We are now at ~ $8,500,000,000,000 and are climbing at a rough rate of $1,740,000,000 a day. That comes out to roughly $20,000 a second. From the time the republicans took office of the presidency from 1980 to 1992, the debt quadrupled! Twelve years ago, I wrote a thesis paper on the national debt in my advanced economics topic class. At the time, the debt wasn't as bad because Americans owned $4,000,000,000,000 of the $4,600,000,000,000 debt. Now, we own less than half of the national debt. The rest is owned by foreigners. This country and its citizens are in a sad state of affairs! What is the scariest of this is the fact that 1/3 of the tax revenues are being used to pay the interest on the debt.

So much for that then. Whats the point of projections? They mean jack.

http://news.bbc.co.uk/1/hi/business/the_economy/411973.stm

http://news.bbc.co.uk/olmedia/410000/images/_411973_us_debt_300.gif

The sad thing is, that was a projection after Clinton had gotten the budget balanced. Now, with Bush, spending is far exceeding income and the debt is growing substantially every day.

I'm suprised Bush is spending so much, I thought it was supposed to be Democrats that love to spend, spend, spend?

We are now at ~ $8,500,000,000,000 and are climbing at a rough rate of $1,740,000,000 a day. That comes out to roughly $20,000 a second. ...In scientific notation debt is 8.5E12 and US population is now 300 million or 3E8 people. (8.5E12)/(3E8) = $28,333 dollars of debt for every man, woman and child, even a baby only one minute old! (No wonder US babies cry when born without the normal bottom smack.)

US can borrow money at about 6% still. Thus, with no repayment, just the interest on your share of the national debt, you must fork over (in taxes) $1,700 just to service the old debt each year, again for each man, woman, child, and baby. I.e. the “family of four” needs to pay taxes of $6,800 annually just so US can avoid borrowing to pay interest. All government expense such as the rapidly growing payments to retiring baby boomers by Social Security, Medicare, NIH medical research, alternate energy research, FBI. etc. is on top of this debt service cost.

With the cost of living going up and average salaries going down for last four years in constant value dollars (in part because the baby boomers, who were at the peak of their earnings and tax paying years, are starting to retire and collect from government and saved funds instead of pay taxes or invest.) it is not possible to even to avoid US borrowing more just to pay interest on the old debt.

Then of course there are little things like Bush's wars ($300 billion thus far spent and most of the cost yet to come in benefits, veteran’s hospital expenses, etc.) but considering only what has already been spent alone or $3E11 or per man woman and child that is: (3E11)/(3E8) = $1,000 spent for each man, woman, child and baby.

Considering Iraq is about to undeniably enter into civil war, do you think you (each and every one of you, babies included) are happy with chipping in $1,000 per head? Want to "stay on this course?" (no end in sight?)

Clearly US debt has become so great and is growing ever faster every year that it can never be repaid in constant value dollars.

What will happen? Will US go bankrupt? - No - Never! Not so long as there are printing presses, green ink and paper.

When China decides it can sell its production internally and to Brazil (for iron ore, soy beans etc) etc. without selling anything to US, and when Iran, Venezuela, Russia etc start to desire Yuan more than Dollars then the US must:

(1) Ever more rapidly each month run those printing presses as foreigners, see the dollar slide in value cease to recycle dollars to US by buying Treasury Notes and Bonds.
Or
(2) Dramatically raise interest rates paid to compensate foreigners (China et. al.) for the decreasing value of each dollar paid - god help you if your home has an adjustable rate mortgage on it as you will also be out of work in the general economic down turn high interest rates will produce.
Or
(3) A combination of (1) and (2).

Anyway you slice it. - US will soon be going down economically much faster than China is going up. It is really simple: - US is like a family that has been living well beyond it income for six years (since GWB converted Clinton's surpluses into record setting debts) and every month or so throws (on borrowed money) a bigger party than last month's party just trying to impress the creditors that everything is OK - no need to worry, just lend us a little more etc. …… Almost any idiot can finish this story -tell how that family ends up.

So who want to pay for this? Taxpayers?


Message to all those who love capitalism:
IT DOESN'T WORK

What does any of this have to do with capitalism??? Our high tax rates more closely resemble a socialist system. As does our government, which has quietly taken over the industries of education, charity, health care, transportation, etc.

To cool skill andWhat does any of this have to do with capitalism??? ...Did you post here by error? Thread subject is not capitalism. Comment on my (or other's) National Debt posts.

When considering national debt, it's more informative to consider figures in the context of the size of the economy in question. Sure, America has the largest debt in absolute dollar terms, but also the largest economy. You can find figures on national debt in terms of % of GDP here:

https://www.cia.gov/cia/publications/factbook/rankorder/2186rank.html

Notice how many wealthy, developed countries run debts that exceed America's, as a portion of their GDPs: Japan, Italy, Israel, Belgium, Canada, Germany, France, Austria. So, if America's levels of debt are unsustainable and point to imminent decline, it must also be true that these other countries are about to slide into the abyss. And yet, many of them have run larger debts than America for generations and keep humming away.

If you think about it for a while, the fact that America is able to run such an enormous debt and still get reasonable rates is a strong recommendation for the health of America's economy. After all, if America were going down the tubes, why would people still be loaning us money?

Also, a list of debt per capita would be even more tilted in America's favor. Below is a listing of 10 industrialized nations by debt/population:

Ireland: $262,200
UK: $118,500
Switzerland: $114,100
The Netherlands: $99,700
Belgium: $98,000
France: $46,330
Germany: $44,220
US: $29,700
Italy: $15,860
Japan: $12,200

To cool skill andDid you post here by error? Thread subject is not capitalism. Comment on my (or other's) National Debt posts.
What planet are you on?
It has everything to do with crappytalism.

Once upon a time, a bunch of idiots thought it was funny to implement a capitalist system based on primitve and completely inaccurate understanding of economics (resource management).

Over the years it became more and more apparent that capitalism does not work. Eventually, we end up with greater and greater stratification. While some people make a small amount of money, others make billions upon billions. Slowly by slowly, the capital started going into fewer and fewer hands until eventually, we end up with a plutocracy in which a few people own most of the country, and the rest of the world must work for a living and to provide them with more and more capital as well.

Eventually, a great deal of corruption occurs, and we are at war. If not that, money is being spent on other forms of cess. It is spent on everything but providing better lives on the populus.

Result: Debt and a flamingly flawed monitary system as well as a hell on earth capitalism.

Either way, guess who is paying for these results?
Try not to delude yoruself. Look around at the technology we have, and the high standard lives we are capable of producing for all. Then look around, and witness how people on this earth are actually living. Like shit.

...many wealthy, developed countries run debts that exceed America's, as a portion of their GDPs: Japan, Italy, Israel, Belgium, Canada, Germany, France, Austria. So, if America's levels of debt are unsustainable and point to imminent decline, it must also be true that these other countries are about to slide into the abyss....Thaks for the fererence. unfortunately it does ot tell what fraction of the debt is internally held. In a very real sense, the US foreign debt should also include every dollar outside of US as well as treasury notes. About four yeas ago, I had more than $10,000 in green paper dollars in fire proof box gaining no interest as I did not trust the Brazilian Real, but now I have only about $800. Most dollars, by a wide margin, are still outside of US. - I think in Russia alone there are several times as many as circulate in the US. I think most Euros, for example, are the ones circulating in Euro land, not held outside it.

