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Forum Post: How does it happen?

Posted 2 years ago on Jan. 17, 2012, 11:46 p.m. EST by kingscrossection (1203)
This content is user submitted and not an official statement

I'm just wondering how it happens that for years now the government has been spending more than it is taking in. Something would be done about it right? If you have anything to say about bought politicians and overseas employment then I would like numbers on exactly how these have effected the situation here.

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50 Comments


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[-] 1 points by Rico (3027) 2 years ago

When a currency is local, the supply is driven by the local GDP. When a currency is the global reserve currency, the supply is driven by global GDP. Huge expansion of the global economy demands huge increases in the number of dollars, and they are created via issuance of debt. All that 'new' money has to be injected somewhere and we do it through federal borrowing. All's well as long as we remain the reserve currency, but there's already a move underway to transition off the dollar (IMF SDRs most likely). As soon as the world is off the dollar, we're going to suffer austerity like Greece.

[-] 1 points by kingscrossection (1203) 2 years ago

Is the reason for the switch the debt we are in?

[-] 1 points by Rico (3027) 2 years ago

The switch is being pushed primarily by the emerging economies and China in particular (see http://online.wsj.com/article/SB123780272456212885.html and http://www.economist.com/node/21528988 ). The IMF's Special Drawing Rights (SDRs) comprised of a basket of currencies, virtually indistinguishable from the 'Bancor' advocated by Keynes at Bretton Woods (and overruled by the US), is the heads-on favorite. Every problem Keynes predicted with a single nation providing the reserve currency has proven true ( see http://en.wikipedia.org/wiki/Triffin_dilemma ).

The reason for the switch is summarized at http://www.economist.com/node/21528988 . I think the primary concern is the extent to which we control the global economy. China in particular is upset because we're monetizing our debt via Quantitative Easing. On the other hand, they don't seem to want to acknowledge that all the money they receive for their exports had to come from somewhere so it was going to be printed in the first place. Now they're upset that the debt isn't holding it's value, but that's understandable considering the value produced in our economy as a result of their exports was never on par with the exports in the first place. We "jump-started" them by spending money we borrowed from them, but it's now time for them to develop sustainable domestic demand.

[-] 1 points by beautifulworld (21423) 2 years ago

How about end the Bush tax cuts?

Here's a chart that shows that if the Bush tax cuts never happened, the debt would be at a sustainable level. Eliminate the wars, and we'd probably have a surplus....

http://thinkprogress.org/economy/2011/06/07/238602/chart-debt-without-bush-tax-cuts/?mobile=nc

[-] 1 points by randonhuman (2) 2 years ago

Ahh come on now.. surely you know that the good ole U.S. of A (holes) has the pervy to print whatever sum of money it thinks the world will not bilk at... meaning, when the WORLD says you all bat-shit crazy for printing this money and we're not gonna take it, then it stops.

Yes, sadly, that truly is when it stops.

...but the world is holding LOADS of U.S.A(hole) dollars, so, it makes for a VERY bitter pill to swallow.

You asked, I told. There is more, there is always more with the creepy-wrong ways of impossibly arrogant and yet still absurdly stupid, incompetent men. Men who follow their hearts, when their heart are consumed with nothing but LOVE OF MONEY.

Open your eyes and ears... sort it out for yourself, otherwise you'll never believe how wrong and creepy this world of ours truly is.

There is truth.

There is good.

There is justice.

It lives in men's hearts and minds, if not in their cultures of this age. These things always exist, but need SO much effort to prevail.

KNOW THEM. BE THEM. LIVE THEM. LOVE THEM, for they are worthy of LOVE.

Make this a better world, not perfect, just BETTER.

You asked a good and true question.

I'm sorry if I didn't answer it in the way you hoped.

This world is a mess and MUCH HARD work is needed to make it right, good and true. Much work for me, you and not just 99%, but 100%--of us.... ALL OF US. (it's that bad, we need ALL OF US!)

