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Online mspart

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« on: April 18, 2009, 06:00:27 PM »
Ok, I'd like a civilized discussion about this.  Ray Brinzer in another thread posted a graphic that showed the deficits for the last 8 years and the projected deficits for the next 10 years.  The federal debt will double within those 10 years to 20 Trillion dollars.  

Is this information that concerns you?  If so, what is so concerning?  If not, why not?  I would like thoughtful responses.

I'll start.  I'm concerned about the debt we are getting ourselves into.  I was much happier when the budget was in surplus and we were bringing down the debt.  I was never comfortable with the Bush deficits.  The problem as I see it are many fold:

1.  With this kind of spending, the federal government is getting their hands in places that they have no business being in.  That is why the banks are trying to return the money they took.  

2.  I am not at all for the major socialization that is coming our way.  I barely make ends meet as it is.  If anyone believes that we will not have to pay more taxes (at least those 95% of us) then I feel they are as gullible as the guy who bought the Brooklyn Bridge.  With this kind of outlay, we will have to pay it.  Taxes will have to go up.

3. If taxes do not go up for everyone, the only other way to pay for the debt is to print more money.  This will have the effect of destroying the savings of all who have saved for retirement.  When the dollar is worth a small percentage of what it is now, then the savings is gone.  I think that we will head into a situation where the Weimar republic with regard to inflation.  If that happens, then people will clamor for a change, any change.  Any change might not be what we really want.  

4.  All of this spending is based on a budget that no one read before voting for it.  It was passed and signed without anyone really knowing what is in it.  Based on not knowing what they were doing, our legislators and President have set us on the path for the above.  This is a dangerous precedent.  Our legislators are there to debate proposed legislation.  We have allowed this to happen.  Will this continue?  I very much hope not.  

These are my concerns with the current budgetary situation.

mspart
« Last Edit: December 31, 1969, 07:00:00 PM by mspart »

Offline Tripster

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« Reply #1 on: April 18, 2009, 06:59:40 PM »
As a country, we look only towards the next 4 years, during which we should be fine.  Long term, either we fight a global war or we are done.
« Last Edit: December 31, 1969, 07:00:00 PM by Tripster »

Offline bigokieguy

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« Reply #2 on: April 19, 2009, 04:57:03 PM »
Quote from: "mspart"
Ok, I'd like a civilized discussion about this.  Ray Brinzer in another thread posted a graphic that showed the deficits for the last 8 years and the projected deficits for the next 10 years.  The federal debt will double within those 10 years to 20 Trillion dollars.  

Is this information that concerns you?  If so, what is so concerning?  If not, why not?  I would like thoughtful responses.

I'll start.  I'm concerned about the debt we are getting ourselves into.  I was much happier when the budget was in surplus and we were bringing down the debt.  I was never comfortable with the Bush deficits.  The problem as I see it are many fold:

1.  With this kind of spending, the federal government is getting their hands in places that they have no business being in.  That is why the banks are trying to return the money they took.  

2.  I am not at all for the major socialization that is coming our way.  I barely make ends meet as it is.  If anyone believes that we will not have to pay more taxes (at least those 95% of us) then I feel they are as gullible as the guy who bought the Brooklyn Bridge.  With this kind of outlay, we will have to pay it.  Taxes will have to go up.

3. If taxes do not go up for everyone, the only other way to pay for the debt is to print more money.  This will have the effect of destroying the savings of all who have saved for retirement.  When the dollar is worth a small percentage of what it is now, then the savings is gone.  I think that we will head into a situation where the Weimar republic with regard to inflation.  If that happens, then people will clamor for a change, any change.  Any change might not be what we really want.  

4.  All of this spending is based on a budget that no one read before voting for it.  It was passed and signed without anyone really knowing what is in it.  Based on not knowing what they were doing, our legislators and President have set us on the path for the above.  This is a dangerous precedent.  Our legislators are there to debate proposed legislation.  We have allowed this to happen.  Will this continue?  I very much hope not.  

These are my concerns with the current budgetary situation.

mspart
I read somewhere that  Obama has already spent more than every one of his predecessors combined.
That's pretty scary.
« Last Edit: December 31, 1969, 07:00:00 PM by bigokieguy »

Offline ctc

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« Reply #3 on: April 19, 2009, 05:01:38 PM »
The notion that we are too big and too important and too strong of a nation to go under is rediclious.  When it finally happens (thank-you Obama for putting us on the super highway) everyone that had their head stuck up their asp will be saying "wow, I didn't see that coming."
« Last Edit: December 31, 1969, 07:00:00 PM by ctc »
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Offline red viking

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« Reply #4 on: April 19, 2009, 06:00:03 PM »
3. If taxes do not go up for everyone, the only other way to pay for the debt is to print more money. This will have the effect of destroying the savings of all who have saved for retirement. When the dollar is worth a small percentage of what it is now, then the savings is gone. I think that we will head into a situation where the Weimar republic with regard to inflation. If that happens, then people will clamor for a change, any change. Any change might not be what we really want.

