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National Debt
Old 08-17-2005, 01:12 PM   #1
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National Debt

Check out this website to see the up-to-the minute amount of the national debt:

http://www.uwsa.com/uwsa-usdebt.html

What do you think are some of the ramifications of this huge debt toward those of us who aspire to ER? One I can think of is that this means the government will owe some of us for the bonds (and bond funds) we may have purchased, and thus John Q. Public will get the priviledge of paying for part of our retirement! Another possibility is that a huge national debt fuels inflation. Are there any other down sides?
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Re: National Debt
Old 08-17-2005, 01:32 PM   #2
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Re: National Debt

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What do you think are some of the ramifications of this huge debt
Longterm I have to believe interest rates will be high(er). As our foreign friends refuse to continue finance our excessive debt at low(er) rates.

For the FIRE'd higher rates will help offer competitive low risk investments. Once again the working stiffs - with lots of debt - will be left holding the bag (paying higher rates).
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Re: National Debt
Old 08-17-2005, 03:45 PM   #3
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Re: National Debt

In the best-case scenario, running a large deficit is supposed to be stimulative to the economy in the short-term, but eventually the strategy becomes a drag.

Here's what will happen:

- Interest rates will eventually rise. Today's bonds will lose value. Simple supply and demand as deficits increase the supply of treasury debt.

- Taxes will eventually rise. My guess is that these last few years will be fondly looked upon as the period of lowest taxes in history, and future taxes will have to make up for both the current debt and the increasing debt interest burden. Take your cap gains now.

- The gap between rich and poor will increase (assuming that the rich are benefiting most from deficit spending and low taxation).

- Eventually, government spending will be cut, jobs will be lost, and the economy will be in worse shape than before this "stimulus."
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Re: National Debt
Old 08-17-2005, 04:05 PM   #4
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Re: National Debt

the retirement age will probably go up from what 65 to 80 in the future... maybe
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Re: National Debt
Old 08-17-2005, 05:33 PM   #5
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Re: National Debt

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Originally Posted by wabmester
In the best-case scenario, running a large deficit is supposed to be stimulative to the economy in the short-term, but eventually the strategy becomes a drag.

Here's what will happen:

-* Interest rates will eventually rise.* *Today's bonds will lose value.* *Simple supply and demand as deficits increase the supply of treasury debt.

- Taxes will eventually rise.* *My guess is that these last few years will be fondly looked upon as the period of lowest taxes in history, and future taxes will have to make up for both the current debt and the increasing debt interest burden.* *Take your cap gains now.

- The gap between rich and poor will increase (assuming that the rich are benefiting most from deficit spending and low taxation).

- Eventually, government spending will be cut, jobs will be lost, and the economy will be in worse shape than before this "stimulus."
Idle twaddle.
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Re: National Debt
Old 08-17-2005, 06:12 PM   #6
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Re: National Debt

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Originally Posted by MRGALT2U
Idle twaddle.
On an internet forum? You've got to be joking.

So, which part do you consider twaddle? The laws of supply and demand? The fact that our government is funded by taxes? Or the fact that government spending is a large part of our economy? I didn't even know these things were controversial. Silly me.
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Re: National Debt
Old 08-17-2005, 09:35 PM   #7
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Re: National Debt

Wab, I have the same take as you. JG was problably just trying
to run up his post count or was in his cups.

Cheers,

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Re: National Debt
Old 08-18-2005, 04:54 AM   #8
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Re: National Debt

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Originally Posted by charlie
Wab, I have the same take as you.* JG was problably just trying
to run up his post count or was in his cups.

Cheers,

Charlie
No, that was an honest reaction, rapidly formed and broadcast
as usual. I don't really care about post count. "In his cups?"
Well, it was 5:30, and so....................however, I like the phrase
"idle twaddle" and stand by my post.

