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Post by ECE Prof on Oct 5, 2022 13:27:08 GMT
The debt is crushing them now. The US is also in the same category. So, interest hike is very bad for the west. Nobody is giving them cheap loans anymore. They are worse than the leverages of the many CEFs. Now, the houses are on fire.
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Post by Chahta on Oct 5, 2022 13:38:18 GMT
You are exactly correct. We will succumb to our crushing debt which grows every day. We as a citizenry are so stupid to allow politicians the ability to bury us with their mismanagement. But don't despair, the "Eastern" economies will follow one day. BTW, Russia is lying about their numbers.
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Post by ECE Prof on Oct 5, 2022 13:42:08 GMT
You are exactly correct. We will succumb to our crushing debt which grows every day. We as a citizenry are so stupid to allow politicians the ability to bury us with their mismanagement. But don't despair, the "Eastern" economies will follow one day. BTW, Russia is lying about their numbers. But, Russia has the energy resource. In spite of the loss on the ground, Russia has driven the west (and NATO) to dark ages now, of course, through the debt. Energy is a potent tool, as I stated once in the Armschair forum sometime back.
UK is in the worst condition with 345%. US has 102%. US debt was a lot lower, when I migrated. Look what has happened now. Bin Laden did it to us, and the debt increased substantially after 9/11. That was the cause for the defaults of Lehman, AG, and many companies, that, in turn, caused the deep recession of 2008.
Now, eastern economies, will learn the lessons of the west. There are (and were) some grumblings that have started now about the energy price. If the east also goes down, and there are already signs of that in the GDP growth rates. Then, the oil will crumble in the near future.
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Post by johnsmith on Oct 5, 2022 13:46:22 GMT
The west will not fail because of debt.
The US government can print out as much USD, UK can print as much GBP as it wants - the government debts can (and most likely will) be paid.
The indebtness at the corporate, household sectors should be more troubling, apparently it's easy to forget the lessons of 2008/9. The US government took over all that debt and didn't fail (bailout of the rich and private corps? **cough**welfare queens**cough**). Banks, insurance corps, investment banks, households were terribly levered and wrecked havoc.
China isn't having issues because the government has debt, it's having issues because private companies are too levered up.
Japanese Government isn't having an issue despite printing trillions and having close to 0 inflation for the last 30 years. Japanese corporates and households also don't have much debt so they aren't facing existential issues.
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Post by Chahta on Oct 5, 2022 14:00:32 GMT
You are exactly correct. We will succumb to our crushing debt which grows every day. We as a citizenry are so stupid to allow politicians the ability to bury us with their mismanagement. But don't despair, the "Eastern" economies will follow one day. BTW, Russia is lying about their numbers. But, Russia has the energy resource. In spite of the loss on the ground, Russia has driven the west (and NATO) to dark ages now, of course, through the debt. Energy is a potent tool, as I stated once in the Armschair forum sometime back.
UK is in the worst condition with 345%. US has 102%. US debt was a lot lower, when I migrated. Look what has happened now. Bin Laden did it to us, and the debt increased substantially after 9/11. That was the cause for the defaults of Lehman, AG, and many companies, that, in turn, caused the deep recession of 2008.
Now, eastern economies, will learn the lessons of the west. There are (and were) some grumblings that have started now about the energy price. If the east also goes down, and there are already signs of that in the GDP growth rates. Then, the oil will crumble in the near future.
The US has energy resources too but refuse to acknowledge it. We are ashamed.
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Deleted
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Post by Deleted on Oct 5, 2022 14:20:54 GMT
The big government debt is sold to eager buyers, who in turn sell it to the next group of buyers, and so on, fueling the belief that 'deficits don't matter.'
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Post by ECE Prof on Oct 5, 2022 14:26:49 GMT
OPEC+ has doubled down on oil cut. The cartel will cut by 2 million barrels/day instead of Biden's 1 million barrels/day release from our reserve. The OPEC+ wants to deplete our resources. Watch the market go down. I sold all equities in my ROTH accounts that I bought just on Monday because the gas prices will go back up again causing more sustained inflation.
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Post by johnsmith on Oct 5, 2022 14:51:49 GMT
You are exactly correct. We will succumb to our crushing debt which grows every day. We as a citizenry are so stupid to allow politicians the ability to bury us with their mismanagement. But don't despair, the "Eastern" economies will follow one day. BTW, Russia is lying about their numbers. But, Russia has the energy resource. In spite of the loss on the ground, Russia has driven the west (and NATO) to dark ages now, of course, through the debt. Energy is a potent tool, as I stated once in the Armschair forum sometime back.
