Aces High Bulletin Board
General Forums => The O' Club => Topic started by: J_A_B on October 15, 2004, 03:59:52 PM
-
Ok, here's the scenario:
I am wondering what you think would happen if the US government one day just announced that it would not repay the US national debt in any way, shape, or form.
Our national debt is well over $7 trillion and increasing constantly. While it can go up a lot more before defaulting becomes a possibility (probably decades), it can't increase forever.
J_A_B
-
Higher taxes for all. Unemployment. Recession. Worldwide recession. Civil war? No I don't know either. Higher taxes for sure though
-
The US economy would collapse, stand of living would fall dramtically. Canada would have a big refugee problem, as well as a big security/sovereignty problem.
-
Thrawn, would it collapse any faster if it could not pay, or if it just refuses to pay?
-
Originally posted by Lizking
Thrawn, would it collapse any faster if it could not pay, or if it just refuses to pay?
The collapse would be worse if you couldn't pay it. The sooner the US defaulted, if it was going to, the better. The longer, the more damage that is being done.
Of course the only thing that is preventing the US from paying it off is uncontrolled spending.
-
We can't pay it now. Why is the economy not collapsing?
-
Originally posted by Lizking
We can't pay it now. Why is the economy not collapsing?
Because you can still service it.
-
Here is a mind exercise for you, then. How much debt can the US service?
-
not having the money to pay off the total debt, and defaulting on your loans is a completely different thing.
most people don't have enough liquid assets to pay of their mortgage at any given time, but they aren't defaulting so there's no problem. let most people actually default on their mortgages at the same time and it would have a economic impact.
-
Originally posted by Lizking
Here is a mind exercise for you, then. How much debt can the US service?
How much do you want to get taxed?
-
Assume what you will. How much can we service?
-
Originally posted by Lizking
Assume what you will. How much can we service?
Okay, lets assume that US federal government is taxing 100% of the GNP, that's about 10 trillion.
So you can pay 10 trillion in interest on the loans a year. What does the US government borrow at?
-
Originally posted by J_A_B
Ok, here's the scenario:
I am wondering what you think would happen if the US government one day just announced that it would not repay the US national debt in any way, shape, or form.
Our national debt is well over $7 trillion and increasing constantly. While it can go up a lot more before defaulting becomes a possibility (probably decades), it can't increase forever.
J_A_B
Isn't that what caused the collapse of the USSR?
-
Max is about 5%, I think, right now.
-
Originally posted by Lizking
Max is about 5%, I think, right now.
That's what I was thinking.
So, about 200 trillion. Of course, we just killed over 99% of US population. :eek:
-
That's OK, they were liberals and didn't have guns to protect themselves....
So cut it by 2/3's, and then compare that to the current total. We look pretty good for a long time, don't we?
-
Originally posted by J_A_B
I am wondering what you think would happen if the US government one day just announced that it would not repay the US national debt in any way, shape, or form.
All your dollars would become worthless and the largest financial disaster in human history would begin.
-
Originally posted by Lizking
That's OK, they were liberals and didn't have guns to protect themselves....
So cut it by 2/3's, and then compare that to the current total. We look pretty good for a long time, don't we?
Let's see, 2/3s = 133 trillion. At 5% = 6.6 trillion a year. Well your federal taxes just when up above six fold, and your standard of living has fallen drastically as well. You enomony is probably still gone because consumption and investment has been severly curtailed. And your feder government has provided any services yet. Do you want a military?
Edit: Actually it's worse because all the corps have left because the taxes are too big.
-
Our current taxes are 30%, at a minimum.
-
Interesting deficit tidbits.
The US goverment "borrowed" 3 trillion from its Social Security funds last year to help general revenues. That 3 trillion is not counted against the national debt.
I think Per capita national debt is now nearly 26000 and growing USD in the states. (not counting the SS loan 35000 probably with that) and in old liberal, commie Canada with universal national health care.
....a little over 12000 USD. And shrinking.
