Madhatter
Well-Known Member
its good to be optimistic on the economy but that is not what history suggest says will happen . if I spend more than I can ever pay back ,well it is a bad thing.
What do you think will happen when the pot blows and inflation takes over?
- Thread starter Madhatter
- Start date
The big difference between 09 and now is that in a couple of years the interest on the national debt at only 1% will be close to a Billion dollars a day. Make it 3% and were talking a Trillion dollars a year just in interest. We've only had a half dozen budget surpluses in the last 50 year and the largest budget surplus in history was only $200B.
It's like a man making $50 grand a year trying to pay off a million dollar loan at 3%.
IMO, we will never be able to pay down the national debt and it has no where to go but up and that will have to come to a head some day and it ain't gonna be pretty.
PhilPhilippines
Well-Known Member
It's only money. It was "pretend" in the first place...
Back to the barter system..
Back to the barter system..
The barter system works fine for haircuts, watermelons and sex, but doesn't work very well getting a house or a new motorcycle. Half the country gets their pretend barter direct deposited every month and they don't have any backup barter.
Eville Rich
Well-Known Member
In the U.S. the reality is that no one wants to pay for anything. Tax cuts without spending offsets, infrastructure without tax hikes. It's easy to point to government spending that may not benefit you very much, but my challenge to the debt/deficit hawks is that you need to be willing to either have your taxes raised or select government spending that benefits you for the chopping block. To-date I've only had people willing to to accept a modest tax increase that does little to even deal with the deficit, bunch less the debt.
Government debt is different from private debt. The U.S also has the ability to control it's currency. This is in contrast to countries like Greece, who experienced severe limitations due to their use if the Euro. I'm not a fan of ongoing deficits or growing debt. I say we need to raise taxes and cut spending. What government services are you willing to give up that you benefit from? I don't suggest we actually name them on this thread - it will get political - but it's a thought exercise that is really the place to start - what are you prepared to sacrifice that benefits you? If you can't come up with much, then you've started to find the crux of the biscuit.
Eville Rich
Government debt is different from private debt. The U.S also has the ability to control it's currency. This is in contrast to countries like Greece, who experienced severe limitations due to their use if the Euro. I'm not a fan of ongoing deficits or growing debt. I say we need to raise taxes and cut spending. What government services are you willing to give up that you benefit from? I don't suggest we actually name them on this thread - it will get political - but it's a thought exercise that is really the place to start - what are you prepared to sacrifice that benefits you? If you can't come up with much, then you've started to find the crux of the biscuit.
Eville Rich
PhilPhilippines
Well-Known Member
How much is a funny bone worth?
Shock situations require shock measures and shock policies are monetary (emission or interest) ... fiscal policies are slower, medium / long term. The idea will always be to sustain consumption, but above all consumption and "internal" industry ... As usual, the money issued for social assistance ends up in the internal consumption of basic goods and services and that consumption makes the money issued "slowly" return to the hands of the state, through taxes. As Eville says, we would have to review the debt to see what the destination was .... if that was known, it would probably be easier to understand. If the debt were to be paid in gold, diamonds, oil or some rare commodity, that would be a big problem. My country has a large external debt "in dollars", and to get those dollars the only way is "exporting" ... then the paper with which they pay you happens to have more "value" than the merchandise itself.
Government waste would probably eliminate the budget deficits and give US a lot of cash to pay on the debt. $200 hammers, $100 ink pens, $5000 toilets, etc, etc, etc. But, I think the waste problem is too big and popular to control. Everyone in charge of any kind of government spending has a cousin that needs a little $$$. A billion here and a billion there, it all adds up.
Dr Ratbagg
Well-Known Member
massive inflation is about to over come the USA ,
Eville Rich
Well-Known Member
The magic govt waste solution won't do it. Much of the excess has been squeezed. Yes, ongoing efficiencies are always needed, but I will submit that we cannot make a dent in the deficit by eliminating waste. The hard reality is taxes and spending cuts if we want to tackle the deficit and ultimately, the debt.
Eville Rich
And just like your typical credit card junkie, the government will raise taxes and blow the new money on everything but the debt. World class experts on kicking the can down the road.
I don't know when this national debt bomb is going to blow, but it has to have an expiration date and it's going to be ugly. Were so screwed.