I agree the whole world will sink into debt driven deep depression surely I think, within the decade, but it will soon be merged with inflation, in US at least, as the printing presses will crank out paper dollars to pay the "NON-ROLLED" - tresurery notes and bills.

This collapse of dollar value will combine with external dollars returning to buy goods while they still have some purchasing power, so US exports will surge for two reasons - hard to know the overall effects, but US will live in "interesting times."

I would like to know what you think will happen if China finds it need not hold dollars to buy oil and need not sell any production to US (all production going to suppliers of raw materials and domestic consumption.) and sees the purchasing power of its US bonds declining.

Think of it like this.
You are in a game.
The gms control and run the game. You are merely a player.

The only difference is, we have the ability to rise up and take over the gm, and end their evil game.

...we end up with greater and greater stratification. While some people make a small amount of money, others make billions upon billions. Slowly by slowly, the capital started going into fewer and fewer hands until eventually, we end up with a plutocracy in which a few people own most of the country, and the rest of the world must work for a living and to provide them with more and more capital as well....An excellent description of a pre Adam Smith, pre-capitalism, Middle Ages economy, but as there is now a middle class, with most of the wealth, not very accurate now. Capitalism has spread the wealth, as well as greatly increased it, compared to pre- capitalistic economies. - but that is “not working” according to you. - Perhaps you would like to return to pre-capitalism and be a serf effectively owned some feudal lord?

I never said anything about returning to precapitalism.
That is primitive minded thinking.
Why even consider that?

Furthermore, wealhth is not spread in a middle class. The precapitalist stratification that capitalism set off to minimize has returned, and is growing even worse.

City/Social design is not about saying that the current system does not work, so let us return to an even more primitive system. That makes no sense whatsoever. I can't even comprehend how that thought could come to mind. Care to explain?

I never said anything about returning to precapitalism....I agree, you did not. However, your started to discuss, describe, complain about capitalism in a thread about the national debt as if debt were somehow a product of modern consumer based capitalism, (post Marx), which it is not. For example, Shakespeare’s Merchant of Venus is about a man who had pledged a pound of his own flesh to guarantee his debt to Jewish lender. Almost all the medieval governments kings were in debt etc. Much if not most of Adam Smiths famous book is about the various ways to finance the governments debt.*

I only noted you were off thread and that one of your descriptions of capitalism was not very good, as it more accurately described the pre-capitalism era of the middle ages.
------------------------------------------------
*One way he rated highly is no longer used:
The government offered small interest rate and would pay total of principle back that it had collected (sums from the participants were inverse age adjusted or something like that - I forget details as read that book 30 years ago.) to the last surviving one. Typically only a dozen of so wealthy middle-aged men lent the government money in any one of these "winner take all pools." As each voluntary participant thought himself healthy and thus with a better than average chance to collect everything, the interest cost to the government for what might turn out to be a 40 year loan was very low.

It's not off topic. Crappytalism is the reason why we are in debt. Working economic systems do not result in these situations.

Thaks for the fererence. unfortunately it does ot tell what fraction of the debt is internally held.

Well, you can get external debt numbers here:

https://www.cia.gov/cia/publications/factbook/rankorder/2079rank.html

The external debt is about the same size as the public debt. I've heard estimates that the public debt is 60-70% held by foreigners. Incidentally, I used the external debt numbers for the list of per-capita debts in my previous post.


I would like to know what you think will happen if China finds it need not hold dollars

I think you're overestimating the prominence of China in the US debt market. While it is true that they have recently surpassed Japan as the largest single holder of treasury securities, it's important to note that EU countries hold far more US debt than both Japan and China combined. China holds only around 10% of the US external debt; no single nation is in the position to unilaterally cause the dollar to collapse.

It is true that large external debts carry the risk that holders will lose interest, especially if they expect the exchange rate value of the dollar to decline. This is, in fact, already happening, as several EU countries have diminished their stocks of dollars, Japan has stopped buying, and even China is expected to diversify in the coming years. What this adds up to is: a lower dollar, and higher US interest rates. These factors will work to correct the twin deficits: the trade deficit because US exports will become cheaper while foreign imports become more expensive and Americans will be saving more and spending less, and the budget deficit because Congress won't be able to borrow money at favorable rates anymore. This, in turn, will solidify the dollar's value, diminish the external debt and boost investment. Within a couple of years, everyone will be lining up to loan us money so we can repeat the whole process over again.

According to your world fact book, the entire earth is 36.8 trillion dollars in debt.
Thanks again, crappytalism!

East Timor! $0 debt.
I beleive if I am not mistaken, this is the smallest country on the planet. They have have had alot of strife in that area.

Doesn't their comparitive strife suggest that maybe debt isn't such a bad thing?

They are in a good deal of strife, but it does not logically suggest anything regarding debt.

It is illogical to make conclusions that have no bearing on logic.

Debt is a very particular statement. Ususally when you do a job for somebody, that person is in debt to you according to whatever contract. You do the job, you collect the debt.


In the sense of borrowing and paying back, debt is completely different.

In this sense, debt is a bad thing, and that is an objective universal. There are no such things as particulars in which such debt is a good thing. This is in terms of national debt or personal debt either way.

Individuals in a functioning society have no need for personal debt because they have no need to borrow money. If such persons do borrow, it is not based of personal need. When individuals HAS to borrow money based on personal need, something is wrong with the system. When a country HAS to borrow money based on social need, something is wrong with the system as well.

According to your world fact book, the entire earth is 36.8 trillion dollars in debt.
Thanks again, crappytalism!

Public debt or external debt?

Tell me if you find this useful: http://sportsforum.ws/sd/factbook/rankorder/2186rank.html

...it's important to note that EU countries hold far more US debt than both Japan and China combined. China holds only around 10% of the US external debt; no single nation is in the position to unilaterally cause the dollar to collapse.

It is true that large external debts carry the risk that holders will lose interest, especially if they expect the exchange rate value of the dollar to decline. This is, in fact, already happening, as several EU countries have diminished their stocks of dollars, Japan has stopped buying, and even China is expected to diversify in the coming years. What this adds up to is: a lower dollar, and higher US interest rates. These factors will work to correct the twin deficits: the trade deficit because US exports will become cheaper while foreign imports become more expensive and Americans will be saving more and spending less, and the budget deficit because Congress won't be able to borrow money at favorable rates anymore. This, in turn, will solidify the dollar's value, diminish the external debt and boost investment....
Thanks again for good referrence and information. I did not know Europe held more of US debt than Japan and China combined. It only takes one big depositor (10% is big) to start a run on the dollar. - And as you note - others are not waitng for China to do this, but getting out now as much as they can without triggering the run, which will send entire world into deep long-lasting depression; perhaps China is an exception as they have years of experience in running an isolated economy and soon will have middle class with much more purchasing power than that in the US to buy their production (not sold to Brazil et.al. for raw matterial imports) - especially now that US average wage is going down, house values, last report, were going down, many high pay jobs lost (like in auto factories) are replaced only by non-exportable, low pay ones (MacDonaldization of US) etc.

My concern is still with China as I think there is a serious idological difference with them, and that they fear US and would like to see US collapse economically because of this fear. At present, they still need US market, and want to keep what I call their "loaded gun" (currency claim on US)- too deter US from actually stopping the re-anexation of Taiwan, by force if necessary, but I think that very unlikely as their economic approach is working so well.