I agree, but a 3rd option and less likely option is to default on the debt.  I would say hyperinflation is more likely.  If you think people are angry right now, wait until this happens.  It could be a tipping point for a revolution.
« Last Edit: December 31, 1969, 07:00:00 PM by red viking »
A foolish faith in authority is the worst enemy of truth - Albert Einstein, 1901

Offline ac1998

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« Reply #5 on: April 19, 2009, 06:53:08 PM »
I'll reply to each point.

1.  Banks that are returning the money are they ones that didn't want or need it in the first place, such as Goldman Sachs or JP Morgan.   Paulson forced all the banks to take TARP money even if they didn't want it, with the logic being that he didn't want to expose which banks were in trouble and which banks weren't because it might cause a run on the weak banks.  That's debatable.

Now Goldman and Morgan want to return the money because they claim they don't need it.  But lets be clear, they used the money and can't just right a check to return it.  Goldman is getting ready to do a stock offering to raise $8 billion, and JPM is looking for private money too. And they and a few others will return the money by the summer.

But there are far more banks that needed the money and still need it.  Now I disagree with the premise that the US Govt shouldn't have some extra regulations in place for banks that are in need of funds.  After all, we are the largest shareholder in some of these institutions, we should have representation on the Boards, and a say in upper management personel and compensation.  It would be irresponsible not to.  

2. What major socialization is coming our way?  That's an awfully general statement.

3. You're referring to inflation.  I believe that that talk is silly.  After all, the Fed haas been printing money for months and we just had our first month of deflation in 54 years.  Deflation is a much bigger concern than inflation.  Inflation is essy for the Fed to control with interest rates are where they are right now.  If the fed raises rates back up to the historic rates of 5-7% it will greatly tighten the money supply and limit inflation.  No worries.

4. You are confusing the budget and the stimulus bill.  The stimulus bill is a one time expenditure and will be off the budget at the end of 2010.  And you are right it was rushed through and not considered enough.

The budget that Obama presented is just a framework bill.  It is not binding, as each individual part has to be voted on seperately.  The Budget framework was only about a hundred or so pages in long and is not binding legislation.  It really is just a procedural vote, asany number of things can change when each individual part of the budget is voted on by Congress.
« Last Edit: December 31, 1969, 07:00:00 PM by ac1998 »

Offline red viking

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« Reply #6 on: April 19, 2009, 08:35:07 PM »
Quote from: "ac1998"
I'll reply to each point.

1.  Banks that are returning the money are they ones that didn't want or need it in the first place, such as Goldman Sachs or JP Morgan.   Paulson forced all the banks to take TARP money even if they didn't want it, with the logic being that he didn't want to expose which banks were in trouble and which banks weren't because it might cause a run on the weak banks.  That's debatable.

Now Goldman and Morgan want to return the money because they claim they don't need it.  But lets be clear, they used the money and can't just right a check to return it.  Goldman is getting ready to do a stock offering to raise $8 billion, and JPM is looking for private money too. And they and a few others will return the money by the summer.

But there are far more banks that needed the money and still need it.  Now I disagree with the premise that the US Govt shouldn't have some extra regulations in place for banks that are in need of funds.  After all, we are the largest shareholder in some of these institutions, we should have representation on the Boards, and a say in upper management personel and compensation.  It would be irresponsible not to. 

2. What major socialization is coming our way?  That's an awfully general statement.

3. You're referring to inflation.  I believe that that talk is silly.  After all, the Fed haas been printing money for months and we just had our first month of deflation in 54 years.  Deflation is a much bigger concern than inflation.  Inflation is essy for the Fed to control with interest rates are where they are right now.  If the fed raises rates back up to the historic rates of 5-7% it will greatly tighten the money supply and limit inflation.  No worries.

4. You are confusing the budget and the stimulus bill.  The stimulus bill is a one time expenditure and will be off the budget at the end of 2010.  And you are right it was rushed through and not considered enough.

The budget that Obama presented is just a framework bill.  It is not binding, as each individual part has to be voted on seperately.  The Budget framework was only about a hundred or so pages in long and is not binding legislation.  It really is just a procedural vote, asany number of things can change when each individual part of the budget is voted on by Congress.
How can inflation not be a concern when we have a projected $2 trillion deficit?  That is $6,000 per year for every man, woman, and child in the U.S. that is being added to the money supply.  Just because it hasn't started happening yet doesn't mean that the writing isn't on the wall.  The printing press has barely started.
« Last Edit: December 31, 1969, 07:00:00 PM by red viking »
A foolish faith in authority is the worst enemy of truth - Albert Einstein, 1901