As someone who was bitten hard by the pandemic induced recession, I'll throw my two cents into the discussion (at least I can still afford that!). The massive shutdowns of whole industries, as well as the nearly worldwide shelter in place orders, especially in the first half of 2020, created an highly lopsided situation of high demand and low supply for certain staple items. As we adjusted to dealing with the pandemic, supply chains started to come back on line, and things were reasonably stable for a short period. Now we have two major factors affecting supply chains, the lifting of COVID restrictions, resulting isn a shift in consumer demand, and a jittery public that will panic buy any item that may temporarily become scarce (such as the gas hoarding seen on the east coast after the Colonial Pipeline hack). In short, even though inflation is a concern, and we will see some in the next few years, I believe this recovery will be as unusual as the circumstances that created this downturn.
A couple of other things I wanted to comment on as well:
People not wanting to work is a bit of a false narrative. The concern I'm seeing is that many companies are taking what were full time jobs with benefits, and reclassifying them as part time jobs at lower pay rates. I'm sure part of this response is to compensate for losses incurred during the pandemic, but it will continue to artificially inflate unemployment rates. We are starting to see some corrections here though too, for example Bank of America raising their minimum wage to $25/hour and requiring vendors and suppliers to pay at least $15/hour will help.
Housing is an area of major concern, and we could very well see a major correction in the near future. Compounding the problem is how little relief landlords and property owners received during the pandemic. Here in Southern Nevada, rental rates are skyrocketing, and the median house price has increased year over year consistently. We have an added squeeze here that we had a shortage even before the pandemic that was exacerbated by the eviction moratoriums, further reducing supply even as demand has been increasing.
One bit of good news that I see, at least in my industry, is a hockey stick spike in demand. Corporate meetings, trade shows and conventions, concerts and sports all welcoming back attendees and fans is a welcome sign for a $1 Trillion per year industry waking back up. But in a similar vein to "people not wanting to work" we had a major brain drain with many people having to find other work/careers, or those who were close enough to retirement to take that option, and now the question is how many will return? My industry is also very dependent on mentorship to become proficient, so we we could have a boomerang effect where those just getting started won't have the mentors they need to develop the skills necessary to execute Live Events, affecting this industry for years to come.
A couple of other things I wanted to comment on as well:
People not wanting to work is a bit of a false narrative. The concern I'm seeing is that many companies are taking what were full time jobs with benefits, and reclassifying them as part time jobs at lower pay rates. I'm sure part of this response is to compensate for losses incurred during the pandemic, but it will continue to artificially inflate unemployment rates. We are starting to see some corrections here though too, for example Bank of America raising their minimum wage to $25/hour and requiring vendors and suppliers to pay at least $15/hour will help.
Housing is an area of major concern, and we could very well see a major correction in the near future. Compounding the problem is how little relief landlords and property owners received during the pandemic. Here in Southern Nevada, rental rates are skyrocketing, and the median house price has increased year over year consistently. We have an added squeeze here that we had a shortage even before the pandemic that was exacerbated by the eviction moratoriums, further reducing supply even as demand has been increasing.
One bit of good news that I see, at least in my industry, is a hockey stick spike in demand. Corporate meetings, trade shows and conventions, concerts and sports all welcoming back attendees and fans is a welcome sign for a $1 Trillion per year industry waking back up. But in a similar vein to "people not wanting to work" we had a major brain drain with many people having to find other work/careers, or those who were close enough to retirement to take that option, and now the question is how many will return? My industry is also very dependent on mentorship to become proficient, so we we could have a boomerang effect where those just getting started won't have the mentors they need to develop the skills necessary to execute Live Events, affecting this industry for years to come.
We're dealing with different people today. Back in the day a man was ashamed to take welfare and would rather have work to do. While today, well you know.
The US currently takes in about $2.2T in personal and corporate income tax. Even if they did double the taxes and by a real stretch of the imagination they balanced the budget and interest rates went to zero, it would still take 13 years to pay off the national debt. If interest rates went to a reasonable 3%, it would take 20+ years.
And if that picture doesn't look bleak enough, let's not forget that the government still has $148 Trillion on the side lines in unfunded liabilities.
And if that picture doesn't look bleak enough, let's not forget that the government still has $148 Trillion on the side lines in unfunded liabilities.
Last edited:
PhilPhilippines
Well-Known Member
I'm not sure if many are comfortable to receive benefits. I am sure more would be happy to earn a decent wage for any work that is done.
