USA Debt Crisis

[new_trader]

He is old and wise - which can't be said to many other people...

You've seen the film Brewsters Millions?

You couldn't spend all that money if one tried...

What has that got to do with anything? I'm sure the government could spend all that money and more and society would still be poorer. I'd rather let the rich people keep their money instead of taking it away from them and giving it to the government. At least rich people are much wiser with their investment choices and society benefits from them.

Besides, you keep flapping about in the wind with your opinions that I don't even think you understand what the problems are in the economy let alone have a solution. You prescribe high taxes, high inflation and low interest rates while seeking investment advice on how to avoid swallowing your own medicine. I think you should lead by example and sell your gold, pay your capital gains tax and then put all of your cash in the bank and keep it there for the next 10 years.

 

[Splitlink]

. I think you should lead by example and sell your gold, pay your capital gains tax and then put all of your cash in the bank and keep it there for the next 10 years.

How much do you think money placed in the bank for ten years will be worth at the end of the term?

None of us know what to do with money any longer. It has to be put to work all the time because it devalues. But there comes a time when the likes of Buffet knows that it does not matter to him anymore. Bil Gates is still young but it will come to him, too.

So the question for him is, after all his friends and relatives have been taken care of, what to do with the other billions? Whatever he does, the taxman will take a good portion of it, but we are, still, talking about billions left to do some good somewhere.

As I see it, we are picking on those who have all that wealth because they have managed to hang on to it while the majority have lost theirs. I am sure that Buffet has lost billions in assets over the last few years, the same has everyone else, but we are turning socialist, ourselves, inasmuch as we want to spend that which is not ours to spend.

Of one thing we can be sure. Whatever he does will not be right.

 

[Als]

america looks at itself as the metropoly of global quasicolonial empire

and at the other countries as it's colonies

(including fifty first state on british islands)

whose existance serves only one purpose what colony exists for

namely to nourish "shining town on the hill"

with natural and human resources

the rest is only noise......

but typical americans are very naive and unsophisticated

they do not suspect that they fell under control of jews

indirect and not much visible hence more durable and certain

in the end ordinary americans will pay the price as well.....

 

[Atilla]

What has that got to do with anything? I'm sure the government could spend all that money and more and society would still be poorer. I'd rather let the rich people keep their money instead of taking it away from them and giving it to the government. At least rich people are much wiser with their investment choices and society benefits from them.
Your mind is closed NT. I'm sad to say as other than on the topic of gold you don't contribute anything new in terms of solution other than brag on beating your drum about same old dogma.

I like to think of every Indian as a world class enterprise beating entrepreneur. It is simply that they do not have the ability or options to make their dreams come true.

In every facet of humanity there are millions of Patels and Kumars as well as Jane and John's waiting to make their mark given half the opportunity.

If the rich people keeping their money was the solution then the richer countries would simply keep getting richer not falling behind. Think of the bigger macro picture not just what you can see in front of your nose.


Besides, you keep flapping about in the wind with your opinions that I don't even think you understand what the problems are in the economy let alone have a solution. You prescribe high taxes, high inflation and low interest rates while seeking investment advice on how to avoid swallowing your own medicine. I think you should lead by example and sell your gold, pay your capital gains tax and then put all of your cash in the bank and keep it there for the next 10 years.

Your second paragraph sucks big time. Why you personalising again?

I ask for your opinion and I get this silly response. One trick pony that you are. Dissapointed you didn't mention fiat currency in there somewhere... :cheesy:

I do lead by example and I state I am happy to pay more tax and I'll vote for it too and this should be accross the board.

We have collosal government debt and your solution is to:
Cut spending,
Cut taxes and
Raise interest rates....

How does that pay back the debt? About as crazy policy as one can possibly get?

 

[counter_violent]

Your second paragraph sucks big time. Why you personalising again?

I ask for your opinion and I get this silly response. One trick pony that you are. Dissapointed you didn't mention fiat currency in there somewhere... :cheesy:

I do lead by example and I state I am happy to pay more tax and I'll vote for it too and this should be accross the board.

We have collosal government debt and your solution is to:
Cut spending,
Cut taxes and
Raise interest rates....

