US debt in perspective: If the US were a person that made 55 K a year.

[huevonkiller]

Since some people do not seem to understand the gravity of our destitution.

After debt ceiling deal:

Yearly income: $55,000
Total spending this year: $96,000+
Current Debt: $423,000+

Debt 10 years from now: At least $550,000 and only if the economy grows at a good rate (if we get a nice raise in other words).

Our solution is to "double down" on more borrowing and hope for a miracle? That's failed everywhere in the world.

 

[Haakzilla]

...guaranteed to get worse unless the US takes control of its own money supply, something the Congress very easily has the power to do!

The Two Step Plan to National Economic Reform and Recovery

Step 1: Directs the Treasury Department to issue U.S. Notes (like Lincoln’s Greenbacks; can also be in electronic deposit format) to pay off the National debt.

Step 2: Increases the reserve ratio private banks are required to maintain from 10% to 100%, thereby terminating their ability to create money, while simultaneously absorbing the funds created to retire the national debt.

These two relatively simple steps, which Congress has the power to enact, would extinguish the national debt, without inflation or deflation, and end the unjust practice of private banks creating money as loans (i.e., fractional reserve banking). Paying off the national debt would wipe out the $400+ billion annual interest payments and thereby balance the budget. This Act would stabilize the economy and end the boom-bust economic cycles caused by fractional reserve banking.

http://www.themoneymasters.com/monetary-reform-act/

 

[jlprk]

"If the US were a person that made 55 K a year"...How about if the US were a rich person who makes millions per year?

The US is a corpulent rich guy, has 70% body fat, won't pay his taxes, and complains that he needs more food. He should reduce his fat by living off it for a long time. So where is this fat?

70% of the nation's assets are owned by the top 2%. That's where to easily find any additional wealth we need. Reducing the fat from 70% to 68% would boost the economy for a decade. From 70% to 50%, a century. You overpaid rich aren't earning your keep as an efficient management class.

 

[huevonkiller]

"If the US were a person that made 55 K a year"...How about if the US were a rich person who makes millions per year?

The US is a corpulent rich guy, has 70% body fat, won't pay his taxes, and complains that he needs more food. He should reduce his fat by living off it for a long time. So where is this fat?

70% of the nation's assets are owned by the top 2%. That's where to easily find any additional wealth we need. Reducing the fat from 70% to 68% would boost the economy for a decade. From 70% to 50%, a century. You overpaid rich aren't earning your keep as an efficient management class.

Yeah but you live in a fantasy land where you chop off a privatized limb, for a less efficient government limb. Think of a prosthetic arm in other words.

There's no such thing as federal tax revenue.

 

[BLAZER PROPHET]

"If the US were a person that made 55 K a year"...How about if the US were a rich person who makes millions per year?

The US is a corpulent rich guy, has 70% body fat, won't pay his taxes, and complains that he needs more food. He should reduce his fat by living off it for a long time. So where is this fat?

70% of the nation's assets are owned by the top 2%. That's where to easily find any additional wealth we need. Reducing the fat from 70% to 68% would boost the economy for a decade. From 70% to 50%, a century. You overpaid rich aren't earning your keep as an efficient management class.

I dunno, jlprk, the average american income is about $40K per year. If he's using a stat of $55 per year he seems to be erring on the side of the rich. I also think his stats are pretty impressive and put the gravity of the situation in an interesting perspective. So the real questions is- what are we going to do about it?

 

[Denny Crane]

The government's finances aren't like a person's, so the comparison doesn't really valid.

Even so, the guy making $55K saved 10% of his earnings for 5 years, qualified for an FHA 5% down loan, and bought a $500K house.

He has a huge debt! It's many times his GDP of $55K.

His spending for the year was $55K plus the $25K down payment, or $80K.

 

[BLAZER PROPHET]

The government's finances aren't like a person's, so the comparison doesn't really valid.

Even so, the guy making $55K saved 10% of his earnings for 5 years, qualified for an FHA 5% down loan, and bought a $500K house.

He has a huge debt! It's many times his GDP of $55K.

His spending for the year was $55K plus the $25K down payment, or $80K.

I think you're comparing apples to oranges, Denny. It's one thing for myself to buy a house (make my own decision to buy, qualify for a loan, have insurance, care for the place, make payments...) and another for a person (in this case the US government) to build up debt on my behalf I neither want or can pay back or benefit from (for the most part)- and yet I'm stuck with the consequences of it all.

