US War Deficit & US Domestic Deficit

[The Source]

US War Deficit & US Domestic Deficit

 

Over the past few weeks, I have not had the time to visit LucasForums. I brought this subject up a few months back, but I thought I would revisit the subjects at hand. According to Bush's State of the Union, the economy will be repaired by 2012. Today, I went to a few of the local malls, and found a eerie reality taking place. While Bush is saying everything is 'okay', buisnesses are droppiing off the face of the map. I found that in one mall ten companies have closed, and in the other fourteen companies have closed. Keep in mind that these malls get a high volume of consumers. After I noticed this cunundrum, I decided to do some research. Eventhough our Domestic Deficit is being paid, the War Deficit is running on borrowed money. China is one of the economies that we are fuelling. Eventually, the money we are charging on our credit-card needs to be paid. One of the ways we are paying for some of this war is selling our ports and energy companies to foreign countries. However, there is a limitation to what we can sell off, so we can continue to carry out our wars. When people finally hit reality, they will find a massive war deficit that has not received a single dime. Otherwords, the price for the war has not hit tax payers as of yet.

 

What do you think? Am I along in feeling that something is wrong?

[SilentScope001]

Eventually, the money we are charging on our credit-card needs to be paid.

 

Nope. Just pass it onto our childern. And then pass it onto our childern's childeren. And so on and so forth.

 

This is the main secret that allows the US debt to increase, without any problems for the foreseeable future. You see, you borrow money, and then if you make the interest payments, everything will be fine. The US can have infinite debt, since it is able to print its own money, and continue to exist. It will not default on its loan.

 

The problem is that with higher debt, we take away money that could be spent on commerical enterprises and investment, which would be able to increase the economy (Rather, that money is being spent on the federal government). This will cause a decrease in economic growth. There may also be a problem of forigen nations moving onto other markets, because they believe they can make money in other ways than by buying bonds from the US, and America may end up having to raise interest rates to lure more people.

 

That's it. Lower economoic growth, higher interest rates. No need to sell off anything that belongs to America, just deal with the consquences.

[TSR]

Wow. its worrying how the minds of the world havent yet realised this, but star wars forum goers have. That, im afraid, shows how screwed up things are.

[HerbieZ]

I try not to take too much interest. It's all just peaks and troughs with the state of the world these days. Yes shops close, but shops open in their place, and alas the mighty ebb and flow of the world continues.

[Rogue15]

o nos!!! godzilla!!!!!!!!!!!!!!

 

RUN FOR YOUR LIFES!!!!!!!!!!!!

 

every action has an equal and opposite reaction so...something good will come of this.

[Darth InSidious]

I try not to take too much interest. It's all just peaks and troughs with the state of the world these days. Yes shops close, but shops open in their place, and alas the mighty ebb and flow of the world continues.

Perhaps, but try telling that to the ex-shopkeeper now desparate to find a job

 

@Rogue: So...if I crush this paper cup, another paper cup somewhere else gets uncrushed?

 

Egad!

[ET Warrior]

every action has an equal and opposite reaction so...something good will come of this.

...Worst application of Newton's Third law...ever.

 

@SilentScope...you do realize that the money we owe isn't to some U.S. Bank, right? We're borrowing this money from other countries. Specifically China. Do you really think at some point they won't call in our marker and demand we start making payments to actually settle that debt?

 

And even if we COULD get away with making interest payments forever, as the debt increases, so would interest. Eventually that becomes unsustainable, and then we are COMPLETELY screwed.

[SilentScope001]

...Worst application of Newton's Third law...ever.

 

Haven't read the religion of "Balance" in Star Wars, have you?

 

@SilentScope...you do realize that the money we owe isn't to some U.S. Bank, right? We're borrowing this money from other countries. Specifically China. Do you really think at some point they won't call in our marker and demand we start making payments to actually settle that debt?

