Thoughts an opinions... Last year I understand Russia started unloading massive amounts of USA $ reserves. In December 2014 alone. An Russia sold some 20% of the country’s U.S. Treasurys, a move that created increased tensions signaling what could be described as economic warfare between East and West. Do you see it as warfare or not? Then, this summer it was revealed that China, dumped some half a trillion in dollar denominated assets. Amid a major meltdown in Chinese stock markets the People’s Republic sold off billions in dollar assets last week in an effort to stabilize a collapsing financial market. Now, it seems as Russia’s economy collapses under the weight of American and European sanctions, including what some believe as a widespread downward manipulation of the oil prices, Vladimir Putin has sent a signal of sorts to the central bank of the world’s "reserve currency." An China has the 2nd largest economy on the planet, and Russia has the 10th largest. These two Heavyweights have become much closer. Just consider a headline from Sputnik News that I came across; “Crippling US Foreign Policy Draws Russia, China Closer Together“. Has anyone here noticed? Hasn't U.S. relations with China turned kinda sour lately? .... Lots of accusations about spying and trade violations have been flying around recently right? This week 5 Chinese warships were spotted off the coast of Alaska! In international waters, a 1st... In the months ahead, I suspect our USA country with China may continue to unravel, Don't you? If China and Russia were both to fundamentally reject the American dollar at some point, wouldn't much of the rest of the world choose to follow suit? IF so how important is that? The way I see it, the fact that most of the nations of the world use our dollars to trade with one another creates a great deal of an amount of a type of artificial demand on our currency. (am I correct so far?) So in other words, the U.S. dollar would be valued at a much higher value than otherwise. - just because it is the de facto reserve currency of the planet. As a typical result, we can import massive amounts of products at cheaper prices. Like when we get to Wal-Mart or a dollar store, we can fill up our carts with lots and lots of ridiculously inexpensive stuff (sometimes junk). U.S. dollars is used widely in global trades, major exporting nations end up with huge piles of American currency which they been willing to lend back to USA at an ultra low interest rates. This has made it possible to fund our massively bloated federal government and get to 18 trillion dollars + in the hole as a nation. So if im close so far, if the rest of the world stops using our dollars and stops playing our games. Then we Americans will be in a tremendous amount of trouble. ....In what ways do you think? Wouldn't the cost of imported products absolutely skyrocket? and our standard of living would drop? A $5.00 gal of milk might cost $10, $15, maybe $20.00. We would be similar to Greece, an 2nd rate countries or 3rd "world" whatever that means. The federal government (likely along with state and local governments) would have to pay tons more to borrow money right? But who from? This would rapidly create a gigantic debt crisis worldwide right? Russia seemingly knows where they could really hurt us, the most. . . The “power” that America currently projects around the world I believe is based on having the de facto reserve currency of the planet. Anyone taking American financial power away, would make America be far, far less imposing on the global stages, an cause a rift, an a power "vacuum" along with increased "chaos" is this viewed by others as well? Truly the U.S. military has rapidly shrunk and largely been defanged by the Obama administration. ... an the Russian President Vladimir Putin has introduced legislation that would essentially deal a terrible blow the U.S. dollar. Has anyone else heard of this? Putin likely will get the legislation to pass, and the U.S.A dollar would be eliminated from trade between the nations from the Commonwealth of Independent States. In addition with Russia, the list of countries would include Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan and Uzbekistan. This would not mean “the death of our dollar”. It likely would be a huge step towards the end of a era of dominance with our dollar. Most people seemingly don’t realize, the U.S. dollars importance an there actually used more outside of the United States than they are used within America
