Great piece of "chart junk". All causes listed do not total to 100% (the scale given). So what is the part of debt that declines so dramatically from 2007 onwards? Of course there is no link back to the source and I didn't dig enough at CPPB to find it. Apparently neither did M, so perhaps he picked it off TPM or some such.
However, let us consider that M has changed his mind and now agrees that debt does matter, as per Samuelson or Ferguson. It is then worth understanding what causes debt to blossom so dramatically from 2009-19. I wonder if that is a conversation he really chooses to have?
Debt is meaningless and we'll never have to pay it back. That's what I've learned here.
Another sad distortion of truth. If you'd like to have an honest discussion about debt and deficits, which would include historical facts and figures, I'm for it. Continue with this silliness and it's not happening.
Please tell us then, Santa. None of us are as smart as you apparently.
I say that on May 15, 2010, your host said, "We could run deficits for 1000 years but if we are not perceived as a risk and our credit rating remains high, we will keep chugging right along and not "go broke."
Funny... one year later here we sit with China talking about dropping the dollar, the USA credit rating threatened, and for some reason public opinion against the debt seems to have come from nowhere.
Life is funny like that.
But anyway, you were saying something Santa? Feel free to add anything. I'm only here to win the argument, and I'd hate to win by default just because you couldn't think of an intelligent response.
That quote was meant to prove a larger point about credit which was absolutely accurate. And if you look at the historical tables that Mark continually provides which no one looks at you will see that we have always had debt and not paid it back. That's the very nature of credit.
The deficit is another matter entirely. Recall that Clinton left office with a surplus. Tax cuts, unfunded wars, and Medicare D are why that was all erased. Bush bailed on the tab and left Obama to sort out the mess. GOP policies are the main reason we are having problems today. How about admitting that and then realizing that Obama has done the best he could have done given what he was left with in 2009? What would you have done differently?
Well, that's pretty much it, Santa. I wonder if you guys think there will be some magic day in which the United States will no longer need credit and will be debt free having paid back all that is owed. That's not how it works and you guys know it. Again, cease the childish dishonesty and the obsession with me and perhaps we can have an adult discussion. Continue to behave the way you are and have steroid rage about spending and you can pretty much forget it.
How long can we blame Bush for economic problems? 5 years? 20 years? As long as you need to in order to win arguments on blogs?
Santa just said that GOP policies are the main reason we are having problems today. BUT, markadelphia also said that Obama has stabilized the economy. Does Obama only get credit from you all for the good economic news while you conveniently shift blame to Bush when you feel like it?
Can you really blame the GOP for the economy while ON THE EXACT SAME DAY say that Obama has stabilized the economy?
Anytime you want to hold up your own end of that. A good start would be to stop stuffing your fingers in your ears and going "lalalala I can't hear you".
Address questions that are asked looking for clarification and ignore those intended solely as snark - I assume you are capable of distinguishing those, but I may be mistaken. Admit your mistakes when you make them, not after 30 or 40 comments of denial and goal-post moving.
Otherwise, you aren't any different from the pathetic slugs santa, sasquatch, daniel, et al. Not one of them does anything but mindless cheerleading for Team Blue. Which is funny because there really isn't a cheer squad for Team Red here; most of those critical of YOU are also critical of THEM.
Thanks for the clarification Santa. Anonymous beat me to it - your idea of credit is to never have it fully paid off?
Rld raised a good point too - one of you has blamed GOP policies for the current state of the economy on the same day that someone else has credited Obamas policies for the state of the economy. Doesn't sound very "adult" like to have 2 different stories about the same thing. Time to get them straight.
The more appropriate question is how long can you ignore that his policies were the chief cause of it. Essentially, Obama wouldn't have done the things he did if Bush hadn't screwed everything up to begin with. Of course, one can also lay the blame at President Clinton and his team for the financial sector shenanigans as well but we are talking about debt and that's on Bush and the GOP Congress.
Obviously, you aren't getting my point regarding stabilizing the economy and the cause of our debt. Since it isn't jet black and pure white, it's not surprising that you don't get it. I'm not going to waste my time explaining it since I know where it will go.
do you have a large credit-card debt, Santa
There's quite a bit of difference between credit card debt and government debt. This is a fine example of childish dishonesty. Comparing a consumer credit card to the federal government is infantile.