Offline ac1998

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« Reply #7 on: April 19, 2009, 08:54:11 PM »
Because raising interest rates is an easy way to manage the money supply.  The fed pumped the money in quickly,  and they will slowly pull it out when the recovery starts next year by slowly raising the interest rate.   Some inflation at this point is actually good, it's a sign of growth. But I don't beleive hyper-inflation is that much of a risk right now.
« Last Edit: December 31, 1969, 07:00:00 PM by ac1998 »

Offline red viking

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« Reply #8 on: April 19, 2009, 08:59:36 PM »
Quote from: "ac1998"
Because raising interest rates is an easy way to manage the money supply.  The fed pumped the money in quickly,  and they will slowly pull it out when the recovery starts next year by slowly raising the interest rate.   Some inflation at this point is actually good, it's a sign of growth. But I don't beleive hyper-inflation is that much of a risk right now.
I disagree that it is that easy.  Once inflation starts, it can self-perpetuate itself.  They could raise interest rates, but it wouldn't help right away.  Also, raising interest rates creates a problem of increasing the interest rate on the national debt, no?  Could make it unmanageable.
« Last Edit: December 31, 1969, 07:00:00 PM by red viking »
A foolish faith in authority is the worst enemy of truth - Albert Einstein, 1901

Offline ctc

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« Reply #9 on: April 19, 2009, 09:05:17 PM »
Quote from: "red viking"
Quote from: "ac1998"
Because raising interest rates is an easy way to manage the money supply.  The fed pumped the money in quickly,  and they will slowly pull it out when the recovery starts next year by slowly raising the interest rate.   Some inflation at this point is actually good, it's a sign of growth. But I don't beleive hyper-inflation is that much of a risk right now.
I disagree that it is that easy.  Once inflation starts, it can self-perpetuate itself.  They could raise interest rates, but it wouldn't help right away.  Also, raising interest rates creates a problem of increasing the interest rate on the national debt, no?  Could make it unmanageable.
Too late, it already is unmanageable.  Obama worked his change (actually out did Bush on this one)
« Last Edit: December 31, 1969, 07:00:00 PM by ctc »
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Offline ac1998

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« Reply #10 on: April 19, 2009, 09:12:40 PM »
The honest answer is only time will tell. So, we'll see.  I just don't see the economic conditions needed for hyper-inflation. But,  economic models are done by what are the chances of something happening. So,  while there might be a 5% or 8% chance it doesn't necessarily mean its likely.  I guess we'll revisit this topic in 8-10 years and see who was right.
« Last Edit: December 31, 1969, 07:00:00 PM by ac1998 »

Offline leglace

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« Reply #11 on: April 19, 2009, 11:25:22 PM »
Why the F suddenly we need to consider ourselves shareholders. Couldn't we just consider bailing out banks like we used to? Remember when we knew of it as a loan for the the greater good, and it was to be paid back when the money was available. We did it for the airlines, and they paid it back.

  Now suddenly, bailouts have clauses for banks and automakers. Hmm, awfully convenient. You get a chance to intervene with banks to force loans on any social group, and you get to mandate green vehicles on automakers.

  Take the money back from the banks and stay out of their business. Anything less is suspicious.
« Last Edit: December 31, 1969, 07:00:00 PM by leglace »
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Offline Rockhard

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« Reply #12 on: April 19, 2009, 11:34:36 PM »
Quote from: "ctc"
The notion that we are too big and too important and too strong of a nation to go under is rediclious.  When it finally happens (thank-you Obama for putting us on the super highway) everyone that had their head stuck up their asp will be saying "wow, I didn't see that coming."
We were well on our way before Obama.
« Last Edit: December 31, 1969, 07:00:00 PM by Rockhard »
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Offline Ray Brinzer

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« Reply #13 on: April 19, 2009, 11:36:25 PM »
Quote from: "ac1998"
3. You're referring to inflation.  I believe that that talk is silly.  After all, the Fed haas been printing money for months and we just had our first month of deflation in 54 years.  Deflation is a much bigger concern than inflation.  Inflation is essy for the Fed to control with interest rates are where they are right now.  If the fed raises rates back up to the historic rates of 5-7% it will greatly tighten the money supply and limit inflation.  No worries.
Recent deflation in context:


(<a href='http://research.stlouisfed.org/fred2/series/BASE' target='_blank'>source[/url])

While, granted, increasing the money supply in a recession is classic Friedman stuff, this seems a touch extreme.  Combined with what we're doing on the fiscal side...

Eh, hell, I'm with you.  No worries!  Worrying doesn't help anything.
« Last Edit: December 31, 1969, 07:00:00 PM by Ray Brinzer »

Offline leglace

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« Reply #14 on: April 19, 2009, 11:46:03 PM »
Actually hen we include is newest bills he has pushed through, the chart doesn't even cover the numbers.

We though Bush was spending too much on the war. Now we are still spending on the war, plus spending political capital in the trillions. They are not the same.
« Last Edit: December 31, 1969, 07:00:00 PM by leglace »
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