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US debt limit raised to $8.96 trillion
Source: http://news.bbc.co.uk/2/hi/business/4827248.stm
Jam it back in, in the dark. |
The 8.96 trillion is a big number thats thrown around alot. If you've taking some economics classes you'd find out its very misleading and takes into account debt that's not even really bad debt (aka government in debt to itself). Also if you look at the ratio of GDP growth to Debt growth you'd find that our ability to pay the debt has been going up, not down.
Nevertheless, the crowding out effect will happen. Less money will be available to be loaned out to businesses and economic growth will ultimately slow a little. Its all tradeoffs and there's really no right answer. There's nowhere I can't reach. |
Anyway, the US isn't the only one spending up huge sums of debt, Japan in particular worries me (their debt has gotten so bad its 150% of their GDP vs. 65% for the US) and with the ever increasing global economy the effects will likely cause a huge ripple when they finally do occur. This thing is sticky, and I don't like it. I don't appreciate it. |
I am a dolphin, do you want me on your body? |
Most amazing jew boots |
I really don't see any positives to letting it pile up, or how you could see this as "right or wrong." The goverment does need to stockpile a certain amount of debt simply so they have the power to influence interest rates through what they currently pay, but the amount they have acquired is far beyond simply keeping that in check in the market. What kind of toxic man-thing is happening now? |
But maybe the effects of increasing taxes could hurt the economy more then the amount the debt will burden us later on. Of course, knowone can really know this but its a valid point to bring up.
FELIPE NO |
Most amazing jew boots |
Jam it back in, in the dark. |
Possibly an end to the housing market boom.
There's nowhere I can't reach. |
But you know, the bigger problem is social security. Buts thats for another topic This thing is sticky, and I don't like it. I don't appreciate it. |
Or, we could enter a global crisis in which all debts are defaulted, or the Asian Banks burn their US bonds.
Either one is not a desirable scenario. I am a dolphin, do you want me on your body? |
I was speaking idiomatically. |
Carob Nut |
Or someone drops a nuke and every lil bit of debt doesn't matter a damned bit.
What kind of toxic man-thing is happening now? |
FELIPE NO |
Carob Nut |
As stated earlier, there really isn't any real answer. Unless all the countries of the world form one large federation, I doubt anyone's debt will ever be relieved (with exception taken to the African countries during G5).
What, you don't want my bikini-clad body? |
What do you think one nuke would do, anyway?
And by the way, the concept of this debt escapes me. I'm imagining it's not debt in our traditional middle class variation...here's a credit card! Oops, I'm 20,000$ in debt. I wonder exactly where it comes from, and why can't we just say, have no debt any more? Why can't we just wipe the papers out? Debt is an abstract concept. It's not material, so why bother with it? Who is coming to collect? Can anybody elaborate this for me? Jam it back in, in the dark. |
How ya doing, buddy? |
Anyway, what they're holding onto is more or less a "I owe you!" note from the Treasury Department. It used to be that you could turn in your dollars for a certain quanitiy of gold. But not anymore, so you are right when you said it's an abstract concept. It's not even paper... just numbers on a computer nowadays. But numbers on a computer that could cause massive problems for the average American if they were mismanaged. Since the trade in oil take's place only in dollars, countries are required to hold and buy dollars. But that's starting to change. The Iranians tried to launch their oil bourse in Euros. And the Norway has talked about doing the same. If the trade in oil shifted away from dollars, countries would stop buying our dollars, or even loaning them. Then start calling in their "I owe yous" to the Treasury Department. Or trying to sell them. With our trade imbalances and a massive federal deficit, it's doubtful we could pay. As as result the US Dollar would suffer accordingly. Probably through massive Weimer Germany type inflation. Thus the US/world economy and your average American would suffer. Of course that's not the only course of action. Some economists worry about the deficit, some don't. Uhh I could probably elabarote a lot more. But that's basically a summary... especially since I didn't touch topics like GDP/growth, or even capitalism at large. But that's up to you if you want to pursue it. I'm a crappy 'splainer anyway. I probably left out a few very important details. This thing is sticky, and I don't like it. I don't appreciate it. |
Oil remains the main chink in the armor of the US economy though. It's the main way the dollar would collapse, and frankly, in a business sense, it's stupid for OPEC and others to keep trading in dollars anyways. With the terrible exchange rates, they would make much more money by selling in Euro's simply put, and if it weren't for the obvious threat of a US military intervention to prevent an economic collapse, I'm sure countries would be much more open to a change.
I am a dolphin, do you want me on your body? |
Still doesn't change the fact that economists aren't visionaries in any sense of the word. We're conformist reactionaries.
I was speaking idiomatically. |
Actually, I can see such a change occuring in the near future though, especially as the US becomes a less dominating factor in international politics. Most people outside the region don't know this, but the GCC (Gulf Cooperation Council) is planning to adopt a common currency by 2010. Logic means that it won't be pegged to the dollar, since that would just be the same thing it is now then (all current gulf currencies are dollar pegged, mostly because the Saudi Riyal is, and they control the gulf). Oil sales in that currency would be a great way to prop up the currency, give it international legitimacy, and even give the region potentially better rates to China, who they see as a more reliable ally since it doesn't "interfere in their internal affairs." And do you know why above all they will want to do this? To fuck over Israel, and frankly, it's the ultimate way to fire a broadside at the economies of Israeli supporting nations, while also greatly helping the regions allies that decide to cater to their interests. What kind of toxic man-thing is happening now? |
I don't suppose you've heard some of the crazy things our Federal Reserve Chairman has been talking about lately? One plan is to load up helicopters with 100 dollar bills, and drop it on the populace at large to "deinflate" the US economy and currency. World's economy be damned. The man's either completely insane or a genius. Maybe both.
Then again, it'll be 2010 or later. It won't be hard to imagine that there's going to be a whole 'nother playing field at that particular point in time.
FELIPE NO |
Considering China's economic boom as well and the strains it will be putting on global oil supplies, anything that causes a decrease in US oil consumption would lossen up capacity for them that they desperately need. They'll be interested in seeing how such a situation plays out as well.
How ya doing, buddy? |
Which is why I said that the global playing field is definitely going to shift by 2010 even though that's only four years away. Exciting times we live in eh?
Jam it back in, in the dark. |
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