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Old 11-07-2010, 07:52 PM   #41
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I understood that was your suggestion. Do you understand what I am asking? What is wrong with running up a tab? Why cut back on services?
I certainly do understand what you're asking, which is why we're tearing into this like a mongoose in a bird's nest. Feel free to provide some links or references of your own, too. Your repetitive queries regarding my intellectual capacity and ability to comprehend your questions are not exactly sharing the resources & knowledge that would move this thread down the road.

I agree that governments, with their license to tax, are the ideal entities to practice deficit spending. Heck, in a recession or a depression it's their duty to do so. I also agree that paying back one's debts with ever-more-deflated currency is a workable strategy. It damn well better work because we don't seem to have any intention of exploring other solutions.

However it requires the buyer of that debt to keep on buying, or for us to find new buyers. Eventually the supply of buyers could run out, or they'll refuse to buy on what we would hope would be acceptable terms. I don't know if it'll happen, let alone when, but I suspect that the longer we continue the practice then the higher the probability of something bad happening.

Instead of pursuing this strategy (hopefully just short of catastrophe), why not retain more control over our future instead of abdicating that control to the buyers? Why not deficit-spend like crazy when it's necessary, and then afterward either tax the heck out of the citizenry or cut back on spending? I don't have much faith in govt bureaucracy to do its fiduciary duty with my tax revenue, so I'd rather see spending cutbacks that keep my taxes flat (or lower). I also kinda like the idea of lower taxes freeing up the citizenry to start more businesses and raise productivity to generate more revenue through corporate taxes instead of through personal income taxes.

Perhaps an analogy would be the homeowners who put no money down into their residences and then proceeded to finance their lifestyles with HELOCs. Life was good as long as someone would buy their home for at least the price they paid plus some inflation or other appreciation. However when home values dropped and credit tightened, the entire country darn near locked up. I'd hate to see that equivalent happen at a Treasury auction. I'm not sure what collateral a foreign govt would accept for Treasuries-- the 30-year tax-revenue stream of a rapidly-deflating currency? What if something better comes along to surprise the heck out of all of us, like a euro or some other rock-solid currency?

Your concept will work. My concept could work. Yours just has, in my opinion, a higher probability of bad stuff happening. I suspect that we could both marshal several platoons of highly-respected economists to "prove" why the other's reasoning is flawed.
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Old 11-07-2010, 07:53 PM   #42
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"I put SS in the same boat. You took the peoples money, you gave them a promise."


Actually the Supreme Court decided in the Flemming vs Nestor that "there is no contractual right to receive Social Security payments."
Flemming v. Nestor - Wikipedia, the free encyclopedia

Also anyone that that looks at their annual Social Security Statement of estimated benefits should look at the *.

*-"Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2037, the payroll taxes collected will be enough to pay only 76 percent of scheduled benefits."

Of course any representative propose a cut in benefits is putting their political career in harm's way. But eventually the math dictates a reduction in benefits, increase of eligibility age, increased SS tax, or some combination of the three.

Just wanted to set the record straight regarding SS benefits.
I don't mean to hijack the thread.

Carry on.
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Old 11-07-2010, 08:08 PM   #43
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I suspect that we could both marshal several platoons of highly-respected economists to "prove" why the other's reasoning is flawed.
I don't see how my reasoning could be flawed. What reasoning? I just asked what evidence you had to support your view.
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Old 11-08-2010, 11:53 AM   #44
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I don't understand why we can't afford to keep our promises. I look around me and see a very prosperous people. We could afford to pay higher taxes. So far as I know, we could also increase our debt level substantially. You say "there is a good reason to be worried", but you don't say what that reason is. Are we in danger of being like Greece? Why is that? This is all just too nebulous to count as a real argument.
If you are only seeing prosperous people around you maybe you should look a bit harder. Sure there are people who could stand to pay a few more bucks in tax to help out the situation, however there are a lot of people who are lurching from paycheck to paycheck and an increase in taxes could be the end for them.

