|
Post by johntaylor on Apr 8, 2024 13:28:47 GMT
WW II was widely viewed as worth spending on.
Most subsequent projects were more controversial, and everybody has their own favorite boondoggle
|
|
|
Post by Chahta on Apr 8, 2024 14:00:03 GMT
WW II was widely viewed as worth spending on. Most subsequent projects were more controversial, and everybody has their own favorite boondoggle Debt when used judiciously is OK. When it becomes the only way to spend it's not OK. It becomes a lack of self control.
|
|
|
Post by Norbert on Apr 8, 2024 16:05:25 GMT
It's Democracy's Achilles heel: getting reelected is difficult for a politician who decides to take the cookie jar away from the electors. So, both parties play the game.
|
|
|
Post by Mustang on Apr 8, 2024 16:21:12 GMT
The debt will never be paid back. It will be difficult enough to pare back the annual deficit and cover future interest payments. Congress has become dysfunctional. Forget the budget process. It is no longer followed. Instead of separate appropriation bills, spending is lumped together into an omnibus spending package and representatives are given 24 hours to read thousands of pages before voting. When voting they don't have any idea what's actually in it When an individual spending bill is passed, like the infrastructure bill, billions in unrelated spending is added just to get votes. "The U.S. government estimates it will receive $4.174 trillion in revenue through Sept. 30, 2022, creating a $1.837 trillion deficit for Oct. 1, 2022." Our federal government estimated 31% of spending would be borrowed. But that was greatly underestimated. "It later revised the 2021 deficit figure to $3 trillion as a result of the American Rescue Plan." That is almost twice discretionary spending. Social security, medicare and medicaid are 65% of the federal budget. Social Security (the largest expense at $1.196 trillion) and Medicare ($766 trillion). That seems like a lot but a separate tax system pays for them. Payroll taxes (separate from income taxes) were $1.462 trillion. The rest came from the Social Security Trust fund which is payroll taxes previously collected in excess of previous year's spending. "The Social Security Board of Trustees estimates that Social Security's Trust Fund will be depleted by 2033." Medicaid ($571 trillion) is not covered by payroll taxes. "Medicaid is 100% funded by the general fund, also known as "America's Checkbook." This account is used to finance daily activities and long-term operations of the government." "Interest on the U.S. debt is estimated to be $305 billion. Interest on the approximate $30 trillion federal debt is the fastest-growing federal expense. The CBO expects net federal interest costs to double by 2031 and triple by 2051. Military spending is the largest part of discretionary spending at $715 billion. We are looking at the impossible situation where interest on the debt may be greater than military spending in just seven years. 2031-2033. Social Security Trust fund will be depleted and interest on the debt will rival defense spending. Those that say debt is not a problem are wrong. This was written two years ago and spending has done nothing but increase.There is no political will to rein in spending. None whatsoever. www.thebalancemoney.com/u-s-federal-budget-breakdown-3305789
|
|
|
Post by johntaylor on Apr 9, 2024 13:17:46 GMT
Another problem in this Uniparty spending is the misuse of the Administrative Procedure Act.
Rulemaking is to implement existing legislation -- not write new "legislation" under the guise of rules to, e.g., forgive student debt. To be constitutional, that would require a new revenue bill arising in the House.
|
|
|
Post by richardsok on Apr 9, 2024 15:06:39 GMT
Another problem in this Uniparty spending is the misuse of the Administrative Procedure Act. Rulemaking is to implement existing legislation -- not write new "legislation" under the guise of rules to, e.g., forgive student debt. To be constitutional, that would require a new revenue bill arising in the House. 'Rulemaking is to implement existing legislation -- not write new "legislation".....'And who is to stop them? What bill was ever passed to permit millions of illegal aliens from pouring across the borders? Who ever voted for such a bill? --------- Front page headline from today's WSJ: "Biden Is Spending $1 Trillion to Fight Climate Change. Voters Don't Care"
|
|
|
Post by steadyeddy on Apr 10, 2024 0:10:18 GMT
As long as the USD is reserve currency, US debt is less of an issue on the world stage. And, my 2 cents, there is nothing really wrong with increasing debt levels... debt is an asset too -)
|
|
|
Post by Norbert on Apr 10, 2024 2:36:45 GMT
As long as the USD is reserve currency, US debt is less of an issue on the world stage. And, my 2 cents, there is nothing really wrong with increasing debt levels... debt is an asset too -) Isn't debt a liability for the issuer; an asset for the buyer? The issuer has the obligation to repay the debt with interest. US government interest payments are approaching $1 trillion per year, higher than the military budget. It's true that any country with a printing press and reserve currency can carry a lot of debt. Shall we go ahead and test the limits? What could go wrong?
