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Debt

For discussions of events and conditions not necessarily related to Peak Oil.

Re: Debt

Unread postby onlooker » Sun 04 Dec 2016, 22:34:56

Yes, I suppose you do not get much in return to give some money to some poor down on his/her luck perhaps addicted to drugs human being. Pstarr, Debt became a problem when it became the vogue way to pay for everything. What do they often say NO free lunch.
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Re: Debt

Unread postby onlooker » Sun 04 Dec 2016, 23:31:13

Actually Pete, I do see your point of view of debt is mainly bad when it cannot be paid back. In that respect three things have made it especially pernicious. One compound interest. Two fiat money or money just created out of thin air. And three Fractional Reserve banking.
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Re: Debt

Unread postby Outcast_Searcher » Mon 05 Dec 2016, 01:54:59

sparky wrote:.
an interesting number is the third row .
How much should the central government need to increase taxes to balance the budget
the answers is that there would , probably , be big trouble with the taxpayers .

With respect, that's not correct (the part in blue, font color mine, for emphasis).

I'm having trouble trying to copy/paste the box at the top of column three, which defines it. So I'll type what it says as a "quote by eyeball" here:

"Debt to Central Government Revenue Ratio: ...gives an idea of how much federal tax revenue alone would be needed to pay down the debt."

...

Balancing the budget wouldn't be that big a deal. We should do a Graham-Ruddman type of thing and do that TOMORROW, IMO. At least that would keep the debt from exploding. If everybody paid a little more taxes or all programs were cut a little or some combination of both, this could be done. (Yes, there would be LOTS of wailing and grandstanding, but it could certainly be done).

Paying off the entire nearly $20 TRILLION of debt on top of that is a HUGE PROBLEM. THAT most certainly would involve serious pain for a generation or two -- which is why I don't think US politicians will do more than kick the can on that.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Debt

Unread postby SeaGypsy » Mon 05 Dec 2016, 04:31:42

Monkeys clench their jaws when sexually frustrated, wealthy societies which fail at social services foster a security state, siege state.
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Re: Debt

Unread postby vtsnowedin » Mon 05 Dec 2016, 07:38:18

SeaGypsy wrote:Monkeys clench their jaws when sexually frustrated, wealthy societies which fail at social services foster a security state, siege state.

I was unaware of any wealthy frustrated societies of monkeys. :lol:
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Re: Debt

Unread postby sparky » Mon 05 Dec 2016, 20:17:17

.
@ Outcast_Searcher
the point was trying to make is that cutting the US government spending by 15% just to break even is no joke
the alternative of increasing taxes by 15% is politically painful
a mix of both is the realistic solution .

the go softly approach sound good , but while it is less painful the debt will still increase
the softer it is the longueur it would take to repay even more debt
we are not talking of repaying yet ,
we are into a stop going under moment , slowing down the sinking might sound nice but it's still drowning even more

Any contraction in the government outlay or the consumer purse would probably tank the economy ,
decreasing revenues and increasing social security and law enforcement spending .
there is a case to be made that for a lot of countries the meager growth in GDP is the government debt spending
IE this is not economic growth at all , it's just burning money in the chimney to generate some smoke

That's the big thing about deep debt , you are damned if you do and damned if you don't
The bad habits are the hardest to break
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Re: Debt

Unread postby Pops » Mon 05 Dec 2016, 21:00:29

VT said taxes should equal current spending, sounds pretty simple to me.

I'd think a constitutional amendment would tell congress to set a budget based on a percentage of the previous year's GDP, maybe the process of raising or lowering needs a supermajority. I think now we tax maybe 17% and spend 20% so say maybe we would start the budget at 18% [way off on that, see my next post] raise taxes and lower spending to match. Maybe dedicate some spending to debt reduction if there is support

But congress can't spend more and can't tax less than a balanced budget - they duke it out from there.

