you just don't produce the goods they could buy with them.
But in the mean time, that market doesn't work like Adam Smith and the free market apologists thought. Instead of being a mechanism by which China gives away stuff its citizens don't need more, and gets stuff they actually need, it's a mechanism by which China gets some IOUs instead of matching its own citizens' needs. As the wealth of nations go, China gets impoverished by that system.
And if, as the GGP was getting at, the USA decided it can ignore the IOUs because its dogs are bigger than the tax collectors', essentially you'd tell the whole world that USA's IOUs are worth nothing. They'd be a lot less inclined to sell you for more worthless IOUs in the future.
But even that lopsided trade is already based on some artifficial conventions that we, the western world, imposed upon those countries. In a lot of cases the goods they "import" to give those dollars back, are produced locally in China. But they must pay a foreign corporation a "tax" on goods produced in China and sold in China. We created an artifficial situation which _causes_ the western markets to be artifficially wealthier. We decided that the goods China has are low worth, ours are high worth, and China can't produce ours unless it's for one of our corporations. Then they can import their own product and pay us a tax for it.
To use a more classic economics example, the whole trade and market theory is based on the following idea: if England is better for producing wool, and France is better for producing wine, then the sane thing to do is raise sheep in England and grapes in France, then trade them. And the money and merchants' greed would be a mechanism for figuring out the exchange rate and making sure each country gets something closer to what its citizens want.
But now imagine a system where we artifficially decided that wine is cheap, wool is expensive, and France is outright forbidden to raise sheep except if it's for an English lord. 'Cause England patented sheep. Well, _of_ _course_ then the English market would be wealthier than the French one. But it's only due to an artifficial system which pumps resources out of France and makes them pay even for sheep their own shepherds raise.
It's a hypothetical example, France would have never bowed to that kind of conditions, but it's not entirely hypothetical for other goods and countries: That's exactly the thing that, say, IP conventions _do_ to poorer countries. They can only produce raw materials, they have to import computers from us. Even if they know how to make a computer, even if the fabs are on their land and staffed by local workers, and even if the damned design team who designed the CPU or chipset are their own people in their own countries. But they can't actually produce it for themselves. They have to beg, say, _Intel_ to build tha
Re:What's the solution? (Score:3, Insightful)
What has changed is that it is very hard to get a loan now, even backed up to the gills. Consequently people cannot invest, either you and me or big companies. This will be causing a lot of people to lose their jobs and the economy to contract in real terms.
What has been lost is *confidence* that loans can be repaid in time.
Given that the trade of real goods only represented 2% of the financial economy up to the crash, the magnitude of the problem cannot be exaggerated.
Re:Your history is wrong (Score:3, Insightful)
The wealthy are important to the economy. The wealthy and the upper-Middle class business owners are the engine of American prosperity. How many poor people ever offered you a job?
How many rich people ever fixed your sink or baked your bread?
It's true that capital is important, but so is labour.
Re:Heh. No. (Score:4, Insightful)
Not so sure, six armour piercing arrows per minute can be quite persuasive...
Absolutely ridiculous (Score:5, Insightful)
That analogy is absolutely ridiculous. The rich man is not a goose who poops golden eggs and shares them out of kindness. The rich man's wealth is where everyone else's is: In the bar.
When ten men go to a bar, the first five clock in and start working. The next four buy their own drinks. And the tenth gets a free beer because he owns the place. If ANY of them stop going to the bar, the musical chairs just shuffle around, until there are too few people left to operate a bar. And then it closes. And no more rich man.
You talk as though the rich are the lynchpin of capitalism. They're not; they're a byproduct, and in many cases a sign of inefficiency or poor regulation. The middle class are the lynchpin of capitalism. And they have been slowly disappearing into WalMart, CostCo, and the military industrial complex for the last 25 years. Have you noticed that the steps are getting a bit narrow on your ivory tower?
Re:What's the solution? (Score:4, Insightful)
So I am to gather that the current situation with Ford, GM and Chrysler is imaginary too.
Everybody knows that American and English cars are crap. The English car industry died 20 years ago because of this. The US industry is dying now but they made a great profit selling the same cars for 6 or 7 decades with minimal R&D. Now tesla (based on a lotus) may be creating a new US car market to suit the times. Bloody stupid that GM and Ford didn't do it when they had the money.
Re:Clock can run in reverse. (Score:2, Insightful)
Attempting to deceive people by the means of an analogy and a degree is a vile act of the highest order. You sir, should be ashamed.
Analogy's are a way to start educating the lay person in a manner that their brain can process and understand. If the lesson were to continue the analogy would be only the first step in a flight of stairs.
Attempting to discredit an Economics professor with some perceived air of authority is a vile act of the highest order....or is that why you posted as AC?
Disclaimer: I don't know if the OP is a professor of economics or not but the story involved beer and a good probability that the beer was free (as in beer).
Re:Clock can run in reverse. (Score:4, Insightful)
Other than being a well-known fake, the biggest problem with this analogy is that it leaves out the income of each of the men. If the tenth man is making as much money as the other nine put together, then paying 60% of the tab is about as affordable for him as what the other people are paying (given that basic necessities, etc. are a smaller share of his income).
So while it seems unfair that the richest person should pay such a large share, in fact the burden is being shared pretty fairly. Progressive taxation, and estate taxes, are designed to share the tax burden and prevent extreme concentrations of wealth. Concentration of wealth was a big factor in creating the Great Depression, and a large part of the New Deal was to reverse the trend and lessen its effects. We have gotten back close to the same concentration of wealth as the 1920's, and I hope the correction is less devastating this time.
