How much is $17 trillion? Visualized for reference.

[camcojb]

Originally Posted by parsonsj

Governments (and especially governments with their own currency) are not the same as households or businesses. The government has an obligation to follow policies to support employment for all its citizens that's very different than what a household or business does. If your reaction to that statement is that that isn't in the Constitution -- imagine the US with a balanced budget and 30% unemployment. The government wouldn't last long in that scenario.

The data shows that the European (UK, Greece, Italy) experiments with austerity -- reducing their future debt by cutting government spending -- has proven counter-productive. Cutting government spending has increased debt by creating more unemployment and reducing tax receipts.

Simply put: you can't save your way to prosperity. You have to invest your way to prosperity.

Fixating on debt at a time when the economy is operating below capacity and millions of people are out of work (or working below their skill level) is a false savings. A better policy would be to pursue an agenda to support more employment and grow the economy to reduce debt in the future. And that's especially true when the US government can borrow money at historically low rates.

my biggest concern is we enjoy this advantage because we can print our own money, and it's the world's currency. What happens when the Fed goes too far, and it ever lost that status? We could print all we wanted but it would be worthless, think Zimbabwe........... Also realize that the debt is still owed, and the interest rates will not stay as low as they are. When they rise the more debt you have the worse it will be. And there is NO doubt they are going to go up. We HAVE to address the spending to some point.

There needs to be balance, but the fastest way to reduce the deficit is to get people back to work and see the increased revenues rather than trying to increase taxes. But if they are unwilling to pass a budget or reduce spending also, then I don't see it happening near term. They've proven they're willing to spend money, but at this point it's going to the wrong things in my opinion.

[Bucketlist2012]

Speaking on currency..

In 1964 , you could take a Quarter and buy a Gallon of gasoline..You can take that same Quarter in 2012(Silver), and buy a gallon of Gasoline.

In 1964, you could take a paper Dollar and buy 4 Gallons of gasoline..In 2012, that same paper Dollar now buys 1/4 of a Gallon of gasoline.

That is the state of Fiat or paper currency..The Dollar.

[GregWeld]

I mentioned in an earlier post about Europe's bonds - or any bonds (BORROWING) for that matter....

Why is the US Treasury so low (rate)? And Europe's so high?

Nobody wants to own European debt. They'd rather have a negative net return (rate vs inflation) than own Euro debt.

I think what Mike (Bucketlist) and I are trying to say - and nobody wants to listen - is that what you're seeing in Europe NOW - is where the USA is headed continuing to spend what it doesn't have and to issue debt.

The reasons for the woes of Europe are many... but mostly it is based on entitlements and high tax rates. Too few paying too much - and too many doing too little and getting too much.

We have been given the opportunity to look into the crystal ball and see Americas future.

[parsonsj]

Originally Posted by Greg

Nobody wants to own European debt. They'd rather have a negative net return (rate vs inflation) than own Euro debt.

I think what Mike (Bucketlist) and I are trying to say - and nobody wants to listen - is that what you're seeing in Europe NOW - is where the USA is headed continuing to spend what it doesn't have and to issue debt.

The reasons for the woes of Europe are many... but mostly it is based on entitlements and high tax rates. Too few paying too much - and too many doing too little and getting too much.

We have been given the opportunity to look into the crystal ball and see Americas future.

The assertion that "mostly it is based on entitlements and high tax rates" doesn't match the data. There is no such thing as "European" debt, and no such thing as a European bond. The argument needs to be based on the individual countries in Europe in order to have data to match the assertion, and when you do that you find the argument doesn't work so well. Here's why:
1. Northern European countries (Finland, Sweden, Norway) have the strongest growth over the past few years, and they have the highest tax rates and most comprehensive safety nets in Europe.
2. Central European countries are doing ok, though they may be in recession now or on their way to recession. Germany, France, Austria, etc. They have lower tax rates, and more private sector safety net (private health insurance, etc.).
3. Southern European and peripheral European countries are doing poorly. The so-called GIPSI (Greece, Ireland, Portugal, Spain, and Italy) countries are in this group, and they are the ones in crisis. These countries are the ones we need to discuss to see if there is a lesson for the US.

When you dig into the the GIPSI countries' data, you find that the assertion that "high tax rates and large entitlements" argument doesn't match either. Recent attempts to cut government spending in those countries have resulted in even larger deficits, and worse, has put millions of people out of work. Cutting government spending is not working. If we look at the GIPSI woes, the lesson is pretty clear: it's better to pursue policies of increasing employment, and growing the economy to reduce future government debt.

[Bucketlist2012]

Originally Posted by parsonsj

The assertion that "mostly it is based on entitlements and high tax rates" doesn't match the data. There is no such thing as "European" debt, and no such thing as a European bond. The argument needs to be based on the individual countries in Europe in order to have data to match the assertion, and when you do that you find the argument doesn't work so well. Here's why:
1. Northern European countries (Finland, Sweden, Norway) have the strongest growth over the past few years, and they have the highest tax rates and most comprehensive safety nets in Europe.
2. Central European countries are doing ok, though they may be in recession now or on their way to recession. Germany, France, Austria, etc. They have lower tax rates, and more private sector safety net (private health insurance, etc.).
3. Southern European and peripheral European countries are doing poorly. The so-called GIPSI (Greece, Ireland, Portugal, Spain, and Italy) countries are in this group, and they are the ones in crisis. These countries are the ones we need to discuss to see if there is a lesson for the US.

When you dig into the the GIPSI countries' data, you find that the assertion that "high tax rates and large entitlements" argument doesn't match either. Recent attempts to cut government spending in those countries have resulted in even larger deficits, and worse, has put millions of people out of work. Cutting government spending is not working. If we look at the GIPSI woes, the lesson is pretty clear: it's better to pursue policies of increasing employment, and growing the economy to reduce future government debt.

