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More debt than anybody can handle!!!
Old 08-17-2007, 05:10 PM   #1
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More debt than anybody can handle!!!

Since we are all people that think about money and about money in the future. Also we are all aware of the power of compounding interest and what 20-30-40 years of saving can do to your money. I thought it was appropriate to talk about this here. What the &#$* are the politicians doing with our money. Really this is insane and is now officially out of control. The country is on the wrong side of retirement money growth chart(see attachment which is national debt since 1940). This is at the worst time too, right when the baby boomers are going to retire and want more. I am embarrassed for the US right now, and I am worried it is too late. Just like everything else(global warming, etc).

I think of America right now as a seemingly rich businessman living beyond his/her means. With that brand new car (except it is not: NO levees, Minnesota bridge), eating out, going out, going to charity events and throwing their cash around. Then if you looked at his/her net worth he would be hundreds of thousands dollars behind the power curve.

Just like that businessman is going to be in trouble when that interest catches him. The US is in trouble now, and while some people are predicting a recession coming around the corner. So I have two questions…
  • Am I missing something or is it as bad as I think it is?
2. Does anybody have any ideas on what we can do to stop this spending. I am not asking for hypothetical ideas. I am asking for real ideas that this forum can do, or individuals can do to help us stop before we can’t recover.
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Old 08-17-2007, 05:19 PM   #2
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Old 08-17-2007, 05:24 PM   #3
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Yeah, its really bad, but that graph is a bit too abstract....here's a better view (can't vouch for source, tho)

http://zfacts.com/p/318.html
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Old 08-17-2007, 05:32 PM   #4
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as long as GDP keeps up I think we are OK

not that I don't wish that the government would spend a lot less money on everything!

debt vs GDP
United States National Debt 1791 - 2005 vs. GDP ($billions) - Swivel
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Old 08-17-2007, 08:51 PM   #5
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Originally Posted by RLTW View Post
2. Does anybody have any ideas on what we can do to stop this spending. I am not asking for hypothetical ideas. I am asking for real ideas that this forum can do, or individuals can do to help us stop before we can’t recover.
$9 trillion divided among the 125 million working Americans leaves us each with a $72,000 bill to wipe it out
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Old 08-17-2007, 09:00 PM   #6
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$9 trillion divided among the 125 million working Americans leaves us each with a $72,000 bill to wipe it out
Since I'm no longer classified as a "working American", I guess you're on the hook for $144,000.
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Old 08-17-2007, 09:06 PM   #7
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Was it Vinson who said "A billion here, a billion there... pretty soon you're talking real money"?

Quote:
Originally Posted by RLTW View Post
The country is on the wrong side of retirement money growth chart(see attachment which is national debt since 1940). This is at the worst time too, right when the baby boomers are going to retire and want more. I am embarrassed for the US right now, and I am worried it is too late.
Am I missing something or is it as bad as I think it is?
Yeah, we're missing context. It's hypothetically possible that these people made the graph as frightening as they could.

That chart is put out in a linear scale (not log) by people who didn't adjust it for inflation or compare it to growing GDP (as others have done). It's in bright scary red ink instead of black & white. It also doesn't reflect that governments use deficit spending during recessions... imagine going through 2000-2003 with a balanced budget instead of fiscal stimulus. Note how the chart begins right after the Depression ends, as well as other crises like 1913, 1907, and 1873.

That "embarrassment" comment lacks a context too. The U.S.'s spending trend may not be able to last forever, but IIRC Japan is in even worse trouble. It'd be interesting to see how the U.S. national debt & GDP compares to the rest of the top 10.

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Originally Posted by RLTW View Post
2. Does anybody have any ideas on what we can do to stop this spending. I am not asking for hypothetical ideas. I am asking for real ideas that this forum can do, or individuals can do to help us stop before we can’t recover.
Sure, we start breaking each other's rice bowls. As Warren Buffett mentions, I'm in favor of more heavily taxing the rich and keeping the inheritance tax after 2010. Friedman's policies were successfully implemented in Estonia, but look at their ~30% tax rates. Maybe we should cut Social Security & Medicare, too!

I think the best answer is Bloomberg's & Schwarzenegger's approaches (not the men themselves but their administration's fiscal policies). And as GDP ramps up in response to lower business taxes and economic stimulus, hopefully tax revenues will rise to match... allowing the Treasury to retire some debt.
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Old 08-17-2007, 09:19 PM   #8
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Since I'm no longer classified as a "working American", I guess you're on the hook for $144,000.
Alright, but I am only picking up the tab for one of you ER's
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Old 08-17-2007, 09:20 PM   #9
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Does anybody have any ideas on what we can do to stop this spending?
The graph linked by jazz suggests the answer is: elect Democrats. Better yet, elect a Democrat for President, and elect a Republican-controlled Congress. Since they can't agree on spending, they'll spend less.