For example:
"Less than ten years ago, 85% of all the notebook computers were produced in Taiwan. Today, hard as it is to believe, there isn’t a single notebook computer factory left there. Taiwanese companies shut down their plants and moved them over to Mainland China, specifically to a small town called Kunshan. Located about an hour’s drive east of Shanghai, Kunshan was a small town with a population of 40,000 and annual tax revenues of $700,000 in the early 1990s. Today, its population is up fifteen-fold to over 640,000 with annual tax revenues of $1.5 billion. That’s a two-hundred-fold increase in just 15 years! ..."
From:
Rober Hsu's "Inside China Dispatch" of 21 Sept06.

China now makes almost all the world's computers - In Brazil they have started to market strongly the LeNova brand - some are machines of the old IBM division which they bought about a year ago, but LeNova was one of the world's biggest before they bought out IBM's PC division.

China's hold on the world is getting scary as they can concentrate it on critical points, like buying up oil, iron ore etc. with 25 year contracts etc.
- Part of the reason why I wrote the book, Dark Visitor. - See how to read for free at site under my name.

Public debt or external debt?

Tell me if you find this useful: http://sportsforum.ws/sd/factbook/rankorder/2186rank.html
It says Hong Kong only has 1.8. I know somebody that used to live there. He said his family lived in tiny box flat in a highrise. They bought 2 of them, and now they are worth less than what they paid for them.

So? Hong Kong uses capitalism.

That's why they are devaluing?

For America, the problem is not the debt but the income that is not keeping up with expenditure. That is because all our good paying jobs have moved overseas. Here is the income of Uncle Sam.

1995 1,375,731,835
1996 1,486,546,674
1997 1,623,272,071
1998 1,769,408,739
1999 1,904,151,888


2000 2,096,916,925
2001 2,128,831,182
2002 2,016,627,269
2003 1,952,929,045
2004 2,018,502,103
2005 2,268,895,122

When you have less income in 2004 than 2000, then it is time for Uncle Sam to find new jobs. The government is really trying to improve small businesses who are the backbone of the country since 2002. But the problem is that the Small Business Administration is full of idiots that never thought it will come to this and are sleep at the wheel. It is like the FEMA who never thought that there would be a Katrina disaster on their watch.

If the government can hire some really smart people for the SBA, this could be changed pretty quickly. Otherwise we would be looking like Argentina very soon.

For America, the problem is not the debt but the income that is not keeping up with expenditure....we would be looking like Argentina very soon.You make a valid point, but I would only note that Clinton had less income every year than GWB, yet managed to make budget surpluses. He tried to solve problems diplomatically, keep a balance about the rights and wrongs that BOTH sides in the ME have done in contrast to GWB who has only used the military approach and been very Pro Israel, even delaying the Lebanon cease fire a few days so Israel could spread more than a million bomblets by cluster bombs in the last three days that will be killing children more than a decade from now (some not even born yet!)

You make a valid point, but I would only note that Clinton had less income every year than GWB, yet managed to make budget surpluses. He tried to solve problems diplomatically, keep a balance about the rights and wrongs that BOTH sides in the ME have done in contrast to GWB who has only used the military approach and been very Pro Israel, even delaying the Lebanon cease fire a few days so Israel could spread more than a million bomblets by cluster bombs in the last three days that will be killing children more than a decade from now (some not even born yet!)

Clinton faced a Republican House and Senate, so there was pretty much constant gridlock. Clinton vetoed their spending bills and they vetoed his. Now that it's all republican, all the time, there's no one to say no to pork.

Couple that with the tax reduction, and you see a ballooning deficit.

It is true that large external debts carry the risk that holders will lose interest, especially if they expect the exchange rate value of the dollar to decline. This is, in fact, already happening, as several EU countries have diminished their stocks of dollars, Japan has stopped buying, and even China is expected to diversify in the coming years. What this adds up to is: a lower dollar, and higher US interest rates. These factors will work to correct the twin deficits: the trade deficit because US exports will become cheaper while foreign imports become more expensive and Americans will be saving more and spending less, and the budget deficit because Congress won't be able to borrow money at favorable rates anymore. This, in turn, will solidify the dollar's value, diminish the external debt and boost investment. Within a couple of years, everyone will be lining up to loan us money so we can repeat the whole process over again.

And there is the beuty of Capitalism, it is entirely based on evryone trying to achieve thier equilibrium where their benefits are maximized and their costs are minimized. So while we naturally fluctuate between points in thw orld market, the market will always correct itself and in fact overcompensate, which will in turn cause an ovecompensation the otehr direction. It seems to fluctuate wildly but it is always in control between two extremes and is focused on achieveing teh middle. It swings like a pendulum, constantly fluctauting between sides but always focusied on returning to the midddle.

The catch is market will return to which middle? The middle number of the period of past oscillation or the downward slope of the larger period due to planetary ground water depletion, temperature swings, war, population growth (which is not linear) etc....

the middle which at that time is the most satisfying equilibrium for everyone. Information only travels so fast, you cant have a perfect response time

Clinton faced a Republican House and Senate, so there was pretty much constant gridlock. Clinton vetoed their spending bills and they vetoed his. Now that it's all republican, all the time, there's no one to say no to pork....That is true, but Clinton could have gotten the US into wars, as GWB has.

Hell, even George Bush, senior was smart enough not to step into an Iraq version of Vietnam.

see graph of Clinton vs the Reagan & the two Bushes at:

www.marktaw.com/culture_and_media/TheNationalDebtImages/NewDebtAnnualy-1980-Present.gif

As chinese say, a picture is worth 10,000 words, but clearly it is not cheap for the tax payers when party in power must reward the relative few rich contributors who put them there instead of the masses.

Even though the National Debt is horrid right now, it still is manageable.

What everyone really should be worried about is medicare/medicaid and social security, once the baby boomer start to retire. Unless there is legislation to curb the expenses, the sheer weight of the costs of all these retirees will destroy the US economy, because the government won't be able to afford it at all. I doubt we'll be able to even borrow that much.

There's going to be HUGE HUGE service cuts in the budget, coupled with massive borrowing.

We're so deep in debt because of one party control. During the Clinton years, gridlock prevented all but the most necessary of spending. Neither party could pass spending bills willy-nilly. Compromise, and ultimately, more efficient government was the result.

There was a political theory that if you cut taxes, politicians would spend less while the economy grew. This would lead to less taxes but about the same amount of revenue. However, the neo-cons have proven that this theory is just that– a theory. And a poor one, too. They're unable to say no to spending, meanwhile they cut taxes. Somehow cutting taxes is supposed to make the government more money. In reality, the supply-side benefit to tax cuts is in the long-run and quite small– small compared to the level of spending Republicans are fond of.

see graph of Clinton vs the Reagan & the two Bushes at:

www.marktaw.com/culture_and_media/TheNationalDebtImages/NewDebtAnnualy-1980-Present.gif



The graph says when good times roll, people vote for the Republicans and when bad time comes - people vote for the Democrats. That is obvious...when the belly is hungry look fo the democrats.

the investors in the fed..... are secret.

i.e.. the fed ... is a private corp... it is privately owned.

it is owned by its investors.... and the public doesnt know their names.


since we all use fed notes.... dollars..

everything we buy.... is bought with their money.
our land... our cars.... our clothes on our backs..

all paid for with their funny money.

money... which isnt based on anything...


i.e.. foriegn investors... own the fed.

the fed... owns all the dollars... and has the power to take anything its wants from its citizens... one way or another.


meaning... foriegn investors, actually own the entire united states.
they own our dollars... and they only allow us to use them.

meaning you dont own your land... thats why you pay taxes on it.
you dont own your car... thats why you must registar it.
you dont even own your own children.. since you gave them a birth certificate.
that made them 14th ammendment citizens....
and the 14th ammendmant... puts all people under the jurisdiction of the fed..... SOMETHING ILLEGAL IN THE CONSTITUTION.



