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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17-10-2013, 02:03 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.

OK just so we are clear the debt limit is not a budget. The debt limit is what enables the treasury to pay the bills of the federal government, it is not allocating new spending. To not raise it would be to default on all the payments (everything from social security and medicare to government bonds) for the stuff that has already been spent. This has never been controversial before 2011. Under every president the debt limit was raised as was necessary no questions asked with the exception of 1 time in the 70's when they actually did go over accidently and it caused interest rates to spike costing Americans several millions of dollars (both private and to the national debt). A good analogy is the debt limit is like making a payment on your motorbike it is not new spending but rather a payment on things already spent.

(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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17-10-2013, 05:51 AM
RE: Big surprise. The Republicans caved in.
Republicans cave today so as to live on to fight another day. The thing you have to realize is that the smaller the deficit, the less damaging not raising the debt ceiling will be. For instance suppose the deficit were only 1 dollar per year. Not raising the debt ceiling wouldn't be catastrophic....as everyone would agree that the government could find a place to cut 1 dollar and not go into default.

The budget deficit is decreasing and the more it decreases the more likely it becomes that a situation arises when congress does not agree to raise the debt ceiling. When you are running a trillion dollar deficit, not increasing the debt ceiling has a much more negative impact then as when you are running a 250 billion dollar deficit.

If the budget deficit continues to decrease, You may see the republicans not cave. In January this fight will be had again, and the republicans will actually be in a stronger position to resist the gun in the head tactic that Obama employed and the lockstep Nazi dems employed.

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17-10-2013, 08:29 AM
RE: Big surprise. The Republicans caved in.
(17-10-2013 01:55 AM)earmuffs Wrote:  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.

Yes. Lending 101. Thanks for the unnecessary lesson on how that works. Not quite what I was getting at but whatever. What my rant was directed at is the root problem of our economical fuckery in general, but I realize that's not quite the gist of what this argument is about. I will exit stage left.

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17-10-2013, 10:09 AM
RE: Big surprise. The Republicans caved in.
Quote:To not raise it would be to default on all the payments (everything from social security and medicare to government bonds) for the stuff that has already been spent.... A good analogy is the debt limit is like making a payment on your motorbike it is not new spending but rather a payment on things already spent.

Horrible analogy. Apples and oranges. The debt limit is just that—a debt limit. Like your credit card limit. Citibank gives you a $100k limit. You spend twice what you make, so you cover the shortage by taking a cash advance each month (adding debt) to pay your bills. Until you hit your credit limit... Then, if Citibank won't raise your credit limit (debt ceiling), you have to cut your spending, and spend no more than your income. Where you cut is up to you. You can stop making payments on your motorbike, or you can cut other things, like not getting a daily massage. Smile

The US is no different. If I were President, I would NOT raise the debt limit. The US has enough debt. I would first SLASH military spending by 90+%. Shut down all the 1,000+ overseas bases, stop occupying over 100 countries, load all the troops and bring them home. Then I'd also shut down the government agencies that do more harm than good, like HUD, Dept of Education, Commerce, etc. And voila... No default. No need to raise the debt limit. Spending is now <= income.

IF the US defaulted, it would only be because Obama decided to stop paying the US debts and instead keep spending on all the unnecessary shit.

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

It was stupid because NEITHER the Reps or Dems were willing to make any spending cuts. The Reps were just trying to get rid of Obamacare. I AM in favor of NOT raising the debt ceiling (see above).

Quote:the issue is debt in relation to 'income'... 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.

The US HAS already defaulted, like Greece. The US CANNOT pay it's bills. But the US bailout comes not from another country (like Germany, or the EU), but from the Federal Reserve, which every month prints more money to “lend” the government, knowing the government can never pay it back. The only reason the US dollar hasn't collapsed already with all this money printing is that all the world's oil can ONLY traded in US dollars. Without one exception, every single time a country tries to sell oil in non-dollars, the US attacks that country on trumped up 'terrorism' charges. But, obviously, the rest of the world doesn't like going to the US as the middle man for their oil and giving the US hard goods in exchange for piece of paper (dollars) to buy their oil. Once that monopoly breaks, game over.

