Sounds like its time to fire up the printing press. How can you back your way out of a hole that big?
Bob
More USA political questions
- Thread starter Keith1
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Sounds like its time to fire up the printing press. How can you back your way out of a hole that big?
Bob
I know this figure of $16.8 trillion is a tad more than most people could comprehend but with the best part of $140 trillion still in the gold reserves have the US really got that many issues. Mind you looking at the decline of the US reserves it does make you wonder whos`s been at them. Japan seem fond of the stuff.
Total reserves (includes gold, current US$) | Data | Table
Total reserves (includes gold, current US$) | Data | Table
Pat
Supporter
I think you will find that much of the U.S. gold reserves are actually paper entries. As for the hard stuff: Current Report: Gold Report: Publications & Guidance: Financial Management Service
Just like when the government takes money out of Social Security Taxes (actually called Federal Insurance Contributions) and puts it into general revenue it counts it as income and never recognizes the IOU as a liability. If a corporation would keep it's books like the U.S. government, they would all go to jail.
If you put it all on the same balance sheet, the actual liabilities of the federal government—including Social Security, Medicare, and federal employees' future retirement benefits—already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure. Cox and Archer: Why $16 Trillion Only Hints at the True U.S. Debt - WSJ.com
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Jim Craik
Lifetime Supporter
Say Pat,
In 2012, the US GDP was Approximately $16 Trillion..............
Now if our debt is also approximately $16 Trillion..................
Now I know that the gross domestic product is different than "income", but Is that similar to a family with an income of say $100,000 per year having a mortgage on their home of $100,000?
In 2012, the US GDP was Approximately $16 Trillion..............
Now if our debt is also approximately $16 Trillion..................
Now I know that the gross domestic product is different than "income", but Is that similar to a family with an income of say $100,000 per year having a mortgage on their home of $100,000?
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Pat
Supporter
I'm not sure I understand your analogy Jim. I'm not economist but I always found GDP being a "velocity indicator" more useful in the analysis of the change than merely as a static comparison to debt.
Getting back to your analogy, GDP would be more like how much the total of what everyone in your neighborhood or community makes versus the $100K you make. Your neighborhood "GDP" would be good indicator if Skyline Drive is a better or more prosperous place to live versus someplace in the valley or even 17 Mile Drive in Carmel. I imagine you may use something like that when you value properties. Your home payment could be indirectly tied to the increased "GDP" of your neighborhood causing it to appreciate in value and equity. You could then get a home equity loan at a better rate and borrow more. But at some point, your creditors are going to want assurance they will be paid and your are not over extended. If the GDP keeps booming, then things are good, if it slows at a rate greater than your borrowing, Houston, we have a problem.
In the case of the government, it's like it "makes income" through taxes of $2,450B but spends $3,537B. In addition it has to service the short and long term indebtedness cited in my previous post. The issue is how fast the debt is accumulating and if the interest rates spike even a few % then the government's cost of funds will skyrocket consuming ever more of the budget in a downward spiral. That's why I think both sides in the current fiscal brinksmanship are insane.
I probably didn't state that well but maybe it helps.
Jim Rosenthal
Supporter
Maybe we all need a vacation from talking about all this, and we should discuss something useful and important, like race cars. We'd accomplish a lot more.
Jim Craik
Lifetime Supporter
Pat,
I'm no economist either, but if the GDP could be considered the Countries "income" and the debt is it's mortgage, wouldn't "taxes" be equal to the "mortgage" payment?
If thats the case, then a $16 trillion income, with a $16 trillion debt does not seem so outragous, does it?
I mean the numbers are huge and taken by itself the $16 trillion debt seems unbelievable, but when compared to the GDP, it seems slightly less outragous.
I'm no economist either, but if the GDP could be considered the Countries "income" and the debt is it's mortgage, wouldn't "taxes" be equal to the "mortgage" payment?
If thats the case, then a $16 trillion income, with a $16 trillion debt does not seem so outragous, does it?
I mean the numbers are huge and taken by itself the $16 trillion debt seems unbelievable, but when compared to the GDP, it seems slightly less outragous.
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yes,yes,yes, please...
I think you will find that much of the U.S. gold reserves are actually paper entries. As for the hard stuff: Current Report: Gold Report: Publications & Guidance: Financial Management Service
Just like when the government takes money out of Social Security Taxes (actually called Federal Insurance Contributions) and puts it into general revenue it counts it as income and never recognizes the IOU as a liability. If a corporation would keep it's books like the U.S. government, they would all go to jail.