 

[Denny Crane]

The apples/oranges comparison is federal govt. finances to a person's. A person can't print money.

I'm not saying there's no value in such comparisons.

Purchasing a home is an investment that will at least leave the person owning the home outright in 30 years if he pays off his mortgage on schedule. A comparable government purchase might be roads, bridges, and dams.

A person making $55K, spending $96K, and all of the extra spending being charged on credit cards is apropos. Not only is the spending on credit cards, the person is getting new credit cards and using the balance of those to pay the interest on the previous cards as well as being charged to the limit. And the money isn't being spent on some asset with value like a home, it's being spent on steak and lobster dinners which ultimately turn into shit in the toilet bowel and get flushed away.

 

[BLAZER PROPHET]

The apples/oranges comparison is federal govt. finances to a person's. A person can't print money.

I'm not saying there's no value in such comparisons.

Purchasing a home is an investment that will at least leave the person owning the home outright in 30 years if he pays off his mortgage on schedule. A comparable government purchase might be roads, bridges, and dams.

A person making $55K, spending $96K, and all of the extra spending being charged on credit cards is apropos. Not only is the spending on credit cards, the person is getting new credit cards and using the balance of those to pay the interest on the previous cards as well as being charged to the limit. And the money isn't being spent on some asset with value like a home, it's being spent on steak and lobster dinners which ultimately turn into shit in the toilet bowel and get flushed away.

Gee, I like steak & lobster dinners. (I hope you caught my barfoism)

 

[Paxil]

The analogy isn't very applicable... as Denny points out. With the exception of houses, most people have a hard time time carrying too much debt (they just wouldn't get approved for it) What the government brings in varys wildly based on the economy.

I bought a 300K house when my income was about 55K... so at that time I had debt of 310K or thereabouts with car payment etc... I had almost no assets. So with 310K in debt... it appeared at that point I was sunk forever right? Better for me to live in a apt and not carry that debt right?

Wrong. Only a decade later I have two houses... one completely paid off and assets that exceed my debt by at least 500k. If I would have have sold the house, cut my spending and debt and lived in an apt... my assets right now would have been *much* less.

 

[The_Lillard_King]

Welcome to today's world Mr 55k. You have children to take care of, your school need money, your parents are getting older, need assistance and have no savings, other relatives you feel an obligation to needs assitance finacially and physically with some being unable to pay for their medication, all your assets have lost money, home need repairs, and your business needs an influx of cash with the down economy.


Go ahead Mr 55k, fix all this and reduce your debt all at one time. It's easy, just ask the people on this board . . . oh and getting more money from anyone else is out of the question.

 

[maxiep]

Welcome to today's world Mr 55k. You have children to take care of, your school need money, your parents are getting older, need assistance and have no savings, other relatives you feel an obligation to needs assitance finacially and physically with some being unable to pay for their medication, all your assets have lost money, home need repairs, and your business needs an influx of cash with the down economy.


Go ahead Mr 55k, fix all this and reduce your debt all at one time. It's easy, just ask the people on this board . . . oh and getting more money from anyone else is out of the question.

Because declaring bankruptcy isn't an option, then the cuts are going to be painful. Promises are going to have to be broken and real people are going to suffer.

BTW, what you're describing is Greece. So far, it's only been one side of the aisle trying to stop us from getting to that point.

 

[jlprk]

cuts are going to be painful. Promises are going to have to be broken and real people are going to suffer.

There was no pain in Clinton's 2nd term, when the problem was all solved. Then came Bush. Simply reverse the new Bush expenses. A couple of things can't be reversed, but most can.

 

[Denny Crane]

There was no pain in Clinton's 2nd term, when the problem was all solved. Then came Bush. Simply reverse the new Bush expenses. A couple of things can't be reversed, but most can.

People lost a combined $6T in wealth during Clinton's second term. That's PAIN!

 

[maxiep]

Simply reverse the new Bush expenses. A couple of things can't be reversed, but most can.

That's the least bat shit crazy thing you've written on this forum. Bush was no fiscal conservative, and neither were his acolytes in Congress. I'm glad they were booted.

 

[Draco]

...guaranteed to get worse unless the US takes control of its own money supply, something the Congress very easily has the power to do!



http://www.themoneymasters.com/monetary-reform-act/

HAHA what a funny article. A reserve ratio of 100%, banks would have to hold every dollar deposited in their vaults. They wouldn’t be able to use money to give out profitable loans. What would even be the point of having any bank? If people think the recession was bad because banks weren’t loaning out TARP funds just imagine a world where banks are prohibited from loaning anything!

