I know there has been a lot of political rhetoric lately about the National Debt, Government spending, Tea Party Protests, etc… but I would like to try to have a civil discussion about it here without anyone resorting to partisan cheerleading. Both sides are responsible for where we are today.

National debt:
1970: $400B
1980: $1.0T
1990: $3.0T
As of 4/15/09: $11.1T

NASA 2008 budget: $15B
Education 2008 budget: $61B
Interest paid on National Debt in 2008: $429 B (this represents 16% of total expenditures and is behind only social security, medicare, and defense as the largest category of spending)

Record deficit: ~$460 B (2008)
2009 deficit: projected $1.2T – $2.0T

What are your opinions based on these facts? What do you see for the future?

Here's the data that I'm showing on the issue. Quite compelling.
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This is a good topic as there is a lot of misunderstanding around our National Debt. Of the 11T we owe, I believe about 3T is owned by foreigners (China/Japan hold about 1.7T). The rest is to ourselves. Thus of the 429B/yr, how much of that is paid to ourselves (should be around 300B)?

What Id like to ask the Pied Piper....who does he think would be adversly impacted the most...without the bailout? I can gaurantee you it wouldnt be the ones who caused it.

shrew Wrote:
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> This is a good topic as there is a lot of
> misunderstanding around our National Debt. Of the
> 11T we owe, I believe about 3T is owned by
> foreigners (China/Japan hold about 1.7T). The
> rest is to ourselves. Thus of the 429B/yr, how
> much of that is paid to ourselves (should be
> around 300B)?


Good question. You are correct, it's ~$3.1T

I ran a few other #s as well

2000 total debt: $5.7T
Current debt: $11.1T
Growth: 94%

2000 foreign owned debt: $1.1T
current foreign owned debt: $3.1T
Growth: 181%

Foreign owned debt as % of total private held debt in 2000: 35%
Foreign owned debt as % of total private held debt currently: 52%

We can coclude from these #s that the foreign owned debt is growing at a much faster pace than the overall debt and that is is becoming a larger and larger portion of the total private held debt.

Using an inflation calculator, the National Debt for 1970 would be closer to $3 trillion today and the debt for 1990 would be closer to $5 trillion.

Just an FYI.

Another thing to point out is that much of the debt we had in 1970 still remained from WWII and had nothing to do with Social Security or Medicare.

WashingTone Locian Wrote:
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> Another thing to point out is that much of the
> debt we had in 1970 still remained from WWII and
> had nothing to do with Social Security or
> Medicare.


Are you saying that without the leftover WWII debt the 1970 debt would have been much smaller, thus making the growth from then to now even more extreme?

I don't mean to make any judgements on the merits of social security, medicare, or national defense. I'm just using them as reference points.

What distresses me is the potential inflation we could see in the near future.

Justin Wrote:
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> WashingTone Locian Wrote:
> --------------------------------------------------
> -----
> > Another thing to point out is that much of the
> > debt we had in 1970 still remained from WWII
> and
> > had nothing to do with Social Security or
> > Medicare.
>
>
> Are you saying that without the leftover WWII debt
> the 1970 debt would have been much smaller, thus
> making the growth from then to now even more
> extreme?
>
> I don't mean to make any judgements on the merits
> of social security, medicare, or national defense.
> I'm just using them as reference points.
>
> What distresses me is the potential inflation we
> could see in the near future.

My point is that Defense Spending is just as much a consideration when it comes to the deficit. True libertarians believe we shouldn't have a huge standing military like we do.

That is true WTL.

Given the enormity and trajectory of the debt are you worried about the possible outcomes?

We just need to play nice with China, that's all.
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Justin Wrote:
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> That is true WTL.
>
> Given the enormity and trajectory of the debt are
> you worried about the possible outcomes?


Yes, I am worried.

However, if the government didn't increase spending by one dime, you would still see huge increases in the deficit because of the contraction of the economy, resulting in the decline of the tax base.

Between 1929 and 1933, Herbert Hoover pulled in the reigns on spending. What was the result? 10 Percent contractions in the GDP and 25 percent unemployment rates. And the policies did nothing to get the U.S. out of the Great Depression.

If you listen to Obama's argument, he is saying that we are going to have these huge deficits regardless of what we do. We might as well come out of it with improved infrastructure and health care while providing jobs. The alternative is to have just as large a deficit but with a lot of human suffering and crumbling infrastructure to show in the end.