UK is in the worst condition with 345%. US has 102%. US debt was a lot lower, when I migrated. Look what has happened now. Bin Laden did it to us, and the debt increased substantially after 9/11. That was the cause for the defaults of Lehman, AG, and many companies, that, in turn, caused the deep recession of 2008.
Now, eastern economies, will learn the lessons of the west. There are (and were) some grumblings that have started now about the energy price. If the east also goes down, and there are already signs of that in the GDP growth rates. Then, the oil will crumble in the near future.
Whole lots of things that are not necessarily true here.
Bin Laden didn't force the US into debt, America did it to itself. Russia isn't doing anything, the West is doing it to itself. There's a difference between private and government debt. Lehman, AIG and others failed because of their own greed and mendacity. Not because government debt increased.
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Post by ECE Prof on Oct 5, 2022 15:04:37 GMT
"Bin Laden didn't force the US into debt, America did it to itself. Russia isn't doing anything, the West is doing it to itself. There's a difference between private and government debt. Lehman, AIG and others failed because of their own greed and mendacity. Not because government debt increased. "
LOL. I really had a big laugh. You can say that. But, I sold a big chunk of equities today.
Iranian and Saudi oil ministers cooperate with Russia and are smiling in the WSJ's picture together, there must be something big cooking up.
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Post by steelpony10 on Oct 5, 2022 15:23:42 GMT
The important number is percentage of debt to GNP to my recollection. Of course being the largest economy gives you the largest debt in dollars. Add endemic inflation to that. Stimulus checks are a mainstay I’ll bet. Deficits don’t matter. They can always be negotiated down. What about Greece and Ireland as recent examples?
The U.S. only had a budget surplus 4? times in it’s history. The last being during the Clinton years. No country possesses the virtue of fiscal responsibility. The States do have the upper hand on the military option. The U.S. did start planning an invasion during the oil embargo in the 70’s. Take a page from recent headlines and threaten to nuke them. Lol.
It’s all wall of woe chatter with no long term affects on markets.
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hondo
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Post by hondo on Oct 5, 2022 16:10:38 GMT
The west will not fail because of debt.
The US government can print out as much USD, UK can print as much GBP as it wants - the government debts can (and most likely will) be paid. Please help an old man and explain how the US government debt can be paid off by printing more money? I guess I'm not smart enough to understand that. The US has been printing money for decades and we keep going more and more in debt.
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Post by ECE Prof on Oct 5, 2022 17:12:36 GMT
"Please help an old man and explain how the US government debt can be paid off by printing more money? I guess I'm not smart enough to understand that. The US has been printing money for decades and we keep going more and more in debt. "
+1. LOL. The worst country is UK with such a debt load of 345% of its GDP. The empire of Winston Churchill has crumbled now.
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Post by steelpony10 on Oct 5, 2022 18:57:07 GMT
The west will not fail because of debt.
The US government can print out as much USD, UK can print as much GBP as it wants - the government debts can (and most likely will) be paid. Please help an old man and explain how the US government debt can be paid off by printing more money? I guess I'm not smart enough to understand that. The US has been printing money for decades and we keep going more and more in debt. Fellow old man remember when the national debt was 60 billion? We were going to bankrupt our grandchildren? I think that’s us. I expect the national debt to reach 1 bazillion before I pass. Check this, 6/21. The others will never see a cent. people.howstuffworks.com/5-united-states-debt-holders.htm Keep investing in so called “safe” U.S. bonds like other countries. The government owes the majority to us. That’s how that Ponzi scheme works. Modeled after SS and Medicare. Anyway this is how I see that situation, not a problem. I like to keep a cool head and make decisions based on actual factual situations when required as they occur and not speculate about future unknowns. No “what if” geezer stress.
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Post by Mustang on Oct 5, 2022 19:53:49 GMT
The west will not fail because of debt.
The US government can print out as much USD, UK can print as much GBP as it wants - the government debts can (and most likely will) be paid. Please help an old man and explain how the US government debt can be paid off by printing more money? I guess I'm not smart enough to understand that. The US has been printing money for decades and we keep going more and more in debt. By causing inflation. 7% inflation will double the amount of money needed to buy a product in 10 years. (I picked 7% because the calculations are easy.) Let's say we have 7% inflation for 10 years. If incomes keep up then taxes will double in nominal dollars. If prices keep up then the GDP will double in nominal dollars. But, a 10 year $1,000 bound is only worth $500 in real dollars even though the government pays back $1,000. The investor can only buy half the products and services he could 10 years earlier.
