$15 Trillion in 5 Days

In an effort to cut through all the BS, lies & complex economic policies few understand, much less are qualified to offer solutions for, I like to concentrate on bottom lines.

Bottom line is our economy thrived when the top federal tax rates were the highest and tax policy promoted growth, thus allowing those who invested in job creation (in the U.S.) lower tax rates.

Bottom line is, since globalization, economic policies that cut spending and lower top tax rates shift wealth to the wealthy, thus killing the American Dream and along with it the middleclass.

Bottom line is, since capitalism is based on greed, the government (the people) must control it, so the ambitious can prosper, yet everyone else isn’t screwed.

 

Log in or Sign up to hide this ad.

So, to sum up, you believe our economy functioned best in the 1970's, and worst in the latter 80's? Those time frames correspond to your highest and lowest tax rate argument.

Corresponding tax rates to the economy is tricky, especially since most of the damage to the economy is not through taxation but regulation. Regulation was slashed int he 80's, and we benefited. The regulations are again strangling industry here today.

Btw, anyone who thinks the Fed is a good overseer of "promoting jobs" I worry about. The Fed "promotes jobs" by getting out of the way, and not interfering. THe higher level of Fed interference, the worst we all are.

Just my opinion.

Chris

 

Just a factual note, the "latter 80s" date would only be true if you were talking about the top-rates. The only tax rate higher now than in 1988-1990 is the very top. The rest are all lower.

As for the highest, the top rates during WW2 and the booming 50s were way way higher, almost 3 times higher for the top and almost 4 times higher for the lowest, than they are now. The 70's rates were median-ish for the 20th century. (but it's understandable to arbitrarily choose the 70s if you're trying to make an ideological, not a factual, point)

 

Yeah, lax regulation worked the last 10 years, lax on Wall St., and lax on trade agreements. I’m saying THOUGHTFUL regulation is necessary to keep the playing field level and so the thieves don’t steal it all.

I’m still going with high top tax rates combined with deductions for creating U.S. jobs is the best policy. This scenario “forces” investment in the U.S. in order to avoid the higher rates. Consumers may have to pay slightly higher prices, but we all benefit. We’re not left with letting the wealthy have it all and begging them to invest in the U.S., when greed says, employ child/slave labor in China or force down U.S. wages to the point where a meager existence isn't even possible, let alone attaining the American Dream.

 

Slightly? That slight decimal place is enough of a difference to hand all 300,000,000+ people in the USA $1670. It's more than a month's wages for someone working on the minimum wage. It's an example of the magnitude of the problem of the problem in question.

In regards to the GDP itself, the real number is much less as it includes the finance industry and government spending. It's a disaster in the making but not one unknown. No fiat currency has lasted more than 50-70 years in the recorded history of the planet. No reason to believe it will change now.

 

Yes, slightly. Firstly, it's a comparison of current debt to 2010 GDP, and it's all a bit of an estimate anyway, and secondly even with that it's within 3.5%. Slightly, on a national level.

 

It doesn't matter how it's quantified. It should be obvious there is no hope of paying it off. It's mathematically impossible. Furthermore, though this country is 235 years old, 25% of that debt was run up in just the last 2 years and amount of increase is accelerating.

 

Proof? Mathematical formula? Link to mathematical formula or universal declaration of impossibility? Link to reasonable discussion over merits of paying off every cent of national debt? (footnote: the country has only been debt free once, right before a large financial crisis)

Big numbers are relative. You get too hung up on the absolute number.

 

1/3 of GDP is produced by financial institutions that offer no tangible production value, and whose profits are based on a massive ponzi scheme. It should also be accounted for that $15 trillion in debt creates an additional $1.2 trillion in debt accumulated by interest each year.

 

I agree with all of this post except that capitalism is not based on greed. It may reward the ambitious (a nice way of saying greedy), but what it's based on is a free market system. We have not had capitalism for some time now. Unfortunately in a free market there will always emerge a concentration of power that will seek to use it to its advantage, but this is where government regulation comes in. Another thing we have not had for some time now.

 

I dislike being in debt, owing something to someone else. We have about 15k left to pay on the house, and I could pay it off today if I wanted to. My dad had a great strategy for staying out of debt, one of the things people owe money on are car payments, he told me, you are always going to need a car, so when you pay off your car, keep depositing money in a seperate account as if you are still paying, this strategy is pretty good, you have a source of cash if your car needs repairs, then when you are shopping for another vehicle you have a nice pile of cash, and sometimes when you tell the seller you will pay in cash you have a good bargaining point.

I think most people are carrying a lot of debt, but I do not know that for sure.

 

Statistics are like bras. That is they can promise a lot and reveal very little. It's best to work with absolute numbers. They tell the real story.

Debt, is nothing more than a future claim on labor. So the USA has run up a debt of $15T (and increasing fast). That's $15T claim on future labor of this country. Last week, the BLS claims there are 101M people working in the USA and they make a median salary of $39K/year. So the labor in the USA earns roughly $4T/year. Earnings have been falling since 2009 according to the US Census.

Thus debt is $15T, interest is $1.2T/year, and debt growth (no balanced budget) is $2.5T/year.

So growth in the debt is $3.7T/year, but total earnings are $4T (which also has to feed, house & clothe 300M people), and dropping, how do you expect this debt to be paid off? In less than 2 years growth in the debt will be larger than the total earnings of all the people in this country. No absolute number needed for this; it's a whole lot of not good.

 

Chip, that's a great strategy, seeing as once I have a real income, I will need a new car eventually as well, I will use this strategy. I got my license four days ago and my uncles 1994 Pontiac Gram Am with 169k miles on it for $300. My parents are covering my insurance and stuff still, but I most definitely will use this strategy for savings, I think it's a great idea.