Massive amounts….? US Treasury debt is a portion of Russia’s currency reserves, and Russia is liquidating those reserves to sustain its government. But let’s remember, Mother Russia’s currency reserves are in the neighborhood of 350 billion dollars and the US Dollar is just one component of that reserve. The largest component of Russia’s reserves is most likely the Euro as the EU is Russia’s largest trading partner. US-Russian trade is a pittance of US trade. Year-to-date the US-Russian trade deficit is 6 billion dollars in Russia’s favor. That’s about 40% of Trump’s reported net worth. Russia is more dependent on the US, than the US on Russia. And that isn’t difficult, because the US isn’t at all dependent on Mother Russia. And just where do you get this notion that the US is in anyway bothered by Russia’s alleged selling of US Treasuries? If Russia sold off some 20% of its US debt as you alleged, it has had zero impact on US Treasury rates. US Treasury rates have been virtually unchanged and remain very low and the US Dollar has been and remains very strong. So where do you get this notion the US is miffed at Mother Russia for allegedly selling its US debt? Why would the US be miffed? If what you allege is true, it had absolutely no impact on US debt or the US Dollar. As long as oil prices remain low and sanctions remain in place, Russia will be living on its cash reserves. Unfortunately for Mother Russia, its cash reserves are limited. Economic circumstances have and will continue to force Mother Russia to liquidate its cash reserves. That hurts no country other than Mother Russia. Economists have estimated Mother Russia can survive for 2 to 3 years living on its is cash reserves. That means Mother Russia will continue to sell US Treasuries. But that selling will not in any way harm the US Dollar or impact US Treasury rates. It's just not significant. Russia’s selling of US debt isn’t warfare, it’s survival for Mother Russia. Aside from specious right wing and conspiracy sources, I have found no credible evidence of this alleged dumping. But if it did occur as you allege, it has had absolutely no adverse impact on US Treasury rates or the US Dollar. The US Dollar Index has remained very high and US Treasury interest rates have remained extraordinarily low during this alleged "dump". What signal would that be exactly? What signal has Putin sent? Seriously, you believe state controlled Russian propaganda? And here is the part you have left out; there is a wide disparity between the largest 5 economies and the rest of the world. And let’s not forget the #2 and #10 largest economies have a penchant for window dressing or fudging their numbers in order to make them look bigger and better. They also parade out their military weapons every year in an attempt to impress their citizens and the world. That reeks penis envy and insecurity. That's a weakness not a strength. Further, they are autocracies; their GDP is what their leaders say it is. Unlike Western nations, there is no transparency in Mother Russia or China. So in all likelihood their real GDP numbers are something less that the reported numbers. Even so, big heavy Mother Russia only accounts for 2% of the world’s economy and most of that are oil exports. Using China’s self-reported GDP numbers, China accounts for 13% of the world’s economy. China and Russia are not buddy-buddy. They tolerate each other when it suits them. But they are not by any stretch friends. Each feels superior to the other. Don’t kid yourself, there is no love lost between them. At the moment, being under international sanctions, Mother Russia needs all the help it can get and China is more than happy to take full advantage of Russia’s ills and weaknesses. That isn't friendship, that's predation. With the exception of the warships, none of that is new. China has and continues to build a naval fleet. It’s showing off its new fleet. Yes, I think it reasonable to expect further deterioration in the US-China relationship. It has been widely reported that within the next few weeks President Obama will announce sanctions against Chinese nationals who participated in cyber-attacks against the US government. China like Putin has a terminal case of penis envy, nothing new there. But here is something to think about, the US has 11 carriers, China has one. The US has over 660 military bases in 38 countries. China has NONE. Perhaps China can convince Mother Russia to allow them to build and maintain a few Chinese military bases in Mother Russia in order to cement their new found friendship? Please Register or Log in to view the hidden image! No, and why would the rest of the world follow Russia and China? Do you think the rest of the world is that dumb? Russia and China both have significant economic problems. Earlier this week China announced it will liquidate almost half of its foreign currency reserves by the end of 2016 in order to stimulate its economy. Why? Because the Chinese economy is slowing. China's economy has some major problems. Further China is HEAVILY dependent upon US trade and exports to the US. China runs about a .333 trillion dollar annual trade surplus with the US. A refusal to accept the US Dollar would be a fatal stab in China's economy. As long as China wants and needs to trade with the US and as long as China needs to purchase Arab oil and purchase raw materials, China needs US Dollars. So there is no way in hell China would ever reject the American Dollar. It isn’t important because it will never happen. China isn’t suicidal nor is it dumb, Putin, maybe, but China… no.