WTL- agree that cutting Govt spending abruptly will do severe damage to the economy in the short run. Considering that govt spending made up 21% of GDP last year (in line with recent average), and is projected to increase to 30% this year, it is clear that our economy has become dependent on it like a junkie. Certainly Hoover failed in that regard (and many others). But using a boost in government spending to make up for the slack has potential dangers too.

Perhaps letting the economy heal on its own is the middle ground. Certainly neither Hoover's nor FDR's method worked so maybe it's time to try a new one.

This is not meant to be an indictment of Obama or his spending plan. I am not one of the Tea Party hypocrites. Although his plan does little besides paper us through the current short term crisis, his spending is just a drop in the overall bucket when taking into consideration the unfunded obligations of Medicare and Social Security-- $40T+

Peter Piper Picked Peppers Wrote:
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> Here's the data that I'm showing on the issue.
> Quite compelling.

that rebounding off the bald spot was fucking hilarious. that's the best post all month!


"the wisdom of the wise will perish, the intelligence of the intelligent will vanish."

WTL- I understand your point about lost revenues due to contracting GDP which would then result in deficits. However, it isn't an apples to apples comparison to say that this drop in revenues would be equal to the amount of the deficit attributable to the stimulus. Roughly, there's a 1:4 ratio.

Gravis Wrote:
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> Peter Piper Picked Peppers Wrote:
> --------------------------------------------------
> -----
> > Here's the data that I'm showing on the issue.
> > Quite compelling.
>
> that rebounding off the bald spot was fucking
> hilarious. that's the best post all month!
>

Hey, thanks man. See, I'm not all about Republican bashing 100% of the time. I do have quite a diverse photo gallery armed and ready for launch.
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The demand for Keynesian solutions preceeded Keynesian explanations

Too many unemployed people tend to cause social unrest, which is not good for anarcho-capitalist, minarchist, or social democratic countries.

The stimulus will greatly expand our debt. At the moment, it is the lesser of the two evils. I'd rather have a Japan-style 'lost decade' (which also had a great deal of deficit spending) than a hellish, deflationary 3-5 years. A decade of 1970s-style misery is in the middle.

Hopefully the US will win the World Cup in 2010. A US victory in a sporting event we've traditionally not been good in is absolutely needed to end the misery.



Edited 1 time(s). Last edit at 04/16/2009 05:06PM by formerhick76.

Main Event

Now skip ahead to the biggie, the Great Depression. By the time the economy hit bottom in 1933, the depression (nothing to worry about, it’s just a Great Depression) was already three years old. 25% of the workforce were looking for a job, and economists were looking for an answer. Where were the self-righting forces promised by the neoclassical model? Consumer prices had fallen nearly a third, and near-zero interest rates indicated that cash was plentiful. So why were those self-righting forces taking so long?

The longer the Great Depression continued, the more economists suspected that something was wrong with the neoclassical model. By 1935, John Keynes thought he had figured it out, and the following year he published his General Theory. The heart of his explanation – here’s Keynes in 28 words – is that when most people want to save but most businesses are afraid to borrow those savings and invest them in real things, the economy’s path to recovery is blocked. The public’s attempt to save pushes the economy down to a level where incomes are so low that saving becomes impossible. The cure recommended by Keynes was for the government to borrow what the public wanted to save and spend it for them.

The Keynesian model quickly replaced the neoclassical model in the thinking of most economists. They liked it so much that they kept liking it even when the government ran huge deficits through the later 1930s and the economy failed to recover. Cynics say economists liked it despite the evidence, because understanding the implausible idea that thrift hurts must be the mark of a really high-powered intellectual wizard and because the subtext of Keynes’ message is that the world would be a far better place if economists were in charge. Politicians, of course, liked the theory for the license it gave them to spend and spend without taxing.

Roughly a decade later, an astounding fact emerged, astounding in itself and astounding that it had gone unnoticed for so long. Keynes’ intellectual enterprise took for granted what most observers, noticing near-zero rates in the money markets, took for granted about the collapse from 1929 to 1933 – that it happened even though cash was plentiful. But in fact cash had not been plentiful. The money supply had shriveled by a catastrophic one-third.

Why hadn’t anyone noticed? Easy. No one noticed because the Federal Reserve is the branch of the DMV with jobs for economists. Although the information was close at hand, no one at the Federal Reserve or anywhere else was compiling the money supply data routinely provided by commercial banks and the U.S. Treasury. Ultra-low money market interest rates seemed to be saying “Looks plentiful.” But the simple adding machine no one thought to use would have revealed “Shrinking fast.”