The United States had a debt of 34 percent of GDP in 1792. Over the years it has gotten as low as 0 and as high as 121 percent. From 1837 to present we have always had debt and, technically, we have not "paid it all back." Are we still here? During the time period from 1835 to present, did we not build ourselves into an economic juggernaut? As long as we continue to make our interest payments and have the credit rating we have, this can continue as long as..well...who knows how long our earth will be around? Something tells me that the way we look at economics might be different in 300 years.
The concern is that percentage being too high to GDP. We've certainly gone higher and that was when we weren't the only power in the world as we are now.
>Comparing a consumer credit card to the federal government is infantile.
Out of curiosity, why? Sure, a sovereign can issue currency and inflate away a debt, which a consumer can't do, but that doesn't mean it's a good idea for the sovereign to do that. Consumers, as well, are quite capable of rolling over debt for as long as they live. At the end of the day, both federal and consumer debt have the same general consequences - you must sacrifice some of your current spending priorities in order to maintain creditworthiness (interest payments) and running a constant debt generally impairs your ability to respond to a situation where you really need credit right now, such as a war.
As debt increases, at some point, creditors will decide that a consumer is no longer a good risk. Why would creditors not make the same determination about the US government? Do you think the rules are really that different?
Comparing a consumer credit card to the federal government is infantile.
Oh then please explain the great difference in debt, between any private entity (consumer or business) and govt (at various levels). Is there one that is fundamentally predicated on never being repaid? Obviously I must be missing some fundamental aspect about debt - and I don't wish to be uneducated.
Well, for one thing, the interest rates are drastically different. One is public entity, the other a private one. The government is not an individual. The power of the Constitution gives the government the power to borrow on the credit of the United States. A person has no such power.
This all goes back to the childish baloney which goes something like..."if the government only balanced its checkbook like I do..." Last time I checked, I didn't have to write an aid check out of my private bank account to Pakistan in the hopes of assisting them in protecting their nuclear weapons from Al Qaeda. In other words, the complexities of government spending are a tad more intricate then a home credit card.
creditors will decide that a consumer is no longer a good risk. Why would creditors not make the same determination about the US government? Do you think the rules are really that different?
Well, did they in 1946 when our debt was 120 percent of GDP? And, yes, the rules are different because of we are the number one economy in the world. Currently we have a 14 trillion dollar economy-that's roughly the same as the next four countries COMBINED! (Japan, China, Germany, France). We are the lynch pin the world economy. If we go, everyone goes. You are actually right about creditors, though. Moody's just announced today that if the US doesn't raise its debt ceiling, they will downgrade us. So, correct but for a different reason.
That's why this whole BS over the debt ceiling is ridiculous. People who don't want it raised have no earthly idea of the consequences of their desires. Of course, these are the same people who have been wrong about nearly everything so it's no real surprise there.
>Well, for one thing, the interest rates are drastically different.
Huh? What does that have to do with anything? Interest rates are generally driven by a creditors perception of how good a risk an entity is. This is true for consumers, and it is true for governments. You'll also notice that among consumers, interest rates vary quite a bit based on credit risk as well.
>The government is not an individual. The power of the Constitution gives the government the power to borrow on the credit of the United States
So? Corporations are not individuals either, and yet corporations borrow on the creditworthiness of the corporation itself as a separate entity, not on the sum of the creditworthiness of the individuals working or even leading the corporation. Similarly, the government borrows on the creditworthiness of the entity known as the government. None of this is materially different than an individual credit card.
>Well, did they in 1946 when our debt was 120 percent of GDP?
No, should they have? I wasn't aware that 100% of GDP, or tax income, or anything is some kind of magical number. Lenders certainly let consumers borrow much more than their income.
>And, yes, the rules are different because of we are the number one economy in the world. Currently we have a 14 trillion dollar economy-that's roughly the same as the next four countries COMBINED! (Japan, China, Germany, France). We are the lynch pin the world economy.