 

Nah. Credit card companies would love people who are constantly in debt and owe them money. As long as they pay of course. If we somehow turn into a Third World nation (unlikely but possible), China will start screaming at us.

 

What we need to fear is that China may become bored of loaning to America and then decides to loan to other countries and other investment projects that could net China more money than just pouring it to America. Then America raises those interest rates to lure Chinese money back to America, and we get some more problems...

 

And even if we COULD get away with making interest payments forever, as the debt increases, so would interest. Eventually that becomes unsustainable, and then we are COMPLETELY screwed.

 

It can become sustainable. We've been in debt ever since the United States of America was founded (in fact, we only got out of debt once, under Andrew Jackson, only to return swiftly back into debt). All we need to do is just make sure we make the interest payments...and more importantly, have the economy grow fast enough so that we can afford to pay the interest payments and have some money not be used to help grow our economy.

 

Hey, I'm a fiscal conservative and I hate national debts. The problem is, no matter how we hate it, it's going to happen anyway and we can't get rid of it. Therefore, we might as well consider the consquences of such a debt and trust/hope that the US is able to stay infintely in debt without any problems, knowing that if we do default on our loans, it's not the end of the world.

[CountVerilucus]

Why cant we just cut our loses and leave IRAQ?!

[SilentScope001]

Why cant we just cut our loses and leave IRAQ?!

 

Simple. Do so and the Democrats will then spend that money on something else! Spending money on health care and social security is the same as spending money on war. Both sounds neat, and both may bite us when we least expect it.

 

You can't avoid the "curse" of the National Debt. We can get lucky if we are even able to reduce the speed at which we accumlate the National Debt (by reducing the deficit, which is the cause of the National Debt).

[ET Warrior]

Haven't read the religion of "Balance" in Star Wars, have you?

I Don't base my real-world ideas and opinions on science-fiction writing.

 

 

It can become sustainable. [...] All we need to do is just make sure we make the interest payments...and more importantly, have the economy grow fast enough so that we can afford to pay the interest payments and have some money not be used to help grow our economy.

The point I am making is that at the rate we are accumulating debt to other countries, it is not sustainable. At some point we will be unable to adequately pay our debts, and unless we can figure out some way to convince China it is in their best interest to let us off the hook our economy will be trashed.

 

Simple. Do so and the Democrats will then spend that money on something else! Spending money on health care and social security is the same as spending money on war.

I'm sure the Democrats would just love to take that more than 300 billion dollars and use it to provide actual HELP to the citizens they are representing, as opposed to using it to kill other humans on the other side of the globe.

 

And no, they actually aren't the same at all, when you figure that the government is already spending money on these programs, it means they won't need as much funding as a war across the globe, meaning that our debt would at the very least be increasing at a MUCH slower rate. Also, health care and social security provide tangible benefits to the people who are PAYING the taxes that are being spent on these things. And if there are tangible benefits people will be little less upset about paying more in taxes. If my taxes increase a little, but I suddenly get free health care because of it, swell!

[SilentScope001]

I Don't base my real-world ideas and opinions on science-fiction writing.

 

No need to get offended, it's just a light-hearted joke.

 

I'm sure the Democrats would just love to take that more than 300 billion dollars and use it to provide actual HELP to the citizens they are representing, as opposed to using it to kill other humans on the other side of the globe.

 

Maybe. But as I say, I am a fiscal conservative. Spending money to help us is still being automatically wasteful. I do not wish a debate on the Iraq War and it does not matter to be quite fair.

 

And no, they actually aren't the same at all, when you figure that the government is already spending money on these programs, it means they won't need as much funding as a war across the globe, meaning that our debt would at the very least be increasing at a MUCH slower rate.

 

You can't say that. Social programs cost a lot of money, and if it does not work, then more money may need to be spent. You could blame Roosvelt's New Deal actually for causing this huge national debt. In an attempt to stop the Great Depression, he spent a lot of money helping Americans get out. He's also the person that started the Social Security that is what really threatens to ballons the National Debt.