-Esme
Re:Cheney is right.... (Score:5, Insightful)
Which reminds me of a tale from the Depression years:
At the funeral of a banker, one of the mourners goes up to the Banker's son, and tells him, "Your father was a good man. Why, one time I was a mite short, and he offered to lend me $20. When I told him I wasn't sure I'd be able to pay him back, he told me not to worry about it. He said that if I gave him $1 every week, I could pay him that $20 back just whenever it suited me. Let me tell you, he was as good as his word - I paid him $1 every week, and he never did ask for his $20 back, and that's been nearly 30 years now."
Re:Cheney is right.... (Score:3, Insightful)
So how is shipping goods to the US different from the dumping them in the ocean? All sending them over to the US does is cause dollars to be sold by American importers to pay the Chinese exporters, then the Chinese government has to sell some of it's yuan in order to buy US dollars in order to keep the exchange rate "semi-pegged", and then buy some treasuries with those dollars.
So what is the difference with the Chinese government directly giving those yuan to the chinese exporters (buying the crap) and then dumping it in the ocean?
The point is China doesn't gain anything from this trade, except for US dollars - which it is becoming pretty obvious are worthless IOUs from a country on a downward spiral.
America doesn't have any capital - the savings rate is negative. In order to build a factory in the US money needs to be borrowed from abroad. China on the other hand has huge amounts of savings to invest - as does Japan.
So yes factories can be built in America - they likely won't be built by "us" though, since foreigners will have to provide the capital.
Armchair economists... (Score:2, Insightful)
Re:Clock can run in reverse. (Score:3, Insightful)
And if they do, then perhaps we should consider such a large chunk of our economy being controlled by foreigners to be an unacceptable risk to our national security, and nationalize said chunk.
Two can play the blackmail game.
Re:I am a rat jumping ship (Score:1, Insightful)
Where would you go? What makes you think their government is better? Pick a country, research it, and you're likely to be disappointed.
Re:Cheney is right.... (Score:5, Insightful)
Considering the US are paying with IOU's at the moment, I dont think China would mind collecting. If China and the EU both decided to cut off the US at the moment and collect on their debts, if they get their money back their economies may bounce back and the US would be screwed.
Except that they can't. Certainly China and the EU can try to collect on their debts. What happens if the US actually pays them? The first question you should ask is how. We could take those IOU's and redeem them for cash. Were does that money come from? Well, since we don't have an actual reserve, we would just print it. Instant inflation, devaluing the dollar and devaluing their own portfolios.
The issue is that financials are truly global now. The mortgage crisis underlines that. The Conventional Wisdom was that this would be contained in the US. Oops. If you were surprised that the real-estate correction hit global markets hard you might be surprised at how much worse a correction in the value of the dollar would be, especially through such a confrontational method. Unless you read any of the economists that predict such an effect.
I think alot of people on here (I am assuming americans) overestimate how big of an exporter they really are in actual goods. You guys seem to forget the manufacturing parts of american business have been outsourced overseas for years now with Wall St being (quote Ralph Nayder) nothing more than a gambling casino.
It really doesn't matter. In fact this bolsters the opposite viewpoint rather than defeating it. Since the US is not as big an exporter -- what are those countries going to do with all that US money? In your scenario, China doesn't want US$ anymore, the EU doesn't want US$ either. So, who are they going to trade them to? The US? And do what - buy bonds? /sarcasm Or are they just going to burn them then? As soon as they try buying stuff in the US, prices will be driven up. If they don't buy from the US, what are they going to do with the money?
It really is quite a bit of mess. The whole world has helped in leveraging the US dollar. The total amount of wealth on the books does not match wealth in reality. Any attempt to realize that "wealth" causes that "wealth" to lose significant value.
It does look like this trend is unsustainable - that is we create more faery money at a greater rate than actual growth and insist that this is also "growth". This growing inequality is not just a figment of imagination and sooner or later must be addressed, but I'm not sure the "system shock" method is viable.
While some level of unreality is fine for economic markets, periodically all structures get touched with cold iron. When that faery support evaporates if the structure can no longer hold itself up it will collapse in a heap (or more politically correct, "be restructured"). The impression that US$ represent some stable container for value creates a portion of that value and that portion of value disappears into thin air the minute actions are taken that refute this impression.
Re:The national debt is completely inevitable (Score:3, Insightful)
If the borrower defaults, then the amount of the default is taken directly from the banks reserves. While any single loan may be less than the total reserves, the combined amount of loans outstanding is something like 100x more than their reserves. If it were 100% backed, then a bank could easily weather having 95% of its loans default while still remaining solvent. If this were the case, we would never have failed banks.
I don't think you are in a position to call it 'bullshit' if you don't even know how our banking system works. It's not hard or complex. It's just fraudulent. An arguably legal fraud.
What nonsense - China is a house of cards (Score:3, Insightful)
Nonsense. China's "growth" is subsidized by government loans to government-owned companies, an enormous amount of which are under-performing or non-performing [google.com]. It's a ponzi scheme, and sooner or later it collapses. It will make the subprime crisis look like a deck chair on the Titanic. One of the few things that keeps China afloat is the influx of cash and credit from the US. To suggest they don't need us is ludicrous.
And of course China doesn't have to dump them in the ocean, they can sell them to their own people - who will be much richer than Americans once their currency stops being artificially surpressed.
Are you crazy? 70% of China's population are pre-industrial agrarian people who live in poverty by any measure.
Re:Your history is wrong (Score:3, Insightful)
So let's cut this bullshit right now that wealthy = villain.
Why? Jesus said it was so.