Well, you are correct in saying the dollar's status as a world reserve currency creates added demand for the US Dollar, but you are wrong to say that demand is artificial. There is nothing artificial about the demand for US Dollars. Here is the part you are missing; the US Dollar isn’t the only reserve currency. In fact there are several, the Euro, the Japanese Yen, the Swiss Franc, the British Pound, and the Canadian Dollar are also reserve currencies. But the US Dollar is by far the most widely held reserve currency. Except, the US government isn’t 18 trillion dollars in the “hole”. That 18 trillion dollar number includes debt the US government owes to itself. It’s an artifact of the government’s accounting method (i.e. fund accounting). When you net out the money the government owes to itself, the US debt is more like 10 trillion dollars. And the relevant debt measure here is debt to GDP ratio not the nominal debt, and the US has a much lower debt GDP ratio than most if not all developed nations. Japan has the highest which is higher than that of Greece. The other important measure is debt service. The US debt services is about 2% of GDP, that’s not very much nor is it very significant. But yes, being a reserve currency, it makes imports cheaper. It also makes domestically produced goods and services more expensive and less competitive internationally. It's a competitive disadvantage. It's a two edged sword. Well you haven’t provided a cogent case as to why the 85% or more of the world economy which isn’t Russia or China would want to ignore and refuse to trade with the 25% of the world economy which is the US. You haven’t even made a case as to why China would want to dispatch with its most significant trading partner and commit economic suicide. China is a huge consumer of raw materials like oil and raw materials, including oil, and those commodities are priced in US Dollars. China needs US Dollars to buy the oil and raw materials its economy needs to sustain its economy and its military. Americans will only be in trouble if they succumb to the fiscal and monetary recklessness advocated by Republican entertainers and politicians (e.g. causing a debt default). We are only in trouble if we become unable to govern ourselves effectively. That’s why Republicans are and have been a very clear and present threat to the health and wellbeing of the country. Their policies would damage the trust other nations place in this country and more importantly they would wreck the economy. Republicans are a far greater threat to the US than China or Mother Russia could ever hope to be. Forsake of argument, let’s assume the US Dollar loses is status as a world reserve currency through an unidentified processes and means. Prices for foreign produced goods would rise and therefore become less competitive in American markets, while domestically produced goods and services would become cheaper and more competitive internationally. So it would effectively boost the US economy. The US would move from being a net importer to a net exporter. That’s what would happen. It wouldn't be the end of the world you and your fellow so called conservative envision. You see unlike some countries the US is very blessed with natural resources. It has massive petroleum and natural gas reserves and huge mineral deposits. It has a talented and educated workforce. It has a vast network of roads, rivers, railroads, airports and seaports which enable it to seamlessly and quickly move goods and resources. It has the world’s most powerful military. It is a technological cooking pot. The US is a great innovator and innovation drives economic growth. Innovation is something Mother Russia and China have both struggled with. China and Russia need innovation in order to become the economies they want to become. But that innovation threatens their autocracies. China and Russia want the value innovation brings. But the free thinking innovators they need might begin thinking things which threaten the ruling autocracy - can't have that! It’s a dilemma the US does not have. The US is an innovator, Russia and China are not and innovation is key to long term sustainable economic growth. As explained numerous times, the US is no in any way similar to Greece. The economies are fundamentally different. Greek economy is not well diversified and it’s a small economy amounting to only 2oo or so billion dollars and heavily dependent upon foreign trade, more specifically tourism. Further, the US is a fully sovereign state, Greece is not. Greece surrendered a portion of is sovereignty when it entered the EU in 2001. Greece is now dependent upon the Euro for its monetary policy. The US does not suffer those dependencies. Therefore equating the US with Greece is just wrong all around. And US debt levels are not anywhere near those of Greece. Japan by the way has a higher debt to GDP ratio than Greece. But like the US and unlike Greece, Japan is fully sovereign state. Ah…no. You have been listening to too much right wing entertainment. That’s all nonsense. Well that is a fantasy shared by both American and Russian right wingers, but it isn’t true. The power the US projects around the world is based not on one thing but rather many things. It’s based on years of diplomacy and history. It’s based on our history as a nation. It’s based on the trust that has been earned over many decades and centuries. It’s based upon how we conduct our affairs. It’s based on trust. It’s based on our economy. It isn't based on printed pieces of cloth. Here is an unpleasant fact for right wingers. Since the Great Recession, the US economy has been one of the world’s fastest growing economies. No thanks to Republicans, the American economy has been growing and it continues to grow. US unemployment numbers were released today, and the US is now approaching full employment. One of the many key problems with your thesis is the continued strength of the US economy. The US Dollar will remain a reserve currency for as long as the US remains one of the world’s largest and most stable economies regardless of what China or Russia do. China and Russia cannot wave a magic wand and make the US Dollar go away. It really is that simple. The value of currency is derived from the strength of the underlying economy. The US Dollar isn’t the source of America’s power; it’s a merely reflection of American value and power. American power/value resides in its economy and its people and in its alliances, not some piece of printed cloth or a series of digits residing on a computer. The only way Mother Russia could damage the US economy is if it launched a nuclear device at the US and in that event, it’s all over for everyone. So it really doesn’t matter at that point. The US is not in any way dependent upon Russia. US exports and imports to Mother Russia are miniscule. So there is no way in hell Mother Russia could hurt the US economy short of a nuclear attack, but a nuclear attack would also wipe out Mother Russia and the rest of the world for that matter.