 

[Draco]

Since some people do not seem to understand the gravity of our destitution.

After debt ceiling deal:

Yearly income: $55,000
Total spending this year: $96,000+
Current Debt: $423,000+

Debt 10 years from now: At least $550,000 and only if the economy grows at a good rate (if we get a nice raise in other words).

Our solution is to "double down" on more borrowing and hope for a miracle? That's failed everywhere in the world.

If this individual is spending $41,000 more than they make this year I would expect their debt to increase by much more that $127,000 in 10 years.

 

[huevonkiller]

The apples/oranges comparison is federal govt. finances to a person's. A person can't print money.

I'm not saying there's no value in such comparisons.

Purchasing a home is an investment that will at least leave the person owning the home outright in 30 years if he pays off his mortgage on schedule. A comparable government purchase might be roads, bridges, and dams.

A person making $55K, spending $96K, and all of the extra spending being charged on credit cards is apropos. Not only is the spending on credit cards, the person is getting new credit cards and using the balance of those to pay the interest on the previous cards as well as being charged to the limit. And the money isn't being spent on some asset with value like a home, it's being spent on steak and lobster dinners which ultimately turn into shit in the toilet bowel and get flushed away.

I said the same thing in less words: "Debt 10 years from now".

Our debt is growing, and exponentially.

 

[huevonkiller]

The analogy isn't very applicable... as Denny points out. With the exception of houses, most people have a hard time time carrying too much debt (they just wouldn't get approved for it) What the government brings in varys wildly based on the economy.

I bought a 300K house when my income was about 55K... so at that time I had debt of 310K or thereabouts with car payment etc... I had almost no assets. So with 310K in debt... it appeared at that point I was sunk forever right? Better for me to live in a apt and not carry that debt right?

Wrong. Only a decade later I have two houses... one completely paid off and assets that exceed my debt by at least 500k. If I would have have sold the house, cut my spending and debt and lived in an apt... my assets right now would have been *much* less.

Wrong, only a decade later our debt-to-GDP is even worse and we didn't buy a valuable asset like a home.

We spent it on government cars, less efficient healthcare, etc.

If this individual is spending $41,000 more than they make this year I would expect their debt to increase by much more that $127,000 in 10 years.

You are correct, but I was using the optimistic CBO projections of only 22 trillion dollars of debt a decade from now.

And we "cut" 2.5 trillion off that debt, I even gave us credit for that.

 

[blazerboy30]

The analogy isn't very applicable... as Denny points out. With the exception of houses, most people have a hard time time carrying too much debt (they just wouldn't get approved for it) What the government brings in varys wildly based on the economy.

I bought a 300K house when my income was about 55K... so at that time I had debt of 310K or thereabouts with car payment etc... I had almost no assets. So with 310K in debt... it appeared at that point I was sunk forever right? Better for me to live in a apt and not carry that debt right?

Wrong. Only a decade later I have two houses... one completely paid off and assets that exceed my debt by at least 500k. If I would have have sold the house, cut my spending and debt and lived in an apt... my assets right now would have been *much* less.

It should be pretty obvious that the government has not made smart, appreciating investments with our money, like some individuals have done with real estate. Otherwise we wouldn't be $14 trillion in debt. How far down that path do we need to go before people stop trying to convince themselves that the government makes smart investments for the future with our money?

 

[Draco]

"If the US were a person that made 55 K a year"...How about if the US were a rich person who makes millions per year?

The US is a corpulent rich guy, has 70% body fat, won't pay his taxes, and complains that he needs more food. He should reduce his fat by living off it for a long time. So where is this fat?

70% of the nation's assets are owned by the top 2%. That's where to easily find any additional wealth we need. Reducing the fat from 70% to 68% would boost the economy for a decade. From 70% to 50%, a century. You overpaid rich aren't earning your keep as an efficient management class.

The only reason individuals can own assets is because we setup a system predicated on legal ownership with the ideal it is for the better good of most people. We the people can create whatever system is in the best interest of everybody, if that means nobody can earn over $10million dollars that is our choice. Just how in the NBA there is a max salary, we could create a max salary in the US. Money is an abstract idea created by man.

7% of the US population believes their income is in the top 1%.

