US Budget Simplified

[billy pilgrim]

I saw this on the internet the other day.

Maybe some of the craziness would stop if taxes were raised to fund the budget. THAT would start getting peoples attention.

[HeloDude]

Maybe some of the craziness would stop if taxes were raised to fund the budget. THAT would start getting peoples attention.

It would only get about 1/2 of the country's attention because only about 50% pay income taxes.

[Apollo]

God damnit, I avoid Facebook for a reason. Don't copy and paste that factless, baseless bullshit here. Show up with something more than some high school drop out's napkin notes.

[Tank]

God damnit, I avoid Facebook for a reason. Don't copy and paste that factless, baseless bullshit here. Show up with something more than some high school drop out's napkin notes.

Do tell us the facts then for us simple people....

[Muscle2002]

God damnit, I avoid Facebook for a reason. Don't copy and paste that factless, baseless bullshit here. Show up with something more than some high school drop out's napkin notes.

Agreed.

Edited August 29, 2012 by Muscle2002

[SocialD]

God damnit, I avoid Facebook for a reason. Don't copy and paste that factless, baseless bullshit here. Show up with something more than some high school drop out's napkin notes.

Dude, it's true...it's on the internet! What more could you want?

Edited August 29, 2012 by SocialD

[BitteEinBit]

BS...that's not a napkin...why would anyone type on a napkin??

[Loach]

I heard that example used on Red Eye Radio the other night (on my weekly 3AM drive from home to purgatory for the week - the Pentagon). According to the two hosts, even if we raised taxes to the level that the Pres, Reid and Pelosi want us to, it would make the family income only increase from $21,700 to $22,400 or something similar to that. Their point was that nothing is going to change with tax increases -- it's all about the spending.

[HeloDude]

Fact: preying upon people's complete ignorance about how sovereign debt works is a powerful tool to build up obstructionist sentiment for any opposition party, in any

Sounds more like an opinion.

[JAXK]

If you don't think that the massive amounts of debt we are in is going to hurt this country you are a fool

[GoodSplash9]

God damnit, I avoid Facebook for a reason. Don't copy and paste that factless, baseless bullshit here. Show up with something more than some high school drop out's napkin notes.

OMFG.....YGTBFKM.....everyone knows we don't really have a debt problem. We should have Apollo get some paper towels from a community college student(somebody with a little more credibility than facebook) that has the real facts about our national economic situation.

Edited August 29, 2012 by Wraith

[HercDude]

Comparing credit card debt to the nation’s debt is just plain idiotic. Anyone who thinks you can make a valid comparison between the two should remove themselves from any conversation regarding the national debt, its relevance to the national economy, or American fiscal policy.

[f16wolfpack]

One of the only reasons we have been able to avoid a debt crisis in the US is because there are other nations around the world with bigger debt problems (i.e. Greece, Italy, Spain, Portugal, and Japan). The dollar and US treasury bills are still more solid than most other currencies or investments around the world. Do not expect this to always be the case. Printing more money can only carry us so far. Unless the economy rebounds quickly, additional revenue is generated, or spending is drastically cut, we are in for a rude awakening. Debt is debt and at some point, the piper has to be paid. To think otherwise is very naive and unsubstantiated.

[frog]

Comparing credit card debt to the nation’s debt is just plain idiotic. Anyone who thinks you can make a valid comparison between the two should remove themselves from any conversation regarding the national debt, its relevance to the national economy, or American fiscal policy.

Yeah, a nation can just print more money and take everybody down with inflation instead of a single household failing.

[f16wolfpack]

Yeah, a nation can just print more money and take everybody down with inflation instead of a single household failing.

Good point. If you have the time, look up Zimbawawe. This is how sovereign debt can take down a country one dollar at a time.

[spaceman]

Good point. If you have the time, look up Zimbawawe. This is how sovereign debt can take down a country one dollar at a time.

I remember that -- my younger brother had one of the $100,000,000,000 bills they were cranking out. I think he got it online for like 5 USD and hung it up in his house just because it was so ridiculous.

[Dupe]

One of the only reasons we have been able to avoid a debt crisis in the US is because there are other nations around the world with bigger debt problems (i.e. Greece, Italy, Spain, Portugal, and Japan). The dollar and US treasury bills are still more solid than most other currencies or investments around the world. Do not expect this to always be the case. Printing more money can only carry us so far. Unless the economy rebounds quickly, additional revenue is generated, or spending is drastically cut, we are in for a rude awakening. Debt is debt and at some point, the piper has to be paid. To think otherwise is very naive and unsubstantiated.