How does that pay back the debt? About as crazy policy as one can possibly get?

Atilla m8, we have a colossal govt debt as do all western govts because govt and state are quite simply too big and do too much. You really ought to be livid about this sorry state of affairs. You as a tax paying middle class working professional are already paying a disproportionate amount into the system and getting nothing in return.
In order to incentivise those with low paid jobs, they should be taxed less which in turn means they would perhaps choose to work more hrs or even take a second job etc to better themselves and it also boosts spending power. Alongside this there should always be a differential between the unemployed and the low paid, otherwise where exactly is the incentive to get off benefits. State benefits are now at such a high level that for some it has actually become a life style choice. How many times have you heard the stories like, why bother going to work when I can get this paid and that provided oh and some pocket money thrown in. It really is absolutely ridiculous and it definitely takes the pi55 out of the low paid and all the middle class hard working tax payers and it is for this exact reason ( because the middle is getting decimated) that we will never get out of this recession/ depression with the current western policies. Middle pays for everything and when middle feels the pinch and see's no prospects and doesn't feel confident then you can be sure we are going nowhere fast.
Cutting taxes does lead to growth and is in and of itself an economic stimulus, the people are just smart enough / dumb enough to put that money to work either by consuming or upgrading house or saving etc etc all of which is the direction we should be going in.

There really is no way of escaping what I describe above. All these loony govt's have tried throwing money at the problems which has obviously failed. The markets and ratings agencies will now ensure that govt's are forced into doing the right things and this is the phase we are currently in.

 

[Splitlink]

Atilla m8, we have a colossal govt debt as do all western govts because govt and state are quite simply too big and do too much. You really ought to be livid about this sorry state of affairs. You as a tax paying middle class working professional are already paying a disproportionate amount into the system and getting nothing in return.
In order to incentivise those with low paid jobs, they should be taxed less which in turn means they would perhaps choose to work more hrs or even take a second job etc to better themselves and it also boosts spending power. Alongside this there should always be a differential between the unemployed and the low paid, otherwise where exactly is the incentive to get off benefits. State benefits are now at such a high level that for some it has actually become a life style choice. How many times have you heard the stories like, why bother going to work when I can get this paid and that provided oh and some pocket money thrown in. It really is absolutely ridiculous and it definitely takes the pi55 out of the low paid and all the middle class hard working tax payers and it is for this exact reason ( because the middle is getting decimated) that we will never get out of this recession/ depression with the current western policies. Middle pays for everything and when middle feels the pinch and see's no prospects and doesn't feel confident then you can be sure we are going nowhere fast.
Cutting taxes does lead to growth and is in and of itself an economic stimulus, the people are just smart enough / dumb enough to put that money to work either by consuming or upgrading house or saving etc etc all of which is the direction we should be going in.

There really is no way of escaping what I describe above. All these loony govt's have tried throwing money at the problems which has obviously failed. The markets and ratings agencies will now ensure that govt's are forced into doing the right things and this is the phase we are currently in.

So, you don't think that the present government is doing enough, yet?

 

[Splitlink]

Atilla m8, we have a colossal govt debt as do all western govts because govt and state are quite simply too big and do too much. You really ought to be livid about this sorry state of affairs. You as a tax paying middle class working professional are already paying a disproportionate amount into the system and getting nothing in return.
In order to incentivise those with low paid jobs, they should be taxed less which in turn means they would perhaps choose to work more hrs or even take a second job etc to better themselves and it also boosts spending power. Alongside this there should always be a differential between the unemployed and the low paid, otherwise where exactly is the incentive to get off benefits. State benefits are now at such a high level that for some it has actually become a life style choice. How many times have you heard the stories like, why bother going to work when I can get this paid and that provided oh and some pocket money thrown in. It really is absolutely ridiculous and it definitely takes the pi55 out of the low paid and all the middle class hard working tax payers and it is for this exact reason ( because the middle is getting decimated) that we will never get out of this recession/ depression with the current western policies. Middle pays for everything and when middle feels the pinch and see's no prospects and doesn't feel confident then you can be sure we are going nowhere fast.
Cutting taxes does lead to growth and is in and of itself an economic stimulus, the people are just smart enough / dumb enough to put that money to work either by consuming or upgrading house or saving etc etc all of which is the direction we should be going in.

