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Thread: The Debt Ceiling

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    Legendary Zoner coastal's Avatar
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    The Debt Ceiling

    This may be way overly simplistic, but the debt ceiling has to be raised annually to avoid the US defaulting on its loans.

    this seems akin to us not living within our means and relying on newly found credit every year in order to continue our lifestyle. And at the end of every year... we call CHASE and CITI and ask to have our credit limit raised.

    At some point the balance of debt to income is going to reach a tipping point... much like global warming... where the problem is beyond our ability to recover from. How close are we to that?

    as a mild aside... the GOP can honestly never call themselves the party of fiscal conservatism. They’re Trump’s party of cheap debt and bankruptcy.

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    RABBI Haile SpikedLemonade's Avatar
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    Re: The Debt Ceiling

    Well there just had to be a trillion dollar tax cut.

    Trump's puppet masters demanded it.

    Then there is the fact the US spends more money on its military then the next 10 countries combined.

    That is also a must.

    No money for silly things like health care or infrastructure.

    A wall is more important.

    Priorities.

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    Re: The Debt Ceiling

    Quote Originally Posted by coastal View Post
    This may be way overly simplistic, but the debt ceiling has to be raised annually to avoid the US defaulting on its loans.

    this seems akin to us not living within our means and relying on newly found credit every year in order to continue our lifestyle. And at the end of every year... we call CHASE and CITI and ask to have our credit limit raised.

    At some point the balance of debt to income is going to reach a tipping point... much like global warming... where the problem is beyond our ability to recover from. How close are we to that?

    as a mild aside... the GOP can honestly never call themselves the party of fiscal conservatism. They’re Trump’s party of cheap debt and bankruptcy.
    The debt ceiling is an arbitrary limit that has no business being enshrined in law.

    Yes, you are being overly simplistic since, first, the ceiling does not necessarily have to be risen "every year". In fact, we are now enjoying a period of time where there is NO limit....it was just suspended for one year. Other times Congress decides on an arbitrary number that can last one or two years...or, whatever amount of time they want. It would take a one sentence law to get rid of it permanently.

    The main reason it stays is for negotiating leverage.

    And, no, this has nothing to do with "us not living within our means and relying on newly found credit every year in order to continue our lifestyle"....trying to compare the largest economy in the world, who prints its own money and controls it's own monetary policy, and one who's own government decides exactly how much "income" they take in....to a household budget is, shall we say.....silly.

    Same goes with "...we call CHASE and CITI and ask to have our credit limit raised."

    Certainly there is a grain in truth in "...At some point the balance of debt to income is going to reach a tipping point...", although we are no where close to that.

    I have asked this question many, many times over the years....what is the danger of federal debt?? I ask it again. Irregardless of the arbitrary debt limit....what negative effect does large federal debt have on our economy??

    A hint....none at the moment.

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    Re: The Debt Ceiling

    The “tax cut” was a transfer of wealth... nothing more.

    if the Dems were smart, which they aren’t, they’d brand it as that.

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    Re: The Debt Ceiling

    The Uber Wealthy all have their funds hedged elsewhere just in case Trump manages to do what he does best and bankrupt the US.

    Whether the average joe will be able to liquidate his 401K is another matter.

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    Re: The Debt Ceiling


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    Re: The Debt Ceiling

    Ideally we wouldn’t come near our debt limit ever but spending has been increasing without identifying revenue offsets. The tax cut accelerated the pace of reaching the limit but it was going to happen regardless. It has to be raised though, the fallout of defaulting could be catastrophic.
    COMING SOON...
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    We were both drunk and Hillary did not look that bad at 2 AM, I swear!!!!!!

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    Re: The Debt Ceiling

    I am concerned about the ever rising national debt. I think it is an issue because the US has to sell bonds to cover the shortfall. The money supply (printing of money) is under the jurisdiction of the Federal Reserve. I do not believe it is used directly to pay off government debt. If it were, the result would be a high rate of inflation as money becomes steadily worth less. As the debt continues to rise, the danger is that bonds may become harder to sell. When that happens, the price drops, the result being a de facto increase in the interest the US has to pay on those bonds. The percentage of the national budget dedicated to paying interest on outstanding bonds will steadily increase. The national debt is the main reason that I believe both main parties have failed the American people. We are not at the tipping point yet, but I am not so confident as notacon that it is a long ways away.
    I've made up my mind. Don't confuse me with the facts.