All any of that means is that creditors believe that the US government is a better risk than most. In the event that creditors no longer believe that, the consequences will be exactly the same as for individuals. Creditors either won't lend to us, or will demand higher interest rates to offset the risk they perceive. Again, that is absolutely identical to what would happen for an individual, a corporation, or what have you.
Call me crazy, but I'm not particularly interested in playing chicken with creditors to see how far we can go before creditors decide that it isn't a good idea to lend to the US government. Creditors can see the huge unfunded liabilities of entitlements just as well as we can.
>People who don't want it raised have no earthly idea of the consequences of their desires.
It might also be that people don't want it to be raised without some kind of indication that Washington can be trusted with the credit card. And of course they can't. Politicians spend money to get votes. It's what they do. The only thing that would constrain them is forcing them not to spend, such as by a law. Strangely, this seems to be exactly the kind of sentiment the GOP is trying to ride.
You mention that it can borrow on the credit of the US government, conveniently ignoring the point of the question, which is how the debt affects the credit worthiness of same.
Well, for one thing, the interest rates are drastically different. One is public entity, the other a private one. The government is not an individual. The power of the Constitution gives the government the power to borrow on the credit of the United States. A person has no such power.
Good god - seriously? THAT is your explanation?
This all goes back to the childish baloney
Every entity that spends must get the funds to spend from somewhere. Every entity that borrows must have a source of funds to repay. Doesn't matter if the entity is govt, a business or an individual - and your explanation of the "difference" is the very fucking definition of childish: it is different because I said so.
In the event that creditors no longer believe that,
Two things to point out here. First, they may not believe that if we don't raise the debt ceiling. Two, these same rating agencies really should be called into question considering how they rated the top financial shops even a month before the collapse in 2008, right?
which is how the debt affects the credit worthiness of same
But Hap just told me that the debt numbers I listed aren't important. But I guess I'll ask you-given where we were in 1946, were we a credit worthy country? How about now as the world's number one economy?
Every entity that borrows must have a source of funds to repay.
Well, it's funny that you mention that, juris, because one side of the spectrum seems to be working very hard to take that funding source away. Seems awfully counterproductive to me but that just may be the point.
Sorry M but I'm not playing your childish game. You don't get to engage with me until you admit you were blowing smoke up everyone's ass with that ridiculous comment on how govt debt is different from all other debt.
Juris, the only infantile behavior here is the inability to recognize the difference between the United States government (the #1 economy in the world) and Jane Smith with her 300 dollar balance on her Capital One card. If you think that each debt is measured, defined, and categorized in the same way...well...that's childish dishonesty.
does the definition of credit hinge on never paying it back?
Let me ask you something, anonymous. Did the US government buy a 30 year mortgage like most people do and have a definite timetable in which they are going to pay it back? No. That's what people do and there's a big difference right there between an individual and the government. We are always going to have debt and that means money not paid back. We have been that way since 1836. In fact, we have only had two years in country's history in which we had no debt (1835, 1836). Otherwise, it has never been paid back.
And we still have the highest credit rating because of the perception that we could given our revenue but we actually won't.
Did the US government buy a 30 year mortgage like most people do and have a definite timetable in which they are going to pay it back?
Yes. The US issues (or at least used to issue) debt with maturities of 5, 10 and 30 years. Each of those instruments of debt (like a mortgage) was paid off. That the US issues NEW debt is irrelevant to the fact that it paid off the existing debt. Rolling over debt is still being in debt. Every dollar the US govt has ever borrowed has been repaid, in full. You really don't understand that? You think the US govt would be considered the best credit risk in the world with a track record of NOT paying out when due?
Nor for that matter have I ever paid off a 30 year mortgage - I have sold or refi'ed long before I paid the thing off. That doesn't change in the slightest that the debt is due to be paid in full by maturity.
That you insist these are fundamentally different is stupid (to be charitable) or simply dishonest.
the difference between the United States government (the #1 economy in the world) and Jane Smith with her 300 dollar balance on her Capital One card.
The difference between Jane's $300 card, Scrooge McDucks $1 million limit and the US Govt's multi-trillion limit is the difference in their relative assets, liabilities, income and repayment histories.