Quote:The best way to solve the debt problems is to stimulate the economy.

Here is an excellent 1 minute video of how stimulus actually works:
http://www.youtube.com/watch?v=HBgJqgUmSZE

@earmuffs is right, when the government takes printed money from the Fed and creates a job for a bureaucrat who is tasked with converting oxygen into carbon dioxide, sure, it IS another job. But it's actually making the problem worse—not better. Remember, the public sector jobs are paid for out of the private sector. So, you need jobs in the private sector—not public sector. Government 'stimulus' that is simply taking more money from the private sector to dump into the public sector is only adding fuel to the fire.

Quote: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

Sorry to burst your bubble. It means c) people have given up hope and stopped looking for jobs. The number of WORKING Americans is going down. The number of unemployed is also going down only because they've given up.
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17-10-2013, 10:16 AM
RE: Big surprise. The Republicans caved in.
(17-10-2013 10:09 AM)frankksj Wrote:  
Quote:To not raise it would be to default on all the payments (everything from social security and medicare to government bonds) for the stuff that has already been spent.... A good analogy is the debt limit is like making a payment on your motorbike it is not new spending but rather a payment on things already spent.

Horrible analogy. Apples and oranges. The debt limit is just that—a debt limit. Like your credit card limit. Citibank gives you a $100k limit. You spend twice what you make, so you cover the shortage by taking a cash advance each month (adding debt) to pay your bills. Until you hit your credit limit... Then, if Citibank won't raise your credit limit (debt ceiling), you have to cut your spending, and spend no more than your income. Where you cut is up to you. You can stop making payments on your motorbike, or you can cut other things, like not getting a daily massage. Smile

The US is no different. If I were President, I would NOT raise the debt limit. The US has enough debt. I would first SLASH military spending by 90+%. Shut down all the 1,000+ overseas bases, stop occupying over 100 countries, load all the troops and bring them home. Then I'd also shut down the government agencies that do more harm than good, like HUD, Dept of Education, Commerce, etc. And voila... No default. No need to raise the debt limit. Spending is now <= income.

IF the US defaulted, it would only be because Obama decided to stop paying the US debts and instead keep spending on all the unnecessary shit.

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

It was stupid because NEITHER the Reps or Dems were willing to make any spending cuts. The Reps were just trying to get rid of Obamacare. I AM in favor of NOT raising the debt ceiling (see above).

Quote:the issue is debt in relation to 'income'... 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.

The US HAS already defaulted, like Greece. The US CANNOT pay it's bills. But the US bailout comes not from another country (like Germany, or the EU), but from the Federal Reserve, which every month prints more money to “lend” the government, knowing the government can never pay it back. The only reason the US dollar hasn't collapsed already with all this money printing is that all the world's oil can ONLY traded in US dollars. Without one exception, every single time a country tries to sell oil in non-dollars, the US attacks that country on trumped up 'terrorism' charges. But, obviously, the rest of the world doesn't like going to the US as the middle man for their oil and giving the US hard goods in exchange for piece of paper (dollars) to buy their oil. Once that monopoly breaks, game over.

Quote:The best way to solve the debt problems is to stimulate the economy.

Here is an excellent 1 minute video of how stimulus actually works:
http://www.youtube.com/watch?v=HBgJqgUmSZE

@earmuffs is right, when the government takes printed money from the Fed and creates a job for a bureaucrat who is tasked with converting oxygen into carbon dioxide, sure, it IS another job. But it's actually making the problem worse—not better. Remember, the public sector jobs are paid for out of the private sector. So, you need jobs in the private sector—not public sector. Government 'stimulus' that is simply taking more money from the private sector to dump into the public sector is only adding fuel to the fire.