I think one of the reasons our debt is high is because debt remains a viable policy option. As long as the return on T-bills remains at or below the inflation rate, then the real interest on that debt is essentially nil.

[BitteEinBit]

I remember that -- my younger brother had one of the $100,000,000,000 bills they were cranking out. I think he got it online for like 5 USD and hung it up in his house just because it was so ridiculous.

It is legit. I just got an e-mail from some retired queen or something in Zimbabwe wanting me to cash a check for her for over $100M from the Royal Bank of Zamunda, and I get to keep half! So, say what you want, but there is money to be had in Zimbabwe....and I'm going to get mine bitches!! I may go tell the WG/CC to do f*ck himself now that I'm a millionaire!!!

I'M RICH BITCH!!!

Edit: Turns out the e-mail was a hoax...I found out after I crashed the Wing Standup and did the helicopter dick yelling 'I'm rich bitch' in front of the entire wing leadership that I was in fact NOT a millionaire. One Article 15 later plus a 365 later, moral of the story is...beware of Internet hoaxes and countires with sovereign debt.

Edited August 30, 2012 by BitteEinBit

[f16wolfpack]

I think one of the reasons our debt is high is because debt remains a viable policy option. As long as the return on T-bills remains at or below the inflation rate, then the real interest on that debt is essentially nil.

Again, this policy can probably stand in the short term, but the reason the credit downgrade was such a big deal is the fact it could lead to higher rates in the long term. Investors (individuals and other governments) want a decent return on their investment when they buy our debt through treasury bills (T-bills). If they are assuming a greater risk, they will demand a larger return. This larger return equates to higher interests rates. The Federal Reserve adjusts these rates based on the demand for the investment. As the demand drops, the interest rate must be increased in order to continue funding "soverign debt." That's where our government and public will suffer.

If investors demand a higher rate for assuming greater risks, the Federal Reserve will be "forced" to raise rates. This will make it more difficult to continue the current policy, because it will cost the government too much in interest payments down the road. This rate increase will also make it more difficult for you and me to obtain financing through bank loans, because most bank loans base their rates on what the Fed sets. Attached is a good article that explains this a bit better than I did. https://www.elliottwave.com/freeupdates/archives/2012/08/30/When-Will-the-Fed-Raise-Interest-Rates-When-the-Market-Says-So.aspx

[matmacwc]

Comparing credit card debt to the nation’s debt is just plain idiotic. Anyone who thinks you can make a valid comparison between the two should remove themselves from any conversation regarding the national debt, its relevance to the national economy, or American fiscal policy.

I guess you believe debt=prosperity, news flash, interest on debt can drown you, just ask all the homeowners who are out of their houses. And credit card debt is equally as idiotic, only at a higher interest rate. I get that the American debt isn't at those rates, but wait until it rises due to inflation, then we are F'd. How bout we don't owe anything to anyone, or better yet, the other countries owe us, this is a better scenario.

Edited August 31, 2012 by matmacwc

[Dupe]

Again, this policy can probably stand in the short term, but the reason the credit downgrade was such a big deal is the fact it could lead to higher rates in the long term. Investors (individuals and other governments) want a decent return on their investment when they buy our debt through treasury bills (T-bills). If they are assuming a greater risk, they will demand a larger return. This larger return equates to higher interests rates. The Federal Reserve adjusts these rates based on the demand for the investment. As the demand drops, the interest rate must be increased in order to continue funding "soverign debt." That's where our government and public will suffer.

If investors demand a higher rate for assuming greater risks, the Federal Reserve will be "forced" to raise rates. This will make it more difficult to continue the current policy, because it will cost the government too much in interest payments down the road. This rate increase will also make it more difficult for you and me to obtain financing through bank loans, because most bank loans base their rates on what the Fed sets. Attached is a good article that explains this a bit better than I did. https://www.elliottwa...et-Says-So.aspx

I definately agree that our future choices have to be different than our current ones... especially as America's demographics shift towards an aging population. At some point, there will be a higher risk premium on American debt. The thing is, that hasn't happened yet. Not even close. T-bill rates have been in a decline since 2007 (the chart in your link shows that). Now, rates are rock-bottom lows and have been flat since 2009. Even with the American credit downgrade...T-bill rates and hence the Fed Funds Rate didn't much move. Why? I think the answer is that investors believe we're still a low-risk investment. In fact, with the Euro crisis flamming and the low cost of the American dollar, I think the risk of investing in Amercian debt has actually decreased. T-bill returns have dropped accordingly.

