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Offlinephi1618
old hand

Registered: 02/14/04
Posts: 4,102
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How large is the American debt, really?
    #3356232 - 11/13/04 05:02 PM (12 years, 28 days ago)

Here is a paper from March by the head of the GAO (governments auditor):
http://www.nabe.com/publib/be/0403/040307.pdf


The basic story is that the government is lying about the amount of money it owes (but you knew that). What you might not know is the size of the gap.

From the above article:
Quote:


The official gross debt now stands at about $7 trillion, which works out to about $27,000 for every man, woman, and child in this country. But if you factor in items such as unfunded promises for future Social Security and Medicare benefits, the burden for every American rises to more than $140,000.





Keep in mind that the author if this article is the man with the best knowlege of the subject; his knowlege of government finances is more intimate than any other single person alive.

So, do you believe it? Is the economy just going to grow out of this little problem? What's going to happen?


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OfflineBleaK
paradox
Registered: 06/24/02
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Re: How large is the American debt, really? [Re: phi1618]
    #3362780 - 11/15/04 05:16 AM (12 years, 26 days ago)

ive been posting about this recently as well.
few seem interested.


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"You cannot trust in law, unless you can trust in people. If you can trust in people, you don't need law." -J. Mumma


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OfflineGazzBut
Refraction

Registered: 10/15/02
Posts: 4,733
Loc: London UK
Last seen: 4 months, 3 days
Re: How large is the American debt, really? [Re: phi1618]
    #3362933 - 11/15/04 07:57 AM (12 years, 26 days ago)

Quote:

What's going to happen? 




The fall of the empire overseen by the fool of the empire.  :smirk:


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Always Smi2le


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InvisibleInnvertigo
Vote Libertarian!!
Male

Registered: 02/09/01
Posts: 16,296
Loc: Crackerville, Michigan U...
Re: How large is the American debt, really? [Re: phi1618]
    #3363053 - 11/15/04 09:25 AM (12 years, 26 days ago)

I think the world should forgive our debts, it seems like the chic thing to do nowadays.


--------------------

America....FUCK YEAH!!!

Words of Wisdom: Individual Rights BEFORE Collective Rights

"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." -- Thomas Jefferson


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Offlinephi1618
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Registered: 02/14/04
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Re: How large is the American debt, really? [Re: Innvertigo]
    #3363811 - 11/15/04 02:06 PM (12 years, 26 days ago)

we owe the Chinese and other foreign governments alot, but most of the money the author of that article is talking about is what we'll be paying out in Social Security and Medicare - with present spending, even if there was no debt, we'd be in financial trouble.

I don't think that those who argue that economic growth alone will get us out of this mess are acknowledging the extent of the problem.


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OfflineJesusChrist
Son Of God
Registered: 02/19/04
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Re: How large is the American debt, really? [Re: phi1618]
    #3369011 - 11/16/04 03:31 PM (12 years, 25 days ago)

Scary article and a good find. The problem of social security should have been dealt with decades ago. With every passing year without reform the problem just gets bigger and bigger. The time has come for our leaders to do something about it. The way it is social security won't be around for me, but I will spend most of my working life paying for other people's retirement. Thanks for the link.

And those retiring baby boomers that get the social security aren't blameless. They kept on putting people in power who failed to save for their retirement. They wanted the government to spend the money on them at the time yet still give them a retirment plan paid for by somebody else. You can't have everything.


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Tastes just like chicken


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InvisibleLe_Canard
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Registered: 05/17/03
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Re: How large is the American debt, really? [Re: JesusChrist]
    #3369046 - 11/16/04 03:37 PM (12 years, 25 days ago)

As I understand it, an ever increasing federal deficit will devalue the dollar, causing amongst other things a nasty little recession. Be that as it may, it rather irks me when people expect more and more government services whilst paying less taxes. You simply cannot have it both ways....


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Offlinekadakuda
The Great"Green".......East
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Re: How large is the American debt, really? [Re: Le_Canard]
    #3369176 - 11/16/04 04:13 PM (12 years, 25 days ago)

if people could trust the gov not to completely fuck up and waste the tax payers money perhaps they wouldnt mind paying a little more. id pay more if i could trust them.


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The seeds you won't sow are the plants you dont grow.


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Invisibleafoaf
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Re: How large is the American debt, really? [Re: phi1618]
    #3369218 - 11/16/04 04:22 PM (12 years, 25 days ago)

all of a sudden, survivalist militias don't sound all that crazy.

just wait until the dollar isn't worth the heat generated by
burning it and the petroleum runs out.

it's gonna be sweeeeet.


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All I know is The Growery is a place where losers who get banned here go.


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Offlinekadakuda
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Re: How large is the American debt, really? [Re: afoaf]
    #3369235 - 11/16/04 04:25 PM (12 years, 25 days ago)

:grin:  i like your thinking.  cant wait.