There really is no way of escaping what I describe above. All these loony govt's have tried throwing money at the problems which has obviously failed. The markets and ratings agencies will now ensure that govt's are forced into doing the right things and this is the phase we are currently in.

So, you don't think that the present UK government is doing enough, yet?

 

[YouAreNotFree]

The worst government spending of all is deficit spending. It is best to make cuts, but failing that tax rises are better than borrowing.

 

[Atilla]

Atilla m8, we have a colossal govt debt as do all western govts because govt and state are quite simply too big and do too much. You really ought to be livid about this sorry state of affairs. You as a tax paying middle class working professional are already paying a disproportionate amount into the system and getting nothing in return.
In order to incentivise those with low paid jobs, they should be taxed less which in turn means they would perhaps choose to work more hrs or even take a second job etc to better themselves and it also boosts spending power. Alongside this there should always be a differential between the unemployed and the low paid, otherwise where exactly is the incentive to get off benefits. State benefits are now at such a high level that for some it has actually become a life style choice. How many times have you heard the stories like, why bother going to work when I can get this paid and that provided oh and some pocket money thrown in. It really is absolutely ridiculous and it definitely takes the pi55 out of the low paid and all the middle class hard working tax payers and it is for this exact reason ( because the middle is getting decimated) that we will never get out of this recession/ depression with the current western policies. Middle pays for everything and when middle feels the pinch and see's no prospects and doesn't feel confident then you can be sure we are going nowhere fast.
Cutting taxes does lead to growth and is in and of itself an economic stimulus, the people are just smart enough / dumb enough to put that money to work either by consuming or upgrading house or saving etc etc all of which is the direction we should be going in.

There really is no way of escaping what I describe above. All these loony govt's have tried throwing money at the problems which has obviously failed. The markets and ratings agencies will now ensure that govt's are forced into doing the right things and this is the phase we are currently in.

Same old rhetoric and solution and probably reason why we are here today.

Continued efforts to cut tax coupled with increased spending.

CV, you don't get the message or the picture. It is simple...


I too would prefer a smaller government I'm not arguing against cut in spending.

However, as YouAreNotFree said - is it not obvious that raising taxes to pay off debt is an obvious response.

1. Which country in the West is under attack or fears an invasion?
2. Why has the US spent collosal amount of money on the military and space?
3. Why have they fought so many wars and have bases all over the world?

This is about as stupid as it gets.

4. How if any country was under attack how quickly would they be able to crank up military spending and divert resources?


Life is about choices. I'm afraid most people are absolutely blind beyond their noses. Don't know or don't care BUT DON'T BLOODY WELL TOUCH MY TAXES...


Cutting taxes does not make people work harder. This is a stupid false assumption. Beyond certain level of income people substitute leisure for work. Cutting taxes makes no difference.

People argue but the bankers will leave us. If that idiot Bob Diamond were to leave the UK and sod off some where else, do you seriously believe no other subordinate manager in Barclays will be unable to fill his job.

Do you seriously believe if Fabio Capello leaves his job there will be no other person to replace his position from within the UK?

Do you guys seriously believe Bob Diamond makes £50m difference to Barclays bottom line and the next average layer of management could not do the same.


To cut debt.

1. Raise taxes
2. Cut spending

No alternative. Period.

Once debt is in control then one can cut taxes and raise spending. Common sense init?

Honest guv.


Your suggestion is precisely what has been done since Thatcher and Rageonomics of the 80s... Doesn't work... Period.

 

[Pat494]

We all know that left wing Govts have mainly caused this problem by massive overspending. The only account they are brought to is being thrown out when unfortunately it is too late. Blair/Brown etc should also be liable for their downright incompetency and have their assets seized. It may not pay off much of the debt but it would send a clear signal to future Govts NOT to overspend.

Cameron take note when giving away hardearned taxpayers money imho

 

[Atilla]

We all know that left wing Govts have mainly caused this problem by massive overspending. The only account they are brought to is being thrown out when unfortunately it is too late. Blair/Brown etc should also be liable for their downright incompetency and have their assets seized. It may not pay off much of the debt but it would send a clear signal to future Govts NOT to overspend.