You seem to think that the US economy allows an unlimited amount of debt. The economy is vast, but so is the current level of debt. Jane can hit her limit just like Scrooge can and just like the US Govt can - they are simply at different levels.
First, they may not believe that if we don't raise the debt ceiling
Are you seriously suggesting that in order to keep our favorable credit rating we have to raise the amount of debt we have? That makes sense in a way that only you could propose.
First, they may not believe that if we don't raise the debt ceiling...
But merely "raising the debt ceiling" isn't what Democrats are demanding, is it? Democrats are demanding that we raise the debt ceiling without making significant cuts in spending.
You're leaving out fully half of the point being debated. Isn't that what you label as "childish dishonesty"?
That's not going to happen. Significant cuts are going to be made but you bring up an interesting point that I have been mulling over lately.
What if you are wrong about spending? Many economists (including Krugman) say that it was too little spending, as it was with FDR, that has caused the recovery to be soft. I don't agree with this assessment but what if he is right? What if the solution is to spend more money? Would you accept that?
The other problem in this equation is taxes. Cutting spending alone won't do it. The revenue issue has to be addressed as well.
Funny how they weren't even being contemplated until the House changed hands, and at that, it has taken a "Tea Party" insurgency within the Republican ranks to make that much happen. Most "cuts" are still we will spend less than we originally planned but more than we spent today.
Many economists {mostly Krugman)
FTFY.
I don't agree with this assessment but what if he is right?
I've linked at least two articles (and you yourself freely acknowledge) that the recovery is not stalled by insufficient liquidity. Businesses have cash, but they don't have confidence to invest (in new equipment or people). Is your answer to that to continue to expand govt?
Oh, and I notice you don't seem to have anything more to say about debt.
What if you are wrong about spending? Many economists (including Krugman) say that it was too little spending, as it was with FDR, that has caused the recovery to be soft. I don't agree with this assessment but what if he is right? What if the solution is to spend more money? Would you accept that?
What if Thomas Sowell is right? I'm not sure, but I suspect there are at least as many economists who agree with Sowell as agree with Krugman, and Sowell doesn't have a fiasco like Enron on his record. Would you accept that renowned economists like Sowell and Walter Williams are right, or are you too racist for that?
Well, if it makes any difference, I don't think either one of them is accurate. More spending certainly isn't the answer. And Sowell suffers from the same utopian fantasies that socialists suffer from. I will agree that both men are brilliant and do know more than I do regarding matters of economics. Of course, both lean on the crutch of ideology and have their own emotional biases so that does even things out a little more.
In some ways, I liken current economic views to the rigidity of the realism and idealism (yin and yang) tandem of foreign policy. Both had very strict ideas on how to confront the Soviets. Both were unwavering in their approach. Both completely failed to predict the end of the Cold War and Gorbachev's rapprochement. What we need now is constructivist thinking in terms of our economy. I think it is more likely that this person will come from the left, not the right, but I could be wrong.
43 comments:
Great piece of "chart junk". All causes listed do not total to 100% (the scale given). So what is the part of debt that declines so dramatically from 2007 onwards? Of course there is no link back to the source and I didn't dig enough at CPPB to find it. Apparently neither did M, so perhaps he picked it off TPM or some such.
However, let us consider that M has changed his mind and now agrees that debt does matter, as per Samuelson or Ferguson. It is then worth understanding what causes debt to blossom so dramatically from 2009-19. I wonder if that is a conversation he really chooses to have?
Debt is meaningless and we'll never have to pay it back. That's what I've learned here.
http://www.blogger.com/comment.g?blogID=10123622&postID=8394124403370031256&isPopup=true
Tax cuts cannot cause debt as they are an income item not a 'spending' item.
Debt is meaningless and we'll never have to pay it back. That's what I've learned here.
Another sad distortion of truth. If you'd like to have an honest discussion about debt and deficits, which would include historical facts and figures, I'm for it. Continue with this silliness and it's not happening.
Continue with this silliness and it's not happening.
Yet you continue with this silliness...
Nothing is silly if M just ignores that he said it. We are then being childish and dishonest when we remind him of what he actually said.