As long as debt is measured as a percent of GDP then inflation makes an increasing debt level not look as bad.
The reason it is more and more in debt is deficit spending. Debt is increasing faster than inflation. This is especially true of the last several years when inflation was roughly 2% and deficit spending was through the roof. It takes around 35 years for costs to double at 2% inflation.
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Post by ECE Prof on Oct 5, 2022 20:12:55 GMT
"Debt is increasing faster than inflation. "
You can see that in the table. Our real GDP growth has been negative for a while. The same is also true of Europe. How do we fund our debt? You can see the column "external debt." Now, when the external debt keeps growing, we are mortgaging our future, who lend money to us. I know that we are not in the same boat. However, several south Asian countries borrowed a lot of money from China, and they are not able to pay back. They are now begging IMF to lend them more money to pay back the Chinese interest. Where is the end? That is how Britain has ended up with a debt of 345% of its GDP.
Unless, the real GDP growth is positive, the countries cannot even payback the interest, let alone the debt.
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Post by Mustang on Oct 5, 2022 20:16:39 GMT
When you find yourself in a hole the first thing you have to do is stop digging.
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Post by Chahta on Oct 5, 2022 20:36:38 GMT
Somewhere along the way the idiots than "operate" this country have been taught a line of BS; "Full faith and credit of the US", "we operate a printing press", "% of GDP" etc., and on and on. All anyone needs to know is that inflation is not controllable unless the economy gets crashed. Not a single person can stop it. Does anyone think that the debt is controllable?
"It’s all wall of woe chatter with no long term affects on markets." Well not yet at least.
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Post by ECE Prof on Oct 5, 2022 20:37:30 GMT
When you find yourself in a hole the first thing you have to do is stop digging. That is right. But, we're still digging our hole with deficit funding every year, irrespective of the party in control.
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Post by steadyeddy on Oct 5, 2022 20:46:16 GMT
US was energy-independent not too long ago (I mean less than 2 years ago). Hmm... I hope people remember this when they go to cast their ballot in midterms...
God bless us all.
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Post by ECE Prof on Oct 5, 2022 21:01:24 GMT
US was energy-independent not too long ago (I mean less than 2 years ago). Hmm... I hope people remember this when they go to cast their ballot in midterms... God bless us all. We are still and can be energy independent. But, we were importing oil from the Middle East and even Russia (about 6 million barrels/day) But, the oil companies want to sell the oil to the highest bidder in the world market. So, Exxon and other major oil companies are exporting oil. In fact, there are also some long term contracts. One I know is that India buys oil from Texas. I also believe that India is importing 10% more oil from the US this year under such long term contracts. So, the administration is asking the companies not to export to other countries. But, oil companies are in the business of making money for its shareholders, and they are not obliging anybody but for themselves. This problem has nothing to do with politics but the world oil prices. More and more, all prices will be determined by the world prices, and therefore, we are importing the Europe's inflation.
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Post by ECE Prof on Oct 5, 2022 21:02:58 GMT
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Post by steelpony10 on Oct 5, 2022 21:55:24 GMT
Somewhere along the way the idiots than "operate" this country have been taught a line of BS; "Full faith and credit of the US", "we operate a printing press", "% of GDP" etc., and on and on. All anyone needs to know is that inflation is not controllable unless the economy gets crashed. Not a single person can stop it. Does anyone think that the debt is controllable? "It’s all wall of woe chatter with no long term affects on markets." Well not yet at least. I just think the reasoning is flawed whipper snapper. Deficit spending has been there since Hamilton issued 10k worth of bonds to build roads. Nothing is ever going to be paid back in full. If the U.S. has had a deficit for over 200 years who did we ever pay back? When did Europe or Japan ever pay us back after WWII? The U.S. just issues more bonds and individuals and countries keep snatching them up over and over. Anyway like attracts like and I don’t belong here. The way of the world. Lol. I’m completely good with issuing bonds for roads, weapons, social programs etc. if approved by the majority of the governed.