Cameron take note when giving away hardearned taxpayers money imho

No way Pat,

Current problem is purely the Bank bailouts coupled with the recession when tax revenues fall and social spending rises.

Two key factors for US are; Wars and Bank Bailouts.


Problem is people focusing on social spending because people object to being laden with this mess.

Middle class knee jerk reaction is don't touch my taxes without thinking cause and effect.

If one does not identify source of problem then solution is going to be wrong altogether.

 

[new_trader]

Your second paragraph sucks big time. Why you personalising again?

I ask for your opinion and I get this silly response. One trick pony that you are. Dissapointed you didn't mention fiat currency in there somewhere... :cheesy:

I do lead by example and I state I am happy to pay more tax and I'll vote for it too and this should be accross the board.

We have collosal government debt and your solution is to:
Cut spending,
Cut taxes and
Raise interest rates....

How does that pay back the debt? About as crazy policy as one can possibly get?

As I said before, you do not understand the problems. You see the debt like a mortgage and you think that all the Government has to do is tax the rich and keep interest rates low so they can 'pay off the debt' and we will all live happily ever after as a result. You do not understand the difference between wealth redistribution and wealth creation; you do not understand the law of unintended consequences, you do not understand trade deficits, you do not understand the lack of productive labour or the problems of misallocation of labour and capital that are caused by artificially low interest rates.

If you make an effort to understand that interest rates should be determined by the free market and the natural force of supply and demand you will at least be able to see why the policy the bank of England is following is only doing more long term damage. Low interest rates cause people to borrow, consume, and speculate at the expense of saving, producing and investing. The determinative factors for interest rates should be the supply of savings available to lend and the demand for money by people and business who want to borrow.

On top of all of this, Politicians are under the misguided belief that all jobs are the same and that all consumption is the same. If that were the case you could employ 50% of the population to dig holes and the other 50% to fill them back in. I could go on but I know I’m wasting my time with you.

 

[new_trader]

Cutting taxes does not make people work harder. This is a stupid false assumption. Beyond certain level of income people substitute leisure for work. Cutting taxes makes no difference. .

You can't be serious? You think taxes don't affect behaviour and choices? Would you work 100% harder for only 10% more money? Nobody would!

You are right, beyond a certain level of income people will substitute leisure for work and that income level is determined by the amount of tax taken above that level, don't you get it?

If the person substitutes leisure for work then the government gets ZERO tax revenue!!

 

[YouAreNotFree]

The most pressing issue is not the debt, but the deficit. You can't even begin thinking about our debt pile before we sort the deficit.

Whether we solve the deficit by spending cuts, tax rises, or a combination, it needs to be done and quickly. I prefer spending cuts only, but government borrowing only leads to serious, serious issues so lets just get it done.

When government spends, almost exclusively it does nothing but harm an economy. Typically government does not create jobs and it does not create wealth. When they run deficits they are sacrificing future taxpayer's income for current spending. Not only does it not make economic sense (interest must be paid and governments does not 'invest' for a return) but it is morally bankrupt and imposes a debt burden on future generations, both alive and yet to be born. Sound fair?

Cutting spending and lowering taxes does greatly assist an economy. If individuals and companies keep more of there own cash the economy will better be able to thrive. This is because they, and only they can allocate resources and capital in the most efficient manner. Governments are absolutely unable to do this because it is not their own money they are spending. That is the only reason we have endless wars, quangos and social projects.

When an individual in the private sector spends money on something they do so because they value the thing they are buying more than the money they hand over. When an individual or a company invests they are taking that risk because they believe they will receive a positive return. This is what makes an economy productive, this is what creates growth. Government does none of this. Think about what the government has in mind when it spends. Its none of the above and that is why we get such a raw deal.

As for interest rates, they do need to rise. They are a check on government borrowing, its as simple as that. If we had a market rate of interest for the past years the kind of deficits we have seen would not have been possible. The irony is that because such low interest rates allowed large deficits, when rates finally do rise the accumulated debt burden will be that much harder to manage.

 

[barjon]

Same old rhetoric and solution and probably reason why we are here today.