 

The programs works, and it's very effective. But it still cost a lot of money. War is also expensive, but wars last for, say, 5-10 years, and either we win, or we get bored and leave. (And, one may make an argument that fighting in wars help defend America. You can't cut programs in military, becuase if you do so, other nations [read, that China nation that owns our debt] may seek to take advantage and take over the globe and become a superpower.) Social programs last forever.

 

I'm saying, sooner or later, we have to pay for "free" health care and other government perks. If we are willing to deal with a huge national debt, with the risk of higher interest rates and lower economic growth, as long as we get programs that will help us, then so be it. But know that we will have to pay.

 

Also, health care and social security provide tangible benefits to the people who are PAYING the taxes that are being spent on these things. And if there are tangible benefits people will be little less upset about paying more in taxes. If my taxes increase a little, but I suddenly get free health care because of it, swell!

 

Depends on how tangible you are talking here. If I am not sick or old, I see no tangible benieft to health care and social security.

 

But, here lies a problem. Higher taxes. That's not good. The reason economists call for a lower debt is so that investment money would stay where it is and help build the US Economy. Increasing taxes TAKE AWAY that investment money directly. At least a national debt work on the sidelines to decrease national growth, higher taxes directly cut into the economy and weaken it. Both are bad, but the taxes work directly. Not to mention, taxes are sort of unpopular with the non-economist population as well (wonder why).

 

If we don't want a national debt without decreasing economic growth, then we have to be serious. We have to CUT. No "reorinetation of priorities", you are just shuffling paperwork and giving tangible beniefts out to other people, but you are still having that national debt that you fear. You may hate the war, so you can call for a cut in defense. But you cannot use that money you gain from the cutting of defense to spend on any other projects, because then the national debt will remain as it is. And if you happen to spend MORE money on such a project, gah!

 

But what do we want to cut? Defense, bah, we have to keep America safe from terrorism! Homeland Security, what, you want a terrorist to attack? Social Security, are you insane, do you care about the future? Health Care, do you care of the sick and eldery? Aid to other nations...but we have to help out our allies! Pork barrel projects, everyone hate them (but the people who actually gain the pork) but they compose 1% of the budget, and won't make a dent in the national debt?

 

It is a hard desicion to decide what to destroy, and if we want to destroy. It is hard to decide if the costs of keeping the national debt outweigh the beniefts.

[HerbieZ]

Perhaps, but try telling that to the ex-shopkeeper now desparate to find a job

 

Unless he employs me, i could'nt give a monkeys.

 

@Rogue: So...if I crush this paper cup, another paper cup somewhere else gets uncrushed?

 

 

No, one is made.

[Darth InSidious]

Unless he employs me, i could'nt give a monkeys.

You've got no compassion

 

 

 

No, one is made.

I hate to refuse to take someone's word, but prove it

 

@Vericulus: Your country was borrowing money before it went into Iraq, and in any case, leaving Iraq won't reverse your borrowing

 

@ET: You don't base your beliefs on t3h Star Wars?! OMG, u n00b

[Totenkopf]

No, one is made.

 

I hate to refuse to take someone's word, but prove it

 

You're both sort of correct. One new cup is not made every time a cup is crumpled, but cups are constantly made to replace the cups that will be crumpled.

 

Also, I'm guessing that Vericulus wasn't insinuating that getting out of Iraq would stop the borrowing, but that that money could be used elsewhere.

 

Frankly, if politicians could be trusted to do the right thing, I'd be willing to endure a tax increase where the funds went STRICTLY to paying off the debt and not some social boondoggle that never dies, in spite of it's irrelevance or redundancy. ET is fooling himself if he truly believes that a small tax hike will grant him universal health coverage. Seriously, anybody or corporation should have to basically be means tested to prove they're worthy of any kind of "welfare". Also, they should have to be LEGAL to qualify.