I would also like to see those that do receive benefits work in the community or similar, for some semblance of pride and to keep them active. I have friends and acquaintances that have benefits due to mental health etc, but they would gladly chip in but are often not allowed to.
Then again, I would like to see Bozos paying taxes. I think him paying 500,000,000 on yacht is just dandy, but maybe a few taxes would give a leg up to some that need it.
Debt is never a good thing whether it's your personal finances or the US government. We have to face the fact that taxes have to be raised. I'm fine with raising taxes if the very rich and big business pay their fair share. Like it or not we as a country have bills to pay. The infrastructure needs to be addressed, the roads around here just plain suck. They have been putting patches on top of patches for years. Infrastructure, immigration and healthcare need to be taken care of and it's going to cost some money. Cutting the corporate tax rate was a big mistake. Trickle down economics just doesn't work as history has shown.
The fact that the stock market did not crash last year at the beginning of Covid-19 leads me to believe that we will make it through this. Sure, there will be some inflation and shortages, and it will take some time for the supply chain to return. We have been enjoying low inflation rates of 1-3% for the last 10 years along with low interest rates. I expect to see both increase, but not a great amount in the near future.
Well, I have to go test drive the new Harley ADV bike now. I have no intention of buying one, but my connection at HD insists that I come down for a test drive. I'll post a report on the HD thread later.
The fact that the stock market did not crash last year at the beginning of Covid-19 leads me to believe that we will make it through this. Sure, there will be some inflation and shortages, and it will take some time for the supply chain to return. We have been enjoying low inflation rates of 1-3% for the last 10 years along with low interest rates. I expect to see both increase, but not a great amount in the near future.
Well, I have to go test drive the new Harley ADV bike now. I have no intention of buying one, but my connection at HD insists that I come down for a test drive. I'll post a report on the HD thread later.
EricV
Riding, farkling, riding...
2011 Site Supporter
2012 Site Supporter
2013 Site Supporter
2014 Site Supporter
Some good questions and observations going on in this thread. I certainly don't have answers. What I see locally is people blowing their free government money on tangible things, (the street in our neighborhood that is nearly all rental homes at one point had big screen TV boxes at almost every house for a week after stimulus checks hit), while rent forgiveness goes away and a segment of the population that was working lower pay jobs is not going back to work at those jobs since they make more money on unemployment than working. Here in MS, the State is eliminating the Fed extra unemployment funds, as are several other states, and cracking down on proof of job search documentation for unemployment benefits. I believe that the goal is to get people to go back to work so they can pay their bills and feed themselves. Time will tell. The extra Fed funds are supposed to go away beginning June 1, so that's right around the corner.
As a retired household, we're debt free. Inflation always stings, but short of a full on devaluation of the American dollar, I think we'll be ok for the foreseeable future. Trying to decide on a hedge against things turning bad is difficult. Things have to get really bad before solid assets like metals become useful locally. Being capable of self sustainability is another way to hedge. We can mostly do that if need be, but won't go back to growing our own food tomorrow.
MS is making noises about eliminating income tax and raising sales tax. Some cry about lost tax income, forgetting that a lot of people aren't paying their income tax in MS and everyone from normal folks to drug dealers & tourists pays sales tax. MS is using it's lottery money for schools now, having crossed the first $80 Mil threshold with that income paying for roads and that infrastructure.
I'd like to see the marijuana laws go through here so that tax income can add to the state's desperate need to improve infrastructure that's been ignored so long. It won't do bad things for those businesses and the trickle down impact for jobs either.
I also see a segment of the, mostly younger, population that interest rates don't impact as much. "How much do you need your monthly payment to be" is the common refrain for salesmen talking to this segment. They don't care what it really costs because they have zero plans to actually pay it off to begin with. Be that a car, house or many other things. They will keep spending money as long as they can make their monthly bills, don't save much and expect the government to bail them out when things go bad. They file bankruptcy and two weeks later get a new round of credit cards offered to them.
Is being in debt better than being out of debt, in the grand scheme of things today? I would like to hope not, but I suspect a lot of people are playing their cards that way. Like those that expected the rapture on specific dates, they will keep going deeper into debt to the very end, not expecting to actually have to pay the bill. It's better for the Nation to pay down the National debt and be more fiscally responsible about the budget. It's not realistic to think we can pay it off, and there are benefits to some debt on that scale. But at some point other countries are going to call in their markers for the money the US owes them and expect a ROI. If the US defaults on large portions of National debt, that's not going to be pretty on a world wide scale. If US investments become a high risk scenario, that's really going to hurt the US economy with higher interest rates for loans well beyond anything we've seen before.
