$15 Trillion in 5 Days

I give up. This was never about "underlying statistics" or "knowledge of the data", but rather GDP-to-debt ratio was preferrable for historical comparison over absolute debt amounts. When comparing about the amount of national debt now versus other times, the absolute number is more usefully viewed in terms of contemporary GDP instead of just the absolute numbers. The "knowledge of data" you're looking for is right there - the GDP.

 

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Read back. It was you who brought it up in the first place when you faulted me for working with absolute #s. I had assumed it was because you had nothing to say about the actual points that I made, and choose instead to discredit the messenger.

Absolute #s don't lie and don't deceive. They quickly reveal reality as was just proved. You dismissed 1/2 Trillion dollars as insignificant, and presented the amount of money in terms that people could understand, that is, if paid out to every person in the USA, it would be more than they can earn in 5 weeks being paid the minimum wage. Nothing slight about that. I answered your question about why the debt can't be repaid but you didn't acknowledge that either though you had demanded that I supply something.

The point, is any objective look at the national debt shows unprecedented numbers and the USA moving into a geometric debt growth. It's a very bad situation and there is nothing in the USA's history like it.

 

Not to worry.

The US continually charges that the Chinese manipulate their currency, but alas we are the currency Masters. Although the Chinese have thousands of years of history, they are newbies in the money trading game. Consider this: they have been accepting green paper for their goods since Communism fell to Nixon in the 1970's. They have warehouses full of our green paper, and we have shelves of stuff. Um, seems like we are winning. Especially since the shelves of green paper have lost over half it's value or so in the last decade or so. When they come to spend it here, they can at best expect to get a nice stay at a Marriot in DC, so little is the dollar worth when traded for. Finally, a well known Hong Kong economist who studies Chinese capitalization says that EVERY Province in China is bankrupt. Sooooooo, if you are betting on an Asia market rebound, maybe you bet on us instead. The Wall Street guys are REALLY GOOD at ripping off people, and right now they are after the vaulted Eurozone muggles who thought it would be easy to supplant the dollar with a pocketfull of currency which couldn't even be satisfactorily traded across the countries who printed it. LOL. Greece was undone by Goldman Sachs, (Keiser report) who managed to collapse that country just like us, with deriviatives. Credit Defaults be darned, Germany will not bail out those easy going folks in Greece who get a month off every year. And China has said it wont. So once the other shoes drop, the flood of money pouring into our banks from Euros will ultimately produce so much new enterprise here that our debts might easily be erased in less than one generation. Have faith, folks, those fools on Wall Street got our government to bail them out, and that means they are either really slick, or really smart, or both. So not to worry.

 

I read recently that interest accumulated debt in October was $200 billion, which I was using as a basline, but I can't find that story now. It must have been including some other data, so good call. It looks like in 2010 the total interest accumulated debt was $451 billion. So we are definitely onward and upward from there. I can't seem to find current data on this.

As far as value, I said they produce no tangible value. The definition of tangible is something you can hold in your hand, not numbers shuffled around in cyberspace. Sure you can hold cash in your hand so I suppose that is an exception. What I meant was that it's not producing anything of intrinsic usefulness, such as a car, lumber, or tools, etc. Money is only useful because it is money, but anything can be money.

Also, the financial system is a ponzi scheme to a T. Here's a link since I don't want to try to explain it: http://www.huffingtonpost.com/2010/10/27/bill-gross-fed-ponzi_n_774849.html

I think we got hung up on that I am referring to the system as a ponzi scheme, not all financial institutions. Though most banks are also doing the same thing, but even if not all financial institutions are a ponzi scheme they are all participating in it. Even you and I are. It's an unavoidable cost of using money in a fiat / fractional system.

 

You are ignoring the total US debt, which is way higher than in World War 2. I posted this earlier in the thread. Total US debt is now higher than any time during the Great Depression or World War 2 or any other time in US history. It is 362% of GDP. So which one do we default on? Federal debt? Social Security? State debt? Student Loans? Credit cards? City debt? Mortgages?

Also, at the end of WW2 the US generated 50% of the world's GDP. That's because Europe, Russia, England, Japan were essentially wrecked. It was a giant boom time and not likely to be repeated. Even if it was repeated, the situation now of total debt/GDP is worse than 1945. Nor do we have presidents like Truman and Eisenhower, or Congresses that committed to fixing the problem. Every president we have elected recently has made things worse.

Inflection: the interest on the US National Debt is 414 billion for 2011. Maybe interest on all debt per year in the US is 2.4 trillion?
http://www.heritage.org/budgetchartbook/interest-spending

 

That makes a lot more sense! Thanks for the link and the plausible explanation, I was getting tired of racking my brain / search engines.

 

Nothing to rack, the interest on the debt is not accrued, and some months are much higher in payouts. You may have heard of one very high monthly amount.