JG
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Re: National Debt
Old 08-18-2005, 02:42 PM   #9
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Re: National Debt

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Originally Posted by Mountain_Mike
Check out this website to see the up-to-the minute amount of the national debt:*

http://www.uwsa.com/uwsa-usdebt.html

* Are there any other down sides?
Potential downside is that to service the debt, the government squeezes out investment by either restricting capital or making it very expensive. Result is that new businesses/activities that would create economic activity to support the retired population would not be as robust and thus insufficient to support those obligations.
Could be a serious problem in the future.
I personally don't thing the sky is falling, just that we'll have to pay more in the future for our present consumption, but that's one of the dire possibilities.
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Re: National Debt
Old 08-18-2005, 10:00 PM   #10
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Re: National Debt

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Potential downside is that to service the debt, the government squeezes out investment by either restricting capital or making it very expensive.
For the nonce, there is a surplus of capital world wide. US citizens don't save anything in aggregate, but foreign citizens more than make up for it. US corporations also are saving quite a bit. The US national debt is easily being absorbed by world wide capital.

This world wide surplus is likely to continue, since the rapidly growing nations traditionally have high savings rates.
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Re: National Debt
Old 08-18-2005, 10:01 PM   #11
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Re: National Debt

Nothin' worse than an "idle twaddle"...
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Re: National Debt
Old 08-18-2005, 10:46 PM   #12
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Re: National Debt

Maybe I'm an alarmist but I think the current US policy of "Debt, what's that?" is going to lead to a disaster down the road. One that makes me very skeptical of placing all my investment eggs in the US. It's rather bizarre that we spent how many years trying to solve the debt problem and getting there in the Clinton years and then bingo! it doesn't matter anymore.

Canada (where I live) has been running surpluses for many years now which makes me happier. Except that if the US economy chokes you'll drown us with you....
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Re: National Debt
Old 08-18-2005, 11:56 PM   #13
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Re: National Debt

I don't like the debt either, but there is nothing I can do about it. Most Americans like to be in debt. They run their private lives that way, and elect politicians to do the same.
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Re: National Debt
Old 08-19-2005, 12:08 AM   #14
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Re: National Debt

I have no problem with debt -- it's interest payments that I can't stand. The interest on our current debt is over $300B/year. We taxpayers pay that. It's the third largest item in the national budget (behind defense and health/human services). Your tax dollars at work.
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Re: National Debt
Old 08-19-2005, 12:11 AM   #15
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Re: National Debt

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Originally Posted by Have Funds, Will Retire
Nothin' worse than an "idle twaddle"...*
Isn't that cured by Viagra?
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Re: National Debt
Old 08-19-2005, 05:12 AM   #16
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Re: National Debt

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The interest on our current debt is over $300B/year.
I would certainly like to pay $300 billion per year less in taxes. Cut out the waste, and we could easily lop off another $300 billion plus. Alas, it won't happen.
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Re: National Debt
Old 08-19-2005, 08:38 AM   #17
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Re: National Debt
Old 08-19-2005, 10:02 AM   #18
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Re: National Debt

I don't understand the notion that there was no national debt during the Clinton years. When I look at the graphs that show the national debt over time, I do not see any time in recent history when there has been no debt.
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Re: National Debt
Old 08-19-2005, 10:34 AM   #19
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Re: National Debt

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Originally Posted by Mountain_Mike
I don't understand the notion that there was no national debt during the Clinton years.* When I look at the graphs that show the national debt over time, I do not see any time in recent history when there has been no debt.
The debt has been accumulated over the years.* *The Clinton administration's budget had annual surpluses, which reduced the debt, while the Bush administration's budget had huge annual deficits, which increased the debt.

[img width=750 height=473]http://traxel.com/deficit/deficit-constant-dollars.png[/img]
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Re: National Debt
Old 08-19-2005, 10:59 AM   #20
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Re: National Debt

Being an old lunch bucket Dem - I love to get my licks in against 'those durn Rep. guys.'

Unfortunately - having watched debt cycles since 1961 - it seems when pols are 'rich' they spend and when 'poor' they panic - due diligence and fiscal prudence seems to escape both parties except when the handwriting is on the wall.

Leverage works in both directions - the lever in low interest environment - can really bop you when the worm turns.

It's not a matter of the chickens coming home to roost - but when.

I expect to buckle up - and take the ride with De Gaul and the Norwegian widow.

I'm too old - to be smart anymore.
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