Continued efforts to cut tax coupled with increased spending.

CV, you don't get the message or the picture. It is simple...


I too would prefer a smaller government I'm not arguing against cut in spending.

However, as YouAreNotFree said - is it not obvious that raising taxes to pay off debt is an obvious response.

1. Which country in the West is under attack or fears an invasion?
2. Why has the US spent collosal amount of money on the military and space?
3. Why have they fought so many wars and have bases all over the world?

This is about as stupid as it gets.

4. How if any country was under attack how quickly would they be able to crank up military spending and divert resources?


Life is about choices. I'm afraid most people are absolutely blind beyond their noses. Don't know or don't care BUT DON'T BLOODY WELL TOUCH MY TAXES...


Cutting taxes does not make people work harder. This is a stupid false assumption. Beyond certain level of income people substitute leisure for work. Cutting taxes makes no difference.

People argue but the bankers will leave us. If that idiot Bob Diamond were to leave the UK and sod off some where else, do you seriously believe no other subordinate manager in Barclays will be unable to fill his job.

Do you seriously believe if Fabio Capello leaves his job there will be no other person to replace his position from within the UK?

Do you guys seriously believe Bob Diamond makes £50m difference to Barclays bottom line and the next average layer of management could not do the same.


To cut debt.

1. Raise taxes
2. Cut spending

No alternative. Period.

Once debt is in control then one can cut taxes and raise spending. Common sense init?

Honest guv.


Your suggestion is precisely what has been done since Thatcher and Rageonomics of the 80s... Doesn't work... Period.

Atilla

You complain of "Same old rhetoric and solution" and yet you do much the same yourself.

There's no doubt that everyone's in a pretty pickle but, like most things, there's a balance to be drawn to get out of it.

I will correct your last assertion of:

"To cut debt.

1. Raise taxes
2. Cut spending

No alternative. Period."

This should read:

1. Increase tax yield
2. Cut spending

Now, increasing tax yield comes from either raising taxes, or from economic growth as more tax is paid the more people and companies earn, or from a combination of both. The increased tax yield from strong economic growth far outstrips what you could get away with by raising taxes per se. (there used to be another route for raising government income of selling the family silver but Thatcher took care of most of that).

I would suggest that the problem is of such a scale that it is only a sustained period of economic growth that can rectify it and government must find a balance that starts addressing the debt whilst at the same time stimulating economic growth. A neat trick if you can do it because we have a consumer led economy and the more you hit the consumer the less they have to spend.

jon

 

[new_trader]

Now, increasing tax yield comes from either raising taxes, or from economic growth as more tax is paid the more people and companies earn, or from a combination of both. The increased tax yield from strong economic growth far outstrips what you could get away with by raising taxes per se. (there used to be another route for raising government income of selling the family silver but Thatcher took care of most of that).

This has been explained to Atilla a number of times but he either cannot comprehend or refuses to comprehend, it is all explained in the Laffer curve.

http://en.wikipedia.org/wiki/Laffer_curve

 

[marbig]

The reality is that you are all focused on the wrong problems such as tax cuts spending cuts, etc

The real problem is that over the last 20 years the West has actively caused the destruction of their own manufacturing sector with the result that we are now confronted with massive unemployment or under employment. One country that I know of considers a person as employed (that is, NOT unemployed) if they work for ONE hour per week. The unemployment figures bandied about by various Western governments understate real unemployment levels by a factor of 2.5 to 3.

The manufacturing sector has almost universally been moved to China with the result being a 'hollowing out' of Western economies. Instead of producing things of value, we in the West are producing Facebook and Twitter where everyone talks about THEMSELVES to a nauseating degree. (Its all about 'Look at me!' The Western world is becoming ultra narcissistic and self indulgent ).

The next 5-10 years will see a RAPID and MASSIVE drop in wealth and living standards in the West as the wealth moves to the East and the 1.3 billion Chinese see a substantial increase in their living standards. The US has Trillions in debt and the US taxpayers will be paying it off through a lower standard of living.

