Originally Posted By pecos bill In my travels across the internet I have been seeing more and more people who are gearing up for some type of economic upheaval. The range is dramatic, from the guys with the arsenal of weapons in a bunker with three years provisions, to the investors who are quietly stocking up on precious metals. I must admit, with the unbelievable U.S. debt, the ceaseless printing of more and more fiat currency, the rumors of major nations rejecting the dollar standard, and the ever expanding Chinese juggernaut, I have some concerns. So I would like to get some opinions from the wise people who post here about how they feel regarding such a potentially dynamic subject. Do you expect the status quo to remain, or do you see big changes ahead?
Originally Posted By fkurucz We certainly can't run trillion dollar plus deficitrs into perpetuity. Even scarier is that we aren't the only ones doing this kind of nonsense. My experience from living in another country that wouldn't turn off the printing presses is that people try to acquire income generating assets. Rental property always seemed popular, but you had to pay cash for it as the banks were charging astronomical interest rates on loans.
Originally Posted By DVC-dad-3Gs My take is that Obama has spent way too much time and money on the Holy Grail of Socialism (Gov Health Care) while doing absolutely nothing about the economy. It's quite simple. It is all a house of cards that will somehow (if not come down) fall into equilibrium at some point. Does that mean complete collapse of society? No. I don't think so. But there is certainly an "I told you so" moment on the horizon somewhere. All said, IMHO of course.
Originally Posted By SuperDry <<< Holy Grail of Socialism (Gov Health Care) >>> Yet, the plan passed doesn't even include a public option. Strange program from someone that allegedly was in search of the Holy Grail of Socialism. It's almost as if he really wanted to make sure every American had access to affordable health care, even if through the private sector.
Originally Posted By Dabob2 In all fairness, I don't think you can call a 787 billion stimulus "absolutely nothing." Many economists credit it with preventing us from sliding into Depression - and read up on the Great Depression and what people lived through for a decade if you think that's not a big deal. It's hard to get credit for a negative, i.e. for something NOT happening, but it was vital. He was handed an economy in the ICU; the first step is to stop the bleeding. He did that. And yes it was expensive. But fully one third of the stimulus was tax cuts (albeit for the middle class, not for the wealthiest, so some Republicans - not referring to you here, DVC - seem to think they somehow don't count.) Was some of the stimulus pork? Sadly, yes. But not that much in the greater scheme of things. Do I wish more of it had been devoted to infrastructure particularly? Yep. Still, it stopped the bleeding and got the economy out of free fall. That was by NO means a sure thing. Now... do I wish Obama had turned his attention to jobs earlier? Sure. It took far too long for health care to pass - had there been less obstructionism (which didn't ultimately work anyway), we could have passed it by last summer, and been on to more attention to jobs much sooner. Even so - what's now being referred to as the "bikini graph" shows that an economy that has hemorrhaging jobs at a rate of more that 700,000 PER MONTH when Obama took over, has been reversed, and has even started added jobs. The visual really is pretty striking. <a href="http://wvablue.com/tag/Bikini%20graph" target="_blank">http://wvablue.com/tag/Bikini%20graph</a> Is it good enough? Of course not. But I think the charge of "doing absolutely nothing about the economy" is not fair.
Originally Posted By pecos bill But can the economy sustain itself with the massive burden of debt? If the U.S. were a private business, am I correct in saying it would be bankrupt? Right now, the only thing keeping us afloat is our ability to print more and more money on demand, even though it is backed up by absolutely nothing. A slight bump in job growth is one thing, but what happens when Social Security goes bust, or China, and other Asian nations who are sure to follow, reject the dollar standard?
Originally Posted By SpokkerJones "If the U.S. were a private business, am I correct in saying it would be bankrupt?" Haha, check out Sirius radio. It's got a bunch of debt but it just won't die.
Originally Posted By Anatole69 ^^ China won't reject the dollar standard anytime soon because they have invested too much money in propping it up and is still too reliant upon the health of the American market for their economy. Plus they have their hands full now dealing with the financial crises and riots linked to slow economic growth and a real estate bubble in theirs and the Hong Kong real estate markets, to really do anything about moving away from the dollar standard for the time being. - Anatole
Originally Posted By Dabob2 There's no question that the level of debt we have now cannot be sustained indefinitely. However, the stimulus was necessary to stop the bleeding and prevent a Depression, which just would have made things worse. Obama was between the proverbial rock and hard place, and made the right (if not the perfect) decision. Let's hope he takes a page out of Clinton's book and moves us towards a path of balanced budget, even surplus. I think he's sincere about wanting to; Bush essentially never paid more than lip service, and was getting his tax cuts for the wealthy and wars in there no matter what.