As a retired household, we're debt free. Inflation always stings, but short of a full on devaluation of the American dollar, I think we'll be ok for the foreseeable future. Trying to decide on a hedge against things turning bad is difficult. Things have to get really bad before solid assets like metals become useful locally. Being capable of self sustainability is another way to hedge. We can mostly do that if need be, but won't go back to growing our own food tomorrow.
MS is making noises about eliminating income tax and raising sales tax. Some cry about lost tax income, forgetting that a lot of people aren't paying their income tax in MS and everyone from normal folks to drug dealers & tourists pays sales tax. MS is using it's lottery money for schools now, having crossed the first $80 Mil threshold with that income paying for roads and that infrastructure.
I'd like to see the marijuana laws go through here so that tax income can add to the state's desperate need to improve infrastructure that's been ignored so long. It won't do bad things for those businesses and the trickle down impact for jobs either.
I also see a segment of the, mostly younger, population that interest rates don't impact as much. "How much do you need your monthly payment to be" is the common refrain for salesmen talking to this segment. They don't care what it really costs because they have zero plans to actually pay it off to begin with. Be that a car, house or many other things. They will keep spending money as long as they can make their monthly bills, don't save much and expect the government to bail them out when things go bad. They file bankruptcy and two weeks later get a new round of credit cards offered to them.
Is being in debt better than being out of debt, in the grand scheme of things today? I would like to hope not, but I suspect a lot of people are playing their cards that way. Like those that expected the rapture on specific dates, they will keep going deeper into debt to the very end, not expecting to actually have to pay the bill. It's better for the Nation to pay down the National debt and be more fiscally responsible about the budget. It's not realistic to think we can pay it off, and there are benefits to some debt on that scale. But at some point other countries are going to call in their markers for the money the US owes them and expect a ROI. If the US defaults on large portions of National debt, that's not going to be pretty on a world wide scale. If US investments become a high risk scenario, that's really going to hurt the US economy with higher interest rates for loans well beyond anything we've seen before.
Being debt free has always been our goal; finally reached it. Zombie hoards may take our house, but the bank won't.
Ft. Worth implemented a .01 sales tax for use by police & fire over a decade ago. It was voted on by the citizens of Ft. Worth, and renewed after the first ten year period. When it first started, you would every so often see a cop car with a sticker saying that it had been payed for by this tax/fund. Nowadays, all of their cars have that sticker. Their police & fire training centers take up acres of land. The cops have a pursuit track, and two 1/4 mile long buildings that have scenario rooms. Cars can be driven inside the buildings, and they can make their own weather. The fire guys have multiple "burn" buildings, and towers. Their police academy is eight months long. They graduate at an "intermediate" level, which puts them way ahead of any other academy I know about; all paid for by that little bitty sales tax that everybody that buys anything in Ft. Worth helps pay. The city that I worked for decided that they would rather implement a similar tax. . . . for a minor league ball park. . . . instead of the public safety option.
I watched a segment the other day about the younger population in the work force. It went on to say that the Millennials were continually transferring from job to job for increased pay. The main problem with that, was that they were not going to work at any one place long enough to receive a pension or retirement check. That in it's self was not an issue. . . . as long as they were putting a portion of the their paycheck into a retire plan, such as a 401k. But, apparently next to none of them are doing such.
I remember my dad telling me that Social Security wouldn't be around when I got old . . . . and that was 40 years ago. I think that when the current crop of Millennials, who haven't prepared for retirement, apply for Social Security. . . . that will be more than it can handle.
Of course it's all a moot point if the zombie apocalypse happens, and the world ends.
Agreed
Before retiring I got saddled with the Contracting Officer PITA task on top of regular work and can tell you that there will always be waste in any budget, but the cutting has gone beyond that into the staff needed to have a working Govt for a long time. Any politician trotting out the "we'll cut the waste" is either a lying SOB or doesn't yet know what reality looks like.
There will always be a percentage of the population who can't work, as one of my charts showed.
I'm with magic in that we somehow keep moving along and will get through this without the sky falling.