--------------------
The seeds you won't sow are the plants you dont grow.


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InvisibleInnvertigo
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Re: How large is the American debt, really? [Re: Le_Canard]
    #3369259 - 11/16/04 04:33 PM (12 years, 25 days ago)

Quote:

Be that as it may, it rather irks me when people expect more and more government services whilst paying less taxes. You simply cannot have it both ways....




cutting a majority of the government programs would be a great start.


--------------------

America....FUCK YEAH!!!

Words of Wisdom: Individual Rights BEFORE Collective Rights

"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." -- Thomas Jefferson


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Offlinezappaisgod
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Registered: 02/11/04
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Re: How large is the American debt, really? [Re: Le_Canard]
    #3370244 - 11/16/04 07:48 PM (12 years, 25 days ago)

Quote:

ToiletDuk said:
As I understand it, an ever increasing federal deficit will devalue the dollar, causing amongst other things a nasty little recession.



-
Let me make sure I understand you correctly. An increased federal deficit causes the dollar to be devalued. Could be. It certainly describes the current situation. Not so sure that this coincidence proves causality, but OK, I'll leave this alone for now. (If you can provide me with a historical correlation I would appreciate it, but I'm not holding your feet to the fire on this one.)
-
But the next step is a little tough to understand. You say a devalued dollar leads to recession. Au contraire, mon frere. A devalued dollar leads to increased exports and thus increased employment and better wages for Americans. American companies will be better placed to compete with foreign nations, not just for the American market but for all markets worldwide. Recession does not necessarily follow from a devalued dollar.


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OfflineAncalagon
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Registered: 07/30/02
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Re: How large is the American debt, really? [Re: zappaisgod]
    #3370324 - 11/16/04 08:01 PM (12 years, 25 days ago)

Quote:

zappaisgod said:
Quote:

ToiletDuk said:
As I understand it, an ever increasing federal deficit will devalue the dollar, causing amongst other things a nasty little recession.



-
Let me make sure I understand you correctly. An increased federal deficit causes the dollar to be devalued. Could be. It certainly describes the current situation. Not so sure that this coincidence proves causality, but OK, I'll leave this alone for now. (If you can provide me with a historical correlation I would appreciate it, but I'm not holding your feet to the fire on this one.)
-
But the next step is a little tough to understand. You say a devalued dollar leads to recession. Au contraire, mon frere. A devalued dollar leads to increased exports and thus increased employment and better wages for Americans. American companies will be better placed to compete with foreign nations, not just for the American market but for all markets worldwide. Recession does not necessarily follow from a devalued dollar.



Lets take this to its logical conclusion then; wouldn't it therefore benefit the US economy tremendously to have an almost completely worthless dollar? History tells us this is so far from the case it's sad. The hyperinflationary period of Weimar Germany marked by a completely worthless currency did not lead to a country flowing with prosperity -- it led to a country rife with calamity. To only look at the fact that a weakened dollar would lead to more exports is to ignore much of the picture. The neccesary result of a weakened dollar is the reduction in purchasing power for every American. While the first few groups of people to spend the newly printed money would benefit, every following group would suffer more and more. While perhaps some companies would be better off due to increased exports, the domestic market would be devestated by any significant amount of inflation. I know you were around in the '70s, even if I wasn't.


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?When Alexander the Great visted the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: 'Yes, stand a little less between me and the sun.' It is what every citizen is entitled to ask of his government.?
-Henry Hazlitt in 'Economics in One Lesson'


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Offlinezappaisgod
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Registered: 02/11/04
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Re: How large is the American debt, really? [Re: Ancalagon]
    #3370423 - 11/16/04 08:16 PM (12 years, 25 days ago)

What I said was, and I know you can see this, is that a devalued dollar does not necessarily cause a recession. Nor did I concede that a deficit in the federal government causes a devaluation of the dollar. Would a relatively worthless dollar, vis a vis the Weimar mark, be a disaster? Of course. But I don't think that this is what we are talking about here, nor do I think there is any risk of that whatsoever, seeing as that the federal deficit was a far greater proportion of the GDP in the 80s than it is now. The current low value of the dollar versus the Euro is causing a lot more worry in Europe than it is here. And isn't this stimulative for employment within the US? Of course it is. This actually goes to point out that, having been handed a recession upon taking office, and given the fact that employment is a seriously lagging indicator of economic health, the Bush economic policiy of cutting taxes has been quite succesful. Never forget that it is better under all conditions that the people be able to balance their budgets than it is that the government is.


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InvisibleLe_Canard
Danger Man

Registered: 05/17/03
Posts: 93,269
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Re: How large is the American debt, really? [Re: zappaisgod]
    #3371209 - 11/16/04 10:27 PM (12 years, 25 days ago)

Of course, you're right in a lot of ways. There are many economic factors involved in recession besides a devalued dollar. I do think the current expanding federal deficit, combined with inflation is cause for more than a little concern, however.