Liberal Joe, lot to read an digest. But thanks for your comments. Will try to get back soon with some of my opinions soon to the many questions you raise
Well, again that is a popular another right wing fantasy, but it simply isn’t true. The US military remains the most powerful military force on the planet. It hasn’t shrunk. It’s not shrinking rapidly. The Obama administration has not defanged the military. If you have proof to the contrary, please do show it. The US military still remains the world’s preeminent military power. That isn’t going to change anytime soon. China has one aircraft carrier, the US Navy has 11. Obama has actually strengthened US military power. When Obama came to power US military was overstretched, now it isn’t. US military power has been increased under Obama. Obama has found and killed Bin Laden and a host of terrorists since beginning his presidency. Obama in a few years did more to strengthen US military might and destroy its enemies than Republicans did in the 8 years in which they exerted complete control of US government. No matter what legislation is introduced in the Russian parliament there is nothing Putin could do short of a nuclear war, and perhaps not even then, which would adversely affect the US Dollar and its role as a world reserve currency, period! Because the US is not in any way dependent on Mother Russia or any of Russia’s dependencies. US trade with Mother Russia and its dependencies, from an American perspective, is almost nonexistent, 6 billion dollars in a nearly 18 trillion dollar economy is virtually nothing. It certainly isn't the catastrophe you are making it out to be and it definitely isn't a threat to the US reserve currency status. The US could however; make Putin and mother Russia suffer more by freezing them out of the international payments system. That would be a bullet into the head of the Russian economy.Russia’s economy is highly dependent upon the West. Unfortunately for Mother Russia, Mother Russia is on the short end of the economic stick. Yes, the US Dollar is an important world currency. Many nations use the US Dollar as legal currency. But you don’t understand the reason why US currency is so powerful and strong and why it is the world’s most popular reserve currency. It’s because the US economy is the largest economy in the world, and it’s a diversified and stable economy. The US is a stable, trustworthy, and transparent nation. And as long as those conditions remain, people of the world will continue to trust and demand US Dollars and the US Dollar will remain a world reserve currency. Putin can say whatever he wants and do backflips all day long every day, but that will not affect the value of the US Dollar or its use as a world reserve currency. A 6 billion dollar Russian trade surplus against the US's 18 trillion dollar economy isn’t “a huge step towards the end of a era of dominance with our dollar” as you have asserted. It isn’t anywhere near that. It’s just more right wing nut case demagoguery.
LOL, well I'm sure many of the liberals on this site will take issue with your labeling me a "liberal" given I have had a number of knock down bouts with them over the years. Truth and reason aren't liberal conspiracies.
You often offer this simple POV, but the government MUST pay the debts it has to other government agencies. For example, consider the debt the federal government owes to the Social Security Administration - one of the largest. For many years early in SS's existence few were collecting benefits and the SS collections, via the SS tax, were huge in comparison to the SS pay-out requirements. The federal government just took the excess collection and issued non-marketable bonds, now held in the SS trust fund. All that excess collected tax income has been spent on many things from wars to corn subsidies. Recently however, with the aging population, the SS taxes have not covered the SS payouts. Initially the interest on the bonds in the SS trust fund was great enough to keep from cashing in any of the bonds in the Trust fund - So what you imply WAS true - The federal government did not need to pay off these bonds. Now the interest on the bonds (plus the lesser SS taxes on the increasing low-wage "Big Mac" jobs) will not meet the SS pay-out obligations to the growing number (10,000 more each day) of retiring "baby boomers." So some bonds in the trust fund are being cashed in - presented to the US treasury for payment of their "face value." Cashing bonds in of course lowers the total interest SS receives on the bonds remaining in the trust fund - This is a negative feed back systems leading to collapse of SS if continued. It will not be. The SS benefits must be decreased, or age at first benefit increased (as has already been done). Alternatively, in principle, the SS tax can be increased; however, the only politically feasible way that can be done is to increase the maximum annual collection from any individual. For examples some one not now having SS tax taken out of their wages for the last five months of the year might find they don't escape the SS tax before 1 November. Even doing just that without any increase in the SS tax rate, will be politically difficult. More likely IMHO, is limit /reduce / the monthly check the very rich are now receiving. Unfortunately that will not "Save SS" as there are not enough "very rich" - The shrinking "middle class" would need to be hit too, for that to be significant. So to avoid depletion of the trust fund, some more forms of benefit reduction will be required. No path that can "save SS" will be popular with Congressmen facing tight re-election races. The point of the above is that the Federal Government MUST actually pay off the bonds it has issued to other government agencies as they in turn, have obligation to pay and need to collect on the bonds they hold just as all non-government agencies and commercial firms expect to collect the face value of the bonds they hold. To not pay off ANY bond issued is DEFAULT ! Your "Government debt is only 10 trillion as it owes 8 trillion to itself" argument does not "wash" - The government owes ~ 18 trillion, which must, and will, be paid. Probably by depreciating the value of the dollars paid (and all other dollar people saved for their retirement). You should stop making the silly argument that debt the government owes to government agencies is not "real debt" - only false accounting effects and does not need to be paid.