Quote: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

Sorry to burst your bubble. It means c) people have given up hope and stopped looking for jobs. The number of WORKING Americans is going down. The number of unemployed is also going down only because they've given up.

Hey what do you know another thing you know nothing about. Debt Limit =/= budget it is money already spent. It is the bills the federal government already has. Do you not pay your bills? Do you tear up past due notices because that is what you are suggesting here. The ignorance of the right is astounding.

(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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17-10-2013, 10:24 AM
RE: Big surprise. The Republicans caved in.
Quote:To not raise [the debt limit] would be to default on all the payments

You do realize that what you're saying proves the US is already bankrupt and will inevitably collapse, right?

I mean imagine you had a cousin who every month borrowed more and more money to pay his bills, and every time he hit his debt limit (credit limit), he got the limit raised. Until one day they refused to raise the debt limit. And you hear your cousin say "OMG, you MUST raise my debt limit and let me keep borrowing because if you don't, I will default and be homeless and bankrupt."

When your cousin says that, it means he's already bankrupt, and raising the debt limit is just stalling the inevitable, and leading to an ultimately bigger bankruptcy. He's better off to file bankruptcy now, and start living within his means.

Similarly, the US spends twice what it makes, and borrows the rest every month. If Congress raises the debt limit to $100 trillion, sure, that will buy lots of time. But then when the US hits it, there will be a $100 trillion bankruptcy, and we'll be looking back at today, when the debt was "only" $16 trillion, and wish we had just defaulted today rather than postponing the inevitable. Sure, the US needs to borrow. But if things are so desperate that the US will default without a raise in the debt ceiling, it means it's already too late.
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17-10-2013, 10:46 AM
RE: Big surprise. The Republicans caved in.
(17-10-2013 10:24 AM)frankksj Wrote:  
Quote:To not raise [the debt limit] would be to default on all the payments

You do realize that what you're saying proves the US is already bankrupt and will inevitably collapse, right?

I mean imagine you had a cousin who every month borrowed more and more money to pay his bills, and every time he hit his debt limit (credit limit), he got the limit raised. Until one day they refused to raise the debt limit. And you hear your cousin say "OMG, you MUST raise my debt limit and let me keep borrowing because if you don't, I will default and be homeless and bankrupt."

When your cousin says that, it means he's already bankrupt, and raising the debt limit is just stalling the inevitable, and leading to an ultimately bigger bankruptcy. He's better off to file bankruptcy now, and start living within his means.

Similarly, the US spends twice what it makes, and borrows the rest every month. If Congress raises the debt limit to $100 trillion, sure, that will buy lots of time. But then when the US hits it, there will be a $100 trillion bankruptcy, and we'll be looking back at today, when the debt was "only" $16 trillion, and wish we had just defaulted today rather than postponing the inevitable. Sure, the US needs to borrow. But if things are so desperate that the US will default without a raise in the debt ceiling, it means it's already too late.

Well by that illogic the US has been bankrupt since 1917. Please go educate yourself before spouting inanities.

http://en.wikipedia.org/wiki/United_States_debt_ceiling

Thats a good start.

(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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17-10-2013, 10:51 AM (This post was last modified: 17-10-2013 11:03 AM by Bucky Ball.)
RE: Big surprise. The Republicans caved in.
Any Econ 101 student learns that the analogy between individual households, and governments is fatally flawed.

http://articles.latimes.com/2011/aug/24/...g-20110824

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17-10-2013, 11:20 AM
RE: Big surprise. The Republicans caved in.
Quote:Well by that illogic the US has been bankrupt since 1917. Please go educate yourself before spouting inanities.

http://en.wikipedia.org/wiki/United_States_debt_ceiling

Thats a good start.

There's nothing at all illogical about it. I challenge you to point out something specific that is not logical. Your comments that this has been going on since 1917 are lunacy. Google "unprecedented qe bernanke". Most everybody, including Bernanke, and all the Keynesian economists, says that the current policy which began in 2007 is "unprecedented". So, they all say you're wrong to suggest this has been going on since 1917.