WE HAVE ALL BEEN FORCED OUT OF OUR CONSTITUTIONAL RIGHTS... by way of contracts with the fed...

wherein... by contract... we give the fed athority, in return... the fed offers various forms of benefits.... like.. social security.. medicare.
and police... and social services...



national debt.... external debt... means we all must work to pay it off.

it means we have all been enslaved.

thats why the dollar goes down... thats why prices go up.

eventually...we will all be poor.... and slaves to a system that tells us its all normal... and the way its supposed to be.

its all a lie.

-MT

bump

Im tryin to see quadroponics respond agan, the guys seems really well educated.

The amount of debt is irrelevant.
What is the Debt-to-GDP ratio of the US national debt?

The best way to manage a business is by decreasing costs, while maintaining or improving performance.

What is the US doing to decrease costs?

Governments are a waste of money? Why? Because they are too bureaucratic! There is no disintermidiation in governments. So when the information travels through all the layers, it decreases its accuracy. And it's not like the information moves fast anyways!

Bureaucracy is way too expensive.

Medical systems are also very poor in north america. They are all still paper-based. The sad thing about the american medical system is that people don't get help and the system is still shitty and bankrupt. The canadian one might be bankrupt, but at least it sorta works!

And what's up with the fucking pension plans? Governments get your money to pay for the other people who paid before and needs it now. Instead of investing the money, they just pass it along. No wonder that system is also bankrupt!

Governments are stupid! :rolleyes:

The amount of debt is irrelevant.
What is the Debt-to-GDP ratio of the US national debt?

FROM THE cia....



GDP (purchasing power parity): $12.36 trillion (2005 est.)
GDP (official exchange rate): $12.49 trillion (2005 est.)
GDP - real growth rate: 3.5% (2005 est.)
GDP - per capita (PPP): $41,800 (2005 est.)
GDP - composition by sector: agriculture: 1%
industry: 20.4%
services: 78.7% (2005 est.)


Inflation rate (consumer prices): 3.2% (2005 est.)
Investment (gross fixed): 16.7% of GDP (2005 est.)
Budget: revenues: $2.119 trillion
expenditures: $2.466 trillion; including capital expenditures of $NA (2005 est.)
Public debt: 64.7% of GDP (2005 est.)


Current account balance: -$829.1 billion (2005 est.)
Exports: $927.5 billion f.o.b. (2005 est.)


Reserves of foreign exchange and gold: $86.94 billion (2004 est.)
Debt - external: $8.837 trillion (30 June 2005 est.)
Economic aid - donor: ODA, $6.9 billion (1997)
Currency (code): US dollar (USD)
Currency code: USD
Exchange rates: British pounds per US dollar - 0.5500 (2005), 0.5462 (2004), 0.6125 (2003), 0.6672 (2002), 0.6947 (2001); Canadian dollars per US dollar - 1.2118 (2005), 1.3010 (2004), 1.4011 (2003), 1.5693 (2002), 1.5488 (2001); Japanese yen per US dollar - 110.22 (2005), 108.19 (2004), 115.93 (2003), 125.39 (2002), 121.53 (2001); euros per US dollar - 0.8041 (2005), 0.8054 (2004), 0.8866 (2003), 1.0626 (2002), 1.1175 (2001); Chinese yuan per US dollar - 8.1943 (2005), 8.2768 (2004), 8.2770 (2003), 8.2770 (2002), 8.2271 (2001)




we have a 100 billion a year trade inbalance.

and our public debt..... equals... 67% of our GDP.


id say.... the USA, is up to its eyeballs in debt.


and all of this was 2005... not including the war costs.


its not a pretty picture...

and sadly... most countries look exactly the same.

all in debt to their eyeballs......

-MT

Thank you for that info...

Wow... 67%... that's pretty dangerous..... :eek:

THE THING IS....

THE BANKERS.... are happy if you never pay off the debt...

they just want you to pay the interest payments....

for the rest of eterenity.


until... one day.. they MAY choose to collect... and own the world.

-MT

{US has}:............................................. .........................Brazil has:
a 100 billion a year trade inbalance. ....................................~20billion trade SURPLUS
and our public debt..... equals... 67% of our GDP. ................~50% OF GDP
id say.... the USA, is up to its eyeballs in debt. .....................up to the belt.
and all of this was 2005... not including the war costs. ...........no war cost as does not invade others.
its not a pretty picture. .................................................. .Also Brazil is energy*, food and water self sufficient (an explorter of all three) .....-MT{With Brazil inserts by Billy T}Amazingly, the dollar is considered "safe" and Brazil's money, the Real, R$, a "risk." Slowly the "Reality of the Real" is being recognized. I.e. It only take half as many R$ to buy a dollar now as it did 4 or 5 years ago. In a few years, when the run on dollar starts, relative to the Real, the dollar will have less than 5% its old "stable" ha ha value and gas cost to US drivers in dollars will be > $100/gallon with very few cars on the nearly empty roads:( (Look on the bright side - no traffic jams :D )
-------------------------------
*Net exporter of petroleum as most of the cars here now run on alcohol (efficiently produced from sugar cane, not cold Iowa's corn).

Indeed...

Good thing my family still has lots of Reais..... :D

Amazingly, the dollar is considered "safe" and Brazil's money, the Real, R$, a "risk."

Those terms refer to the volatility of a currency, as opposed to its actual value (or even its first derivative). The roller coaster the Real has been on over the past five years makes it difficult to predict how its value will change over the next few years. On the other hand, the dollar has been quite predictable, if declining.

We are now at ~ $8,500,000,000,000 and are climbing at a rough rate of $1,740,000,000 a day. That comes out to roughly $20,000 a second. From the time the republicans took office of the presidency from 1980 to 1992, the debt quadrupled! Twelve years ago, I wrote a thesis paper on the national debt in my advanced economics topic class. At the time, the debt wasn't as bad because Americans owned $4,000,000,000,000 of the $4,600,000,000,000 debt. Now, we own less than half of the national debt. The rest is owned by foreigners. This country and its citizens are in a sad state of affairs! What is the scariest of this is the fact that 1/3 of the tax revenues are being used to pay the interest on the debt.

so what,its all just a NUMBER on a computer somewhere and we all know how easy its to manipulate numbers,one days its here and next day its gone or reduced by whatever amount THEY want ;)

big G (the goverment)has you all under control with their BS so you just keep on slaving and paying your taxes like all patriots should.

None of those economic disasters... will happen if the Nations of the world, simple comply with my proposed efforts.

Efforts sent to all the worlds nations.

Efforts which could begin November 30, 2006.

-MT

The amount of debt is irrelevant.
What is the Debt-to-GDP ratio of the US national debt?