JOE budget cuts to the military hasnt been good. Barack also planned to cut last I knew some 40,000 troops. Simple Google or Yahoo searches help explain. so no obama hasnt strengthened it. My search engines pulled this rabbit out.
Why do you call Russia mother Russia Joe? You from there or something ? From some searches I done did.. Chiefs: Budget Cuts Weaken Force, Increase Risk of Losing Wars freebeacon.com › national-security › Please Register or Log in to view the hidden image! .... military capabilities declined during the Obama administration and deep defense spending cuts ... Joint Chiefs: Budget Cuts Weaken Military, Endanger American Lives Newsmax.com › ... military capabilities have declined during the Obama Administration and major defense cuts are ... Lawmakers talk big cuts for Pentagon budget - Military Times www.militarytimes.com › - Big, once-unthinkable cuts to the Pentagon budget were openly discussed ... "We look incompetent, we look selfish, we look weak," Cooper said. Rep. Lindsey Graham: Army is smallest since 1940, PolitiFact.com We're taking the military budget under sequestration cuts ... Still, Graham was trying to make the point that the budget cuts have weakened the military to points not seen in decades. Congress Should Increase Defense Spending in the FY 2016 Budget... www.heritage.org Consecutive years of across-the-board budget cuts have significantly weakened the U.S. military! Funding cuts would weaken U.S. submarine readiness Navy > Under the 2011 Budget Control Act, the Pentagon must cut spending by $500 billion ... The Growing Problem of a Shrinking U.S. Military Budget - US News breakingdefense.com - These cuts, he reminded the Pentagon leaders and his members, ... Tom Price, chairman of the House Budget Committee, ... but is still true, that reducing our military spending in the ... Potential Cuts Will Lead to a Weaker US Military - www.brookings.edu › forbes.house.gov › You can't do it if you zeroed the budget.” ... “The roughly $1 trillion in cuts … would seriously weaken our military,. What related information have you seen to the contrary, Joe? What info have you been particular too that troop cuts an budget cuts really help the military? If the government cant afford "items" & personal it is similar to any other company or household. It suffers an sometimes folds. YES! WE Americans have great troops, good technology, some stuff others haven't invested in. But like Iraq when the troops pulled out there was equipment left behind. We cant keep replacing it, an talks about getting new jets, weapons, an vehicles have been delayed different times. I was in the Army its heavy on bureaucratic stuff an Red Tape, an headaches! Sent from my Sprint phone.
Well, you need to talk to your fellow Republicans about military budget cuts. Obama has opposed cuts to military spending. Do you remember Republican threats to cause a default and shut down the government? The military cuts were part of he sequestration bill and part of the budget cuts demanded by Republicans. "Obama has said he wants Congress to increase both defense and non-defense spending, and will veto any bills that keep the sequestration framework in place. House Speaker John Boehner's office called the veto threat "a dangerous game." - USA Today June 9, 2015 http://www.usatoday.com/story/news/...-house-veto-threat-defense-spending/28761787/ If you want to blame Obama for something blame him for something he actually did. And that doesn't change the fact that the US military ins more powerful today than it was when Obama took office. The US military has deployed and continues to deploy laser weapons, new weapons technologies continue to be deployed. The military is less stressed. It has more available resources, because much of its resources are not tied up in places like Afghanistan and Iraq as they were when Obama assumed office. Tell your fellow Republicans they need stop the sequestration they demanded and continue to demand.