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Post by ECE Prof on Oct 5, 2022 22:03:08 GMT
Somewhere along the way the idiots than "operate" this country have been taught a line of BS; "Full faith and credit of the US", "we operate a printing press", "% of GDP" etc., and on and on. All anyone needs to know is that inflation is not controllable unless the economy gets crashed. Not a single person can stop it. Does anyone think that the debt is controllable? "It’s all wall of woe chatter with no long term affects on markets." Well not yet at least. I just think the reasoning is flawed whipper snapper. Deficit spending has been there since Hamilton issued 10k worth of bonds to build roads. Nothing is ever going to be paid back in full. If the U.S. has had a deficit for over 200 years who did we ever pay back? When did Europe or Japan ever pay us back after WWII? The U.S. just issues more bonds and individuals and countries keep snatching them up over and over. Anyway like attracts like and I don’t belong here. The way of the world. Lol. I’m completely good with issuing bonds for roads, weapons, social programs etc. if approved by the majority of the governed. It will be ok, if funded by its own citizens. But, here, we are talking about external debt. You don't want to become another Pakistan or Sri Lanka. Do you?
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Post by Chahta on Oct 5, 2022 23:04:31 GMT
Somewhere along the way the idiots than "operate" this country have been taught a line of BS; "Full faith and credit of the US", "we operate a printing press", "% of GDP" etc., and on and on. All anyone needs to know is that inflation is not controllable unless the economy gets crashed. Not a single person can stop it. Does anyone think that the debt is controllable? "It’s all wall of woe chatter with no long term affects on markets." Well not yet at least. I just think the reasoning is flawed whipper snapper. Deficit spending has been there since Hamilton issued 10k worth of bonds to build roads. Nothing is ever going to be paid back in full. If the U.S. has had a deficit for over 200 years who did we ever pay back? When did Europe or Japan ever pay us back after WWII? The U.S. just issues more bonds and individuals and countries keep snatching them up over and over. Anyway like attracts like and I don’t belong here. The way of the world. Lol. I’m completely good with issuing bonds for roads, weapons, social programs etc. if approved by the majority of the governed. Roads OK, but not $55b and counting for Ukraine. Total debt printed out of thin air. But hey it's only 5.5% of a trillion. The real problem is it never goes down, only up. I kinda like being a whipper snapper, Gramps. 😊
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Post by johnsmith on Oct 6, 2022 10:43:37 GMT
Deficits don’t matter. They can always be negotiated down. What about Greece and Ireland as recent examples?
Greece doesn't control it's own currency. The US does. Countries go bankrupt when they borrow in foreign currencies. Japan has trillions in debt (in yen) - no failure. Greece borrowed in Euro (controlled by ECB, not Greece) - failure.
I don't know Ireland.
Show me a country that failed to pay debt that it owed in it's own currency.
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Post by Chahta on Oct 6, 2022 11:56:14 GMT
“This problem has nothing to do with politics but the world oil prices. More and more, all prices will be determined by the world prices, and therefore, we are importing the Europe's inflation.”
I think this is fundamentally flawed. The US has the capability to be 100% energy independent but chooses not to be (politics). A country like Japan does not.
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Post by steelpony10 on Oct 6, 2022 12:12:25 GMT
ECE Prof You know India is in bed with Russia? Both Pakistan and India have nuclear weapons? We were once Pakistan’s champions? I’m fairly sure Pakistan has the dirty nukes, plutonium, supplied by China and short range rockets. I don’t know about India’s nukes. Geopolitics is really a murky ever changing quagmire. I’m in the nip it in the bud camp, being proactive. Why do governments issue bonds? They predate taxes. It’s worked to raise money for 200 years with few problems and helped put the U.S. at or near the top of the heap of all nations in history. You’re dealing with human beings so there’s tons of slop and waste worldwide along with theft and graft etc. but there’s few better systems in the 2k history of organized governments. Bond purchasers see the U.S. as a safe haven to park cash not tittering near default. In that light I don’t see a problem with debt relative to such a huge economy. That’s just my opinion and there’s no wrong opinions. You’re free to believe what you like. I appreciate how great a life we’ve had in the U.S.
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Post by Mustang on Oct 6, 2022 17:44:01 GMT
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Post by johnsmith on Oct 6, 2022 21:27:46 GMT
Rome's example doesn't work because the romans used gold/silver (they couldn't mint unlimited amount of gold/silver).
US can print as much USD as they want, so there is no way the US Govt can default on it's debt. It may cause inflation, it can't default.
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Deleted
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Post by Deleted on Oct 6, 2022 21:41:40 GMT
Rome's example doesn't work because the romans used gold/silver (they couldn't mint unlimited amount of gold/silver). US can print as much USD as they want, so there is no way the US Govt can default on it's debt. It may cause inflation, it can't default. If U.S. wants to default, it could. Not recommended, but possible.
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