US Budget Simplified

[Vertigo]

One thing that is often overlooked is how much foreign debt we OWN. As of 2010 that number was $6.8T- that's how much other nations owe us.

That's more than what we owe to foreign nations.

To put it in OP's terms:

We owe $142K on the Visa card but we have a $68K credit on the Mastercard.

Edited August 31, 2012 by Vertigo

[Patcho]

/rant on

I can't speak for other countries, so here's the view from where I sit, overseas:

There is an undercurrent I've sensed from Washington lately...Maybe it's just me?

"We owe $XXXXXX-bazillion 'USD' to other countries...so let's just devalue (via your preferred means - dollar printing, buying our own debt, both at the same time, etc.) our USD! w00t! Problem solved!" And...it's catching on - at least over here in Japan. (They've learned soooo many lessons from us!)

The Bank of Japan is busy doing...well, that. Just watch what happens anytime the USD/Yen rate gets down near 75.

So, it's not like the good ol' U-S-of-A is operating in a vacuum in this argument. Japan is devaluing the Yen, China is presumably (help, anyone more knowledgeable about China?) still screwing around with the value of the Renminbi, etc. (I'm waaay out of my depth to comment on Europe.) In any event - from what I can see...I believe it's called "Competitive devaluation"?

I don't think the U.S. should OWE any country anything that can't be settled at the end of the month. And it SHOULD be settled at the end of the month, every month. (This doesn't mean we shouldn't have allies. We just shouldn't owe a lot of money to...say...a large Communist country that has has an excellent chance of being this generation's "new USSR", and has a name ending in "-hina", for example.)

Looking at our average households, I don't see fiscal responsibility happening anytime soon...but it should be our goal. Stop owing other countries money. Because you know they're going to come knocking at the worst time.

(Full disclosure:

#1 - I wish the USD was tied to something...ANYTHING. Gold. Moon dust. Whatever. Something we just can't make up more of 'from thin air'. The idea that we can devalue or revalue <though that never happens, does it?> the USD invariably winds up as a punishment for fiscally conservative folks. You know...the kind who join the military, because they want a safe, stable country, and presumably a safe, stable currency. Nice to have people operate within their means, including the U.S. Govt.

#2 - I'm not implying I have all, most, or even some of the answers. This is just my two cents.

#3 - Damn, this Chu-Hi is good. Those who've been here, Korea, or China know what I'm talking about. )

/rant off

Edited September 1, 2012 by Patcho

[guineapigfury]

We just shouldn't owe a lot of money to...say...a large Communist country that has has an excellent chance of being this generation's "new USSR", and has a name ending in "-hina", for example.)

When you owe someone a couple of trillion dollars, they have a bigger problem than you do.

[guineapigfury]

There's a lot of phrases you can use to describe the type of people who join the military, but "fiscally conservative" doesn't even crack the top 10 for me.

Nor does it crack the top 10 of the strip clubs, pawn stores, tattoo parlours, liquor stores, and payday lenders all of whom cluster around military bases for some reason ...

[Patcho]

Which military are you talking about? The U.S. military? There's a lot of phrases you can use to describe the type of people who join the military, but "fiscally conservative" doesn't even crack the top 10 for me. Anyway, I feel more secure basing our currency on the full faith and credit of a superpower nation, rather than a really pretty and shiny metal found in mountains that has almost zero practical use other than being really pretty and shiny. A gold standard doesn't have anymore place in today's world than a Spanish galleon has in a modern naval battle.

Yeah, "Fiscally conservative military member" was probably just optimism and Chu-Hi talking. My bad.

(Guinneapigfury is also 100% right about the standard spread of business around the main gate of Anybase, USA.)

As far as the gold standard...yup, it is an old system that nobody uses anymore. That's why I said "something...ANYTHING".

No, I'm not so foolish as to think that being on a fixed standard of some kind would solve all of our problems. I do think it would greatly curtail the whole "kicking the can down the road" idea, which seems to be the only plan that absolutely has bi-partisan support in Washington these days. (Yes, everybody SAYS they want to solve the debt problem by <###, YYY, ZZZ>. But really, what do they wind up DOING?)

Wait while I dig out my crystal ball...ok.

"What will happen at the end of this year, when "fiscal cliff" of automatic tax increases and budget cuts arrives due to tomfoolery on both sides of the aisle and in the SuperCommittee?"

"All signs point to can-kicking, possibly disguised as 'We'll do this easy part right now, the hard stuff we'll get back to...ummm...later!' and/or development of the 'WeReallyMeanItThisTimeSuperDuperCommittee', which will also deadlock."

Currently, we are no longer rated "AAA" across the board - one of the three credit rating agencies disagrees with your confidence in the USD being backed up by the "full faith and credit" of the USA.

But hey, it's just one of the three, right?

Well, good news! We've painted ourselves into a corner.

Either:

a) We allow the US economy to "go over" the cliff - possibly causing a double-dip recession (I guess the economy is doing great now???)...and we'll get downgraded by another agency (see PIMCO's Bill Gross, other news analysts, etc.), leaving us with a "AAA" rating at only ONE agency.

b) We waffle as predicted in my crystal ball, change the law at the last second/pass a resolution to really, honestly, no-kidding take care of the budget...someday/etc. (I haven't heard of the impact of this from any news agency, despite it being the obvious outcome...??)

Then...I wouldn't be surprised to see a downgrade to USA's credit rating, for failing to follow it's own laws - from both remaining agencies.

Anyway, the only thing I stand behind 100% in my post is:

#2 - I'm not implying I have all, most, or even some of the answers. This is just my two cents.

Edited September 2, 2012 by Patcho

[pawnman]

When you owe someone a couple of trillion dollars, they have a bigger problem than you do.

Unless you are continuing to run huge deficits, and they turn off access to the money.