Because I want to. This forum is know to have a population of Russophiles and based on your posts you might be one of them. Well you are being a little disingenuous. With respect to Graham's comment, this is the part you left out, "We took Graham’s claim to several experts, who told us that comparing the American military of 2014 to that of the early 20th century is irrelevant. Because of technological advances, the ships and troops of today’s military have greater capabilities than they did in the world wars. "One of the reasons for the decrease in size -- both Army and Navy -- is that we now rely far more on technology than on sheer numbers," said Roland, the military history expert from Duke. "The question is not how we compare to our Army in 1940 or our Navy in 1915, but how we compare with our potential enemies in 2014. We are head and shoulders above them." For example, the Navy did not have any aircraft carriers in 1915, but now it has an active fleet of 10. David E. Johnson, a political scientist at the Rand Corporation, estimated that just four modern aircraft carriers would have capabilities equal to that of the entire Navy before World War I. At that time, the military also did not have radar, satellites, computers, virtually undetectable ballistic missile submarines, drones and other advanced technology that allow the military to do more with fewer soldiers. Also, in terms of military spending relative to other countries, the United States accounts for 37 percent of the world’s total military spending. China follows, at 11 percent of the world’s spending, as of 2013, according to the Stockholm International Peace Research Institute. (Put another way, the United States spends as much on its military as the next 8-12 biggest defense-spending countries combined.) Warfare also has changed, Johnson said. It’s been decades since the United States has been involved in a war, like the world wars, where the country lost numerous ships and hundreds of thousands of soldiers. While the military should continue have a robust number of ships and soldiers, it does not necessarily need as many as it did in previous conflicts. That being said, Johnson said sequestration has hindered military capabilities -- particularly in light of recent developments in Iraq and Syria. The Pentagon has had to make cuts to its day-to-day operations, while carrying out missions in the Middle East that were not budgeted for." - Politifact http://www.politifact.com/truth-o-m...y-graham-army-smallest-1940-navy-smallest-19/ And, I asked for credible references. The highly partisan sources you cited are not credible. Those sources blame Obama for everything regardless of fact - remember death panels and government take over of healthcare?
Then tell your Republican friends, don't cut military spending. Personally, I think the US should increase military spending, but it needs to be smart about it. We have two very real potential enemies, China and Russia. The decision to leave equipment behind was a business decision. Delays are common in private and public entities when you are pushing the technology envelope. I was in the Navy. I have a son in the Coast Guard. Yeah, I agree the Army is slow moving and big on red tape. The US Army has evolved for the better since Vietnam. It's much better today than it was a few decades ago. Two, the US government isn't like a household. It doesn't have the income limitations households have. It can increase taxes on a whim at any time and taxes are the lowest they have been since WWII, last few years excepted. Obama and Republicans did increase taxes a few years ago but not by much. When you can print money as the government can, you can afford anything. Private companies and individuals cannot create money, so it is fallacious to compare a full sovereign government to a company or individual. Private companies and individuals cannot create money.
Not with out limits. Too much "printing" of a fiat currency always ends the same way - economic collapse. The trick is to know how much is "too much." Powerful Germany was destroyed by WWI and the peace treaty required post WWI Germany to pay for ALL the economic damage the Germans had caused the victors. The clever Germans got the victors to agree that these payments could be in Marks and the amount was fixed / specified. So the Germans just printed that fixed quantity of Marks, which of course was "too much." So small domination notes, like 100 Mark notes, were not as valuable as the paper they were printed on. That was the only way the German debt could be paid. US probably is in that same condition now, as the per capita federal debt continues its ever upward climb - Can only be paid (if this climb up in per capita debt continues) with near worthless dollars. I don't know how much is "too much" but do know that regardless of what that sum is, it will be exceeded, if the per capita debt continues to climb up. Especially as the average age of the population increases and the total purchasing power of those not retired /wage earners / continues to fall as Big Mac jobs replace the better paying jobs their parents had.