[-] 1 points by kingscrossection (1203) 2 years ago

Either you're not a citizen and you don't like the country, which is fine with me or you live here and really hate the country either way I don't see why you care much and I can't say I thoroughly enjoy the ass hole remark at all. So if you don't mind, be useful or get out.

[-] 1 points by Seekyr (-1) 2 years ago

The government spends more than it takes in because it can. Or maybe because they have to. Perhaps they'd raise taxes if it weren't for the fit people throw when they have to pay money, but they still want to buy their big fancy armies and puppeteer countries with oil. I don't know, those are the best conspiracy theories I can come up with. Or if we go down to basics, its all Obama's fault, right? If not him, then Bush, or [insert other president you hate here].

[-] 1 points by kingscrossection (1203) 2 years ago

I don't exactly think its fair to blame any one president. What I mean by that is that the problems started somewhere but if the president after the original didn't fix the problem then it would continue to snowball and eventually run out of control. You can say that Obama promised change but never delivered but you can't really blame him for the problem when he wasn;t in office when it started, And don't get me wrong because I have an incredible dislike for Obama but I don't think its fair to pin it on one person unless you blame it on the original guy and I'm not even sure how you would find that out.

[-] 1 points by Thrasymaque (-2138) 2 years ago

I agree. Form shapes content. It doesn't matter who the president is (content), if the political system of America which is currently a republic democratic with flawed laws that permit corruption (form) is not fixed, the problem will never be resolved.

[-] 1 points by kingscrossection (1203) 2 years ago

I completely agree with you. Also, thank you for phrasing it better.

[-] 1 points by Seekyr (-1) 2 years ago

Oh no, you definitely can't blame it on one person. I was just trying to give you conspiracy theories because I don't have much of a legitimate answer. It was meant to be sarcasm, sorry (: I totally agree with you.

[-] 1 points by kingscrossection (1203) 2 years ago

Oh I totally understood and it was fine with me. It was pretty good for a laugh. I just wanted to put that little bit out there because it seems like a lot of people want to put the blame on one person or one group of people. I'm not saying that there may not be some people causing problems but I don't think it is who everyone is focusing on.

[-] 1 points by kingscrossection (1203) 2 years ago

Come on give me something, anything. Its the damned republicans. Its the prissy democrats. I don't know. Aliens force the U.S. at laserpoint to be indebted to China.

[-] 0 points by occupypuppies (71) 2 years ago

I have heard that NO ONE UNDERSTANDS IT. it's just a mysterious load of bull shit.

[-] 1 points by kingscrossection (1203) 2 years ago

Well that's rather interesting. Well I have a possible reason for it but I'm not sure at all if it is right. I think its pretty obvious that the government spends much more than it takes in from taxes.

[-] 0 points by April (3196) 2 years ago

It's the global economy and unfair trade policies. Coupled with excessive greed, tax policies that favor the rich and the Repelican lie that the wealthy are job creators. I don't have the numbers. I suggest you talk to ModestCapitalist for that.

[-] 1 points by Rico (3027) 2 years ago

OMG. Et Tu ? The 'repelican' is so unclever it's silly.

I can't say for sure who the job creators are, but they certainly aren't the poor.

[-] 1 points by April (3196) 2 years ago

And look what else. Did you see this.

“I would like to get rid of the campaign finance laws that were put in place,” Romney said at a debate Monday night in Myrtle Beach, S.C. “ . . . Let people make contributions they want to make to campaigns, let campaigns then take responsibility for their own words and not have this strange situation we have.”

He wasn't kidding when he said corporations are people. And he wasn't talking about for contract law purposes.

I think he got big applause from audience when he said this. I need to find that clip. I saw a few other clips and the audience was cheering and booing at the most inappropriate comments! The Republican candidates are naturally playing to their audience. Who are these people?! oh wait, they're my family. Sigh.

http://www.washingtonpost.com/politics/the-influence-industry-activist-groups-want-to-undo-ruling-that-led-to-super-pac-frenzy/2012/01/18/gIQADUCR9P_story.html

[-] 1 points by April (3196) 2 years ago

In my snarky moments, yes, me too. You don't understand. My whole family is Republican. And most of my friends too. I'm like a minnow in a sea of sharks! Nobody listens to me. Why do you think I come here. I'm surprised they even talk to me at all. Because I voted for Obama and believe he was born in Hawaii. I was almost disinherited for that! I still might be. My own father thinks I'm an anarchist now. I've got nothing! Give me this much.