What I'm trying to argue is that ideas like the Bush-era tax cuts, medicare prescription drug benefits, TARP, the stimulus, funding two wars, and the automotive industry bail-outs all seem more reasonable if the debt you take on has a 0% real interest rate.

I'll offer a heretical opinion: Right now, we're in a unique time. Inflation rates are at or above the interest rates on American debt. That means American debt has a zero to negative real interest rate. At the same time, the future road looks hard. America's population is aging and our infrastructure is crumbling. Global challengers (ok...really one challenger) to American military hegemony are growing. America's access to cheap energy sources is increasingly challenged. We should be using this opportunity to deficit spend while the real cost is essentially free to fund enabling projects/programs for the next few decades. When the real rate of our debt then starts to increase, we should shift to a more balanced fiscal policy. We're in agreement that change has to happen...we just don't agree when.

[HercDude]

I guess you believe debt=prosperity, news flash, interest on debt can drown you, just ask all the homeowners who are out of their houses. And credit card debt is equally as idiotic, only at a higher interest rate. I get that the American debt isn't at those rates, but wait until it rises due to inflation, then we are F'd. How bout we don't owe anything to anyone, or better yet, the other countries owe us, this is a better scenario.

I'm not saying being in debt is a good thing - don't know where you got that from.

I'm saying chopping off a bunch of zeros and implying that money runs through the national economy the same way a family runs through it's budget is simplistic and incredibly useless.

[czecksikhs]

Even with the American credit downgrade...T-bill rates and hence the Fed Funds Rate didn't much move. Why? I think the answer is that investors believe we're still a low-risk investment. In fact, with the Euro crisis flamming and the low cost of the American dollar, I think the risk of investing in Amercian debt has actually decreased. T-bill returns have dropped accordingly.

Or perhaps it is because the Federal Reserve has bought about 70% of all 10-30 yr US debt issuance the past couple of years. But hey, it is money we owe ourselves and deficits don't matter. Party on!

[f16wolfpack]

I definitely agree that our future choices have to be different than our current ones... especially as America's demographics shift towards an aging population. At some point, there will be a higher risk premium on American debt. The thing is, that hasn't happened yet. Not even close. T-bill rates have been in a decline since 2007 (the chart in your link shows that). Now, rates are rock-bottom lows and have been flat since 2009. Even with the American credit downgrade...T-bill rates and hence the Fed Funds Rate didn't much move. Why? I think the answer is that investors believe we're still a low-risk investment.

Like I said before, I think we are a less risky investment now, relatively speaking, based on the fact others are more risky (i.e. the EU). However, let's not kid ourselves. The rate is deceptively low for another important reason. Since 2009, the Federal Reserve has been printing money to buy treasury bills and bonds at unprecedented rates, to the tune of over $2.3 trillion (see today's article: https://www.usatoday.com/money/economy/story/2012-08-30/ben-bernanke-speech-jackson-hole/57470268/1).

Unfortunately, it is difficult to translate this approach to entities outside the government, which obviously has the ability to print its own money. The closest example I can come up with is comparing this to a Fortune 500 company. This would be like Coca-Cola purchasing its products off the shelves of convenient stores in order to keep its sales abnormally high. In the long run, it is not sustainable. It is a ploy to prevent us from sliding back further into another recession, but at what cost to the future?

Sure, debt is cheaper today, deceptively cheaper as I've pointed out. Does that mean we should continue to finance projects, proposals, and policies with debt in the hopes of bailing ourselves out of a hole we dug for ourselves in the first place? I think it is a very risky proposition. In fact, isn't this also similar to financing a second home in order to turn a profit on your investment since financing is easier to obtain? That didn't work out so well in 2007 and 2008 for some Californians buying homes in Vegas and Phoenix. If we fund projects today that are not sustainable in the long term because of the costs required to maintain them and the potential for costs to increase, should we continue to go into debt because its cheaper or easier to obtain financing now versus later? That's assuming heavy risk for a very low return in my opinion. I don't believe it is sustainable either.

[Guest]

I read op's pics, and immediately thought it was bullshit from the 9fag stamp. My advice, go sell all the jewelry you own at a cash 4 gold place, then invest at Goldline or another gold investment organization, start a reverse mortgage, play the lottery daily, and buy commemorative treasury coins from late night infommercials.

Sent from my rooted Atrix using Tapatalk 2.