KadaKuda: Good point. I wonder how much we could save if there was less inefficient bureaucracy and less duplication of effort in government...


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OfflineShdwstr
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Re: How large is the American debt, really? [Re: zappaisgod]
    #3371646 - 11/16/04 11:42 PM (12 years, 25 days ago)

Quote:

zappaisgod said:

... (If you can provide me with a historical correlation I would appreciate it, but I'm not holding your feet to the fire on this one.)...





In 2000 when Bush took office, there was a high surplus in the government resources. Price Canadian to buy $1.00 US ... $1.65
In 2004 after Bush has created the largest deficit in History, the price Canadian to buy $1.00 US... $1.15.
In 2008 after Bush gets through with your econony, if there is another 50 cent decrease, price Canadian to buy $1.00 US... $0.65  :shocked: 
You Think?  :smirk:

Quote:

zappaisgod said:

A devalued dollar leads to increased exports and thus increased employment and better wages for Americans. 




This would be true except for the fact that a lot of the manufacturing in the US has already, and continues to be sent offshore. Bush is screwing your economy!


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Offlinephi1618
old hand

Registered: 02/14/04
Posts: 4,102
Last seen: 6 years, 6 months
Re: How large is the American debt, really? [Re: Le_Canard]
    #3371865 - 11/17/04 12:37 AM (12 years, 25 days ago)

Quote:

As I understand it, an ever increasing federal deficit will devalue the dollar, causing amongst other things a nasty little recession.




I don't know about this... these are difficult things to figure out.

There are two suggestions here:
1) A federal deficit leads to a lower dollar
2) A lower dollar is bad

I'm not sure about the first one. I think a large US deficit/debt will have no effect on the strength of the dollar until lenders start to fear that the US federal gov't will default on its loans. The low rate of interest that the federal gov't has to pay demonstrates that lenders are still confident that they will get repaid.

For example, the federal deficit rose from $60 billion in 1980 to $220 billion in 1986; over the same period, the federal debt rose from $750 billion to $1.7 trillion. (from wikipedia, hist. of the US 1980-1988)

Here are the exchange rates for a few years and currencies (from eh.net):
year UK France Canada Australia Japan
1980 .43 4.22 1.17 .88 226.63
1986 .68 6.93 1.39 1.49 168.35
1990 .56 5.45 1.17 1.28 146.00

If you want to check out more dates/countries, go here:
http://www.eh.net/hmit/exchangerates/

In any case, you can see that the dollar actually strengthened over a period which saw massive increases in the federal deficit and national debt.


On contention 2:
The effects of a weakened dollar won't be seen immediately; exporters frequently price their goods in the currency of the target economy, so prices won't immediately rise in response to a weaker dollar.
A weaker dollar is likely to lead to inflationary pressure, more expensive imports (non-agricultural commodities and many manufactured goods will increase in price), increased exports (good for US manufacturers) - this last effect may decrease unemployment. In a tight job market, wages will increase - though probably not untill prices increase. If unemployment is high, wages won't increase and workers will have to pay more for goods.
A benefit to American capitallists is that American's assets held overseas will increase in dollar-value, while foreigners assets in America won't (as a result of changing exchange rates). This is significant because foreiners own more American assets than Americans own foreign assets (about $2 trillion difference). This means that Americans pay foreigners more interest on things we've already consumed than visa-versa, but a decline in the dollar will decrease this effect.


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InvisibleAutonomous
MysteriousStranger

Registered: 05/10/02
Posts: 901
Loc: U.S.S.A.
Re: How large is the American debt, really? [Re: zappaisgod]
    #3372047 - 11/17/04 01:12 AM (12 years, 25 days ago)

"seeing as that the federal deficit was a far greater proportion of the GDP in the 80s than it is now."
You've got to look at total expenditures, not just the expenditures that are counted in the official deficit. In the 80s the GNP, not the GDP was used as the key measure of aggregate economic activity. You also need to consider what the bean counters use in compiling the GDP, some major components are not an increase in productivity of the country. For instance, natural disasters (like hurricanes) pump up the GDP numbers because people are re-building. However, ask anyone who's had their home destroyed by a hurricane if they were better off after the destruction then go ask the insurance companies the same thing. Also, say you go bankrupt and sell your assets, the prices received for these assets are the types of things the government will add to the GDP. You sell a used car for five grand and buy a cheaper used car for 3 grand... the GDP just went up 8 grand. You sell your home for three hundred thousand and buy a cheaper one for two hundred thousand... the GDP just went up by five hundred thousand.

It is also important to look at total debt, not just yearly increases in debt. After all, isn't this what underwriters do when qualifying people for loans? How does the total debt in relationship to the total assets of today, compare with the figures ten years ago or twenty years ago?


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"In religion and politics people's beliefs and convictions are in almost every case gotten at second-hand, and without examination."
-- Mark Twain


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