 

The politicians should stop stealing and all the money....just a thought

Oh yeah and if they cold try and use what's left over after the stealing efficiently that would be great too!

 

Remember the US House of Representatives check overdraft scandal of 1992?

The following 22 House members were singled out by the House Ethics Committee:
[TABLE="class: wikitable sortable jquery-tablesorter, width: 548"]

[/TABLE]



Name, State, Party, # Checks, Weeks Overdue
[TABLE="class: wikitable sortable jquery-tablesorter"]


Tommy F. Robinson
Arkansas
Democratic/Republican
996
16

Robert J. Mrazek
New York
Democratic
920
23

Robert W. Davis
Michigan
Republican
878
13

Doug Walgren
Pennsylvania
Democratic
858
16

Charles F. Hatcher
Georgia
Democratic
819
35

Stephen J. Solarz
New York
Democratic
743
30

Charles Hayes
Illinois
Democratic
716
15

Ronald D. Coleman
Texas
Democratic
673
23

Carl C. Perkins
Kentucky
Democratic
514
14

Bill Alexander
Arkansas
Democratic
487
18

William F. Goodling
Pennsylvania
Republican
430
9

Ed Towns
New York
Democratic
408
18

Ed Feighan
Ohio
Democratic
397
8

Harold Ford, Sr.
Tennessee
Democratic
743
30

Mickey Edwards
Oklahoma
Republican
386
13

Bill Clay
Missouri
Democratic
328
9

Tony Coelho
California
Democratic
316
12

John Conyers
Michigan
Democratic
273
9

Mary Rose Oakar
Ohio
Democratic
213
18

Joseph D. Early
Massachusetts
Democratic
124
13

Douglas H. Bosco
California
Democratic
124
13

Jim Bates
California
Democratic
89
9
[/TABLE]




That's got nothing on this...

[video]http://www.cbsnews.com/video/watch/?id=7388130n[/video]

 

I was posting to make a point against all the comparisons of how $15 trillion is some kind of impossible number. It's the yearly GDP of the USA. It's too large for sure, but running around like a chicken without a head does not help anything.

You're alone on that then. Economists know better. Do the absolute numbers really mean anything when a loaf of bread 100 years ago cost 10c and now it's $2.00, but salaries have increased to the point where the loaf is relatively cheaper as a percentage of salary than 100 years ago? Comparing historical absolute numbers in economic discussions is not usually helpful.

No one said it wasn't bad. There are steps that can be taken (in most reasonable peoples' opinions that includes revenues). There are very clear reasons for how we went from a budget surplus to a huge deficit in a few years. Unpaid-for wars, huge tax cuts originally intended to return the surplus to people but now have somehow become sacred, out-of-control health care costs and a growing aging population. How people want to fix those things depends on people not being ideologically rigid, but realistic.

 

Well first, I don't have a clue where you get the assumption that we are paying 8% interest on our debt. That is a complete untruth on the face of it, its more like 2%. Therefor your interest expense per year would be $300 billion, not $1.2 trillion. Slight difference.

Second, to say all financial transactions produce no value, and are simply a ponzi scheme is also untrue. Financial Institutions produce time/place/risk management value. I simply do not find any truth in that statement either, sorry. To say that you only count producing cars and other items as "value" today is a very narrow concept of the term. Even producing cars is producing value out of thin air, since the metal and plastic composing it is worth less than what the car sells for, the only "value" created is functionality difference, just like Financial Services.

Just my opinion.

Chris

 

LOL Only if you drink the koolaid that "economists" like to spew out. They specifically use statistics for the very reason that I listed. The bread analogy you list is an associative logical fallacy argument. It's irrelevant to the point being made.

Statistics are absolutely useless unless the underlying numbers used to generate them are provided. Else they can be presented in such a way where they can say anything. It's folly to assume otherwise.

I will admit that I do think for myself. If that makes me "alone" I don't mind. It's kept me from falling into the traps that many seem to be in these days.

 

How so? How is that a logical fallacy? That's the exact reason why using absolute measurements in economic comparisons is wrong. You're asserting that absolute numbers are the only way to talk about the present economic situation. The bread example is an illustration of why that's wrong.

The example, maybe clarified (with real values, even)
1900:
cost of a loaf of bread = $0.05
average yearly income = $438
percentage of income for a loaf of bread = 0.011%

2011:
cost of a loaf of bread = $1.98
median yearly income = $41,673
percentage of income for a loaf of bread = 0.0047%

So, in absolute numbers the cost of bread increased by 40 times, but the relative cost is about half of what it was in 1900. You're saying that comparing $0.05 vs $1.98 is the only thing that matters. During WW2, the GDP-to-debt ratio was higher than it is now, even though the absolute number now is much larger.

 

I don't deny these facts at all as it has nothing to do with the National Debt discussion. But what you provided does prove exactly what I said. Your example is understandable because the absolute numbers are provided. If however you had simply said the cost to buy bread has dropped to 50% of that in 1900, the party has no idea what you are talking about. Was it because salaries rose a lot faster than bread costs or is bread making extremely cheap now, etc.? This is why you have to have the underlying data before the statistic makes sense.

A more real life example. The government says that unemployment dropped from 10.5% to 10%? It sounds good, but without the data, you have no idea if it is good or not. Is it because they stopped counting people because they gave up looking in a hopeless economy and thus the labor force dropped, or does it mean more jobs were created. No way to tell. This is why I said that statistics are useless without knowledge of the data.