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Old 08-17-2007, 10:20 PM   #10
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Uh, I did a presentation in 1981 for my business 101 class about how the National debt was out of control unfortunately at my advancing age (44) I can't remember the solutions I proposed.
Also fortunately it is a little more complicated than that. I would still like to see the chart turn around. One nice thing about owning the treasury is you always have the option of printing more money. Is that the inflation concern you guys mention from time to time??
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Old 08-17-2007, 10:27 PM   #11
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To bad Congress does not use their power to print money when they need it, instead of buying it at interest from the federal reserve.
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Old 08-17-2007, 10:50 PM   #12
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One nice thing about owning the treasury is you always have the option of printing more money. Is that the inflation concern you guys mention from time to time??
It's not a concern as long as the presses keep running!
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Old 08-18-2007, 12:35 AM   #13
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Originally Posted by EngineeringMyFinances View Post
The graph linked by jazz suggests the answer is: elect Democrats. Better yet, elect a Democrat for President, and elect a Republican-controlled Congress. Since they can't agree on spending, they'll spend less.
yeahbut.........that's why I added the disclaimer about vouching for the source.....Gridlock is GOOD

how's that go "past performace, blah blah blah"
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Old 08-18-2007, 10:12 AM   #14
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Good graph....

NOW, note that the graph was going UP even during the Clinton years when everybody was saying he was 'paying off the debt'...

Don't get me wrong... I wish the debt ratio was going down like it was during the Clinton years... but the Repubs have got to go (and I am one of them)... spent like drunken sailors (sorry to you drunken sailors...) and that does not include the UNFUNDED promises they made that we can not afford...

Will the dems do better I doubt it, but if you prove you can not control spending, then you get throw out and let the next guy have a shot... if he does nothing.. then back to repubs....
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Old 08-18-2007, 10:50 AM   #15
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Tex said
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graph was going UP even during the Clinton years
Yes, the graph did go up during the first part of the Clinton years, though not at the rapid pace of the Bush/Reagan years.

Then the Republicans took over Congress, and the graph falls. Which was the period where the common expectation was that the debt would be zeroed out soon. And also my point about splitting the power between the political parties.
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Old 08-18-2007, 04:09 PM   #16
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Here are some international data on debt as a percentage of GDP....

List of countries by public debt - Wikipedia, the free encyclopedia

and the national debt of the countries of which I am a citizen.....

Here is the Canadian national debt.....

Federal debt: historical data, brief definition and related links

Stingy Investor: Canadian Debt & Tax Clock

and the Irish national debt.....

NTMA - National Debt - Level of Debt

NTMA - National Debt - Debt / GDP Ratio

NTMA - National Debt - Interest Cost

NTMA - National Debt - Historical Data
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Old 08-18-2007, 05:16 PM   #17
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As long as the bill comes due after I'm dead, I'm OK with it.
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Old 08-19-2007, 06:38 PM   #18
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As long as the bill comes due after I'm dead, I'm OK with it.
That, unfortunately, is the sentiment of too many people, including many in office. My goal has always been to give more than I take, to leave the Earth and its citizens better off. If my actions can't do that, I don't deserve to use its resources.
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Old 08-19-2007, 11:05 PM   #19
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Does anybody have any ideas on what we can do to stop this spending. I am not asking for hypothetical ideas. I am asking for real ideas that this forum can do, or individuals can do to help us stop before we can’t recover.
Nothing.

Honestly the hemorrhaging may go up a little at times and up a lot at other times but these people (elected reps) will never have an epiphany together and make a drastic change. Grassroots stuff comes and goes with minor changes but the core of corruption will not. I've worked on contracts at the city, county and state level and it is all about the budget and continuing to get a bigger one, not about saving money and doing a more 'efficient' job.

I've been on contracts where I've offered honest, easy to implement solutions that would reduce the city agencies staffing requirements and in one case after a well drafted presentation to upper management (not the top management) was pulled into a room where I was told if I escalated the process any further I could consider my contract terminated, I did them a favor and quit instead.

Also had the opportunity to know a man that worked at a State Capital years ago and the stories he told me were hair raising and stuff of tabloid papers. If the man wasn't so well respect and didn't have such a sterling reputation I would have not believed a word. If 50% of what he told me during late night one-on-one coffees during an extremely abusive project schedule (if you've worked them you know how you have opportunities to talk with no one else around) were true these people will never change until there is a violent rebellion...notice how more and more Congress people have police escorts and are getting concealed handgun licenses, they're getting scared too
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Old 08-20-2007, 04:13 AM   #20
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The Caesars of Rome experienced the same problem. Buy the contentment of the population with the treasury.

The problem is that the two parties in power both want to spend... they just have different objectives.

One issue is that there is little accountability in government. Those @ssh0!3s make a bunch of self-serving decisions and then get out and take the high paying job with private business... all with the intent of lobbying for the business with their inside connections.

Our government has reached a critical mass of dysfunction that will be difficult to untangle.

But... this is nothing new, since the beginning of time the ruling party or individual has taken advantage of things.
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