Poll: How will this ultimately work out?
The Fed will be able to continue buying up the government's with newly printed money indefinitely.
The Fed will have to stop at some point, but the US will be able to handle the interest payments.
It will lead to either a currency collapse if the Fed keeps printing money like this, or a default if they don't.
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Big surprise. The Republicans caved in.
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16-10-2013, 09:47 PM
Big surprise. The Republicans caved in.
So nothing changes. Keep spending, keep raising the debt limit.

In the 90's a wave of anti-government Republicans swept into the house and refused to sign a budget or raise the debt ceiling until Clinton agreed to massive cuts. Of course, back then there was the same rhetoric about 'fiscal cliffs', the bringing the country to the brink', bringing the US to default, etc. There were the same dire predictions about the effects of the government shutdown. The only difference is that time the Republicans didn't back down until they got their way and the Dems gave in and agreed to major cuts, which they predicted would absolutely destroy the economy, lead to a recession, etc. But, things turned out the opposite. The economy got much better after the cuts and the shutdown. And 10 years later the Dems were boasting about how fiscally responsible they were to slash the budget during the Clinton years and actually pay down the debt and not raise the debt ceiling.

Of course, had the Reps held on this time, in 10 years the Dems would likewise be bragging about how responsible they were under Obama to cut spending. However, they gave in. So, here's my question to everybody...

Even the Fed admits this QE, where the Fed buys up the government's debt with newly printed money, can't go on forever without leading to a total collapse of the currency. And they all admit that once happens, the US will again have to pay "normal" interest rates of around 6% a year, at which point the interest on the debt will be so huge the government won't be able to pay the interest, let alone pay down the debt.

So, now the media is breathing a sigh of relief that the Reps caved in and they're not making any cuts, and they're just going to keep raising the debt ceiling. But, to all you guys who share this view, how do you think this will turn out? Do you think the Fed will continue buying up all the debt indefinitely? If so, how will we avoid an epic currency collapse? If not, how will the country cover $1.2 trillion in interest payments ($20 trillion @ 6%)?

It seems to me all we've done is trade a government shutdown that had minimal impact, for an inevitable currency collapse or default. I've yet to see any economist explain the end game, and even guys like Warren Buffet have expressed shock that there appears to be no exit strategy and no way out.
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16-10-2013, 09:53 PM
RE: Big surprise. The Republicans caved in.
(16-10-2013 09:47 PM)frankksj Wrote:  So nothing changes. Keep spending, keep raising the debt limit.

In the 90's a wave of anti-government Republicans swept into the house and refused to sign a budget or raise the debt ceiling until Clinton agreed to massive cuts. Of course, back then there was the same rhetoric about 'fiscal cliffs', the bringing the country to the brink', bringing the US to default, etc. There were the same dire predictions about the effects of the government shutdown. The only difference is that time the Republicans didn't back down until they got their way and the Dems gave in and agreed to major cuts, which they predicted would absolutely destroy the economy, lead to a recession, etc. But, things turned out the opposite. The economy got much better after the cuts and the shutdown. And 10 years later the Dems were boasting about how fiscally responsible they were to slash the budget during the Clinton years and actually pay down the debt and not raise the debt ceiling.

Of course, had the Reps held on this time, in 10 years the Dems would likewise be bragging about how responsible they were under Obama to cut spending. However, they gave in. So, here's my question to everybody...

Even the Fed admits this QE, where the Fed buys up the government's debt with newly printed money, can't go on forever without leading to a total collapse of the currency. And they all admit that once happens, the US will again have to pay "normal" interest rates of around 6% a year, at which point the interest on the debt will be so huge the government won't be able to pay the interest, let alone pay down the debt.

So, now the media is breathing a sigh of relief that the Reps caved in and they're not making any cuts, and they're just going to keep raising the debt ceiling. But, to all you guys who share this view, how do you think this will turn out? Do you think the Fed will continue buying up all the debt indefinitely? If so, how will we avoid an epic currency collapse? If not, how will the country cover $1.2 trillion in interest payments ($20 trillion @ 6%)?