    I'm the most reasonable poster here. If you don't agree, I'll be forced to have a hissy fit.

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    Re: The Debt Ceiling

    Quote Originally Posted by Haile SpikedLemonade View Post
    The Uber Wealthy all have their funds hedged elsewhere just in case Trump manages to do what he does best and bankrupt the US.

    Whether the average joe will be able to liquidate his 401K is another matter.
    Exactly.

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    Raging hypocrite and resident troll Discotrish's Avatar
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    Re: The Debt Ceiling

    Quote Originally Posted by coastal View Post
    This may be way overly simplistic, but the debt ceiling has to be raised annually to avoid the US defaulting on its loans.

    this seems akin to us not living within our means and relying on newly found credit every year in order to continue our lifestyle. And at the end of every year... we call CHASE and CITI and ask to have our credit limit raised.

    At some point the balance of debt to income is going to reach a tipping point... much like global warming... where the problem is beyond our ability to recover from. How close are we to that?

    as a mild aside... the GOP can honestly never call themselves the party of fiscal conservatism. They’re Trump’s party of cheap debt and bankruptcy.
    The sad part is (among many sad parts) that if the government took all our social security payments and actually INVESTED them with a conservative return, instead of using the money as another source of "borrowed" funds, we'd each have a over million bucks to retire on.

    Patti

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    Re: The Debt Ceiling

    Quote Originally Posted by TigerJ View Post
    I am concerned about the ever rising national debt. I think it is an issue because the US has to sell bonds to cover the shortfall. The money supply (printing of money) is under the jurisdiction of the Federal Reserve. I do not believe it is used directly to pay off government debt. If it were, the result would be a high rate of inflation as money becomes steadily worth less. As the debt continues to rise, the danger is that bonds may become harder to sell. When that happens, the price drops, the result being a de facto increase in the interest the US has to pay on those bonds. The percentage of the national budget dedicated to paying interest on outstanding bonds will steadily increase. The national debt is the main reason that I believe both main parties have failed the American people. We are not at the tipping point yet, but I am not so confident as notacon that it is a long ways away.
    Finally, an answer that starts to touch on the issue. The threat of deficits and federal debt is rising interest rates and inflation.

    There is ZERO evidence that this is a problem. In FACT, the interest rate on Treasury Bonds is close to or into negative return (when inflation is taken into consideration). In other words, the appetite to finance the US government debt is not even close to abated. If it was, interest rates for T-Bills would start to rise.

    They aren't.

    The 10 year rate for Treasury Bonds is 2.124%. Inflation rate is right around 1.8%. This signals that there is no problem selling these bonds. The safety of the investment overshadows the low return.

    Paul Krugman arguses that federal debt is not a problem because the growth rate is higher than the interest rate.

    He has written extensively on debt and defects. Here is a pretty good piece to read...

    On The Debt Non-Spiral

    The debate between Joe Stiglitz and Larry Summers over secular stagnation is a somewhat embarrassing affair, which I hope will soon be forgotten. Joe, one of our greatest living economists, seems to have misunderstood what secular stagnation means – which is, to be fair, easy given how unintuitive the term is. And he accused Larry of inventing the doctrine to justify the Obama administration’s policy shortfalls.

    Urk. Secular stagnation means that situations like 2008-16, in which monetary policy alone can’t restore full employment, should be seen as highly likely and maybe the norm. It doesn’t say that nopolicies can promote growth and employment. On the contrary, it’s a justification for more policy activism, especially on the fiscal front, not less – which is exactly what Larry has been saying.

    And it’s hardly an excuse for Obama-era failures. I spent 2009-10 screaming that the stimulus was inadequate, precisely because I didn’t expect the slump to be rapidly self-correcting; I based this lack of faith partly on the tendency of financial crises to have long shadows, but I also simultaneously and independently arrived at the same secular stagnation conclusions as Larry did.