Latest political out rage in canada other then our neeto subs catching fire ..
An outrageos budget surplus (9 billion)that will just be used to pay down the national debt instead of used on social programs!
-
Pongo, source the 3 trillion dollar number, please.
-
well, what you have to do is get congress to stop spending your tax money on bling bling. To get relected congressmen make deals with each other ( you vote for my pork , i vote for yours).
when your local congressman tells you he just get X millions in "federal funding" for your local bridge, road,park, school,ect ect, you all say YEAH YEAH, GREAT,LETS VOTE HIM BACK IN OFFICE
every congressman does this, some more than others, it depends on how much "power" they have in congress. more "power" more "federal funding". so you can see what happens when all congressman want more bling bling for their districts.
can you say "term limits"
some have tried to get a balanced budget law passed, thats like asking your wife to give up her credit cards, congress will never give up the right to spend your tax money.
it is up to you people to tell congress to stop spending money they don't have, even when they want to spend it on you.
i'm an 'indpendent' and i aprove of this message.
-
Originally posted by Lizking
Our current taxes are 30%, at a minimum.
I screwed up. The US fed. gov. receives about 2 trillion, I thought it was 1 trillion.
So if we pretend the corps stay around, your taxes would be more than tripled and you still don't have anything for it...once again, like a military.
Now, if you have to pay over 90% of your cash to the government, are you going to work?
-
Originally posted by Lizking
Pongo, source the 3 trillion dollar number, please.
worddig (http://www.wordiq.com/definition/U.S._national_debt)
"There is no reliability to budget and debt reporting, in part because political leaders can announce official numbers that are almost meaningless, while careful analysis of implications by experts go all but unreported.
For instance, in 2003 the G. W. Bush administration announced a projected $1.4 trillion deficit over the next 10 years (to 2013) amidst disclaimers from the White House about how the numbers are unreliable and how these deficits aren't very big relative to the size of the U.S. economy. These are examples of the types of disclaimers that are often used to 'fuzz' bad news.
By law, the budget office that prepares these numbers must assume that existing laws expire as planned, and that no new programs are added or subtracted. This permits politicians to extend laws, add programs, etc., in the period after budget announcement, for instance, to make temporary tax cuts permanent, or pass a Medicare prescription-drug package. Then they may hope that something changes in the interim that will improve the news before they (or their successors) must announce the budget numbers the next year, or simply hope for some reaction to taxes that they can exploit. For instance, if federal alternative minimum tax as projected hits 30 million taxpayers due to bracket creep, the pressure to remove it rises, and debt, being paid in the future, seems like less of an issue.
According to Economist Alan Sloan, writing in Newsweek in September 2003, if one assumes that the tax will be eliminated, the prior cuts made permanent, and the drug package passed, these changes alone add $3.6 trillion to the deficit over the same ten-year period.
Another issue is that the numbers do not count other shortfalls and leakage. For instance, in the 2003 projection, the U.S. Department of the Treasury used a $2.4 trillion Social Security surplus to offset its cash shortfall. This means that in 2013, "the government will owe Social Security about $4 trillion, just as baby boomers begin retiring en masse. I don't see how that debt can be honored without huge borrowings from outside investors that would send rates to the moon, or huge cuts in other programs," claimed Sloan.
He thus calculates the total projected deficit using only the published numbers and limited assumptions above at more than five times the $1.4 trillion, or about $7.4 trillion. These numbers further assume spending nothing in Iraq starting Oct. 1, 2005, which seems optimistic, as there are no budgetary nor troop commitments from nations that did not invade as of his publication date.
Business confidence is a major reason to mislead about debt and deficit numbers. Wall Street in general responds poorly to growing debt. The U.S. Office of Management and Budget announcements (such as that in July 2003 that they expected a $455 billion deficit (after subtracting Social Security's surplus) for fiscal 2004) cause interest rates to move up.