Oh, and where is the evidence to back that claim? BillyT we have been over this numerous times. ALL currency is fiat currency, anything short of a fiat currency is barter and barter is tremendously inefficient. That's why we are not paying our electricity bills with chickens. Two, there is trick. Macroeconomics isn't as simple as you imagine it to be. When you make those kinds of statements you greatly oversimplify and in doing so arrive at incorrect conclusions. Printing "too much" money, whatever that means, doesn't always end in economic collapse. Economic collapse is the result of monetary and fiscal mismanagement, not the printing of "too much" fiat currency. There is never a good excuse for fiscal or monetary profligacy. Fully sovereign governments can spend and print as much money as they want but there will be economic impacts and those impacts will vary depending on economic circumstances and those consequences can be managed. That is a fact. Economic collapse occurs and only occurs when the economy has been either acutely or chronically grossly mismanaged or through some catastrophic externality. That's more than just creating money. As has been explained you numerous times over the years expanding the money supply without sufficient supply does create inflation. But just "printing new money" in and of itself doesn't equate to inflation or economic collapse (e.g. The Great Recession of 2007-2009). Inflation isn't synonymous with economic collapse (e.g. oil supply shocks of the 70's and resultant inflation). Inflation is often a remedy to prevent economic collapse (e.g. the oil supply shocks of 70's). And there are remedies for inflation. Well that "powerful Germany" you reference had just been defeated militarily and forced to pay reparations and sign a treaty which kept the country perpetually disadvantaged militarily and economically. So Germany obviously wasn't very powerful. Your assertion is wrong and moreover it's misleading. This is what you are leaving out: "The Treaty of Versailles and the 1921 London Schedule of Payments required Germany to pay 132 billion gold marks (US$33 billion) in reparations to cover civilian damage caused during the war. This figure was divided into three categories of bonds: A, B, and C. Of these, Germany was only required to pay towards 'A' and 'B' bonds totaling 50 billion marks (US$12.5 billion). The remaining 'C' bonds, which Germany did not have to pay, were designed to deceive the Anglo-French public into believing Germany was being heavily fined and punished for the war." https://en.wikipedia.org/wiki/World_War_I_reparations At that time the world operated under the gold standard. That is no longer the case. That's nonsense. You have predicted the end of the dollar for 8 years now, and you have always been wrong. You were wrong last year when you predicted the demise of the dollar would occur on Halloween of last year. And you will be proven wrong again next month when your predicted demise of the US Dollar fails to occur on Halloween of this year. You are just that perennial demise of the dollar kind of guy who has never opened a macroeconomic text in his life but somehow knows more about economics than all the world's economists because you are just smarter and have secret knowledge. What you have consistently failed to recognize is that macroeconomics is a very complex science. It cannot be reduced to just one thing and only one thing. You cannot make these blanket statements you are so fond of and retain any degree of credibility.
Yes I have admitted I got the timing wrong. The economic decay in US did not come 7+ years after my prediction of it. We will need to wait a few months more to see if it comes this Halloween. But there is nothing wrong with the logic (Per capita debt can not forever grow faster than middle class worker's total purchasing power, as now.) Your attacks on me, my knowledge, etc. do not refute that logical conclusion.
Well apparently it isn’t so simple because folks like you have a great deal of difficulty comprehending it. The fact is you cannot borrow from yourself, nor can you repay yourself. It’s a fiction. The Social Security taxes which have created this “debt” are not investments. They are taxes and taxes are not debt. Yes, the government must pay its debts. That isn’t the issue. It never has been. The issue is the legal fiction you are enmeshed in. There is no debt. Interagency debt isn't debt. It's an internal accounting transaction which is used to track and account for funds. Unfortunately for you BillyT words have meaning. One cannot borrow from one’s self nor repay one’s self. Debt: “An amount of money borrowed by one party from another” http://www.investopedia.com/terms/d/debt.asp If the government used the same accounting method used by private industry, interagency debt would be netted out and not reported as debt. Debt is something owed to others, not something you owe to yourself. It really is that simple and it shouldn’t be difficult to understand. What you are advocating is analogous to writing an IOU to yourself for a million dollars and calling it debt. Just because you write an IOU to yourself for a million dollars doesn’t make you a million dollars in debt as there is no legal obligation for you to pay yourself and you cannot borrow from yourself and so it is with US debt. Your belief is just silly. That is why the US Treasury reports debt owed to the public separately. Because that is the important number and that is the number used by academics, professionals and the Congressional Budget Office. As you know, a significant portion of the debt our government “owes” to itself is related to excess Social Security and Medicare taxes which began to accumulate after Ronald