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I understood that was your suggestion. Do you understand what I am asking? What is wrong with running up a tab? Why cut back on services?
My only question on this would be would you do this with your personal finances? Eventually someone has to pay so rather than burden future generations with unlimited amounts of debt why not look at ways of controlling expenses now?
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Old 11-08-2010, 12:57 PM   #45
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My point is the government has the means to keep it promises to the military. The question is are other vote buying schemes going to be favored over this responsibility. I put SS in the same boat. You took the peoples money, you gave them a promise. Medicare, is similar.
I'd actually put SS and Medicare in a different, lower, basket compared with the promise made to military members for future payment. In the case of both SS and Medicare, the government sets the tax rate and everyone pays it. No exceptions. You expect to get some benefit when your time comes, but there's no aspect of two informed parties making a contract. If you want to work, you'll pay the taxes. In the case of the military member, the retirement pay and promised medical care in retirement were part of a package of compensation that was promised in exchanged for services to be rendered. Every military member made an appraisal of this offer and counted on the government keeping it's word when deciding on where they wanted to work. That's a lot different from SS. I'm sure there's a Latin legal term for this distinction, but being just a slug I don't know it.
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Old 11-08-2010, 01:04 PM   #46
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My only question on this would be would you do this with your personal finances? Eventually someone has to pay so rather than burden future generations with unlimited amounts of debt why not look at ways of controlling expenses now?
I owe nothing, myself, and I think that frugality pays off for individuals. But nations are not people. You say "eventually someone has to pay", but how do you know that?
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Old 11-08-2010, 02:47 PM   #47
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I owe nothing, myself, and I think that frugality pays off for individuals. But nations are not people. You say "eventually someone has to pay", but how do you know that?
Everyone who pays taxes is paying on the interest on our debt which is now about 10% of the Federal budget. Since more of our debt is being bought up by foreign countries more and more of that interest payment is going overseas, ~50%.
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Old 11-08-2010, 05:09 PM   #48
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I owe nothing, myself, and I think that frugality pays off for individuals. But nations are not people. You say "eventually someone has to pay", but how do you know that?
Isn't a nation made up of individuals?
The tab is passed to children & grandchildren. Contrary to what Cheney said to Paul O"Neill; deficits DO MATTER.
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Old 11-08-2010, 05:31 PM   #49
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The tab is passed to children & grandchildren.
But is it really? Are you now paying off the national debt that was incurred in your parents' day?
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Old 11-08-2010, 05:46 PM   #50
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But is it really? Are you now paying off the national debt that was incurred in your parents' day?
Yes in the from of higher interest payments. The debt clock shows the annual interest payments per citizen of $10,500 this is an increase of $3,000 from 2004 and the forecast that by 2015 will be $13,625 per citizen in interest payments. Now you may not think this has consequences but I suspect that if you talked to folks in Iceland, or Greece, or the countless citizen in numerous countries that IMF has enforced austerity measures they would strongly disagree.
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Old 11-08-2010, 05:49 PM   #51
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Yes in the from of higher interest payments.
So paying interest reduces the principal? I think you're putting me on.
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Old 11-08-2010, 05:53 PM   #52
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So paying interest reduces the principal? I think you're putting me on.
I am at loss at what point you are trying to make and tired of the guessing game. Perhaps using more than two sentences replies might help.
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Old 11-08-2010, 07:08 PM   #53
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I am at loss at what point you are trying to make and tired of the guessing game. Perhaps using more than two sentences replies might help.
Well, let me see if I can explain it to you at greater length. I had asked, "Are you now paying off the national debt that was incurred in your parents' day?". You answered, "Yes in the from of higher interest payments." Since your answer implied you think paying interest on the national debt pays off the national debt, and since that is silly, I was just giving you the opportunity to correct what you had said.

Is that clearer?
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Old 11-08-2010, 07:22 PM   #54
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"The problem you see"? Where is the problem, actually?
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I understood that was your suggestion. Do you understand what I am asking?
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I don't see how my reasoning could be flawed. What reasoning?
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You say "eventually someone has to pay", but how do you know that?
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But is it really?
I'm beginning to suspect this is either a bot or someone working on a master's degree in applied noodgism...
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Old 11-08-2010, 10:28 PM   #55
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In some ways, this is similar to an ongoing thread with regard to the possibility of raising the retirement age for all sorts of civil servants. The same budget arguments are being floated over there. As the recipient of both a civil service and military pension, I will say the same thing I said over there and have been pounded for it. Each of us made our choices for our careers based on many facts, one of which was the promise of pensions and health care. Though, in most cases, I don't think that was a primary factor for any of us at the start of our careers. I don't have a problem with raising retirement ages or years of service for new hires/enlistees or those very early in their careers (they can adjust, leave, etc.). But, for those of us close to or already retired, it's kind of late to ask us to make sacrifices for the taxpaying public that made choices that turned out to be poor.