|
|
|
Post by steadyeddy on Apr 10, 2024 15:52:28 GMT
As long as the USD is reserve currency, US debt is less of an issue on the world stage. And, my 2 cents, there is nothing really wrong with increasing debt levels... debt is an asset too -) Isn't debt a liability for the issuer; an asset for the buyer? The issuer has the obligation to repay the debt with interest. US government interest payments are approaching $1 trillion per year, higher than the military budget. It's true that any country with a printing press and reserve currency can carry a lot of debt. Shall we go ahead and test the limits? What could go wrong? Yes, debt is a liability for the issuer. But if the issuer happens to be the sovereign govt that issues the reserve currency, it will continue to be tolerated. Additionally, higher inflation is the cure for higher debt - as sovereigns can inflate away the debt. Testing the limits is a relative "thing" as limits for most sovereigns are growing in sync.
|
|
|
Post by Mustang on Apr 10, 2024 16:40:36 GMT
You are correct. Higher inflation is a cure for debt previously incurred because the dollars that pay off the debt are worth far less than the dollars borrowed and inflation grows the GDP without any increase in productivity. But inflation affects all aspects of an economy. It also means less purchasing power for the working class. Even modest inflation, like what we have now, is devastating. It makes it hard for the middle class to buy things like homes and cars. It makes it difficult for them to pay rent and utility bills especially when a much larger portion of their paycheck is used to buy groceries. Today people are having fits over a mere 4% inflation rate. The worst 10 year period was 1973-1982. Not only was inflation high but four of those 10 years had double-digit inflation. The highest was a single year inflation rate of 13.5% in 1980. www.usinflationcalculator.com/inflation/historical-inflation-rates/
I lived through those times. Trying to get a job. Working in a factory. Getting married and buying a house. The unemployment rate was three times over 8% hitting 10.8% in 1980. Mortgage rates hit 12.9% in 1980. Car loans hit a high of 18.5% in 1981. Inflation is a cure for the national debt but no one wants that to happen again. I strongly believe that those who say the deficit and debt do not matter are wrong.
|
|
|
Post by mnfish on Apr 10, 2024 18:38:59 GMT
As long as the USD is reserve currency, US debt is less of an issue on the world stage. And, my 2 cents, there is nothing really wrong with increasing debt levels... debt is an asset too -) Wikipedia - According to MMT, governments do not need to worry about accumulating debt since they can create new money by using fiscal policy in order to pay interest. MMT argues that the primary risk once the economy reaches full employment is inflation, which acts as the only constraint on spending. MMT also argues that inflation can be addressed by increasing taxes on everyone to reduce the spending capacity of the private sector. It's all falling into place. More rapidly since the pandemic.
|
|
|
Post by steadyeddy on Apr 10, 2024 19:19:26 GMT
It took us a while to get here, and it certainly will like us a while to get out of here - 2024 is shaping up to be an interesting year. I never liked the fact that Chair Powell was tipping the hat towards 3 rate cuts this year and the data doesn't appear to be supporting. Additionally, this being an election year, is he really going to be cutting rates just a month or two before Nov?
|
|
|
Post by Mustang on Apr 10, 2024 19:46:34 GMT
As long as the USD is reserve currency, US debt is less of an issue on the world stage. And, my 2 cents, there is nothing really wrong with increasing debt levels... debt is an asset too -) Wikipedia - According to MMT, governments do not need to worry about accumulating debt since they can create new money by using fiscal policy in order to pay interest. MMT argues that the primary risk once the economy reaches full employment is inflation, which acts as the only constraint on spending. MMT also argues that inflation can be addressed by increasing taxes on everyone to reduce the spending capacity of the private sector. It's all falling into place. More rapidly since the pandemic. Higher taxes? That's called being between a rock and a hard place. So, unless our government can control spending then the choice is inflation eroding purchasing power, high interest putting rent, mortgages and car payments out of reach, or high taxes taking more from our paycheck. Definitely a lose, lose, lose scenario.