If you put it all on the same balance sheet, the actual liabilities of the federal government—including Social Security, Medicare, and federal employees' future retirement benefits—already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure. Cox and Archer: Why $16 Trillion Only Hints at the True U.S. Debt - WSJ.com Quote
That was an interesting and eye opening read, thanks Pat
I would normally agree with this but this thread has become educational
Bob
Just like when the government takes money out of Social Security Taxes (actually called Federal Insurance Contributions) and puts it into general revenue it counts it as income and never recognizes the IOU as a liability. If a corporation would keep it's books like the U.S. government, they would all go to jail.
If you put it all on the same balance sheet, the actual liabilities of the federal government—including Social Security, Medicare, and federal employees' future retirement benefits—already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure. Cox and Archer: Why $16 Trillion Only Hints at the True U.S. Debt - WSJ.com Quote
That was an interesting and eye opening read, thanks Pat
I would normally agree with this but this thread has become educational
Bob
So Jim, How long do you think it will take for us to pay off this debt?
That's another question you will dodge and not ask.
Jim Craik
Lifetime Supporter
John,
As right now it appears that our monthly payment is less than "interest only", at that rate it will never be paid off.
As any homeowner could tell you, we need to raise our payment (taxes) to a point where we will be paying down our "mortgage".
I'm thinking perhaps we sould raise or "payments" (taxes) to what we paid in the time of the "Great Ronald Reagan". You know, before Bush lowered our monthly payment to below interest only.
As right now it appears that our monthly payment is less than "interest only", at that rate it will never be paid off.
As any homeowner could tell you, we need to raise our payment (taxes) to a point where we will be paying down our "mortgage".
I'm thinking perhaps we sould raise or "payments" (taxes) to what we paid in the time of the "Great Ronald Reagan". You know, before Bush lowered our monthly payment to below interest only.
Ok, lets raise taxes. But what are we going to do when the next round comes? When the government continues to spend and gets bigger and we find ourselves in the same predicament we are in now? Do we just raise taxes again?
Jim Craik
Lifetime Supporter
John,
You do realize that each year our GDP does increase, as does the population hence our income also increases, the trick is to keep the two in balance.
Although Reagan and Bush told us that tax cuts and increased spending were the answer to lowering the debt, it appears they were wrong.
Now we have to adjust our payments to better reflect our debt, you know, pay for what we spend.
You do realize that each year our GDP does increase, as does the population hence our income also increases, the trick is to keep the two in balance.
Although Reagan and Bush told us that tax cuts and increased spending were the answer to lowering the debt, it appears they were wrong.
Now we have to adjust our payments to better reflect our debt, you know, pay for what we spend.
So it kinda sounds like you're saying that the taxes should be pegged to GDP?
That would mean that some percentage of GDP will be taxed. So if the GDP is 16 trillion, what percentage of that should go to taxes? Also, does this percentage fluctuate depending on what the GDP is? So if the GDP contracts, what happens then? Do we lower this percentage?
That would mean that some percentage of GDP will be taxed. So if the GDP is 16 trillion, what percentage of that should go to taxes? Also, does this percentage fluctuate depending on what the GDP is? So if the GDP contracts, what happens then? Do we lower this percentage?
Jim Craik
Lifetime Supporter
No, I'm not.
Using the homeowner analagy, that would be like saying our house payment should be linked to our income, thats not how it works......
The payment (taxes) has to be linked to the amount of debt.
If it takes X$ to sevice the debt, taxes need to be linked to that, right?
Then, if the GDP increases to the point that is higher than the debt, only then would we have the choice of lowering taxes or increasing spending.
My ten-year-old grandson's take on the economy was this:
"You mean that my piggy bank is full and I spend it and borrow the money to replace it, and pay interest on it too, then I'll owe a lot of money and when my bank is empty again because I HAVE to spend it and do it all over" "My allowance and extra work that I do won't be able to keep it up" "That's just STUPID"!
"You mean that my piggy bank is full and I spend it and borrow the money to replace it, and pay interest on it too, then I'll owe a lot of money and when my bank is empty again because I HAVE to spend it and do it all over" "My allowance and extra work that I do won't be able to keep it up" "That's just STUPID"!