I forget the exact numbers, but I know the Debt-to-GDP ratios are going up and have been projected to go up. Like high 70% or something like that?

At least that's much better than Japan. I think they're still over 100%.

... At least that's much better than Japan. I think they're still over 100%.{debt to GDP ratio}I am surprised Japans is that high, but will take your word for it as I do not know. Two points I want to make:

(1) There is nothing wrong with high debt to GDP ratios IF the borrowing was done to increase the productive base, instead of consumption, or even worse as GWB has done, for war expenses. Borrowing for "war expenses" is worse than for "consumption" because the builders of bombs etc get paid and yet leave nothing in the society to soak up the extra dollars that circulate because of their salaries. To prevent this from causing inflation, the FED must set interest rates higher and that in turn lessen the investment in production of good and service. Hence "building bombs" etc is worse than useless economically - An activity that not only supplies no consumable for people to purchase and use etc, but actually reduces the goods and services the society can produce for its own benefit. It is, however, a great way to give tax dollars collected from the many to the few, who are already rich enough to be major contributors to your campaign expenses, as GWB has done.

If you scare the voters enough with "war on terror" etc. they will even think well of you for a while, but as Lincoln (I think) said: "You can fool all of the voters some of the time, Some of the voters all of the time; but not all of the voters all of the time.” GWB will go down in history as the worst president US has ever had, with no one even close to challenge him for this "honor."

(2) There is nothing wrong with high debt to GDP ratios IF your society is with favorable balance of trade and other factors that make the lenders who are financing the debt not only feel at ease that they can be repaid, but repaid in currency which has not lost too much purchasing power. No one will lend even at 20% interest if they expect the purchasing power to have dropped by 25% by the time the loan is repaid. Unfortunately the US is in this position now, thanks to GWB having converted Clinton's surpluses into the greatest deficits the US has ever run. Most central banks and big buyers of US bonds are ceasing to be willing to lend more (even with the relatively rapid increase in interest rates the FED is now making). Some have even started to quietly get out of dollar denominated bonds they now hold. They understand that the twin deficits will not go away as too big now to be repaid; that US is now borrowing to pay the interest on the old debt; that the new higher interest rates are a drag on US's GDP expansion (about 1/4 of China and India's for example); that fundamental components of US growth, such as all commodities and energy are increasing drags on US's GDP expansion; and most importantly that the dollars they will get when their bonds mature will buy less of almost every thing than the dollars they lent. Even stupid central bankers can eventually understand that they have been screwed by lending to the US and will not only stop, but try to get whatever value they can out of dollars before the run on the dollar starts - probably in only a few years now.

As I am sure it is coming soon, I hope the run comes in less than two years so GWB will get the blame for it he so richly deserves. He is the worst president the US has ever had. He has taken the US beyond the point of safe return. It will rapidly collapse when the run on dollars starts and drag the entire world into a depression much worse than one beginning in 1929. The people are finally beginning to understand how bad he is, but mistakenly do not yet understand that the Iraq war is only a small factor in the economic disaster he is causing by giving rewards to his rich supporters etc.

See more at thread "How DUMB can US Voters be?" where the rewards to the rich related to alcohol (instead of oil and defense) industries are discussed.

I note that at least his efforts to give rich friends in the insurance industry a cut of the tax-dollar pie, via making Social Security private, have now definitely failed. - That will never make it thru the new Democratic-controlled Congress, but unfortunately the US voter awaken too late. - US is already beyond the point of safe return.

He might be the worst US president ever, but he could be one of the richest too....!! I'm sure he doesn't mind that... :rolleyes:

Among factors I mentioned in post 51 that will cause a run on the dollar was the fact that central banks are reducing their holdings of dollars in their reserves. China had not publicly admited this (to my knowledge) but now has. This trend is accelerating, but the rapid collapse pahse is still probably a few years distant.

"...The U.S. Dollar Index (DX/Y – 85.52) tumbled on news that China's looking
to diversify its rapidly growing foreign-exchange reserves. The governor of
the People's Bank of China said at a conference that China has very clear
plans to diversify its reserves, which now stand at more than $1 trillion.
A wide range of instruments are under consideration, the governor added.
The greenback slumped to a two-month low against the euro following the
news. ..." 11Nov06 from schafer's (a free financial service)

At least that's much better than Japan. I think they're still over 100%.

Yeah, Japan is around %160. Here the list:

https://www.cia.gov/cia/publications/factbook/rankorder/2186rank.html

Note that France, Germany, Canada, etc. all have higher debts (as a fraction of GDP) than the US does. It is not considered remarkable for developed countries to run debts that are comparable to their GDP.

To the extent that the US has a debt problem, it has more to do with the rate of increase of the debt than with its absolute size per se.

To the extent that the US has a debt problem, it has more to do with the rate of increase of the debt than with its absolute size per se.

Yes.

Say I have $10 and I owe $6.70. That's 67% of my "worth" (I think this is what the US is at).

Now, say I have $1,000,000 and I owe $670,000. Everyone looks at this like it's a huge crisis because how much I owe is much bigger and the difference is much larger. However, few pay attention to the guy owing $6.70 out of his $10.. even though by ratio, equal. It's the same burden. Both owe 67% and neither are being paid back.

Of course, more can be done with $670,000 than $6.70. But spread across many areas that one owes, it's not that large. If I owe the 0.67 million across 1,000 sectors, each of them get an average of $670. Again, not that much. That is a weekly paycheck for some.

Should the debt be paid off? Yes.
Do I want to help pay it back? No.
Am I morally responsible to do so? Maybe.

What should be done is working to reduce the size of the US Government, end pork, and allocate the any surplus appropriately. What can we do? I know nothing about running a government or allocating money within one... but perhaps we could SAVE 10-20% of the surplus. Perhaps a "rainy day" fund. The rest goes to paying off the debt.

Also, enact the Fair Tax.

Say I have $10 and I owe $6.70. That's 67% of my "worth" (I think this is what the US is at).

Not exactly. Those figures are for debt as a percentage of GDP. GDP is more like income than net worth. So a better analogy would be "Say I make $10 a year, and have a standing debt of $6.70. That's 67% of my annual *income*."

Not exactly. Those figures are for debt as a percentage of GDP. GDP is more like income than net worth. So a better analogy would be "Say I make $10 a year, and have a standing debt of $6.70. That's 67% of my annual *income*."

Ahh.. that's right. Thank you for clearing that up. But I hope my example still stands :)

...Thank you for clearing that up. But I hope my example still stands :) Quadraphonics correction is well taken, but IMHO, there is still more to it than just a comparison of debt to GDP. It is also important to consider the political will of the debtor (person or country). If the debtor shows by his behavior that he is willing to defer some consumption to make progress on the Debt

For example Brazil had a debt to GDP ratio as bad as the US's but has set very high interest rates to discourage consumption. They are the highest in the world!! Brazil has now got its debt to GDP down to just below 50%. Paid off entirely the IMF loans, etc.

The contrasting example is the US. - US shows no sign of be willing or able to reduce the debt to GDP ratio.

Summary: The trend of the debt to GDP ratio is also important as well as the ratio itself.

For example Brazil had a debt to GDP ratio as bad as the US's but has set very high interest rates to discourage consumption. They are the highest in the world!! Brazil has now got its debt to GDP down to just below 50%. Paid off entirely the IMF loans, etc.