"
-
Pongo--
The figure you quote is based on projections and predictions. Hence it may turn out to be accurate....or it may not. It might even prove low.
It reminds me a lot of the Clinton budget surplus, which was similaly based on predictions; we all saw what happened to that when their economic predictions turned out wrong.
I try to take any such projections with a grain of salt--they're useful, but merely a tool.
The national debt is a point of interest to me because something like 2/3 of our current budget deficit can be attributed to interest we pay on the debt (effectively we sevice the debt by borrowing more). As long as the debt keeps climbing, that isn't going to get any lower.
J_A_B
-
It'd be akin to America saying "We refuse to pay for the stuff you sent us, but if you could please find it in your heart of hearts to continue sending us stuff, and letting us continue to borrow money from you to not even pay for the stuff, that would be swell."
-
all you anti-american types are having fun hoping for the "fall" of the USA.
i hate to bust up your nice dream , but
so much of the world depends on trade with the USA, ( half of chinas exports go to the USA),and they own so much debt in govt bonds, and they own so much biz in US ( BP), that they could not let the US default on govt bonds.
what would happen is the world would bail out the USA with debt forgivness and low intrest loans, as has been done with many other countrys in the past.
i'm john9001 and i have approved this posting.
-
pssst, john....
The US actually following through on J_A_B's ludicrous hypothetical would be a distater for the entire world.
Don't think for a second that anyone is hoping for it to actually happen.
Nobody is really dumb enough to make such a scenario real.
-
Ya know the funny thing about all this...
think of this scenario...
the US made the UK pay the US back for all the lend lease items from WW2 adjusted for interest. If the US made the Russian's pay the US back for the same. Or better yet, what if the US just called in all the loans owed it.
Our national debt would be paid 2 times over.
So, unless the rest of you pansies choose to acknowledge that the US finacial health controls the worlds finacial health, which you won't, get a grip, and realise, that according to your idiocy, if the US said NO to it's national debt, nothing more that a depression would happen, while foreign goods stopped coming in, and the US would be forced to become self sufficient...
hmmm, maybe it's not such a bad idea.
-
Bodhi, Google is your friend.
-
I wonder more about what would happen if we collected all the debts owd us by other countries
-
Pongo, thanks for findng that link, but it does not source the number, it justs says that it is.
-
Source the source of the source of the source of the source then maybe, perhaps, despite the slings and arrows of outrageous obviousitude, you can continue...
Google is great. Google sucks.
-
"Source the source of the source of the source of the source then maybe, perhaps, despite the slings and arrows of outrageous obviousitude, you can continue... "
Or by opposing, end them?
J_A_B
-
Originally posted by J_A_B
Pongo--
The figure you quote is based on projections and predictions. Hence it may turn out to be accurate....or it may not. It might even prove low.
It reminds me a lot of the Clinton budget surplus, which was similaly based on predictions; we all saw what happened to that when their economic predictions turned out wrong.
I try to take any such projections with a grain of salt--they're useful, but merely a tool.
The national debt is a point of interest to me because something like 2/3 of our current budget deficit can be attributed to interest we pay on the debt (effectively we sevice the debt by borrowing more). As long as the debt keeps climbing, that isn't going to get any lower.
J_A_B
So its "projected" that in 2003 the administration moved 2.4 trillion dollars that have been acumulated over decades of saving by the american public for thier retirement to cover revenue short falls he created.
Normally the word projected isnt used to describe something that happend in the past.
-
(J_A_B: nice)
-
Come on, children, every data point has a primary source. Without this minimum requirement, internet discourse is pointless.
-
Originally posted by Lizking
Pongo, thanks for findng that link, but it does not source the number, it justs says that it is.
Well.
It must be a lie right? Who would take 2.4 trillion dollars out of social secuity right befor the Baby boomers start getting old enought to draw from it..
No rational person would give a tax break to the very wealthy(himself-all his friends- all his cabinet) and take 2.4 trillion dollars out of the SS fund when we all know that it is in fact underfunded for the load that will hit it soon...dont you agree?