 

Don't see it. Maybe you have a custom browser that makes things up for you. My points have stayed the same.

They don't lie or deceive, but doing HISTORICAL COMPARISONS with absolute numbers DOES deceive. I never said insignificant, I said "slight" difference, as in 3%, 3% of numbers that are estimates anyway. I also never said anything about 5 weeks or minimum wage, that was you. Yes that difference, if spread among individuals would be 5 weeks of minimum wage. So? It's a large number yes, but it's 3.5% of the national GDP. It was a counter-illustration to contrast.

You missed it then, let me copy & paste it for you:
"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. "

Agreed. My only point was that using absolute numbers doesn't lead to that conclusion. The debt could be at very large absolute numbers, but actually be quite manageable given the huge GDP of the country. That's what matters.

Again: compare someone who makes $100 million per year and someone who makes $10,000 per year. Give them each $100,000 debt. You're saying that because the absolute number $100,000 is conceptually large, that it has the same meaning to both of those people?

 

I didn't read most of your post because line by line rebuttals are annoying. None the less, I don't disagree with this statement of yours. However, I've shown where the debt isn't manageable with real numbers. It's not a "could be". "Could bes" are irrelevant. In contrast, you haven't provided anything that would address what I've posted beyond opinion and distractions. Nothing is stopping you from using the real numbers to prove the debt isn't a problem for this country, but I doubt that you can make a case.

 

Convenient!

You gave your opinion with numbers, I gave mine with numbers. Both are still opinions.
If the debt was truly unmanageable and we had already passed the point of no return, don't you think the global market would have caught on to that? It's at a dangerous level, but not yet an impassable disaster.

 

Once again as long as you can find a sucker who can buy our debt at low rates we can easily double our debt and still be fine. But in other hand lets say we start cutting too much and that causes our economy to contract which in effect will send alarm bells and cause yields to start going up.

 

I'm not saying we're past the point of no return, but if we were I do not think the global market would have caught on. The global market's job is to instill confidence. Even if they knew the ship was sinking they would still be selling cruise tickets. I would say that ripping off the bandaid in 2008 would not hurt nearly as much as ripping off the body cast we have today.

 

Which means what, letting everything totally collapse? That would have been better?

 

We have seen the collapse of two governments in just the past week because of it. Italy & Greece. We have seen the bankruptcy of a 200 year old trading firm and primary dealer for the Federal Reserve during the same time. The markets know all too well what it means and this is why they are all begging the ECB, BOE, the Federal Reserve and the rest to continue to push for political backstops from the taxpayers. It's not working and we are seeing just the beginnings of the coming collapse. They can print all the money they like, it doesn't change anything.

People can choose to ignore and deny it if they wish, but this won't change what the math says has to come. (posted above)

 

Yes. And I think this "total collapse" was nothing but a scare tactic anyway. They should have bankrupted the TBTF banks, put the executives on trial, reinstated Glass Stegal, and moved the retail banking utility to more responsible management. If they had taken the medicine in 2008 we would not be looking at a real disaster now.

It's called the free market. It works when given a chance.

 

Double post.

 

Everything wouldn't have collapsed. The only reason all the small banks went under is because they can't compete with big banks that get free money from the government. In a free market system the sound business models would have risen to the top while the failed ones should have been allowed to fail. Instead the sound models got snuffed out by the weight of the too big to fail banks, and now we are dependent on their failed business models to keep the doors open. Hence the comparison of a band-aid to a body cast. Of course the reason this was done was to save the derivatives market which would have had far reaching impacts, but nothing that's been done in the last 3 years has done anything to solve this problem, merely stave it off.

 

Note: your math doesn't say what you think it says. You're posting your opinion, I'm posting mine. Also, the US is neither Greece nor Italy. That's not to say the problem could not reach the same height, but you cannot say "The US's debt is unmanageable because Greece dissolved its government over disagreements on accepting EU bailout terms".

Your opinion. Not enough people were willing to risk that opinion being wrong. Also note: there never has been a truly free (all hands-off) market.

 

Here's where the rubber meets the road though - The reason stocks went down today is because Fitch warned that continued Euro zone debt issues could impact the US banking system, which is because of counter party risk and all the European sovereign debt that our banks own. While our debt situation is not the same as Greece or Italy (we actually have much more total debt, although the debt/GDP ratio isn't as bad) that doesn't mean that our financial system isn't impacted by what happens in Europe. As to whether the debt is unmanageable, I can't say one way or the other, however on a long enough timeline that will be the case as compounding interest begins to grow at a greater rate than it is possible to pay off. There is a point of no return somewhere, but I don't know specifically where it is. My point is that the way debt works is geared in a way that puts the debtor at a disadvantage.

 

Of course there will be an effect here from European crises, that's pretty obvious, not only from financial exposure but also trade. I was replying to the wierd assertion that because Greece and Italy have unmanageable debt that means the US has unmanageable debt.