    So can we just chalk this one up to communication problems, and let it go? And can we talk about more interesting implications of the economy’s apparent need for low real interest rates on average?
    One implication, which I and others have pushed, is that the underlying case for a 2 percent inflation target is all wrong. That case rested in large part on the belief that at 2 percent inflation, zero-lower-bound episodes would be rare and transitory. That has clearly proved not to be the case, which makes the argument for a higher target so that real rates can go lower when bad things happen.

    Another implication, which I don’t think has gotten enough attention, is that there is even less reason than before to obsess over government debt.

    The usual scare story about debt warns about a debt spiral: deficits mean higher debt, which means higher interest payments, which means bigger deficits, which means faster growth in debt, and so on until confidence collapses. But this kind of debt spiral can only happen if the interest rate on the debt is higher than the economy’s growth rate.

    And this hasn’t been true for a while. Here’s the average interest rate paid on federal debt:



    Check out our low, low interestCreditFederal Reserve Bank of St. Louis
    These days that rate is well below 3 percent even when the economy is near full employment. Meanwhile, we think the U.S. economy has an underlying growth rate of maybe 2 percent, plus 2 percent inflation – which means 4 percent nominal growth.

    What this means is that debt doesn’t spiral. On the contrary, it tends to fall as a share of GDP unless the government runs large primary deficits

    I’m not saying that we shouldn’t worry about debt at all, because there may be future contingencies when real interest rates rise and debt becomes an issue. But debt is way, way down on the list of things to worry about – absolutely trivial compared with, say, crumbling infrastructure, which should be fixed without worrying about paying as you go.

    Yes, the federal debt will, eventually, be a more serious concern. Not now, nor anytime in the immediate future.

    The BIGGEST problem is WHAT WE ARE GETTING FOR THIS DEBT. Almost ALL of the debt since Bill Clinton left office is BECAUSE OF STUPID REPUBLICAN TAX CUTS!!!!

    As Costal correctly pointed out, the transfer of HUGE amounts of wealth from most Americans to the filthy rich. The overhwmlnig majority of American see ZERO benefit from these stupid tax cuts.

    Certainly not like we would see with better roads, safe bridges, more modern airports, better mass transit, cleaner water, movement aways from dirty fossil fuels, investing in public health.

    The Republicans have embraced a religion of mortgaging America's future to line the pockets of the filthy rich. It's obscene.

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    Re: The Debt Ceiling

    Quote Originally Posted by Discotrish View Post
    The sad part is (among many sad parts) that if the government took all our social security payments and actually INVESTED them with a conservative return, instead of using the money as another source of "borrowed" funds, we'd each have a over million bucks to retire on.

    Patti
    This is unmitigated ignorant nonsense.

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    Raging hypocrite and resident troll Discotrish's Avatar
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    Re: The Debt Ceiling

    Quote Originally Posted by notacon View Post
    This is unmitigated ignorant nonsense.
    Take it up with Dave Ramsey.

    That's assuming a 5 percent annual return.

    Patti

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    Re: The Debt Ceiling

    Quote Originally Posted by Discotrish View Post
    Take it up with Dave Ramsey.

    That's assuming a 5 percent annual return.

    Patti
    I listened to Dave Ramsey for years. His advice for regular people is sound and I adhere to his family financial theories in my life.


    His understanding of how Social Security works and everything to do with federal spending, taxation and debt is moronic, dishonest and utterly without foundation.

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    Registered User TigerJ's Avatar
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    Re: The Debt Ceiling

    The real problem with the national debt is not the timing of any tipping point but the clear fact that nobody in government seems to have the understanding or the will to make hard choices to change what ultimately is an unsustainable trend. Part of that is the fact that we are a democracy. Hard choices are hard because they are unpopular. If an elected politician makes a hard choice regarding the economy, it is likely to get him/her thrown out of office in the next election. Since they like being in office, the overwhelming temptation is to avoid the hard choices and leave them for another day.