The contrasting example is the US. - US shows no sign of be willing or able to reduce the debt to GDP ratio.

It's not appropriate to compare fiscal policies between developed and emerging economies. Debt loads that are no problem for developed countries would be fatal to the progress of developing countries. Likewise with monetary policies.

For example Brazil had a debt to GDP ratio as bad as the US's but has set very high interest rates to discourage consumption. They are the highest in the world!! Brazil has now got its debt to GDP down to just below 50%. Paid off entirely the IMF loans, etc.
AH! That's why we have no money, little education and little health! :D
Because we give all our money to the IMF!!! :D

Now seriously, aren't high interest rates really bad for the economy?

...Now seriously, aren't high interest rates really bad for the economy?Yes they are. Brazil's growing at only about one third of its potential - much less than other "emergent countries" - less than almost all countries in South America - I.e. at the same low rate as the US.

Interest rates are coming down rapidly now. The currency, the Real, is excessively strong because of the flood of dollars coming here to take advantage of the high rates far exceeded the need of them. (Like everything else, over supply of dollars lowers the price or value of a dollar in Brazil.)

Brazil had such a bad history of high inflation, high interest rates may have been necessary for a few years to break the "psychology of inflation." - To get people to save instead of immediately spend. (Less than a decade ago, people were given their pay in the AM and some were given a few hours off to go and spend it because prices went up a few percent every day!)

But the problem is that people in Brazil barely have anything to save! We spend all our disposable income on necessaries! Besides, isn't consumption good for the economy anyways?

But the problem is that people in Brazil barely have anything to save! We spend all our disposable income on necessaries! Besides, isn't consumption good for the economy anyways? Some Brazilians have a lot to spend, ship money out of the country as there is a limit to personal consumption.

Yes consumption can be good for economic growth, but not if it is preventing funding of productive investment. - Then it is sort of like "eating your seed corn."

Brazil badly needs more domestic saving so it can afford more domestic investment in things like education, sewer systems, etc. Years ago, my Brazilian wife went to good public schools, all the way thru the Ph.D. (She is gorgeous also.) Now her grand children all go to privates schools as the public one are just “baby sitting centers” to keep kids off the streets, (and they do not even do that well. - Check with your family still in Brazil!)

In the “How to be a good Republican” thread I made a very bold and easily falsified* prediction. I asked if anyone would like to publicly state I am wrong. As it is more appropriate here, I repeat it and part of the reason why I believe it true.

Reasoning:
As central banks and big buyers of bonds shed their dollar holdings, the US will be forced to increase interest rates to attract the influx of credit (loans) it need to continue operations. For example, despite the latest numbers on "core inflation" - a negative 0.5%, the FED did not dare to cut interest rates. (FED must compensate lenders for the ever increasing risk of dollar collapse.)

Prediction:
I will go out on a long limb and predict that the dollar will collapse and the world enter into a terrible depression before the FED's interest rate drops below 5%. Who will publicly predict that is wrong?

-------------------------------------------
*"Easily falsified" as the current rate is only 5.25%

Well, but the reason why we couldn't invest in education is not a lack of savings from the population, but a lack of funds available from the govenment due to an agressive policy of debt reduction. For a matter of fact, consumption in Brazil has increased steadly since the end of the beginning of the Real plan. Every year there seems to be a new record, even though people have very little money to spend due to high taxation. Now that most of the debt is paid, I suppose the government could either reduce taxes, allowing the population to save and spend more, or invest the money in health and education.

Besides, how risky Brazil really is for foreign investors? We export way more then we import, to start with. Of course, most of our exports are raw materials, and that is one thing we could improve. Still, we have lots of cars. I remember hearing on TV that there are so many cars in Brazil that some automotive companies had to lay off employees. Don't lay off employees! Just export the freakin' cars!! ;)

Anyways... that's my two cents...

Well, but the reason why we couldn't invest in education is not a lack of savings from the population, but a lack of funds available from the govenment due to an agressive policy of debt reduction. For a matter of fact, consumption in Brazil has increased steadly since the end of the beginning of the Real plan. Every year there seems to be a new record, even though people have very little money to spend due to high taxation. Now that most of the debt is paid, I suppose the government could either reduce taxes, allowing the population to save and spend more, or invest the money in health and education.

Besides, how risky Brazil really is for foreign investors? We export way more then we import, to start with. Of course, most of our exports are raw materials, and that is one thing we could improve. Still, we have lots of cars. I remember hearing on TV that there are so many cars in Brazil that some automotive companies had to lay off employees. Don't lay off employees! Just export the freakin' cars!! ;)

Anyways... that's my two cents...Car exports are falling because the Real is so strong. The lack of funds available is more do to the excess of government and unrealistic promises made to the workers about retirement.

The main front page headline in today's Folha de S. Paulo is:
"INSS e gasto com pessoal dificultam investimento"
In the details it states that retirement expense 13.1% of GDP in 2006 will increase to 13.4% in 2007 and together with the government payroles these two items alone are 70% of the expenditures of the government. It does not give the interest on the debt, but as I recall that is about 15% of GDP. Therefore, the remaining 15% must cover health care, education, maintence of roads etc. - all of which is poorly done, as that 15% is not adequate to the needs.
-----------------------------------------
Most can guess at the meaning of the Portuguese headline I quoted, but I must note that "INSS" is the Brazilian Social Security system. - It already a terrible burden on the workers, and only slight improved. Many retired ON FULL FINAL SALARY at age 55, and that salary was corrected for inflation annually - a totally unrealistic system, Rural workers did not ever even contribute into the system!
----------------------------
If it were politically possible to fire at least half of the government "workers" Brazil would be in much better shape. It would be in better shape if they never came to work* as they are worst than useless. For few examples of just the latest stupidity of their central direction of the economy, which they are always changing consider:

(1) a year ago one could buy liquid alcohol product for cleaning. That was made illegal (fire hazard) only a gelled version could be sold,. well the law has changed back again to selling the liquid formula.

(2) about two years ago law introduced that every car had to have a medical aid kit (no doubt a politically well connected maker of them paid some "public servants" to write that law.) After all cars had bought them and many doctors wrote letters to the editors etc about how damaging to health it was for the public to try to practice medicine at accident scenes than laws was cancelled. Still required that all cars have a fire extinguisher and even if the pressure gauge is in the green, you still are require to trade it in for an new one annually but few do.(mine is a bout 10 years old and even if I am stopped as they do to check it, the fine is only about 10times the trade in cost. - It is a great business someone make deal with the "public servants" to create. Brazilians think all the world mandates annual recharging of your car's fire extinguisher - do not know that they are not even required in US! (Damn if I would stand next to burning car with one.) - So few cars burn that it would be more reasonable to let them burn and be covered by slight extra insurance cost - but that does not put money in some "public servants" pockets.

(3) All elevators now, by law, bear a sign on each door telling you not to step into the shaft if the elevator is not there!

(4) Small individual breads were by law required to weight at least 50grams. Now the new law requires that they be sold by weight. the result has been lines at the station to weigh the bread, more expense to shop to hire someone to weigh them (and an extra scale just for this) and smaller breads that cost more. (Under old law the typical bread weight about 55 grams to be sure to be legal. - Now they can be 30 grams etc. _- I was eating two for breakfast, but now eat three)

(5) list is end less, but I will stop.