And I think innovation creates jobs. Yes, investors with money are necessary. Consumer confidence can create jobs too I think. But nobody listens to me. : )

[-] 1 points by Rico (3027) 2 years ago

I listen to you !

I wasn't commenting on the goodness or badness of the republicans, I was commenting on the stupid "repelican" spelling. How exactly does one re-pelican something ? What's "repelican" supposed to suggest ? Without some clever meaning, it's basically just a misspelling. Given the consistent "no" votes by the republican house, some might say they're "republi-cant's." Given their opposition to public funding of virtually any program, one could say they're "no-publicans."

Innovation creates jobs, but it requires capital as well. Consider for example, the smart phone and tablet PC's; these are the result of extreme reduction in power consumption which derives from our ability to keep shrinking CMOS semiconductor processes. Consider the next generation 22 nano-meter (nm) fab Intel is bringing online. According to http://www.conceivablytech.com/513/science-research/intel-confirms-production-of-22nm-processors-for-late-2011 , deploying this new process costs $2.7 to $5 billion.

[-] 1 points by April (3196) 2 years ago

Awww. Thank you for listening to me.

Repelican means a pelican that repels you. Thras says its very kindergarten. I only do this out of frustration sometimes for attention. : ) Republicants is good too! How about Repugnants?!

Good article. Even better that they will be making in the US.

Innovators need capital. And capital needs innovators. Otherwise, the capitalists create bubbles and make stuff up like derivatives and act like crazed casino operators on steriods (no offense to casino operators).

I just think it is, at best, misleading to say that rich people create jobs. That just makes me crazy. I think it is the lie created by the Repelicans as an excuse to cater to the interests of the wealthy to keep tax rates low. Like Mitt Romney's effective rate of 15% which he finally admitted too. Though he still has not agreed to release his returns, which means it's probably even lower.

Would investors really stop investing if their effective rate went up to say 17%? Would there really not be enough money to fund the innovators? Or would they just have to work a little harder to choose what to fund?

Is the government really that bad at allocating capital? Worse than the crazed casino operators on Wall Street? I think government should be making more investments. What about NASA in the beginning, the innovation there created lots of new technology. I do not know. At the very least government should be investing more in education which would spur more innovation.

And I want the Repugnants to stop using the misleading statement that the wealthy are job creators. Or, I want people to stop believing it.

[-] 1 points by Thrasymaque (-2138) 2 years ago

Ya, "repelican" is an ultra lame neologism. Is it supposed to refer to a repellant, a pelican, or some other silly thing? If it's just about using kindergarten intelligence to throw ad homimen at the republicans, I would just call them big potatoes. At least it adds a type of dadaist humor.

Bush is just a big potato.

Alternatively, perhaps an anagram could be used? Can burp lie?

[-] 1 points by April (3196) 2 years ago

A Repelican is a pelican that repels you of course!! lol. Not a repellant, like a bug spray. That might not be a bad idea though. And yes, it's very kindergarten. So now, I'm a kindergartner that needs therapy. Great. lol.

Big potatoes?! lol. Potatoes are too good for them.

I like your anagram! Crab Lineup. I cheated, but I think this kind of fits!

[-] 0 points by Thrasymaque (-2138) 2 years ago

Crab Lineup is good too! I had seen it on the site I used to generate anagrams. I guess you went there too. Lol!

[-] 0 points by Thrasymaque (-2138) 2 years ago

Lol! That must make for interesting discussions at the dinner table.

My own father thinks I'm an anarchist now.