And up is down... sometimes... when it is convenient.
If you jump the link, it looks like you've already had the debt discussion.
Didn't you say what you said?
Really not what he said, folks. Think for a minute. I know it's hard.
Please tell us then, Santa. None of us are as smart as you apparently.
I say that on May 15, 2010, your host said, "We could run deficits for 1000 years but if we are not perceived as a risk and our credit rating remains high, we will keep chugging right along and not "go broke."
Funny... one year later here we sit with China talking about dropping the dollar, the USA credit rating threatened, and for some reason public opinion against the debt seems to have come from nowhere.
Life is funny like that.
But anyway, you were saying something Santa? Feel free to add anything. I'm only here to win the argument, and I'd hate to win by default just because you couldn't think of an intelligent response.
Santa will respond, but his response will sure as hell ignore any talk of deficits.
That quote was meant to prove a larger point about credit which was absolutely accurate. And if you look at the historical tables that Mark continually provides which no one looks at you will see that we have always had debt and not paid it back. That's the very nature of credit.
The deficit is another matter entirely. Recall that Clinton left office with a surplus. Tax cuts, unfunded wars, and Medicare D are why that was all erased. Bush bailed on the tab and left Obama to sort out the mess. GOP policies are the main reason we are having problems today. How about admitting that and then realizing that Obama has done the best he could have done given what he was left with in 2009? What would you have done differently?
Well, that's pretty much it, Santa. I wonder if you guys think there will be some magic day in which the United States will no longer need credit and will be debt free having paid back all that is owed. That's not how it works and you guys know it. Again, cease the childish dishonesty and the obsession with me and perhaps we can have an adult discussion. Continue to behave the way you are and have steroid rage about spending and you can pretty much forget it.
How long can we blame Bush for economic problems? 5 years? 20 years? As long as you need to in order to win arguments on blogs?
Santa just said that GOP policies are the main reason we are having problems today. BUT, markadelphia also said that Obama has stabilized the economy. Does Obama only get credit from you all for the good economic news while you conveniently shift blame to Bush when you feel like it?
Can you really blame the GOP for the economy while ON THE EXACT SAME DAY say that Obama has stabilized the economy?
Did you just say that it's the very nature of credit to never pay it back?
I think I see where we disagree.
Just out of curiosity, do you have a large credit-card debt, Santa?
I blame it all on the stupid right wing policies of Millard Fillmore.
perhaps we can have an adult discussion
Anytime you want to hold up your own end of that. A good start would be to stop stuffing your fingers in your ears and going "lalalala I can't hear you".
Address questions that are asked looking for clarification and ignore those intended solely as snark - I assume you are capable of distinguishing those, but I may be mistaken. Admit your mistakes when you make them, not after 30 or 40 comments of denial and goal-post moving.
Otherwise, you aren't any different from the pathetic slugs santa, sasquatch, daniel, et al. Not one of them does anything but mindless cheerleading for Team Blue. Which is funny because there really isn't a cheer squad for Team Red here; most of those critical of YOU are also critical of THEM.
Thanks for the clarification Santa. Anonymous beat me to it - your idea of credit is to never have it fully paid off?
Rld raised a good point too - one of you has blamed GOP policies for the current state of the economy on the same day that someone else has credited Obamas policies for the state of the economy. Doesn't sound very "adult" like to have 2 different stories about the same thing. Time to get them straight.
Indeed Last in Line. Are we supposed to blame Bush or credit Obama?
How long can we blame Bush for economic problems?
The more appropriate question is how long can you ignore that his policies were the chief cause of it. Essentially, Obama wouldn't have done the things he did if Bush hadn't screwed everything up to begin with. Of course, one can also lay the blame at President Clinton and his team for the financial sector shenanigans as well but we are talking about debt and that's on Bush and the GOP Congress.
Obviously, you aren't getting my point regarding stabilizing the economy and the cause of our debt. Since it isn't jet black and pure white, it's not surprising that you don't get it. I'm not going to waste my time explaining it since I know where it will go.
do you have a large credit-card debt, Santa
There's quite a bit of difference between credit card debt and government debt. This is a fine example of childish dishonesty. Comparing a consumer credit card to the federal government is infantile.