Brazil has not yet recovered for the era of full government planning and the use of political patronages jobs is unbelievably excessive. - All politicians quickly get rich as they get kick backs from the people they give jobs to etc as well as bribes from anyone wanting anything.
----------------------------------------
*Fortunately, many who are relatives of the elected politician do not bother to come to work, except on pay days to collect their check.

I will go out on a long limb and predict that the dollar will collapse and the world enter into a terrible depression before the FED's interest rate drops below 5%. Who will publicly predict that is wrong?

I'll take that action. What do I win if the rate goes down to %4.75 without a worldwide depression?

I'll take that action. What do I win if the rate goes down to %4.75 without a worldwide depression?I thought you might. If discount rate hits 4.75% before dollar drops greatly (say gold more than $500/ oz) you get "bragging rights" - I.e. to remind me each time we contest our views how wrong I was with by "black cloud" view. (My prize is same about your "blue sky" views.)

However, there is one additional condition to make this a fair bet. As it is now, I can loss every time the Fed meets and you can never clearly lose without some time limit for the return to 4.75%. Thus, to open the posibility that you can also be shown to be wrong, (thus keeping reasonable this contest) will you predict when (on or before) Fed rate hits 4.75%?

I will accept a one year window or by end of 2007 to be specific. I expect we will both be active here thru 2007 so winner can utilize the bragging rights. I might note that I think there is more chance that the run on dollar will not start before 2008 and my phrase "enter into global depression" does not mean the global economy has hit bottom - only that total global GDP has started downward on an accelerating curve. Given fact that my prediction is way out of line with "common wisdom" I think you can go along with these clarifiactions or revisions if you like.

Specifically:
I bet dollar drops so that gold > $500/oz before end of 2007 and you bet FED's discount rate has been 4.75% before end of 2007. I.e. I bet gold almost doubles and you bet Fed's rate falls by less than 10% at least once prior to end of 2007. - Deal?

Specifically:
I bet dollar drops so that gold > $500/oz before end of 2007 and you bet FED's discount rate has been 4.75% before end of 2007. I.e. I bet gold almost doubles and you bet Fed's rate falls by less than 10% at least once prior to end of 2007. - Deal?

No, I don't expect interest rates to come down any time soon. Also, gold at $500 is a lot less severe than the "terrible worldwide depression" you were offering up a couple of posts back.

No, I don't expect interest rates to come down any time soon. Also, gold at $500 is a lot less severe than the "terrible worldwide depression" you were offering up a couple of posts back.I am trying to make a bet where BOTH can lose, not just me, and one with definite winner in near future (by end of 2007).

I only said I expect world to enter into terrible depression with dollar run as trigger, not that it will be in terrible depression soon (before end of 2007) as that "limb" is too unlikely (weak) even for me to climb out on.

I think my offer that price of gold will increased 100% before FED's interest rate drops less than 10% (to 4.75%) is very generously weighted for your POV by all conventional wisdom, but I am open to your alternative suggestion for the bet.

People argue for long time just trying to decide if a ressesion has started, do not agree what is a "depression" etc until years later - That is why I tied my side of bet to gold - Feel free to suggest some other equally good indicator of the dollar starting to collapse before end of 2007.

People argue for long time just trying to decide if a ressesion has started, do not agree what is a "depression" etc until years later - That is why I tied my side of bet to gold - Feel free to suggest some other equally good indicator of the dollar starting to collapse before end of 2007.

Well, for reasons I've mentioned in the past, I don't think that the price of gold is a very good indicator of the value of the dollar. It would be more straightforward to just bet on what interest rates will do: in the case where the dollar is collapsing, we'd expect interest rates to go up sharply in order to fight inflation. On the other hand, if the dollar is not collapsing, we'd expect interest rates to slowly vary in the range 3-6%, depending on the business cycle. An inflationary crisis in the dollar would correspond to rates in the range of at least 8%, if not double digits.

So... Billy T, what do you think about Brazil now. Do you think things are improving or are they getting worse? And how's the economy doing...? :)

Hey man, look at this guy...

http://jg.globo.com/JGlobo/0,19125,VBC0-2754-251507,00.html

I love the stuff he says... just brilliant... :cool:

When considering national debt, it's more informative to consider figures in the context of the size of the economy in question. Sure, America has the largest debt in absolute dollar terms, but also the largest economy. You can find figures on national debt in terms of % of GDP here:

https://www.cia.gov/cia/publications/factbook/rankorder/2186rank.html

Notice how many wealthy, developed countries run debts that exceed America's, as a portion of their GDPs: Japan, Italy, Israel, Belgium, Canada, Germany, France, Austria. So, if America's levels of debt are unsustainable and point to imminent decline, it must also be true that these other countries are about to slide into the abyss. And yet, many of them have run larger debts than America for generations and keep humming away.

If you think about it for a while, the fact that America is able to run such an enormous debt and still get reasonable rates is a strong recommendation for the health of America's economy. After all, if America were going down the tubes, why would people still be loaning us money?

Also, a list of debt per capita would be even more tilted in America's favor. Below is a listing of 10 industrialized nations by debt/population:

Ireland: $262,200
UK: $118,500
Switzerland: $114,100
The Netherlands: $99,700
Belgium: $98,000
France: $46,330
Germany: $44,220
US: $29,700
Italy: $15,860
Japan: $12,200


That data must be updated, especially since Canada's dropped substantially. Canada's debt to GDP ratio is now at 30-something %, and 25% is being targetted by 2010.

I think USA's debt-GDP ratio, although historically low, has been increasing. It is projected to being 70-something % by 2010/11.

Budget of the United States Government: Historical Tables Fiscal Year 2006 (http://www.gpoaccess.gov/usbudget/fy06/hist.html)

Look at table 7.1. There is a column that shows Debt to GDP ratio and it doesn't look pretty, since it's been increasing for a while. It was going down in the Clinton years.

TS, Brazil is a special case. You need to consider more than economics to gauge Brazilian wealth. You guys have soooo much cultural capital and such abundant natural resources. The fifth largest country in the world with a climate of Hawaii at its highest latitudes. And a cool language. As a Canadian, I am jealous.

Brazil can only improve.

Hey man, look at this guy...I love the stuff he says... just brilliant... :cool:I like his article too as I fully agree. - I have often here stated GWB is US's worst president and also think he was selected (supported) for his low intelligence and ease with which neo-conservatives could manipulate him.

I think he is sincere but others may disagree. Low intelligence, for example, made it possible for him yesterday in Hanaoi to call for “free trade” while working behind the scenes to increase the subsides to alcohol above the current $0.54 per gallon.

Perhaps I am wrong. - I.e. instead of “low intelligence & sincere”, perhaps he is a “intelligent & a hypocrite.” (Hard to tell one combo from the other, but the second requires that he also be a good actor to give his speaches with a straight face and be quite a cynic . Thus, Occam's razor makes me chose to make two instead of four assumptions about his character and conclude he is just “dumb and sincere.” Fact he was very poor student also supports this choice.)

PS too all:
Even though you may not be able to read TruthSeeker's link to the Rio newspaper article, down load it anyway and leave it open for at least a couple of minutes. - I will not say why just now, but my computer did something because that link was open that gave me a great laugh. (I hope that is all it did.)