I said it on that thread and I'll say it here - a lot of this ill feeling over what others get is based on on the fact that we get something and they don't. The fact that they could have is not a factor in their argument - only that they have to pay for something they don't directly benefit from today. It was great for them when we were the one's going on overseas deployments and not seeing our families, it was great for them when we were the one's protecting them from harm, but as someone said earlier, now that we are too old to do that, we are just another tax burden to them.

IMHO, there are many, many more things that our government spends money on - from failing agencies to failing programs - that should be cut before any cutting to military pensions and healthcare. I don't think I derive any real benefit from what DOE currently does, so we may as well cut that. And I certainly don't understand why elderly immigrants to this country receive social security when they have never contributed to it. And I won't even start on benefits for illegal immigrants that we all pay for.

And I'm definitely +1 for the comment that I'll be damned if we should be ones to make the first sacrifices to balance the budget. Don't cut taxes, eliminate useless programs, cut the size of the federal bureaucracy (which has become bloated beyond belief by successive administrations), seal our borders and have faith that the economy will recover and all those underwater homes will be afloat again.

Remember, every program, every expenditure has its own lobbyists and advocates who will fight tooth and nail to keep the money to them flowing. That's why it's almost impossible to defund an existing program or agency. It's just dandy to gore an ox, unless it's your own - do it to someone else. If we don't fight for our benefits, no one else will.
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Old 11-08-2010, 11:39 PM   #56
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But is it really? Are you now paying off the national debt that was incurred in your parents' day?
File:USDebt.png - Wikipedia, the free encyclopedia

As the chart shows, my parents [WW II generation} did pay the debt incurred by their parents. Since 1980 though, the debt was allowed to rise until the the Clinton administration benefited from a booming economy & reduced defense spending as a result of the collapse of the Soviet Union. Then the Bush administration of deficit spending on guns & butter continues the ever increasing mountain of debt. And the answer to you question: No my generation hasn't paid for the increased debt incurred by my parent's generation in the 1980 or the debt my generation has incurred since 2000. But the rising debt cain't be ignored forever.

The medicare program is unsustainable.
File:Medicare and Medicaid GDP Chart.png - Wikipedia, the free encyclopedia
File:GAO Slide.png - Wikipedia, the free encyclopedia
Entitlement spending will exceed government revenue between 2030 & 2040. Our country will be bankrupt. The sooner the unfunded future liabilities are addressed the less painful the solution will be. I doubt politicians will pursue that course as such action could lead to a loss of their seat. People are angered by a loss or reduction on of benefits & tax increases. And corporate welfare such as agricultural subsidies are inviolate due to lobbyist contributions. So mebbe you're right. Grab all ya can before it hits the fan. Personally it won't affect me as I'm childless & should be dead by then.
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Old 11-08-2010, 11:45 PM   #57
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Well, let me see if I can explain it to you at greater length. I had asked, "Are you now paying off the national debt that was incurred in your parents' day?". You answered, "Yes in the from of higher interest payments." Since your answer implied you think paying interest on the national debt pays off the national debt, and since that is silly, I was just giving you the opportunity to correct what you had said.

Is that clearer?
Not at all clearer if you were trying to make a larger point.

I never said that paying interest pays of the national debt. What I said is the previous generations debts have resulted in greater interest payments for this generations, and if we carry on the tradition it will result in higher interest payments to future generations.

You are factually incorrect, paying interest does reduce the level of national debt. To prove that take the opposite case what would happen to the national debt if we didn't make any interest payments? Do agree that would increase the national debt?. National debt consists of both principal and accumulated interest. The US debt situation is bad but isn't so bad that we can't even pay the interest accumulated debt..
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