The United States had a debt of 34 percent of GDP in 1792. Over the years it has gotten as low as 0 and as high as 121 percent. From 1837 to present we have always had debt and, technically, we have not "paid it all back." Are we still here? During the time period from 1835 to present, did we not build ourselves into an economic juggernaut? As long as we continue to make our interest payments and have the credit rating we have, this can continue as long as..well...who knows how long our earth will be around? Something tells me that the way we look at economics might be different in 300 years.
The concern is that percentage being too high to GDP. We've certainly gone higher and that was when we weren't the only power in the world as we are now.
>Comparing a consumer credit card to the federal government is infantile.
Out of curiosity, why? Sure, a sovereign can issue currency and inflate away a debt, which a consumer can't do, but that doesn't mean it's a good idea for the sovereign to do that. Consumers, as well, are quite capable of rolling over debt for as long as they live. At the end of the day, both federal and consumer debt have the same general consequences - you must sacrifice some of your current spending priorities in order to maintain creditworthiness (interest payments) and running a constant debt generally impairs your ability to respond to a situation where you really need credit right now, such as a war.
As debt increases, at some point, creditors will decide that a consumer is no longer a good risk. Why would creditors not make the same determination about the US government? Do you think the rules are really that different?
Comparing a consumer credit card to the federal government is infantile.
Oh then please explain the great difference in debt, between any private entity (consumer or business) and govt (at various levels). Is there one that is fundamentally predicated on never being repaid? Obviously I must be missing some fundamental aspect about debt - and I don't wish to be uneducated.
Well, for one thing, the interest rates are drastically different. One is public entity, the other a private one. The government is not an individual. The power of the Constitution gives the government the power to borrow on the credit of the United States. A person has no such power.
This all goes back to the childish baloney which goes something like..."if the government only balanced its checkbook like I do..." Last time I checked, I didn't have to write an aid check out of my private bank account to Pakistan in the hopes of assisting them in protecting their nuclear weapons from Al Qaeda. In other words, the complexities of government spending are a tad more intricate then a home credit card.
creditors will decide that a consumer is no longer a good risk. Why would creditors not make the same determination about the US government? Do you think the rules are really that different?
Well, did they in 1946 when our debt was 120 percent of GDP? And, yes, the rules are different because of we are the number one economy in the world. Currently we have a 14 trillion dollar economy-that's roughly the same as the next four countries COMBINED! (Japan, China, Germany, France). We are the lynch pin the world economy. If we go, everyone goes. You are actually right about creditors, though. Moody's just announced today that if the US doesn't raise its debt ceiling, they will downgrade us. So, correct but for a different reason.
That's why this whole BS over the debt ceiling is ridiculous. People who don't want it raised have no earthly idea of the consequences of their desires. Of course, these are the same people who have been wrong about nearly everything so it's no real surprise there.
>Well, for one thing, the interest rates are drastically different.
Huh? What does that have to do with anything? Interest rates are generally driven by a creditors perception of how good a risk an entity is. This is true for consumers, and it is true for governments. You'll also notice that among consumers, interest rates vary quite a bit based on credit risk as well.
>The government is not an individual. The power of the Constitution gives the government the power to borrow on the credit of the United States
So? Corporations are not individuals either, and yet corporations borrow on the creditworthiness of the corporation itself as a separate entity, not on the sum of the creditworthiness of the individuals working or even leading the corporation. Similarly, the government borrows on the creditworthiness of the entity known as the government. None of this is materially different than an individual credit card.
>Well, did they in 1946 when our debt was 120 percent of GDP?
No, should they have? I wasn't aware that 100% of GDP, or tax income, or anything is some kind of magical number. Lenders certainly let consumers borrow much more than their income.
>And, yes, the rules are different because of we are the number one economy in the world. Currently we have a 14 trillion dollar economy-that's roughly the same as the next four countries COMBINED! (Japan, China, Germany, France). We are the lynch pin the world economy.