    I like being in a democracy, but that is an inherent problem. Unless the public finally decides to wise up and hold politicians accountable to make the hard but necessary choices, we are stuck in our unsustainable pattern.

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    Re: The Debt Ceiling

    Quote Originally Posted by TigerJ View Post
    The real problem with the national debt is not the timing of any tipping point but the clear fact that nobody in government seems to have the understanding or the will to make hard choices to change what ultimately is an unsustainable trend. Part of that is the fact that we are a democracy. Hard choices are hard because they are unpopular. If an elected politician makes a hard choice regarding the economy, it is likely to get him/her thrown out of office in the next election. Since they like being in office, the overwhelming temptation is to avoid the hard choices and leave them for another day.

    I like being in a democracy, but that is an inherent problem. Unless the public finally decides to wise up and hold politicians accountable to make the hard but necessary choices, we are stuck in our unsustainable pattern.
    I don't agree with this in the least.

    Sorry, the problem is because one party, the GOP, deals in outright dishonesty and an adherence to a unsustainable religion of cutting taxes for the rich...cutting taxes for the rich...and even more cutting taxes for the rich.

    The understand completely what they are doing. Their allegiance to filthy rich people is more important than anything else.

    If you believe it is anything else, you are fooling yourself.

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    Re: The Debt Ceiling

    America's debt is sustainable because of its GDP, reputation and low interest rate just like an entrepreneur with a good thriving business with high revenue and a bank loan at low rates.

    However, with Trump in charge, you are using the loan to buy militarized lambos and free lunches for already fat, rich uncles instead of investing in your business further and taking care of your employees.
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    Re: The Debt Ceiling

    Quote Originally Posted by Bellowing4DaBills View Post
    America's debt is sustainable because of its GDP, reputation and low interest rate just like an entrepreneur with a good thriving business with high revenue and a bank loan at low rates.

    However, with Trump in charge, you are using the loan to buy militarized lambos and free lunches for already fat, rich uncles instead of investing in your business further and taking care of your employees.
    Trump is irrelevant to the long term trust in American debt.

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    Registered User TigerJ's Avatar
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    Re: The Debt Ceiling

    Quote Originally Posted by notacon View Post
    I don't agree with this in the least.

    Sorry, the problem is because one party, the GOP, deals in outright dishonesty and an adherence to a unsustainable religion of cutting taxes for the rich...cutting taxes for the rich...and even more cutting taxes for the rich.

    The understand completely what they are doing. Their allegiance to filthy rich people is more important than anything else.

    If you believe it is anything else, you are fooling yourself.
    We can agree to disagree, but I don't hold Democrats any less responsible. Democrats like different programs than do Republicans, and they like to impose taxes differently, but their appetite to spend is greater than their appetite to pay for it, just like that of Republicans. There perhaps was a time when robust growth could pay for increased spending, but ultimately ongoing robust growth requires ongoing population growth, and that too is an unsustainable trend that will result in increasing chances for epidemics, natural disasters, famine, civil unrest and a whole host of additional problems (all of which can coincidentally cost billions of dollars).
    Last edited by TigerJ; 07-17-2019 at 01:49 PM.

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    Re: The Debt Ceiling

    Quote Originally Posted by TigerJ View Post
    We can agree to disagree, but I don't hold Democrats any less responsible. Democrats like different programs than do Republicans, and they like to impose taxes differently, but their appetite to spend is greater than their appetite to pay for it, just like that of Republicans. There perhaps was a time when robust growth could pay for increased spending, but ultimately ongoing robust growth requires ongoing population growth, and that too is an unsustainable trend that will result in increasing chances for epidemics, natural disasters, famine, civil unrest and a whole host of additional problems (all of which can coincidentally cost billions of dollars).
    That is untrue. Certainly Democrats are not 100% pure....but, when it comes to degrees...there is a HUGE gulf between the two parties.

    Obamacare was fully funded. Just about every program the Democrats propose also comes with a method to pay for it. Republicans NEVER present ANY WAY to pay for their tax cuts because they promote the LIE that tax cuts pay for themselves.

    You can disagree all you want. Does not make what you believe anywhere close to the truth.

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