Being able to have ownership of nearly every piece of physical property is an abstract idea. The Native Americans didn’t believe people could “own” land, so they were happy to “sell” it to Europeans who bartered with garbage then used the military to enforce claims of ownership. Why did we stop there, why not have somebody own the sky? Could someone own all of the earth’s oxygen? What about the sun, I would like to stake legal claim to the sun then charge everybody rent for using its ray.

 

[huevonkiller]

The only reason individuals can own assets is because we setup a system predicated on legal ownership with the ideal it is for the better good of most people. We the people can create whatever system is in the best interest of everybody, if that means nobody can earn over $10million dollars that is our choice. Just how in the NBA there is a max salary, we could create a max salary in the US. Money is an abstract idea created by man.

7% of the US population believes their income is in the top 1%.

Being able to have ownership of nearly every piece of physical property is an abstract idea. The Native Americans didn’t believe people could “own” land, so they were happy to “sell” it to Europeans who bartered with garbage then used the military to enforce claims of ownership. Why did we stop there, why not have somebody own the sky? Could someone own all of the earth’s oxygen? What about the sun, I would like to stake legal claim to the sun then charge everybody rent for using its ray.

Well we do have no-fly zones, and crazy environmentalists. That's not so far off.

 

[Draco]

It should be pretty obvious that the government has not made smart, appreciating investments with our money, like some individuals have done with real estate. Otherwise we wouldn't be $14 trillion in debt. How far down that path do we need to go before people stop trying to convince themselves that the government makes smart investments for the future with our money?

Government spending is not supposed to get a direct monetary return of capital. Because it doesn’t have an attractive ROI doesn’t mean it’s a failure or success. If it is spent on the right types of education or other beneficial programs it can increase the countries GDP far beyond the cost.

WWII caused the country to spend insane amounts of money far beyond revenues and plunged the country into massive deficits, but the result of all that spending ended the great depression and began an era of economic prosperity. For decades prior politicians tried to tighten budgets and decrease spending and hoard cash to end the depression to no avail. Did WWII expenditures have a good direct measurable ROI? No.

I’m not saying deficits are always good, but decreasing the deficit will have negative effects on the economy, in the short run it will decrease GDP since the government is spending less money. Will that become a compounded problem? Will the positive long-term effects of reduced debt outweigh costs of less government spending? Those are difficult questions.

 

[huevonkiller]

Government spending is not supposed to get a direct monetary return of capital. Because it doesn’t have an attractive ROI doesn’t mean it’s a failure or success. If it is spent on the right types of education or other beneficial programs it can increase the countries GDP far beyond the cost.

WWII caused the country to spend insane amounts of money far beyond revenues and plunged the country into massive deficits, but the result of all that spending ended the great depression and began an era of economic prosperity. For decades prior politicians tried to tighten budgets and decrease spending and hoard cash to end the depression to no avail. Did WWII expenditures have a good direct measurable ROI? No.

I’m not saying deficits are always good, but decreasing the deficit will have negative effects on the economy, in the short run it will decrease GDP since the government is spending less money. Will that become a compounded problem? Will the positive long-term effects of reduced debt outweigh costs of less government spending? Those are difficult questions.

They're not difficult questions because the government is on a path it can not sustain.

Germany is Europe's richest economy and only had .1% growth the previous quarter, socialism is failing and our spending has never been this high in recent decades.

 

[Denny Crane]

Government spending is not supposed to get a direct monetary return of capital. Because it doesn’t have an attractive ROI doesn’t mean it’s a failure or success. If it is spent on the right types of education or other beneficial programs it can increase the countries GDP far beyond the cost.

WWII caused the country to spend insane amounts of money far beyond revenues and plunged the country into massive deficits, but the result of all that spending ended the great depression and began an era of economic prosperity. For decades prior politicians tried to tighten budgets and decrease spending and hoard cash to end the depression to no avail. Did WWII expenditures have a good direct measurable ROI? No.

I’m not saying deficits are always good, but decreasing the deficit will have negative effects on the economy, in the short run it will decrease GDP since the government is spending less money. Will that become a compounded problem? Will the positive long-term effects of reduced debt outweigh costs of less government spending? Those are difficult questions.

In your first paragraph, you describe investment that is a return on capital.

In your second paragraph, you are just wrong. The war didn't end the depression, the spending didn't end the depression. GDP was growing most of the 1930s, so no recession or depression, just not much of a recovery. The recovery was delayed because of the kind of spending done all along. And what the war did was leave us as the only industrial nation standing after Europe and Japan were bombed into the stone age.