[-] 1 points by April (3196) 2 years ago

Exactly! You have no idea. I can't even talk about it anymore because I'm afraid they might try to have me committed or something. They treat me like some poor little sick animal that has to be pitied. Because I'm a Democrat! And then they patronize me and talk about me like I'm not even here. I might need therapy for this. lol

[-] 1 points by kingscrossection (1203) 2 years ago

Alright I can see it but I'm just trying to figure out how the fact that the debt is so well known and how if it was the rich causing it, then why would the rich allow the government to get so much into debt?

[-] 1 points by BradB (2693) from Washington, DC 2 years ago

hmmmm.... you guy's always talk too generally.... the "rich" are not causing the problems.... "Some of the rich" are causing the problems thru theft and fraud... and getting away with it....

the government is going into debt... in an effort to expand world-wide currency....

which would not be bad... except ... "Some of the rich" are using it as an opportunity to kill the middle class.... and they are doing a pretty good job at it....

which in turn will cause the mid sized rich to lose their worth... all giving the top dogs no competition....

they are creating & promoting a false fear among the people... such as .... the opponents want to socialize America and kill Capitalism...etc... all gaining a division among the people and a diversion to keep us from seeing what they are doing...

all right out of hermann goering's play book...

[-] 1 points by kingscrossection (1203) 2 years ago

I'll grant you that some of the rich are bad for the economy but is there such a thing as too rich as long as you made that money without the use of thievery or fraud?

[-] 1 points by BradB (2693) from Washington, DC 2 years ago

I like the rich... if they are honest and use their resources to better the world... many do.... and the more of them the better ....

I just also want to see a world where "zero" people live in poverty and starvation ... and I know we can make that happen ....

[-] 1 points by kingscrossection (1203) 2 years ago

What is your plan for it?

[-] 1 points by BradB (2693) from Washington, DC 2 years ago

not 100% sure yet...

but I do believe that now as we are including more people into the economic game.... thru not only wealth distribution but thru increase of population... that we do need to inject more currency into circulation...

I do not believe that there is one perfect answer... I believe we need many many answers... here's a start of one imo...

http://occupywallst.org/forum/an-occupation-on-the-edge-of-prosperity-draft/#comment-589115

[-] 2 points by kingscrossection (1203) 2 years ago

Wow that was actually incredible. I like it. Things do need to change. thanks for the link. I personally don't have anything that grand but I believe we need to shrink the government so they spend less and then keep the taxes the same until the debt is paid off. You do not need to point out the serious pitfalls here because others have already butchered the idea. I was just going for pure simplicity when I thought of it.

[-] 1 points by BradB (2693) from Washington, DC 2 years ago

thanks,,, ;) glad you like it ...

[-] 0 points by Thrasymaque (-2138) 2 years ago

It doesn't matter how rich some people are if everyone has enough to lead decent lives. Creating a world with perfect wealth distribution is not the same as creating a world without poor people.

[-] 1 points by kingscrossection (1203) 2 years ago

No and honestly I can't condone any form of wealth distribution in the sense that you take from some to give to others. Please don't point me at social security or medicaid because you know what I mean. A world without poor people would be great. However, the system we have should theoretically always have someone out of work.

[-] 0 points by Thrasymaque (-2138) 2 years ago

However, the system we have should theoretically always have someone out of work.

Why?

[-] 1 points by kingscrossection (1203) 2 years ago

Well maybe not always, but when supply climbs to high or demand falls to low then the employer no longer has use for employees because he either doesn't need more produced or he already has more than he needs so he doesn't need as many employees to produce. Right? Or am I totally off base here?

[-] 1 points by Rico (3027) 2 years ago

I believe the statistical 'floor' for unemployment used to be about 4%. I'm not sure what it is today given the shift in skill sets. The old 4% number reflected the continual hiring and firing going on, and that reflected a dynamic economy with some companies growing and others shrinking based on fluctuating demand. When unemployment gets to 0%, we see wage growth (inflation) until such time as the demand for labor falls in response.

[-] 0 points by Thrasymaque (-2138) 2 years ago

In a capitalist economy wherein money trickles down from the top of the pyramid towards the bottom, there doesn't necessarily need to be people who are unemployed.