PS too all:
Even though you may not be able to read TruthSeeker's link to the Rio newspaper article, down load it anyway and leave it open for at least a couple of minutes. - I will not say why just now, but my computer did something because that link was open that gave me a great laugh. (I hope that is all it did.)
Nothing happened. How disappointing. :(

Well, for reasons I've mentioned in the past, I don't think that the price of gold is a very good indicator of the value of the dollar. It would be more straightforward to just bet on what interest rates will do: in the case where the dollar is collapsing, we'd expect interest rates to go up sharply in order to fight inflation. On the other hand, if the dollar is not collapsing, we'd expect interest rates to slowly vary in the range 3-6%, depending on the business cycle. An inflationary crisis in the dollar would correspond to rates in the range of at least 8%, if not double digits.OK - So we can have a bet, I drop gold and accept your ideas.

Specifically I propose the bet be:

If on 30June 2007, the Fed's interest rate is 4.75% or lower, you win; but if it 6.25% or higher, I win.

Note I am still letting you win with only a 0.5% drop but requiring a 1.0% rise for me to win. I think this very generous considering that inflation is low and showing signs of slowing. I do this because I think the FED is losing control of interest rates. I.e. Can no longer use them to curb inflation or stimulate the economy, but must increase them to still attract the loans US needs because confidence in the dollar is starting to collapse. (That is my near term view and that at some point a run on dollar will start leading to world’s worst depression ever.)

I shorted the duration of the bet to make it more interesting, but still place twice rate change burden on me as on you for me to win. If in next 9 months, rate neither hits 6.25% nor 4.75% then we can call it a drawl or extend the period to end of 2007 by mutual agreement.

Is this a deal?

Nothing happened. How disappointing. :(My computer began to loudly sneeze about every 30 seconds and since I closed her link it has not done so again.

Make sure you audio volume is up and try again.

Specifically I propose the bet be:

If on 30June 2007, the Fed's interest rate is 4.75% or lower, you win; but if it 6.25% or higher, I win.

No, I've never predicted that the interest rates will drop in the short term. I thought the bet was about whether there would be an inflationary crisis in the dollar or not. If it is, then I'd be willing to bet on over/under 6.25% (which, although still short of full-blown crisis levels, would indicate a rapid rise in rates). But in the case where there isn't a crisis in the dollar's value, I still wouldn't expect rates to go under 5% in the next 8 months, so that part of it's a red herring.

.... I still wouldn't expect rates to go under 5% in the next 8 months, so that part of it's a red herring.We do not seems to disagree much in the near term (<=30June07) and there is not much point or interest in a bet that streches into 2008 or later. So I guess we must stop trying to structure one.

My point is that The FED would normaly cut interest rate at the next meeting as inflation is well under control and the economy is slowing, but I contend that they will not and are begining to lose control of interest rates. I.e. they must raise rates just to keep the foreign loans coming as central banks are easing out of dollar at the current rates.

In other words: The Fed no longer is able to manage the US economy - Interest rates are in the hands of foreign central banks. - Do you share this view too?

My point is that The FED would normaly cut interest rate at the next meeting as inflation is well under control and the economy is slowing,

No, I'd expect rates to stay more or less constant over the next year or so. Inflation has been brought under control by a long series of increases in the rate (which was below 2% just a few years ago). The fed seems convinced that it's raised rates enough to control inflation, but that doesn't mean you should just turn around and start dropping rates again. That would just bring back the inflation. Unless it looks like GDP growth is going to completely stall or reverse, I don't think they'll lower rates. It seems that the plan is to give the economy some time to settle down from the recent binge of consumption-led growth (with its corresponding drop in savings). This implies an adjustment period of low GDP growth, which is okay as long as inflation is low. Recall that the current levels are still a bit below historical averages for the US, so the economy should plod along just fine once its adjusted to the lack of cheap money.


but I contend that they will not and are begining to lose control of interest rates. I.e. they must raise rates just to keep the foreign loans coming as central banks are easing out of dollar at the current rates.

In other words: The Fed no longer is able to manage the US economy - Interest rates are in the hands of foreign central banks. - Do you share this view too?

No, I think you're overestimating the role of foreign central banks. The Fed is basing its decisions on the same criteria it always has: growth, inflation, employment, etc. The fed does not set the rate in order to finance deficit spending by the government. It's the other way around: the government tends to do a lot of deficit spending when rates are low, and cuts back when rates are high. This is one of the main reasons that the Fed is a (quasi-)independent institution: were it an actual arm of the government, it would be under constant political pressure to keep rates low and so finance government spending, to the detriment of the economy.

For the Fed to "lose control" would correspond to the case where the government wants to do so much deficit spending, and there's so little demand for short-term US securities, that the resultant upwards pressure on the Federal Funds rate exceeds the ability of the Fed to control. That is, the government would be paying much more than the target rate set by the Fed, and the Fed's efforts to bring it into line would not be working. However, that doesn't seem to have happened. The effective Federal funds rate has closely matched the target rate in the past few years:

http://en.wikipedia.org/wiki/Image:Federal_Funds_Rate_%28effective%29.png

Which is to say that, although deficit spending hasn't been brought under control, the rising interest rates have more-or-less offset the declining appetites of dollar-heavy loaners (at least to within the Fed's ability to influence the effective Federal funds rate). While I agree that deficit spending ought to be brought under control, we're far away from crisis levels where the Federal Reserve is going to break down and rates are going to go through the roof. Keep in mind that, as a percentage of GDP, the annual US budget deficit isn't much different from that of other developed countries:

http://en.wikipedia.org/wiki/Budget_deficit#Top_Ten_National_Budgets_.282004.29

Note that Germany and France each do almost as much deficit spending as America, and have comparable interest rates. Japan does substantially more deficit spending than America, although of course Japanese rates are very low.

I said:

" ...{FED is} begining to lose control of interest rates. I.e. they must raise rates just to keep the foreign loans coming as central banks are easing out of dollar at the current rates."...For the Fed to "lose control" would correspond to the case where the government wants to do so much deficit spending, and there's so little demand for short-term US securities, that the resultant upwards pressure on the Federal Funds rate exceeds the ability of the Fed to control. That is, the government would be paying much more than the target rate set by the Fed, and the Fed's efforts to bring it into line would not be working. However, that doesn't seem to have happened. The effective Federal funds rate has closely matched the target rate in the past few years...As usual I am speculating as to what is and will happen and you are "refutting" my POV with historical data.

I of course agree with the past fact that FED has been able to control interest rates - I am speaking of what I think is BEGINNING to happen for first time. to know if I am correct we must wait and see - the past is proof of nothing / not relivant unless you believe that FED is not subject to very changed external conditions, like central banks and big bond buyers easing out of dollars.

When trying to structure a bet you did not agree to bet being "hitting 4.75% before 6.25%" even though for me to win a 1% change was required vs only a 0.5% change for you to win and went further to indicate your expectation that a small up turn in rates was likely (if I understood you). In your most recent post you seem to think that less likely. - I.e. that the recent increases have been sufficient and a quiet period is to be expected.

We both agree that latest trends are slighly slowing inflation and economy (especially in housing market) so I think your cuurent POV more reasonable than one of rising rates mentioned in your prior post WHEN NORMAL CONDITIONS EXIST.

My point continues to be a POV that things are just now becoming "abnormal" - FED losing control. I think you disagree, but not sure as you only offer the "Normal Past" record.