It seems to me all we've done is trade a government shutdown that had minimal impact, for an inevitable currency collapse or default. I've yet to see any economist explain the end game, and even guys like Warren Buffet have expressed shock that there appears to be no exit strategy and no way out.

So you were in favor of this temper tantrum and would have had the US default on it debts and crash the world economy?

The fact that the republicans put political theatre ahead of actual policy is what is wrong with washington these days. What we need to do is stop posturing and get together and work out a real budget. As to the currency collapse I have been hearing the same thing for over 20 years with not a shred of proof.

(31-07-2014 04:37 PM)Luminon Wrote:  America is full of guns, but they're useless, because nobody has the courage to shoot an IRS agent in self-defense

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16-10-2013, 10:11 PM
RE: Big surprise. The Republicans caved in.
I understand that you have heaps of debt ($20trillion did you say? Jesus H Christ and I thought I had a lot of debt...), but the issue so much isn't the amount of debt, the issue is debt in relation to 'income'.
Look at Europe. When the likes of Spain, Greece, Cyprus and a couple others had their little economic melt downs what did they all have in common? Their national debt was huge, unmanageable.
If the US continues to increase debt, and especially if the interest goes up, than there's no reason why the exact same wont happen to the US. With the same results, high unemployment etc..
Except I struggling to think of who's going to bail you guys out. Spain, Greece etc.. had the EU. What does the US have? nothing. It'll have to default. So the results will probably be worse than the European countries that got into fiscal shit.

Debt itself isn't necessarily a bad thing. A country is expected to have some debt. Borrow now, so you can improve your country today so that you may have a better country in the future and be in a position to pay off that debt. It makes economic sense for countries to borrow money. BUT there is a point where you can have to much debt and you get into shit.
Balancing a countries books works on the same principle of balancing your households books. Just obviously on a lot larger scale.


But I don't know the US financial situation outside of "yeah, you got a bit of debt". So I don't know how dire or not it is.

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16-10-2013, 10:14 PM
RE: Big surprise. The Republicans caved in.
(16-10-2013 10:11 PM)earmuffs Wrote:  I understand that you have heaps of debt ($20trillion did you say? Jesus H Christ and I thought I had a lot of debt...), but the issue so much isn't the amount of debt, the issue is debt in relation to 'income'.
Look at Europe. When the likes of Spain, Greece, Cyprus and a couple others had their little economic melt downs what did they all have in common? Their national debt was huge, unmanageable.
If the US continues to increase debt, and especially if the interest goes up, than there's no reason why the exact same wont happen to the US. With the same results, high unemployment etc..
Except I struggling to think of who's going to bail you guys out. Spain, Greece etc.. had the EU. What does the US have? nothing. It'll have to default. So the results will probably be worse than the European countries that got into fiscal shit.

Debt itself isn't necessarily a bad thing. A country is expected to have some debt. Borrow now, so you can improve your country today so that you may have a better country in the future and be in a position to pay off that debt. It makes economic sense for countries to borrow money. BUT there is a point where you can have to much debt and you get into shit.
Balancing a countries books works on the same principle of balancing your households books. Just obviously on a lot larger scale.


But I don't know the US financial situation outside of "yeah, you got a bit of debt". So I don't know how dire or not it is.

Well here is a fun shutdown fact for ya Muffs. It cost the economy 24 billion dollars and the republicans got nothing for it. That is the net impact the shutdown is expected to have it actually shrunk the 4th quarter growth rate by about 0.25% and I know that doesn't sound like much but when you are talking Trillions of dollars fractions of a percent add up fast.