|
|
|
Post by retiredat48 on Apr 10, 2024 21:56:44 GMT
steadyeddy ,...who posted: " Additionally, higher inflation is the cure for higher debt - as sovereigns can inflate away the debt."--------------------- This is the key observation, and is historically what most governments try to do. In this regard, a couple points: --Janet Yellen really blew it by failing to refinance the debt. Even taxi driver's knew to refinance their mortgage down to 3% or less, and lengthen maturity if possible, when rates were very low. People were shouting from the rooftop for Yellen to do likewise. Issue 30 year bonds at super low rates; or even issue 100 year bonds. She refused. Now we have trillions in gvt debt that my understanding is about two thirds matures within 3 year duration. This means majority of gvt debt is at short term interest rates. So Treasury is paying huge sums. And if inflation continues sticky, and Fed keeps rates where they are now (higher for longer), the gvt is really squeezed. Thus remember if a likely unjustified fed rate cut occurs in July thru September, there is a component that this favors the Treasury by reducing debt payment needs; and is also a political move in an election years to allow Pres. to brag re economy. And if the fed makes no change, then it costs the USA people trillions in debt payments. Each a poor situation. BTW A friend once handed me a trillion note from Zimbabwe. The front was a large 1 with many zeros following it. I was told it could buy about 8 gallons of gasoline! R48
|
|
|
Post by steadyeddy on Apr 10, 2024 23:36:16 GMT
Debt is like obesity in the general population. The human body can tolerate (on average) obesity to a certain extent with no detrimental effects. At some point, the laws of physics will prevail.
Two things are the tailwinds for the US right now: 1) Onshoring or Friend-shoring for manufacturing bringing industries back to the US/friends (high tech), and 2) King Dollar. BRICS could pose a threat with alternate currency but given the political alienation particularly between C & I and a so-so positioning of R and the rest of the countries, the dollar is in no danger any time soon.
Additionally, in addition to inflation, wars also cure high debt. Not implying anything here on moral grounds but just stating the financial impact of wars. If additional wars spring up in the world, they would help appropriate countries proportionally.
|
|
|
Post by anovice on Apr 10, 2024 23:46:36 GMT
R48,
Unfortunately, Yellen along with Powell, really believed inflation was transitory.
|
|
|
Post by liftlock on Apr 11, 2024 3:41:41 GMT
"Janet Yellen really blew it by failing to refinance the debt." I read somewhere that Janet Yellen had an advisory board that recommended against re-financing the debt at longer maturities. Like the blind leading the blind.
|
|
|
Post by mnfish on Apr 11, 2024 11:15:41 GMT
It took us a while to get here, and it certainly will like us a while to get out of here - 2024 is shaping up to be an interesting year. I never liked the fact that Chair Powell was tipping the hat towards 3 rate cuts this year and the data doesn't appear to be supporting. Additionally, this being an election year, is he really going to be cutting rates just a month or two before Nov? From a previous post by me - "As far as projections are concerned, here is a snippet from CBO in Feb 2020 (pre Covid) "In CBO’s projections, federal debt held by the public reaches $17.9 trillion at the end of 2020." It was $27.7T in Q4 2020. Now it's $33.1T."(actually $34.5T now) I'm not sure what "a while" means to most but to have the debt go up 104%% since Q2 - 2019($16.2T) seems like a "short while". It took almost 10 years for it to rise that much prior. And the new budget is asking for $7.3T. Just for fun, the last time debt went down for "a while" was Q1-1998 to Q3-2001 under Clinton and Bush. So, it is possible.
|
|
|
Post by Mustang on Apr 11, 2024 17:11:33 GMT
Inflation is a cure for the national debt but no one wants that to happen again. I strongly believe that those who say the deficit and debt do not matter are wrong.
Here is what moderate inflation is doing:
Americans believe they will need $1.46M to retire comfortably --- 15% jump in one year
--- Up 53% in five years --- Gen Z think its $1.6M --- High net worth ($1M) believe it will be $4M
Average savings is $88.4K --- Down $10K in five years --- Eroded purchasing power forces use of retirement savings --- 42% dipping into retirement savings --- 7 in 10 not contributing as much due to high prices
|
|
|
Post by steadyeddy on Apr 11, 2024 23:04:39 GMT
Good posts overall on this thread. The real issue in my mind is that the Fed doesn't want to upset the market, and they keep implying there would be ST interest rate cuts. I have no earthly idea why they are doing that.
|
|
|
Post by mnfish on Apr 12, 2024 10:23:15 GMT
“Well, I do stand by my prediction(order) that, before the year is out (before Nov 5), there’ll be a rate cut,(you hear me?)” Biden said Wednesday at a White House press conference alongside Japanese Prime Minister Fumio Kishida.