That's about what Moonbeam did in CA. Everyone was bitching about taxes so they cut taxes... and spending. after a year or two everyone said, OK, lets raise taxes some.

So instead of saying "lets spend uhhh, this much." and "Let's cut taxes this much." based on just straight ideology they say "OK, the formula says taxes are gonna be this much, now, who pays what? and "The formula says the budget is this much, where does it go?"

Obviously you'd need to incorporate long term investment, retirements, etc, provide an override for the possibility ISIS might come paddling over on rafts and start WWIII, the next depression, blah blah.
But at least have a realistic starting place and wrangle over details, that is the job.
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
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Re: Debt

Unread postby vtsnowedin » Mon 05 Dec 2016, 21:06:39

What government program in the Us could not be cut back 15%? What government salary is not 15% above what the same work and competence would command in the private sector?
Raise the gas tax a dime if you want to fix the highway infrastructure. Who would really notice? But have all the agencies that control and issue permits to the construction industry get with the program and issue the final permit as it should be within thirty days of the application because this is two parts of the same bureaucratic brain and it needs to know what it wants in the end and stop pretending that the final issue is in doubt.
Much more I will not burden you with!!
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Re: Debt

Unread postby Pops » Tue 06 Dec 2016, 09:15:06

vtsnowedin wrote:What government program in the Us could not be cut back 15%?

We have a split personality, we are one of the lowest taxed at 25% (average is 33%) but we spend at 40% of GDP (spending average again is 33%GDP) - not quite at socialist levels of 50-60% but pretty high - much higher than we tax, obviously.

Strictly in dollar terms:
In 2010 the average national government spent $2,376 per citizen, whilst the average for the world's 20 largest economies (in terms of GDP) was $16,110 per citizen. The federal government of the USA spent an average of $11,041 per citizen (per capita), ahead of only South Korea ($4,557), Brazil ($2,813), Russia ($2,458), China ($1,010), and India ($226) in the twenty largest world economies.[8]

That's all from Wiki FWIW
https://en.wikipedia.org/wiki/Government_spending

The big problem of course comes with permanent stagnation or deflation. Inflation pays debt with cheaper dollars, making it essentially cost free. But if the economy doesn't expand and devalue money, interest turns into an actual cost. God forbid the economy contracts, dollars increase in value, effectively making the value of the loan increase.

you all know that tho...
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
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Re: Debt

Unread postby vtsnowedin » Tue 06 Dec 2016, 09:22:43

While we are amending the Constitution I would strip away Congress's ability to set their own salaries. There salaries should go up only in years where the budget is balanced and they should go down by the percentage of deficit spending in any year with a deficit. Also their medicare and health plan should be the same as every other citizens. When they do get a raise it should be limited to the rate of inflation.
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Re: Debt

Unread postby Pops » Tue 06 Dec 2016, 09:45:41

vtsnowedin wrote:What government program in the Us could not be cut back 15%?

Here's a start:
The Pentagon has buried an internal study that exposed $125 billion in administrative waste in its business operations amid fears Congress would use the findings as an excuse to slash the defense budget, according to interviews and confidential memos obtained by The Washington Post.

Pentagon leaders had requested the study to help make their enormous back-office bureaucracy more efficient and reinvest any savings in combat power. But after the project documented far more wasteful spending than expected, senior defense officials moved swiftly to kill it by discrediting and suppressing the results.

https://www.washingtonpost.com/investig ... ge%2Fstory
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Re: Debt

Unread postby sparky » Mon 12 Dec 2016, 18:02:52

.
One of the result of the drop in oil price was that exporting countries got into financial difficulties .
Facing a hole in their budgets , they liquidated some of their foreign holdings to get some cash back .

on top china has fallen out of love with putting their money in the US ,they have been a net seller for a couple of years now
https://www.bloomberg.com/news/articles ... -fire-sale

http://www.tradingeconomics.com/united- ... ital-flows

This resulted in a drop in the dollar and a rise in treasury bonds ,
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Re: Debt

Unread postby onlooker » Mon 02 Jan 2017, 18:26:44

According to International Monetary Fund figures, world indebtedness stands at $152 (£122) trillion. That’s well over twice global output.

http://www.dailymail.co.uk/debate/artic ... e-all.html
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Re: Debt

Unread postby onlooker » Mon 02 Jan 2017, 19:00:50

Thanks for that. It's going to refute Tanada's assertion that the world economy is fine and really really wasn't much hurt by $100/barrel oil.