 

[barjon]

The reality is that you are all focused on the wrong problems such as tax cuts spending cuts, etc

The real problem is that over the last 20 years the West has actively caused the destruction of their own manufacturing sector with the result that we are now confronted with massive unemployment or under employment. One country that I know of considers a person as employed (that is, NOT unemployed) if they work for ONE hour per week. The unemployment figures bandied about by various Western governments understate real unemployment levels by a factor of 2.5 to 3.

The manufacturing sector has almost universally been moved to China with the result being a 'hollowing out' of Western economies. Instead of producing things of value, we in the West are producing Facebook and Twitter where everyone talks about THEMSELVES to a nauseating degree. (Its all about 'Look at me!' The Western world is becoming ultra narcissistic and self indulgent ).

The next 5-10 years will see a RAPID and MASSIVE drop in wealth and living standards in the West as the wealth moves to the East and the 1.3 billion Chinese see a substantial increase in their living standards. The US has Trillions in debt and the US taxpayers will be paying it off through a lower standard of living.

Not really, you're talking about long term strategic, we're talking about shorter term operational

Aside from that, manufacturing is not the be all and end all so far as economic growth is concerned. In any event our manufacturing sector still accounts for 13% of the economy (which is a bit more than the financial sector). That said I don't depart from your view of the shifting in economic power even if I think your timescales are a tad short.

jon

 

[Splitlink]

Not really, you're talking about long term strategic, we're talking about shorter term operational

Aside from that, manufacturing is not the be all and end all so far as economic growth is concerned. In any event our manufacturing sector still accounts for 13% of the economy (which is a bit more than the financial sector). That said I don't depart from your view of the shifting in economic power even if I think your timescales are a tad short.

jon

It's not the be all and end all, Jon, but what else is there for the UK, when things start to pick up elsewhere? There will be a severe shortage of nurses, for sure, in the service sector, but there will be no money to pay for them.

The fact is, we have allowed big business to go abroad for cheaper wages and our world famous industries are gone in the name of a booming financial sector which is now on its knees. 13% of an economy that is hard put to find a crust. In fact, the more that I consider your figure of 13% the more depressing it seems because that will go, too, if Cameron does not get this right soon.

 

[YouAreNotFree]

The reality is that you are all focused on the wrong problems such as tax cuts spending cuts, etc

The real problem is that over the last 20 years the West has actively caused the destruction of their own manufacturing sector with the result that we are now confronted with massive unemployment or under employment. One country that I know of considers a person as employed (that is, NOT unemployed) if they work for ONE hour per week. The unemployment figures bandied about by various Western governments understate real unemployment levels by a factor of 2.5 to 3.

The manufacturing sector has almost universally been moved to China with the result being a 'hollowing out' of Western economies. Instead of producing things of value, we in the West are producing Facebook and Twitter where everyone talks about THEMSELVES to a nauseating degree. (Its all about 'Look at me!' The Western world is becoming ultra narcissistic and self indulgent ).

The next 5-10 years will see a RAPID and MASSIVE drop in wealth and living standards in the West as the wealth moves to the East and the 1.3 billion Chinese see a substantial increase in their living standards. The US has Trillions in debt and the US taxpayers will be paying it off through a lower standard of living.

We are focusing on the problem of government.

What you have said is true but the issues you highlight didn't 'just happen'. Government got us there.

On the manufacturing issue, we don't need China to manufacture all our crap for us. We have millions upon millions of unemployed and we PAY them to stay that way. They could be productive if we let them. The issue is the sheer number of barriers government places in their path.......regulation, employment laws, the minimum wage, taxes, the welfare state.

A successful manufacturing sector is not about low wages, despite the common consensus. It's about capital investment and productivity. The government adversely affects both. It destroys investment by sucking up funds via its deficit spending and arm twisting of the central bank to keep interest rates low. It ruins productivity with onerous regulation and taxes.

Of course we are told all you need to boost manufacturing is a weak currency. Well that has been working out well for the UK and US hasn't it? Deliberate policies by both to devalue. Result? Record trade deficits and contracting manufacturing lol. You can't make this stuff up.

Btw. For decades last century (pre 1980's)the USA was the largest manufacturer in the world. It also had the highest standard of living, the highest wages, produced the highest quality goods, was the largest creditor nation, had some of the lowest taxes/regulation and had a strong currency. Strange that.