(31-07-2014 04:37 PM)Luminon Wrote:  America is full of guns, but they're useless, because nobody has the courage to shoot an IRS agent in self-defense

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16-10-2013, 10:38 PM
RE: Big surprise. The Republicans caved in.
I actually just learned (like 2minutes ago) this was about raising the debt ceiling. I thought the Republicans were in a huff about Obamacare...
I thought you guys literally just raised it not to long ago? You're doing it AGAIN? If I had known it was about the debt ceiling I would have payed a little bit more attention.

I'm with the Republicans on this. Spending cuts is the way to solve this issue not raise the debt ceiling.
You can't keep going deeper and deeper into debt or you end up like Cyprus and Greece, it's that simple.
The debt ceiling is there for a reason, it's a good indication that you're borrowing well beyond your means and that you need to cut back.

And considering the possible consequences of raising the debt ceiling I think 24billion is hardly anything and would have been worth it had the Republicans won the stand-off.

What you have to understand is that the further you get into debt, the harder it is to pay off. Money that should be going to the country is now going to debt repayments and interest. And so a country needs to borrow more money and get further into debt etc..
Now there's no possible bailout like there was with the EU countries. Nobody is going to spend $20trillion dollars to bail out the US.
So the US will ultimately have to default on some of it's debt. If this happens than your credit rating will plummet. People will no longer trust you and if you want to borrow money in the future you will have to pay much higher interest because of the perceived increase in risk.
What this means in the long run is if you have higher interest due to defaults than you will have to pay more back (due to higher interest rates) and so you will initially have to borrow less to begin with.
ie: if you can now borrow $100 at 5% you'll pay $5 interest. If you can only afford $5 than you can only borrow $100.
If you default and future interest goes up to 10%, you can still only afford $5 and so now you can only borrow $50, for the same $5.

Beyond the initial side effects of a country unable to meet it's debt repayments, it will have it's greatest impact on future generations who will now have less money to work with and as such will ultimately have less.


Continuing to raise the debt ceiling is careless.

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16-10-2013, 10:44 PM
Big surprise. The Republicans caved in.
The best way to solve the debt problems is to stimulate the economy. Government shutdown is the opposite of that.
We should not cut government spending, but increase it.
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17-10-2013, 12:56 AM
RE: Big surprise. The Republicans caved in.
Quote:I actually just learned (like 2minutes ago) this was about raising the debt ceiling. I thought the Republicans were in a huff about Obamacare...
I thought this too. I thought that GOP just used debt ceiling as leverage in trying to defund Obamacare.

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17-10-2013, 01:13 AM
RE: Big surprise. The Republicans caved in.
(16-10-2013 10:38 PM)earmuffs Wrote:  I actually just learned (like 2minutes ago) this was about raising the debt ceiling. I thought the Republicans were in a huff about Obamacare...
I thought you guys literally just raised it not to long ago? You're doing it AGAIN? If I had known it was about the debt ceiling I would have payed a little bit more attention.

I'm with the Republicans on this. Spending cuts is the way to solve this issue not raise the debt ceiling.
You can't keep going deeper and deeper into debt or you end up like Cyprus and Greece, it's that simple.
The debt ceiling is there for a reason, it's a good indication that you're borrowing well beyond your means and that you need to cut back.

And considering the possible consequences of raising the debt ceiling I think 24billion is hardly anything and would have been worth it had the Republicans won the stand-off.

What you have to understand is that the further you get into debt, the harder it is to pay off. Money that should be going to the country is now going to debt repayments and interest. And so a country needs to borrow more money and get further into debt etc..
Now there's no possible bailout like there was with the EU countries. Nobody is going to spend $20trillion dollars to bail out the US.
So the US will ultimately have to default on some of it's debt. If this happens than your credit rating will plummet. People will no longer trust you and if you want to borrow money in the future you will have to pay much higher interest because of the perceived increase in risk.
What this means in the long run is if you have higher interest due to defaults than you will have to pay more back (due to higher interest rates) and so you will initially have to borrow less to begin with.
ie: if you can now borrow $100 at 5% you'll pay $5 interest. If you can only afford $5 than you can only borrow $100.
If you default and future interest goes up to 10%, you can still only afford $5 and so now you can only borrow $50, for the same $5.

