Four Ways Out
I recently was listening to a smart economist. He said there are three ways for the United States (or any country) to get out from a massive pile of debt like ours:
1). Grow the economy.
2). Inflate our way out of it.
3). Assign losses.
4). Default
The fourth is the one I added. What are your thoughts on this? Assigning losses is called "austerity" in the news lately. Nice-sounding word. I expect inflation. I don't expect any growth in real GDP above the growth in population. Default is a last resort...a massive resignation.
I think we'll see further real restrictions, probably in the form of means tests, for Social Security. Sure, you paid into it. Here's a quarter - go call somebody who cares. We'll see inflation. So, I'm predicting mainly 2 and 3.
1). Grow the economy.
2). Inflate our way out of it.
3). Assign losses.
4). Default
The fourth is the one I added. What are your thoughts on this? Assigning losses is called "austerity" in the news lately. Nice-sounding word. I expect inflation. I don't expect any growth in real GDP above the growth in population. Default is a last resort...a massive resignation.
I think we'll see further real restrictions, probably in the form of means tests, for Social Security. Sure, you paid into it. Here's a quarter - go call somebody who cares. We'll see inflation. So, I'm predicting mainly 2 and 3.
1). Stop borrowing money!
Without this step, growing the economy will not make the debt go away; inflation will devalue the dollar and lead to even more borrowing, in a continuing vicious circle; “assigning losses” (partial default) will increase perceived risk and make the cost of future borrowing dramatically higher; and default will make further borrowing impossible and leave pure money-printing as the only remaining option.
I have long been in favor of eliminating the future-based budgeting we do now and go to a past-based budget. In other words, you can't spend more money - including debt service - than was actually brought in in taxes the last year. You could even go back two years to give full time for analysis, etc. That way the only way government budgets would grow is if the economy itself was growing.
The government has additional powers to essentially "steal' money from citizens to pay off the debt they created. The government can "tax" the citizens and just take the money, or they can print more paper money, pay off the debt, and leave the citizens with less wealth than they thought they had.
The federal government "defaulted" already under president Nixon when he took us off the gold standard back in the 70's. So, the idea of having restructuring is NOT new at all. Foreign countries took a haircut on the dollars they held back then, and since then all of us who hold dollars have taken a haircut through inflation.
It would be better actually if we just admit that our country is bankrupt, and we move on.
While you and I know the country is bankrupt, no one in a position of power would ever admit to having caused this. Recall how Rand wrote about this in Atlas - the government is still looking for John Galt to bail it out.
What an interesting point of view! +1
I surprisingly find myself leaning toward agreement.
Does assigning losses (#3) mean raising taxes and cutting spending? If so, I predict will manage the debt in the form of responding to a series of mini-crises using #2 and #3. They will never do #4 because #2 is an easier option. The economy will keep growing (#1) independently of this. Item #1 is the only one on the list the gov't can't just decide to do because "the economy" is millions of individuals choosing to help one another in exchange for something they want.
In my estimation Social Security will keep running as it has. By its nature it takes money from people who are working and gives it to those who are old, disabled, or dead (supporting their minor children). Because people think of it as "saving" money for the future but it's really transferring it, there are a lot of histrionics around the ups-and-downs of how much you pay into it or take out of it.
I would like to see SS privatized, debt reduced, and less leverage in general in the economy. It won't happen, so we plod along managing a series of mini-crises.
You're probably right. I hear about so many people not believing in the program that maybe there's a chance people will say, "just keep what I gave you, if I can not put any more in." I agree, though, it probably won't happen.
A bigger GDP is certainly the primary desired solution, but pursuing it in isolation only pushes the end game out further. Reducing government waste and duplication should be accompanying private industry revenue generation.
Inflation should be a lower priority than spending reductions, and should be kept at a level modest enough to inspire lending and bond purchases. High inflation should be prevented.
A renegotiation of government bond commitments, as Trump has suggested, is a lesser form of "default." That should be considered with caution, but is worth careful assessment so it isn't an act of desperation.
I see a lot of hoorah about GDP all the time but it doesn't explain how much a continuous debt on deficits that will not be repaid as we think of it is going to cost not generations ahead but grandpa, grandma and retirees who can't make it up save by working for WalMart. Its great we have one major corporation that is socially conscious enough to provide jobs for retirees who got screwed by the government devaluation and repudiation the last time. Why do I say that? Was it counted in the COLA adjustments? NO! it was not. So that one percent or zero percent last year really wasn't truthful was it? NO
Still want to vote Socialist again?
Chances are you will get the deer in the head light look and they wil change the subject. That's a sure and certain signal why NOT to vote for someone.
zero corporate tax rate...abolish govt regulation...shutdown the Fed, return to the gold standard...reduce govt spending by 90%...sounds better...
We finally decded on a small patch of desert for the traditionalists and call it Abandonment Acres. For those who fought and were abandoned by their friends and neighbors. Sort of a play on words from a fromal draft notice.
1. Austerity.
2. Reduce taxes.
That's it. Austerity means cutting spending except for essentials, like the MILITARY.
Reduce taxes especially on business, and yes, the rich. Make it profitable to do business in the USA and the great engine created in the 19th and early 20th century will do the rest.
They never stop to think where the money comes from.
"Ask not for whom the bell tolls,
It tolls for thee." -- John Donne
Old John Donne was talking about death, but he might just as well have been talking about taxes.
No war if there's a quick victory, and it is possible with today's armament and the will to go all the way.
If the world believes you will leave nothing but stacked skulls ....and have the strength, skill, 'will' to do so it will stop wars before they start.
If you have leaders with 'will' Otherwise you get fifteen years of war and not much to show for it. Or however long it's been.
the worst part is the war on terrorism was lost the second we had to change our way of life and our values and I see no move to give them back. How did the government get the power? Elected by people who haven't the will be be free and independent citizens and are deserving of serfdom. Serf's breed draftees by the way. Wait until you hear the screaming, whining and crying when that happens. 'I didn't vote for this one to start drafting us,' the plaintive cry of despair.
I'm the one sideliens laughing my ass off.
(1) is my first choice and we cannot do it bound so tightly by chains of government.
(2) kills us as it kills wealth by destroying its measure.
(3) We need to accept the real losses such huge debt signifies and inevitably leads to. It has been made so huge and works than it would have been by denying reality too long. A large part of it was from not allowing the 2008 mess to unravel.
(4) At the rate things are going this is nearly inevitable outcome.
English?
Need an excuse Genocide in Syria?
Cold War II with Russia again. Deja f'n vous
It's a great time to be a socialist politician!!!!
Expect another ban on the ownership of gold within the next four years. Probably to include silver this time too.
OR
Lets just fire everyone...call it a wash and start all over again...leaving the Big and Central banks a special place in hell.