Reagan increased those taxes some 35 years ago and was subsequently used to fund tax cuts for America’s wealthiest citizens. It was a massive wealth transfer from middle and lower wage earners to America’s richest citizens. Capital gains taxes were reduced from 40% to 15% on the backs of American wage earners. That interagency “debt” is the theoretical value of those wealth transfers. The Medicare and Social Security tax increases were sold to American workers as necessary to fund their retirement. Well, now those workers are retiring and those funds, based on the latest trustee report and current estimates, would fully fund those retirements through 2030. Now if the government intends to fulfill the promise made to American workers some 3 decades ago, it will need to raise taxes its wealthiest citizens who have received the benefits of their wage earner funded tax cuts for that last 35 years. It’s payback time. But that doesn’t make this interagency “debt” a real debt. These programs could be cut or eliminated, taxes could be raised, or some combination of both, program benefits have been cut before. So it isn’t without precedent. Reagan cut them in the 80’s. But that doesn’t make the excess Social Security taxes debt. Taxes receipts are not debt. Taxes are used to pay debt. This interagency government debt mostly represents an excessive taxation of wage earners over a 30+ year period. Yes it’s difficult to tell any major constituency group you will cut favored programs for any reason, but that doesn’t make spending for those programs debt. The other most significant portion of the “debt” the government owes itself is held by the Federal Reserve. The Federal Reserve holds 2.5 trillion dollars of US debt (i.e. Treasury Notes). That is US debt the Federal Reserve has purchased on the open market. One might look at it as something analogous to a stock buyback. In this case it’s a debt buyback. The Social Security Administration is an agency of the federal government. Its employees are government workers and paid by the federal government. None of that is really relevant to whither these excess Social Security tax payments are debt. Paying Social Security tax doesn’t confer any ownership interest onto the taxpayer or the tax paid. Social Security and Medicare since their inception have always been “pay as you go systems”. Government funding of those programs isn’t contingent upon government accounting method. Congress decides when, how or if it will fund and how much it will fund the program. Political difficulty isn’t a determinate of what is or isn’t debt. As have mentioned many times over the course of years, the US government can revert to Reagan era tax rates to fund Social Security. That means raising capital gains tax back to 40% for wealthier folks. Government has numerous was to raise taxes and given US income tax rates are at historic lows, there is plenty of room to increase taxation to cover any future government expenditures. The wealth transfer of the last 35 years needs to be reversed.
Well, there are many ways government could fund this program. It could reduce benefits. It could increase taxes or it could do both. I suspect it will do both. It has done all of that before. But it really isn’t relevant to this discussion. That’s nonsense. The US government cannot default on itself, just as if you wrote an IOU saying you owed yourself a million dollars and then failed to pay yourself a million dollars, any rational actor would not view that as a DEFAULT! It’s nonsense. It’s an internal accounting device. You cannot borrow from yourself, unless you happen to be schizophrenic and maybe have a multiple personality thingy going on. Those “bonds” are a legal fiction. It’s a government IOU the government has issued to itself. They are bonds in name only. By any reasonable definition they are not bonds. Therefore they cannot be defaulted upon. Congress created them and Congress can easily make them disappear with the simple stroke of a pen. Well here is the kicker which has been repeatedly pointed out to you over the course of years; the government isn’t legally obligated to do any of those things. Payers of Social Security taxes have NO ownership rights – NONE. Therefore there is no debt. It really is that simple. Social Security and Medicare benefits are not etched in stone and change over time. Social Security and Medicare benefits and payouts are whatever the US government says they are at any given point in time. The US government is under NO legal obligation to fund Social Security or Medicare. Our government funds those programs because they are popular programs. The Defense Department is another popular program. But that doesn’t make anticipated future spending for defense programs debt. Using your definition of debt, things get very silly very quickly to the point where debt has no meaning. If everything is debt, nothing is debt. So unfortunately for you BillyT the argument does hold and it does wash. Using your “logic” you could take the anticipated future expenditures of any government program or all government programs and call them debt. The government intends to fund the Defense Department into perpetuity, but that doesn’t turn anticipated future defense spending into debt as you area attempting to do with Social Security and Medicare. One of the many unfortunate facts for you is if the government used the same accounting method used by private industry, government interagency debt would not be reported as debt as it is today, because it’s not debt. Companies don’t report “debt” they owe to themselves (i.e. interagency debt) as debt. So while you may find that “silly”, accountants, investors, and business leaders don’t. That’s why they don’t do it.