Originally Posted By Labuda Dabob - correct me if I'm wrong, but didn't the $700 billion+ stimulus get approved under Shrub, not Obama? I know the money was distributed once Obama was in office, but don't we actually have the previous administration to thank for that added money?
Originally Posted By Dabob2 No the BAILOUT was approved under Bush - the stimulus was something else.
Originally Posted By Labuda Ah, ok. Thanks for the clarification. I could have sworn otherwise, but too lazy to look it up. hehe
Originally Posted By Mr X They were both some 700 billion. Perhaps that's why the confusion (it's not the first time I've heard people mix them up).
Originally Posted By EighthDwarf There is no question that the government (including the Fed) has taken action to avoid a complete economic meltdown, and they deserve credit for that. And it is completely normal - even expected - for governments to run a deficit in recesiionary times. So the concerns about the current deficits may be overblown as they are likely to be reversed, at least somewhat, as the economy rebounds. However, I think the source of many people's concerns comes from the fact that entitlement programs are too big and represent an ever-increasing portion of the budget (and deficits). In fact, the entitlement programs (read: Medicare, Social Security, ObamaCare, etc.) will drive our continued deficits upward unless they are revised - but there is vitually no political will to cut costs in these programs. If that's the case, we are likely to experience muted economic and job growth for years to come. Bottom line is there are not enough producers to pay for the non-producers unless taxes are raised or costs are cut. And since there is no will to cut costs, taxes will have to be raised, which will weigh down economic growth.
Originally Posted By Sport Goofy << And since there is no will to cut costs, taxes will have to be raised, which will weigh down economic growth. >> Funny, that wasn't the result when President Clinton and Congress raised taxes on the wealthy in 1993. Yet, the opposite has occurred in the aftermath of President Bush and Congress lowering taxes on the wealthy in 2001. Tax rates were far higher during some of the most booming periods of our post-WWII history in the United States. Why has our prosperity declined over the past 30 years as tax rates have declined for the wealthy?
Originally Posted By Mr X ***However, I think the source of many people's concerns comes from the fact that entitlement programs are too big and represent an ever-increasing portion of the budget (and deficits).*** Not me. My concern comes from the fact that military programs are too big and represent an ever-increasing portion of the budget (and deficits).
Originally Posted By EighthDwarf <<Funny, that wasn't the result when President Clinton and Congress raised taxes on the wealthy in 1993.>> Sorry to disappoint you, but mine wasn't a Republican vs. Democrat argument (in fact I think Clinton was the best president we had in the last 30 years). Both parties have failed to address the increases liabilites tied to entitlements. Taxes will have to be increased to pay for the debts these entitlements create. Do you actually disagree with this? And if you have less money to spend, do you not believe that will have an effect on the economy? <<Why has our prosperity declined over the past 30 years as tax rates have declined for the wealthy?>> How do figure prosperity has declined over the last 30 years? Do you really believe that?? GDP declined in only 4 of the last 30 years: 1980: -0.3% 1982: -1.9% 1991: -0.2% 2009: -2.4% I really don't get the doom-and-gloom, anti-capitalism talk some of you spew sometimes. We are just coming out of a recession, try and focus on the big picture.
Originally Posted By EighthDwarf <<My concern comes from the fact that military programs are too big and represent an ever-increasing portion of the budget (and deficits).>> Well, then you are focusing on the wrong thing. Military expenditures pale in comparison with the entitlement liablities. And it's a lot easier to trim the military expenditures than the entitlements.
Originally Posted By Sport Goofy << How do figure prosperity has declined over the last 30 years? Do you really believe that?? GDP declined in only 4 of the last 30 years: >> GDP growth does not equal prosperity. How have household incomes compared for the same periods?
Originally Posted By Sport Goofy << Taxes will have to be increased to pay for the debts these entitlements create. >> I think you need to be more specific. Are you talking about Social Security or Medicare? Social Security is solvent for several more decades. It would be in better shape if we didn't reduce taxes and use the trust fund money to pay for the non-entitlement parts of government. Medicare is a mess -- but not because of tax policies. It's a mess because we've allowed private industry to create a situation where health care inflation is outpacing that GDP growth that you tout in another posting by a very wide margin. Unfortunately, we don't have the guts to cut the profiteers out of the health care sector, which only leaves higher taxes as a solution to the problem.