Well P, that is also what Short, says about Debt masking the underlying insolvency of our Economies and the Oil Industry.
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Re: Debt

Unread postby vtsnowedin » Mon 02 Jan 2017, 20:55:52

onlooker wrote:
According to International Monetary Fund figures, world indebtedness stands at $152 (£122) trillion. That’s well over twice global output.

http://www.dailymail.co.uk/debate/artic ... e-all.html

Twice the global output?
When you buy a house how many years salary are you behind? How much of any years salary can you actually put towards the debt. The wife and kids need food and clothing plus dental visits and dance lessons etc.
The ratio of debt to GDP is a easy number to find but it is a poor measure of the borrowers ability to pay back the loan.
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Re: Debt

Unread postby Outcast_Searcher » Mon 02 Jan 2017, 22:44:54

vtsnowedin wrote: When you buy a house how many years salary are you behind? How much of any years salary can you actually put towards the debt. The wife and kids need food and clothing plus dental visits and dance lessons etc.
The ratio of debt to GDP is a easy number to find but it is a poor measure of the borrowers ability to pay back the loan.

Well, and attitude is part of the problem.

People need to be fed and clothed and have adequate health care - at least in the first world, that is a reasonable expectation.

However, people do NOT "need 5" star restaurant food, expensive designer clothes, or dance lessons. Even suggesting dance lessons as a "need" feeds the problem, IMO.

Liberals will deny this, but in virtually every case of "poverty" in the US where I've worked with families and tried to help them (with my money, not taxpayers' money), the number one monetary problem they had was: themselves.

Lack of self control, lack of ability to prioritize spending. Lack of ability or willingness to budget, plan, and save.

So when such people spend all they can earn AND all they can borrow, inevitably, something goes wrong. (Life is like that.)

So then, a perfectly normal and planned and saved for event in the life of a financially responsible person (like a needed roof, a major car repair, or even a broken refrigerator) -- is now a catastrophe, which has negative knock-on ripple effects. The general attitude is that life isn't fair and their financial position has NOTHING to do with their habits.

Oh, and this self control problem can extend way up the income and education strata. The "problems" preventing saving might differ at the top (racehorce broke a leg, planning a month long European vacation, etc. -- yes, I've been given these reasons by rich people who "wanted to invest" -- but the lack of a basic grip on economic reality is the common issue far more than a true "lack of access to resources", at least in first world countries with social program networks.

Now all the far lefties can damn me for daring to speak the truth (in my experience).

...

And since I NEVER was able to actually fix this, despite plenty of trying (yeah, I get the "I am stupid but well meaning" sign for that). (They'll take your money, but not follow your advice): that's why I shifted to doing things like paying for funding structures and social workers for proven, competent, organizations which deal with the local homeless problem, including veterans. At least most such people (in my experience) have serious enough emotional/mental problems that they have a meaningful excuse for their plight.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Debt

Unread postby sparky » Mon 02 Jan 2017, 23:53:44

.
For decades , Australian banks would lend on mortgage up to 30% of your Yearly gross income on repayments
Then they let the standards slip and one could borrow up to 95% of the price .
some people couldn't resist , a few bad years later , marriages broke , kids cried , domestic abuse and suicide soared

governments are like folks , due to the electoral cycle , instant gratification win every times .
the shorter the cycle the worst it get
giving the voters good financial advice will never get you elected.
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