Summary statistics tracking the shrinkage of the money supply that started in 1929 weren’t available at the time. They weren’t compiled until the 1940s. I haven’t been able to find the source for this, but I’m told that before Keynes died in 1947, he said that if he had known of the one-third contraction in the money supply at the start of the Great Depression, he would never have written the General Theory.

For all of those who are tired of people talking about less money, mo' problems. Holla.
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Toss this data right out the window.
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The problems with the deficit are highly over rated. Fixing the deficit will be very simple once republicans get off their idealogue hatred to new taxes. It will take a combination of spending cuts and new taxes to reduce the deficit. With one party not willing to compromise..there is no compromise...and the debt just gets bigger and bigger! But sooner or later they will be forced to compromise.

Maybe we need to reduce the population. Let’s euthanize the parasites.


Hey, Vince, I’m having a party next weekend. You and all your friends are invited.

All the Republicans want to bash Keynes. I guess I need to remind you all that the so-called "free market," caused the mess we are in.

I say "so-called" not because I doubt the "free market," but because many Republicans mistake the creation of a lawless no man's land as "a free market." It's not. It stops being a market when vested interests start gaming it at the expense of everyone else.

WashingTone Locian Wrote:
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> All the Republicans want to bash Keynes. I guess I
> need to remind you all that the so-called "free
> market," caused the mess we are in.
>
> I say "so-called" not because I doubt the "free
> market," but because many Republicans mistake the
> creation of a lawless no man's land as "a free
> market." It's not. It stops being a market when
> vested interests start gaming it at the expense of
> everyone else.

I (also) see it as when all the top players start colluding for the benefit of themselves. More or less a monopoly IMO.

Vince(1) Wrote:
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> The problems with the deficit are highly over
> rated. Fixing the deficit will be very simple
> once republicans get off their idealogue hatred to
> new taxes. It will take a combination of spending
> cuts and new taxes to reduce the deficit. With
> one party not willing to compromise..there is no
> compromise...and the debt just gets bigger and
> bigger! But sooner or later they will be forced
> to compromise.


It's not that simple, although I wish it were. A deficit every now and then isn't the end of the world, but when they add up over time they become a problem. When the debt grows faster than GDP and revenues you have a problem. And as a larger and larger portion of the debt is owed to foreigners and the interest payments become an expense 7 times the size of our education budget it becomes a problem. As these deficits are financed they compete with private investment and produce a crowding out effect and thus potentially reduce future GDP potential, which compounds the problem even further. And as we continue to print money the holders of our debt lose confidence and patience (read the headlines re: China, Russia, Kuwait, etc) and they may eventually dump those dollars and send them back home creating a massive wave of inflation. I could go on and on but I think you will get a much better picture if you read some of the resources available at the cbo site and others. And like I said, this is a non-partisan issue that goes beyond just the last year or two and even though our current leaders are setting all new records when it comes to spending, deficits, and debt, they are a mere drop in the bucket that has been filling up for decades. It's a failure that both sides need to own up to. Vince, I'm disappointed that you broke from the spirit of this thread and brought up the partisan issue again. The problem is bigger than simple political bickering. It strikes at the very core of our central government and society. The situation is untenable.

WashingTone Locian Wrote:
-------------------------------------------------------
> All the Republicans want to bash Keynes. I guess I
> need to remind you all that the so-called "free
> market," caused the mess we are in.
>
> I say "so-called" not because I doubt the "free
> market," but because many Republicans mistake the
> creation of a lawless no man's land as "a free
> market." It's not. It stops being a market when
> vested interests start gaming it at the expense of
> everyone else.

Ah yes, and these are the same people who abuse the principles of monetarists like Friedman as they try to out smart the market and its variable and unpredictable lags. They want to manipulate the market too, they just have their own unique but equally flawed method for doing it.

I won't get into the "so-called" free market discussion now (perhaps that is a good topic for another thread), but let's just say I'll respectfully disagree for now.

panic Wrote:
-------------------------------------------------------
> WashingTone Locian Wrote:
> --------------------------------------------------
> -----
> > All the Republicans want to bash Keynes. I guess
> I
> > need to remind you all that the so-called "free
> > market," caused the mess we are in.
> >
> > I say "so-called" not because I doubt the "free
> > market," but because many Republicans mistake
> the
> > creation of a lawless no man's land as "a free
> > market." It's not. It stops being a market when
> > vested interests start gaming it at the expense
> of
> > everyone else.
>
> I (also) see it as when all the top players start
> colluding for the benefit of themselves. More or
> less a monopoly IMO.