You think there's a message in there to Powell?
|
|
|
Post by steadyeddy on Apr 12, 2024 11:27:18 GMT
“Well, I do stand by my prediction (order) that, before the year is out (before Nov 5), there’ll be a rate cut, (you hear me?)” Biden said Wednesday at a White House press conference alongside Japanese Prime Minister Fumio Kishida. You think there's a message in there to Powell? One rate cut ain't gonna do tihs for the economy, unless that rate cut is 100 bps or more. If a couple of big regional banks fail and Uncle Dimon balks at buying them... possible. The more I hear the Fed leaders talk, I suspect they know something that is gonna break soon.. could be reverse repo? regional banks? what??
|
|
|
Post by retiredat48 on Apr 12, 2024 15:58:12 GMT
"Janet Yellen really blew it by failing to refinance the debt." I read somewhere that Janet Yellen had an advisory board that recommended against re-financing the debt at longer maturities. Like the blind leading the blind. Past secretary Steve Mnuchin (sp?) stated he was planning to extend duration of debt, but he got voted out of office. Sure glad my kids have under 3% mortgages for 25-30 years. "elementary, my dear Watson." R48
|
|
|
Post by johntaylor on Apr 21, 2024 13:45:07 GMT
Apparently the House wants to send 61 billion more to Ukraine, so spending continues apace...
|
|
|
Post by archer on Apr 21, 2024 14:50:30 GMT
Apparently the House wants to send 61 billion more to Ukraine, so spending continues apace... I think this is a case of an aid package being titled deceptively. It makes sense to call it aid to Ukraine, but the motivation is much about containing Russia, and its benefit to the US. I'm sure there are many other countries that could use help that are being ignored as they are not in our best interest to provide aid to. The US is criticized by other countries for meddling, but being #1 comes with a lot of work and responsibility to maintain. The saying "Heavy is the Crown" comes to mind. I don't mean to make a point about the merits of our involvement with Ukraine, better a conversation for other threads, but more that we have grown dependant on providing aid in excess of what have the real resources for.
|
|
|
Post by Norbert on Apr 21, 2024 15:17:31 GMT
I've tentatively concluded that "Deficits don't matter" (per Dick Cheney). www.ft.com/content/375c886b-0df1-4d42-a0b1-504be03304f6This FT pieces sets two conditions: * The debt can't be inflationary; * The debt holders can't lose confidence about getting repaid. I'll add some other factors: * Debt seems to be good if it results in strong future returns (e.g., federal highway or space programs); even high defense spending can pay off by preventing war; but creating a welfare state with debt sounds like a bad idea longer term. * If all countries have elevated debt levels, relative currency value shouldn't be affected (subject to the FT's two conditions). In the case of the Ukraine, I fear the real motivation now revolves around the upcoming elections. (The Russians would have been happy with a neutral Ukraine ... but not a new member of NATO. Hopefully the money will be used to negotiate a deal from a position of strength, nothing more.)
|
|
|
Post by uncleharley on Apr 21, 2024 15:31:47 GMT
“Well, I do stand by my prediction (order) that, before the year is out (before Nov 5), there’ll be a rate cut, (you hear me?)” Biden said Wednesday at a White House press conference alongside Japanese Prime Minister Fumio Kishida. You think there's a message in there to Powell? One rate cut ain't gonna do tihs for the economy, unless that rate cut is 100 bps or more. If a couple of big regional banks fail and Uncle Dimon balks at buying them... possible. The more I hear the Fed leaders talk, I suspect they know something that is gonna break soon.. could be reverse repo? regional banks? what?? My guess would be something in the forex market. That is a guess and is based on the interest in Gold & Crypto currencies.
|
|
|
Post by johntaylor on Apr 21, 2024 16:54:48 GMT
Kennan's book American Diplomacy: 1900-1950 was influential in the policy of containment of communism, but the US is 34 trillion in the hole and Russia seems less dangerous than China to our long-term interests.
Although comparisons of nations to individuals don't always work, high debt seems to have an insidious, corrosive, weakening effect.
|
|
|
Post by mnfish on Apr 21, 2024 17:34:33 GMT
"In a nutshell, the MMT argues that budget deficits don’t matter: a sovereign country can print as much money as it wants to spend until inflation rises, at which point it can raise taxes to cool down the economy."
"Since the Great Recession, major countries have done this (for example, via quantitative easing) to support a recovery—nothing new there. However, to carry this argument to its extreme, saying categorically that deficits don’t matter is wrong."
"Nevertheless, it is music to the ears of politicians both on the right (who favor more tax cuts) and the left (who propose Medicare for All and the Green New Deal). To most of us, it seems too good to be true—and it is."
Something for everyone!!
|
|