All any of that means is that creditors believe that the US government is a better risk than most. In the event that creditors no longer believe that, the consequences will be exactly the same as for individuals. Creditors either won't lend to us, or will demand higher interest rates to offset the risk they perceive. Again, that is absolutely identical to what would happen for an individual, a corporation, or what have you.
Call me crazy, but I'm not particularly interested in playing chicken with creditors to see how far we can go before creditors decide that it isn't a good idea to lend to the US government. Creditors can see the huge unfunded liabilities of entitlements just as well as we can.
>People who don't want it raised have no earthly idea of the consequences of their desires.
It might also be that people don't want it to be raised without some kind of indication that Washington can be trusted with the credit card. And of course they can't. Politicians spend money to get votes. It's what they do. The only thing that would constrain them is forcing them not to spend, such as by a law. Strangely, this seems to be exactly the kind of sentiment the GOP is trying to ride.
Short form of Mark's response:
Because it's the government, that's why.
You mention that it can borrow on the credit of the US government, conveniently ignoring the point of the question, which is how the debt affects the credit worthiness of same.
Well, for one thing, the interest rates are drastically different. One is public entity, the other a private one. The government is not an individual. The power of the Constitution gives the government the power to borrow on the credit of the United States. A person has no such power.
Good god - seriously? THAT is your explanation?
This all goes back to the childish baloney
Every entity that spends must get the funds to spend from somewhere. Every entity that borrows must have a source of funds to repay. Doesn't matter if the entity is govt, a business or an individual - and your explanation of the "difference" is the very fucking definition of childish: it is different because I said so.
In the event that creditors no longer believe that,
Two things to point out here. First, they may not believe that if we don't raise the debt ceiling. Two, these same rating agencies really should be called into question considering how they rated the top financial shops even a month before the collapse in 2008, right?
which is how the debt affects the credit worthiness of same
But Hap just told me that the debt numbers I listed aren't important. But I guess I'll ask you-given where we were in 1946, were we a credit worthy country? How about now as the world's number one economy?
Every entity that borrows must have a source of funds to repay.
Well, it's funny that you mention that, juris, because one side of the spectrum seems to be working very hard to take that funding source away. Seems awfully counterproductive to me but that just may be the point.
Before we get too far away from the beginning of this childish dishonesty, does the definition of credit hinge on never paying it back?
I just want to start from a known premise.
Sorry M but I'm not playing your childish game. You don't get to engage with me until you admit you were blowing smoke up everyone's ass with that ridiculous comment on how govt debt is different from all other debt.
Juris, the only infantile behavior here is the inability to recognize the difference between the United States government (the #1 economy in the world) and Jane Smith with her 300 dollar balance on her Capital One card. If you think that each debt is measured, defined, and categorized in the same way...well...that's childish dishonesty.
does the definition of credit hinge on never paying it back?
Let me ask you something, anonymous. Did the US government buy a 30 year mortgage like most people do and have a definite timetable in which they are going to pay it back? No. That's what people do and there's a big difference right there between an individual and the government. We are always going to have debt and that means money not paid back. We have been that way since 1836. In fact, we have only had two years in country's history in which we had no debt (1835, 1836). Otherwise, it has never been paid back.
And we still have the highest credit rating because of the perception that we could given our revenue but we actually won't.
Did the US government buy a 30 year mortgage like most people do and have a definite timetable in which they are going to pay it back?
Yes. The US issues (or at least used to issue) debt with maturities of 5, 10 and 30 years. Each of those instruments of debt (like a mortgage) was paid off. That the US issues NEW debt is irrelevant to the fact that it paid off the existing debt. Rolling over debt is still being in debt. Every dollar the US govt has ever borrowed has been repaid, in full. You really don't understand that? You think the US govt would be considered the best credit risk in the world with a track record of NOT paying out when due?
Nor for that matter have I ever paid off a 30 year mortgage - I have sold or refi'ed long before I paid the thing off. That doesn't change in the slightest that the debt is due to be paid in full by maturity.
That you insist these are fundamentally different is stupid (to be charitable) or simply dishonest.
Childishly dishonest, JI. You forgot the childish part...
http://cnsnews.com/news/article/china-has-divested-97-percent-its-holdin
This can't be true can it?