Beyond the initial side effects of a country unable to meet it's debt repayments, it will have it's greatest impact on future generations who will now have less money to work with and as such will ultimately have less.


Continuing to raise the debt ceiling is careless.

Have you ever read anything on how the Federal Reserve works? It was a scam to begin with, America was duped from the get go and the president that made the decision to sign up for it admitted that he had sold his country out for failure and apologized a short time after it happened, as he realized what he had done. This system cannot work. The way it is set up, there is no way that the debt can ever be payed back. It's a fiat monetary system and it's all based on inflated debt and imaginary money. It's been that way for quite some time. The debt ceiling isn't the issue. The whole crazy economy is careless.

This whole gov't shutdown was the GOP's fringe extremists last stand against Obamacare, it was their last bargaining chip, and it cost the country a pretty (fake) penny. They lost. But what's worse, is that they knew they would lose in the first place, but they put america in this position purely on "principle".

Fuck that. I want our gov't (people's employees) to actually be doing what the fuck we pay them to be doing, which is running this fucking country. I'm pissed at both sides, but especially the cunts in the house.

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17-10-2013, 01:21 AM
Re: RE: Big surprise. The Republicans caved in.
(16-10-2013 10:38 PM)earmuffs Wrote:  I actually just learned (like 2minutes ago) this was about raising the debt ceiling. I thought the Republicans were in a huff about Obamacare...
I thought you guys literally just raised it not to long ago? You're doing it AGAIN? If I had known it was about the debt ceiling I would have payed a little bit more attention.

I'm with the Republicans on this. Spending cuts is the way to solve this issue not raise the debt ceiling.
You can't keep going deeper and deeper into debt or you end up like Cyprus and Greece, it's that simple.
The debt ceiling is there for a reason, it's a good indication that you're borrowing well beyond your means and that you need to cut back.

And considering the possible consequences of raising the debt ceiling I think 24billion is hardly anything and would have been worth it had the Republicans won the stand-off.

What you have to understand is that the further you get into debt, the harder it is to pay off. Money that should be going to the country is now going to debt repayments and interest. And so a country needs to borrow more money and get further into debt etc..
Now there's no possible bailout like there was with the EU countries. Nobody is going to spend $20trillion dollars to bail out the US.
So the US will ultimately have to default on some of it's debt. If this happens than your credit rating will plummet. People will no longer trust you and if you want to borrow money in the future you will have to pay much higher interest because of the perceived increase in risk.
What this means in the long run is if you have higher interest due to defaults than you will have to pay more back (due to higher interest rates) and so you will initially have to borrow less to begin with.
ie: if you can now borrow $100 at 5% you'll pay $5 interest. If you can only afford $5 than you can only borrow $100.
If you default and future interest goes up to 10%, you can still only afford $5 and so now you can only borrow $50, for the same $5.

Beyond the initial side effects of a country unable to meet it's debt repayments, it will have it's greatest impact on future generations who will now have less money to work with and as such will ultimately have less.


Continuing to raise the debt ceiling is careless.

It wasn't initially about the debt ceiling, but the tea party and house leader held off from voting 2 Weeks ago to make it all one scare in the same. In effort to, as they claim now, to make a stance was all. But the debt celling was always what they were holding hostage.

The biggest sadness is all the wasted obviously foolish efforts put into trying to abolish obamacare and spending to try and set up the US to be in better situation down the line. Those for the past years have hurt the debt and credit of the country making it a worse hole to dig out now than it was going to be.

And yes, they did have this debate recently, and this is again only a temporary move as both arguments of government debt ceiling and government funding have new dates in February/January.

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17-10-2013, 01:55 AM
RE: Big surprise. The Republicans caved in.
(16-10-2013 10:44 PM)black_squirrel Wrote:  The best way to solve the debt problems is to stimulate the economy. Government shutdown is the opposite of that.
We should not cut government spending, but increase it.