However, what you say is true. An economy is constantly in flux which results in jobs being terminated and jobs being created. Between the time someone loses his job and finds a new job, he will obviously be unemployed. The more flexible and adaptable the economy is, the shorter this transition period will be and the less its negative impact will be felt. If we imagine a perfect system controlled by a super computer like in Asimov's last short story in I, Robot, we could imagine an economy so flexible that if you were to lose your job on Monday, you would have another one lined up on Tuesday.

Long lasting low employment rates are caused by badly planned and inflexible economies. For example, 85% of Bali's economy comes from tourism. After the 2001 terrorist bombing in Kuta, the travel warnings from developed nations really put a dent in the number of visiting tourists which created many economic problems. Many Balinese lost their jobs, and since the economy here isn't flexible, many have remained unemployed during the last 10 years. Tourism is better now, but it hasn't yet reached the pre 2001 levels.

[-] 1 points by kingscrossection (1203) 2 years ago

So you're saying America needs to diversify its job portfolio a bit to keep as many people in a job as necessary. I can see that. And the idea applies to several different ideas which to me lends it credibility. Like the idea that a nuclear physicist may be a genius with math but poor with women.

[-] 0 points by Thrasymaque (-2138) 2 years ago

Diversifying is important, but remaining flexible is the most important. Although being diversified will usually equate more flexibility, it is not always the case, and, sometimes, you can have flexibility without being diversified. What's important is that if jobs are terminated, new economies with new jobs can be created quickly to compensate.

The problem is extremely clear when you look at mining cities. These cities are usually created because of the mine, then when the mine's product has been exhausted or is no longer needed, the city dies very quickly and many people are suddenly jobless.

There was a city in Canada (I forget which one) that predicted the downfall of its mine and prepared accordingly. A few years before the mine closed, the city started to shift its economy towards tourism. When the mine finally close, the shift was completed and successful. They didn't have much diversity, but they managed to remain flexible and make it work.

But, you're right, that's more or less an exception. Usually, diversity is the key to flexibility. The expression - don't put all your eggs in one basket - is a good reminder of this concept. We do it when we buy shares and stocks. Low risk portfolios are usually those that are more diversified.

[-] 1 points by kingscrossection (1203) 2 years ago

Ok I see what you mean and it makes sense. How would you recommend doing this?

[-] 0 points by April (3196) 2 years ago

The rich didn't cause the debt. Entitlements caused the debt. Government likes to give stuff out, it helps them get votes. It was just dumb, not necessarily corrupt, just poor short term decision making.

And demographics are now causing a big problem because the baby boomers are aging, coming into retirement, which will put further strain on entitlements.

At the same time, wealthy people don't want to pitch in and pay more taxes to help out. They're afraid if they're a little less wealthy they might have to cut back on the yacht expenses or something. Horror of horrors.

The Repelican party caters to them, and lies to the Christian Evangelical wing of the party that rich people create jobs, as an excuse to keep tax rates on the wealthy low. The Christian Evangelical wing eats this up, and always backs the Repelicans in the hopes of overturning abortion rights.

And thats how the Repelican party gets their votes, the rich get to keep their low tax rates and were in a shitload of debt.

[-] 1 points by kingscrossection (1203) 2 years ago

I have to ask but where do you get this information on the republicans and the wealthy?

[-] 1 points by April (3196) 2 years ago

Thras is right. The cost of the wars caused the debt too. Oddly enough, the Repelican party has no problem sacrificing lives in questionable (at best) wars, yet they find it unconscionable that they might sacrifice their money in the form of higher taxes.

[-] 1 points by April (3196) 2 years ago

It's common knowledge. The rest I made up. I think it's pretty accurate though.

[-] 1 points by kingscrossection (1203) 2 years ago

Alright. Well no offense I would rather have the information.

[-] 0 points by Thrasymaque (-2138) 2 years ago

I think Bush spent a lot on war too, no?

[-] 1 points by April (3196) 2 years ago

Yeah that too. : )