Why didn't somebody warn us?!?!
the difference between the United States government (the #1 economy in the world) and Jane Smith with her 300 dollar balance on her Capital One card.
The difference between Jane's $300 card, Scrooge McDucks $1 million limit and the US Govt's multi-trillion limit is the difference in their relative assets, liabilities, income and repayment histories.
You seem to think that the US economy allows an unlimited amount of debt. The economy is vast, but so is the current level of debt. Jane can hit her limit just like Scrooge can and just like the US Govt can - they are simply at different levels.
First, they may not believe that if we don't raise the debt ceiling
Are you seriously suggesting that in order to keep our favorable credit rating we have to raise the amount of debt we have? That makes sense in a way that only you could propose.
Uh...do you pay attention at all to how the market, credit, the economy and ratings work at all?
http://online.wsj.com/article/SB10001424052702303745304576361931297371002.html
Part of me wants to try it your way, folks, so maybe reality will pierce your thick skulls. Of course, if it didn't after 2008, I doubt anything will.
First, they may not believe that if we don't raise the debt ceiling...
But merely "raising the debt ceiling" isn't what Democrats are demanding, is it? Democrats are demanding that we raise the debt ceiling without making significant cuts in spending.
You're leaving out fully half of the point being debated. Isn't that what you label as "childish dishonesty"?
That's not going to happen. Significant cuts are going to be made but you bring up an interesting point that I have been mulling over lately.
What if you are wrong about spending? Many economists (including Krugman) say that it was too little spending, as it was with FDR, that has caused the recovery to be soft. I don't agree with this assessment but what if he is right? What if the solution is to spend more money? Would you accept that?
The other problem in this equation is taxes. Cutting spending alone won't do it. The revenue issue has to be addressed as well.
Significant cuts are going to be made
Funny how they weren't even being contemplated until the House changed hands, and at that, it has taken a "Tea Party" insurgency within the Republican ranks to make that much happen. Most "cuts" are still we will spend less than we originally planned but more than we spent today.
Many economists { mostly Krugman)
FTFY.
I don't agree with this assessment but what if he is right?
I've linked at least two articles (and you yourself freely acknowledge) that the recovery is not stalled by insufficient liquidity. Businesses have cash, but they don't have confidence to invest (in new equipment or people). Is your answer to that to continue to expand govt?
Oh, and I notice you don't seem to have anything more to say about debt.
Significant cuts are going to be made...
And apparently it doesn't bother you that the Democrats to this day are fighting tooth and nail to keep that from happening.
Mark, I jumped your WSJ link, and can't figure out what the heck you linked it for.
Which part of your opinion is supported by the article?
What if you are wrong about spending? Many economists (including Krugman) say that it was too little spending, as it was with FDR, that has caused the recovery to be soft. I don't agree with this assessment but what if he is right? What if the solution is to spend more money? Would you accept that?
What if Thomas Sowell is right? I'm not sure, but I suspect there are at least as many economists who agree with Sowell as agree with Krugman, and Sowell doesn't have a fiasco like Enron on his record. Would you accept that renowned economists like Sowell and Walter Williams are right, or are you too racist for that?
Well, if it makes any difference, I don't think either one of them is accurate. More spending certainly isn't the answer. And Sowell suffers from the same utopian fantasies that socialists suffer from. I will agree that both men are brilliant and do know more than I do regarding matters of economics. Of course, both lean on the crutch of ideology and have their own emotional biases so that does even things out a little more.
In some ways, I liken current economic views to the rigidity of the realism and idealism (yin and yang) tandem of foreign policy. Both had very strict ideas on how to confront the Soviets. Both were unwavering in their approach. Both completely failed to predict the end of the Cold War and Gorbachev's rapprochement. What we need now is constructivist thinking in terms of our economy. I think it is more likely that this person will come from the left, not the right, but I could be wrong.
Mark you're a maroon. You completely misunderstand the announcement by Moody's. Willful? Ignorant? Reading comprehension? Or blinded by your dogma?
So do we still have the same definition of debt as we did when this thread started?
We still don't have to ever pay it back?
Just trying to stay on topic.
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