Yes and no. You need to stimulate an economy by creating jobs.
The issue though is you can't just create jobs for the sake of creating jobs.
You need to create jobs that are worth creating, that will add value to the economy otherwise all you're doing is creating glorified welfare beneficiaries which doesn't solve the problem.

The solution is yes, you need to stimulate the economy BUT you need to do it via private sector incentives. If you can stimulate private business you can create jobs that actually add value to the government without costing the government.
You do this by several ways, keeping inflation and thus interest rates down is a start. Cheaper interest rates mean more people will borrow which means more business or existing businesses expanding. Which equals jobs which equals a healthy economy.

So no, the government doesn't need to pile billions and billions of dollars into the economy to stimulate it. The government needs to spend in the sense that it takes less from business, thus stimulating it. ie: tax cuts.
BUT, unemployment in America is on the decline. It's gone down 2% since last year. This shows that either a) the government has created glorified welfare jobs or b) business is picking up
Now's a reasonable time to "trim the fat" and cut costs.
Take into account the need to raise the debt ceiling and it becomes essential that the government cuts costs.

Quote:Have you ever read anything on how the Federal Reserve works? It was a scam to begin with, America was duped from the get go and the president that made the decision to sign up for it admitted that he had sold his country out for failure and apologized a short time after it happened, as he realized what he had done. This system cannot work. The way it is set up, there is no way that the debt can ever be payed back. It's a fiat monetary system and it's all based on inflated debt and imaginary money. It's been that way for quite some time. The debt ceiling isn't the issue. The whole crazy economy is careless.

This whole gov't shutdown was the GOP's fringe extremists last stand against Obamacare, it was their last bargaining chip, and it cost the country a pretty (fake) penny. They lost. But what's worse, is that they knew they would lose in the first place, but they put america in this position purely on "principle".

Fuck that. I want our gov't (people's employees) to actually be doing what the fuck we pay them to be doing, which is running this fucking country. I'm pissed at both sides, but especially the cunts in the house.

I'm seriously sick of explaining this "invisible/fake money" money thing.
It's NOT invisible, it's NOT fake. This is such a misunderstanding among people.

To borrow money in the first place that person has to actually have that money to begin with. The government can issue bonds and people have to actually have money in the first place to buy those bonds.
So the money they receive is very much real. Try buying a $100 government bond with monopoly money and see how far you get.
The interest on borrowed money is real too.
ie: A bottle of coke costs me about $3.00 at a local dairy (which is why I don't shop there...). That bottle of coke costs the dairy owner $2.50.
The 50c difference is the exact same as the interest on a loan. It's the price you pay for that service. So 50c of that $3 I pay represents the dairy's part in that production chain of designing, making, distributing that bottle of coke from factory to shelf to my hand.
There's no middleman with interest (well there is in a lot of cases but for sake of simplicity go with me here) so if I lend you $20 and charge you 5% that 5% interest is what I'm charging you to use my money.

It's not fake. It's not invisible. It doesn't come out of thin air. It works on the same principle as a bottle of coke or anything else you buy. Interest is the price you pay to borrow that money, to use that service.
Many factors go into determining interest. Risk is the main one, but also competition. ie: why should I lend to you when I can invest in a safer option for higher interest.

And they are running your country. The fact the Republicans tried to stop the raising of debt ceiling is proof of that. If it was all politics they would have simply let the Democrats fall on their asses and in fact that's probably a bit of what's happening now.



Borrowing isn't a bad thing in itself. Countries need to borrow. BUT like with everyone, countries need to be responsible with their borrowing. And when you're overextending your borrowing habits you don't continue to borrow... you cut costs.
Yes it's nice to have nice things like Obamacare and lots of various programs for the public. BUT you can't have these things when you're on the verge of defaulting on your debts. It's better to give up a little today so that you may avoid giving up a LOT in the future, that's what it comes down too.

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