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OT - Macroeconomics and the National Debt

Discussion in 'Politics, Elections & Legislation' started by dmarbell, Mar 1, 2009.

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  1. dmarbell

    dmarbell Active Member

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    Deficits and the national debt are on the minds of lots of folks lately. If not, they should be. The general concensus is that we are mortgaging our children's future. Taxes will have to increase dramatically in order to pay off the national debt.

    I propose, with opinion only, that there is an amount of national debt (ND) that our country can sustain. I don't know whether that amount is $3 trillion, $8 trillion, or the projected $12 trillion by the end of 2009, or say, $20 trillion.

    Since our ND now stands at about $10 trillion, we could say that we have never actually paid down the national debt, not at least permanently. Certainly we have not paid down the ND during the last thirty years or so.

    When the current treasury bonds and notes mature, as long as there are buyers of new bonds, we can "refinance" the ND. If the GDP grows, and the population grows, with moderate inflation, then $12 trillion will not seem like such a big number thirty years from now. Perhaps we'll be able to say, "Twelve trillion dollars sure won't buy what it used to!"

    We can discuss how the ND compares, as a percent of GDP, to other periods in our history.

    Having said this, I am worried about the rate at which the ND is increasing. The 2009 projected deficit of $1.75 trillion has to be over $1 trillion more than any other previous deficit. Our previous "conservative" administration and congress spent like drunken sailors. The new administration, and congress which has been in power for two years, seems hell bent on spending us into oblivion.

    I have asked no question here, but given plenty of ammunition for debate, and perhaps even ridicule. Be gentle.

    Danny
     
  2. JBrooks

    JBrooks TS Member

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    "The new administration, and congress which has been in power for two years, seems hell bent on spending us into oblivion."

    Bingo, I think we have a winner.
     
  3. halfmile

    halfmile Well-Known Member

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    The debt has interest that is just alittle more than half our national income.

    Try that at home.

    Usury is evil, and has brought a mighty nation down. The year of Jubilee is at hand.

    HM
     
  4. pendennis

    pendennis Well-Known Member

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    Danny, sustainable debt is a matter of confidence. It works that way in the private and public financial markets. Right now, people have confidence (rightly or wrongly), that the Federal debt is sound. Contrast this to the private markets, which have very low confidence levels. Lack of confidence in the private markets is why we're in a very deep recession now.

    The debt level at which the Federal government operates can rise to a certain level of GDP. Above that number, a world-wide depression will occur which will make the Great Depression seem mild.

    The GDP runs at something over $14 trillion. Obama's proposed spending levels (between $3.5 and $4.0 trillion) are in excess of 25%. A lot of economists see that level of spending as the tipping point. That, coupled with mandated spending levels from Congress, and we may be past the point of no return.

    Dennis
     
  5. halfmile

    halfmile Well-Known Member

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    Constant deficits and half our income paying interest.

    Try that on the private level. The fuse is lit, the bomb will definitely explode.

    HM
     
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