I actually disagree with all of them, though. It's only 'unprecedented' in THIS current fiat cycle that began in 1971. If you read your history books about what happened in the prior fiat cycles, you'll see the cycle has actually repeated over 3,000 times in human history, and the end result has always been the same.

That's why a central bank is normally barred from paying for a government's spending by buying up all the government's debt because, historically, 100% of the time it leads to an economic collapse. The Fed decided to try this age-old QE system yet another time in 2008 (QE1) because the Keynesian models predicted this would 'stimulate' the economy and increase economic activity and taxes, so it would be a one time act. The Keynesian models were, of course, wrong--QE had the opposite effect. But, rather than admitting their mistake, they tried an even bigger QE2. Again, it failed and again they tried an even bigger QE3->unlimited. And, big surprise, it still has failed.

So when you say this has been going on since 1917, you're right and you're wrong. This cycle of defaulting on a representative currency, switching to a fiat currency, and then printing fiat money to pay the bills, dates back to the year 1100. The Song Dynasty was the first to try it. It's been tried 3,000 times since then. It has always collapsed within 50 years, leading to an economic meltdown. The US has already gone through this cycle 7 times, and, yes, it's always led to an economic meltdown. So, you're RIGHT, but grossly understated, to say it's been going on since 1917. However, IF we talk about the CURRENT fiat cycle, which began with Nixon, this is the first time the government has resorted to printing money to pay the bills, which is always the final stage before a monetary collapse.
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17-10-2013, 11:47 AM
RE: Big surprise. The Republicans caved in.
(17-10-2013 11:20 AM)frankksj Wrote:  
Quote:Well by that illogic the US has been bankrupt since 1917. Please go educate yourself before spouting inanities.

http://en.wikipedia.org/wiki/United_States_debt_ceiling

Thats a good start.

There's nothing at all illogical about it. I challenge you to point out something specific that is not logical. Your comments that this has been going on since 1917 are lunacy. Google "unprecedented qe bernanke". Most everybody, including Bernanke, and all the Keynesian economists, says that the current policy which began in 2007 is "unprecedented". So, they all say you're wrong to suggest this has been going on since 1917.

I actually disagree with all of them, though. It's only 'unprecedented' in THIS current fiat cycle that began in 1971. If you read your history books about what happened in the prior fiat cycles, you'll see the cycle has actually repeated over 3,000 times in human history, and the end result has always been the same.

That's why a central bank is normally barred from paying for a government's spending by buying up all the government's debt because, historically, 100% of the time it leads to an economic collapse. The Fed decided to try this age-old QE system yet another time in 2008 (QE1) because the Keynesian models predicted this would 'stimulate' the economy and increase economic activity and taxes, so it would be a one time act. The Keynesian models were, of course, wrong--QE had the opposite effect. But, rather than admitting their mistake, they tried an even bigger QE2. Again, it failed and again they tried an even bigger QE3->unlimited. And, big surprise, it still has failed.

So when you say this has been going on since 1917, you're right and you're wrong. This cycle of defaulting on a representative currency, switching to a fiat currency, and then printing fiat money to pay the bills, dates back to the year 1100. The Song Dynasty was the first to try it. It's been tried 3,000 times since then. It has always collapsed within 50 years, leading to an economic meltdown. The US has already gone through this cycle 7 times, and, yes, it's always led to an economic meltdown. So, you're RIGHT, but grossly understated, to say it's been going on since 1917. However, IF we talk about the CURRENT fiat cycle, which began with Nixon, this is the first time the government has resorted to printing money to pay the bills, which is always the final stage before a monetary collapse.

Have fun in the little fantasy land you apparently live in. I am done responding to you as you have no idea what is actually involved in these decisions and are uninterested in a real discussion.

(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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