Sounds like you're talking about a cartel.

If we're talking about monopolies / cartels look no further than the Fed and their monopoly on interest rates. Some might be tempted to move further down the chain to Fannie/Freddie, or easy-money/fat-cat bankers... but if you chop off the head (Fed) the rest is a non-issue.

Vince(1) Wrote:
-------------------------------------------------------
> The problems with the deficit are highly over
> rated. Fixing the deficit will be very simple
> once republicans get off their idealogue hatred to
> new taxes. It will take a combination of spending
> cuts and new taxes to reduce the deficit. With
> one party not willing to compromise..there is no
> compromise...and the debt just gets bigger and
> bigger! But sooner or later they will be forced
> to compromise.


I knew Vince would be the one to come in here and ruin the "non-partisan" thread with some liberal Dem BS.

Justin Wrote:
-------------------------------------------------------


>
> I won't get into the "so-called" free market
> discussion now (perhaps that is a good topic for
> another thread), but let's just say I'll
> respectfully disagree for now.

I say "so-called" because a market that is allowed to be manipulated by monopolies and oligarchs isn't any freer than one that is over-regulated. The fact is you need some policing of the market to keep it from being rigged.

I'll give you an example. What would happen if I walked into a Giant today and started filling my pockets with food and left without paying? Ideally, a store employee would stop me and turn me over to the police for prosecution.

What has happened to our "free market" is that the store employees are on the payroll of the shoplifter, every store is being shoplifted and there is only one cop for the entire state of Virginia.

That is not a free market. That is criminal.

WashingTone Locian Wrote:
-------------------------------------------------------
> Justin Wrote:
> --------------------------------------------------
> -----
>
>
> >
> > I won't get into the "so-called" free market
> > discussion now (perhaps that is a good topic
> for
> > another thread), but let's just say I'll
> > respectfully disagree for now.
>
> I say "so-called" because a market that is allowed
> to be manipulated by monopolies and oligarchs
> isn't any freer than one that is over-regulated.
> The fact is you need some policing of the market
> to keep it from being rigged.
>
> I'll give you an example. What would happen if I
> walked into a Giant today and started filling my
> pockets with food and left without paying?
> Ideally, a store employee would stop me and turn
> me over to the police for prosecution.
>
> What has happened to our "free market" is that the
> store employees are on the payroll of the
> shoplifter, every store is being shoplifted and
> there is only one cop for the entire state of
> Virginia.
>
> That is not a free market. That is criminal.


Yawn... that's a horrible analogy. Not even close to being applicable.

I agree with Justin that the Fed is the monopoly that caused this mess.

Bad Analogy Wrote:
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>
>
> Yawn... that's a horrible analogy. Not even close
> to being applicable.
>
> I agree with Justin that the Fed is the monopoly
> that caused this mess.


Horribly apt, I'm afraid.

Bernanke. Wait, he is a Republican, right?
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Between 1933 and 1937, unemployment was cut in HALF and GDP had nearly recovered to pre-crash levels. The 1937-38 recession did stall this effort -- interestingly, this was when Roosevelt was trying to re-balance the budget.

So if the New Deal didn't fix the economy, what did?

World War II, you say? Wasn't that when the government started hiring people and spending money?

formerhick76 Wrote:
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> Between 1933 and 1937, unemployment was cut in
> HALF and GDP had nearly recovered to pre-crash
> levels. The 1937-38 recession did stall this
> effort -- interestingly, this was when Roosevelt
> was trying to re-balance the budget.
>
> So if the New Deal didn't fix the economy, what
> did?
>
> World War II, you say? Wasn't that when the
> government started hiring people and spending
> money?

The US emerged from WWII as the only superpower left that wasn't bombed to hell, and it's currency became the world's reserve currency due to the Bretton Woods agreement. This led to the US recovery and prolonged boom we have seen up until now.

Spending, inflating, and deficits have never lead to economic recovery and they never will.

Should have told it to this guy --->
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Made in China Wrote:
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> We just need to play nice with China, that's all.


what happened to you china... you used to be cool man...

"china still cool, pay layta, pay layta!!!"