 

[barfo]

In your first paragraph, you describe investment that is a return on capital.

In your second paragraph, you are just wrong. The war didn't end the depression, the spending didn't end the depression. GDP was growing most of the 1930s, so no recession or depression, just not much of a recovery.

The Great Depression never happened. I like it, but why not take it one step further: WWII never happened either. Or maybe we should think bigger: History didn't happen. Up until a moment ago, nothing existed. There. All that messy reality has been erased, so it doesn't conflict with your philosophy.

barfo

 

[Denny Crane]

The Great Depression never happened. I like it, but why not take it one step further: WWII never happened either. Or maybe we should think bigger: History didn't happen. Up until a moment ago, nothing existed. There. All that messy reality has been erased, so it doesn't conflict with your philosophy.

barfo

There is no recession or depression if GDP growth is positive.

The Great Depression describes a decade of malaise, but the issue was slow growth, not negative growth for most of that time.

 

[blazerboy30]

Government spending is not supposed to get a direct monetary return of capital. Because it doesn’t have an attractive ROI doesn’t mean it’s a failure or success. If it is spent on the right types of education or other beneficial programs it can increase the countries GDP far beyond the cost.

WWII caused the country to spend insane amounts of money far beyond revenues and plunged the country into massive deficits, but the result of all that spending ended the great depression and began an era of economic prosperity.

For decades prior politicians tried to tighten budgets and decrease spending and hoard cash to end the depression to no avail. Did WWII expenditures have a good direct measurable ROI? No.

I’m not saying deficits are always good, but decreasing the deficit will have negative effects on the economy, in the short run it will decrease GDP since the government is spending less money.

Will that become a compounded problem? Will the positive long-term effects of reduced debt outweigh costs of less government spending? Those are difficult questions.

Oh great. The typical Dem's argument that government "investments" end up more than paying for themselves in the future due to increased GDP.

When will this broken idea stop? We're at 100% debt-to-GDP ratio, and it is only projected to get worse. When will these arguments be put to rest? Will it take a 200% debt-to-GDP ratio? 300%? How many times, and over how many years does it have to be proven incorrect, and a failed ideal?

Bringing WWII spending into the picture is a flawed argument. The Constitution mandates defense. So even if GDP hadn't increased after WWII, it was still the right decision to make.

 

[Draco]

Oh great. The typical Dem's argument that government "investments" end up more than paying for themselves in the future due to increased GDP.

When will this broken idea stop? We're at 100% debt-to-GDP ratio, and it is only projected to get worse. When will these arguments be put to rest? Will it take a 200% debt-to-GDP ratio? 300%? How many times, and over how many years does it have to be proven incorrect, and a failed ideal?

Bringing WWII spending into the picture is a flawed argument. The Constitution mandates defense. So even if GDP hadn't increased after WWII, it was still the right decision to make.

Maybe it is time to reduce spending, yes our debt is very large. I was saying you can't judge the sucess of government expenditures by government ROI. You can judge an individuals financial decisions by ROI.

WWII expenditures being good for the economy was counter-intuitive. At the time most believed the economy would be saved by reduced spending and balanced budgets, when in fact the opposite approach had far greater success. I'm not saying similar spending will get us out of the current recession or current federal debt problems, only that the best solution may be a radical non-intuive idea.

 

[Paxil]

It should be pretty obvious that the government has not made smart, appreciating investments with our money, like some individuals have done with real estate. Otherwise we wouldn't be $14 trillion in debt. How far down that path do we need to go before people stop trying to convince themselves that the government makes smart investments for the future with our money?

Agreed... but they also are very restricted in what they can do with it. It isn't like they can take trillions in the social security pool and stick it in a vault (that would be stupid... it depreciates just sitting there) Using it for expenses seemed better than borrowing money for other expenses and paying interest to someone. Up until the last few years we always were taking in more than we were paying out.

Anyway... it is risky for the government to cut spending unless it is done very carefully because it is a source of income for many of the people that pay taxes. Greece massively cut goverment spending over the last few years and their problem is getting worse... not better.

Do we need to be careful and not wasteful? Of course! There are all kinds of shitty govenment programs from long long ago that just keep going and going and going... and we all see sometimes that we are making stupid decisions. I used to live of Forster near 162nd... and they build a culvert for salmon that was like 4 million or something... and it was a teeny little stream that I doubt ever had a fish in it. We can't wast money like that. I love salmon sure... but come one... at some point you have to say we can't afford that.