Forget Europe for a second and then try the argument of continuing spending in America...Take California, and try to argue that you need to increase the spending and the debt to grow it's economy..

Instead of lowering the debt, they continue to spend on Government employees, and Bullet train projects ,that will triple in costs and be unfinished.

City after city is going bankrupt due to massive over spending..

The spending and growth you talk about is only on the government programs, and the government employees, not the private sector..The private sector is being punished with more taxes to pay for the spending.

This is the canary in the coal mine...The nation is following California's lead..

I can appreciate your posts , so that the reader's can decide for themselves.

But i guarantee that I don't see through your eyes and never will..When you say that it is clear what is happening, I say the same thing...It is pretty clear what is happening..There is a Debt crisis due to massive overspending..

Government has always been the most wasteful entity ever, and increasing it's size and power only lends to more wasteful spending..

More bankrupcies to follow.And they will all be cities and states...More bailouts, printing and spending is coming.

[parsonsj]

Yeah, California has real problems. It's a bit of a poster child for austerity efforts not working.. as each new round of spending cuts is instituted, the deficit goes up, not down. It was true for Gray Davis, the Governator (who can spell the man's name), and now for Jerry Brown.

What's the answer? More tax base. How? Invest in the population. Get the unemployed back to work paying texes. If you want to see the cause of California's budget problems, go back to Proposition 13 in 1978, and you can see a series of budget crises that have been happening since then.

There's no easy solutions -- but cutting government spending doesn't work. It hasn't worked in California, it hasn't worked in Texas, it hasn't worked in the UK, and it hasn't worked in Italy, Greece, or Spain. We need to do something else.

Wisconsin has shown some promise. Their approach has been to require government employees to provide a larger percentage of their pension contributions -- in effect, a tax on unionized government employees. I'm just spitballin' but maybe something to try in California is to invest in more school teachers (California is currently 48th in spending per capita in education) and require them to provide a greater percentage of their pension.

[Bucketlist2012]

Originally Posted by parsonsj

Yeah, California has real problems. It's a bit of a poster child for austerity efforts not working.. as each new round of spending cuts is instituted, the deficit goes up, not down. It was true for Gray Davis, the Governator (who can spell the man's name), and now for Jerry Brown.

What's the answer? More tax base. How? Invest in the population. Get the unemployed back to work paying texes. If you want to see the cause of California's budget problems, go back to Proposition 13 in 1978, and you can see a series of budget crises that have been happening since then.

There's no easy solutions -- but cutting government spending doesn't work. It hasn't worked in California, it hasn't worked in Texas, it hasn't worked in the UK, and it hasn't worked in Italy, Greece, or Spain. We need to do something else.

Wisconsin has shown some promise. Their approach has been to require government employees to provide a larger percentage of their pension contributions -- in effect, a tax on unionized government employees. I'm just spitballin' but maybe something to try in California is to invest in more school teachers (California is currently 48th in spending per capita in education) and require them to provide a greater percentage of their pension.

Wow...It is the poster child for austerity not working ??? Now that is funny..Nice twist on things. It is the poster child for...well i cannot get political..But without cutting the government waste and spending, it will just be asking for a bailout soon..Moonbeam got it wrong the first time, and round two will be worse.

Again with comments like that, you and I will never agree...More spending on teacher's ? Less Illegal Immigration maybe. No bullet train..No 1000 employees of the government getting raises..

More spending ? Of money they do not have...They will punish the successful to fund the lazy.. More property tax, mileage tax, all to fund those not putting into the system.

I like your twist on things..In my humble opinion, completely off base and wrong, but again, good for the readers of this thread...

Let them decide what they believe..I know you have, and so have I.
We agree to disagree.

[parsonsj]

In related news:

http://www.bloomberg.com/quote/USGG10YR:IND

I'm not trying to change the subject from California, but have a look at Japan.

Its bond yields are even lower than those of the US, with a debt to GDP ratio nearing 200%. And that's been true for a very long time.

[Bucketlist2012]

Originally Posted by parsonsj

In related news:

http://www.bloomberg.com/quote/USGG10YR:IND

I'm not trying to change the subject from California, but have a look at Japan.

Its bond yields are even lower than those of the US, with a debt to GDP ratio nearing 200%. And that's been true for a very long time.

I will check it out..

Gotta go, but like I said, it is good to hear all sides and let each reader decide for themselves.. lateral:

[Tony_SS]

If we go back and look at our own recent history, we can see what got us out of the depression. And despite what public school textbooks say, it was not going to war, but it was the ending of WW2, reducing taxes by 1/3 and cutting govt spending by 2/3. Those 3 key items gave us baby boomers and prosperity.

John, I don't know if you have Amazon Prime but I want to suggest a neutral movie called IOUSA. It's free to watch if you have Prime. I'm about half way through but so far it does a good job explaining the history of our debt and tells the story of how the Govt Accountability Office basically went on a tour trying to educate voters about the dangers of a then 14 trillion dollar debt.

But a large part of this too, is understanding the Federal Reserve. It is a private cartel of banks that by law is in charge of our currency and fixes interest rates. They are a blank check for a spend happy Congress, and they profit from govt spending. Think of Goldman Sachs financing our govt spending, and allowed to create money from thin air and charge interest on that. You can see how private institutions like this are only concerned with their bottom line and not the end users. Especially when they have a monopoly.

The truth is our govt (which is really us, you and me) is indebted to private central banks in which we are human collateral providing revenue by law. We have literally been enslaved and conquered by these institutions.