-
Ahem... there is something inherently corrupt about spending $200 million to campaign for a $300K/yr job.
-
So far, all I agree with is that you are making suppositions based upon a number pulled out of your ass.
-
Pongo--
If I read your article right, the Administration is "paying" for projected shortfalls by using projected SS funds. Neither has actually happened yet. The projection covers the decade from 2003 to 2013. Well, that would mean 1 year of it has supposedly happened. Is such information handy?
Cut from the posted article--
"For instance, in 2003 the G. W. Bush administration announced a projected $1.4 trillion deficit over the next 10 years "
"For instance, in the 2003 projection, the U.S. Department of the Treasury used a $2.4 trillion Social Security surplus to offset its cash shortfall. This means that in 2013, "the government will owe Social Security about $4 trillion"
Don't get me wrong, I don't disagree that the habit of using SS money to cover general expenses is monumentally stupid. However, it isn't a case of taking that money out all at once. The Social Security surplus the government "used" in the above quote isn't money SS currently has, but rather the excess money it would otherwise accumulate over the next decade. And like any predictions, it isn't set in stone and is subject to change.
Although it isn't a case of taking a lump sum out of the SS fund (a fund which is nowhere close to being $2.4 trillion, which is why I originally asked for your source), it still shows just how dedicated they really are to "fixing" Social Security. But then, sadly, politicans on both sides of the fence have a long and sad tradition of using SS money to pay for normal budget expenses.
J_A_B
-
ah..
that distinction was beyond me. Thanks for the clerification.
Liz.
Its ok. I know its upsetting to find out what your hero is up to with your daddys retirement funds.
-
Lizking, yes google is good, as is every bit of BS posted, because it links to it... especially if the ley words hit.
So piss off, and provide me hard data that what I said is wrong.
-
Just to hit the high points, Bodhi, Lendlease in total was 50 billion, and has all been repaid, even by the Soviets.
-
It's happened in the past, repeatedly. Governments get deep into debt, then suddenly decide to just cancel them, or even better, arrest their creditors and seize their assets. The suppression of the Templars in 1309 (or was it 1308)? Done by Philip IV "The Fair", King of France; the Master of the Temple was routinely his treasurer, and he was short on cash. The expulsion of the Jews from France and England the century before? The kings "suddenly got religious", annulled their debts, seized the assets of the Jewish communities (including loans to others in the kingdom), and got some cash. The collapse of the Banks of Florence in the 1340s? The king of England defaulted.
Of course, now we have demoratically elected leaders who only serve for a short time before returning to the private sphere. So look for them to rack up even bigger debts to businesses and try to ride that train all the way to the station. Just hope the other guy's in power when it crashes.
(and btw, foreign investment is artificially propping up the US economy to make foreign goods more affordable).
-
Just to hit the high points, Bodhi, Lendlease in total was 50 billion, and has all been repaid
Just a very minor correction, but Britain still has 3 payments left, $148 million in December this year, $142 million December 2005, $83 million December 2006.
-
Bodhi...the Lend Lease program from Bermuda's perspective:
The US is granted a 99 year lease to establish two naval bases.
They do so and pump millions into the local economy.
Budget cuts and the collapse of the Soviet Union means that these bases are no longer viable.
The US pulls out.
The US leaves us with a massive ecological mess as a result of illegally dumping all kinds of waste into a natural cave system. This waste includes everything from JP5 jet fuel sludge to raw sewage to disposable US navy issue tampons.
This waste will cost about 50-100 million to clean up,but the caves would not be able to sustain any life at all. They are dead. The island's water table is threatened as a result, making well water in that area at least totally polluted.
As compensation the US government pays 11 million dollars to wash their hands of the situation.
The local government accepts, and quite likely deposits most of it into Swiss bank accounts.
Debt paid and a huge mess which is someone else's problem.
-
You are correct, Nashwan, I should have used the word "resolved" not "repaid".