"National debt is used rile up the uneducated..."

[Don Perignon]

Today at 12:29pm, usaone wrote:

He was the right guy for the time. He broke the country out of the Malaise of the 1970's.

Post Watergate, run away inflation,Nixon,Carter,Iran Hostages, we needed a guy like him.
Being an actor helped him greatly.

No President is perfect but he did more right than wrong.

The fact that he had arranged with Iraq to have the hostages released immediately after Carter was ousted... speaks volumes. The stink of that deal was overlooked by many, but not all.

[AgeOfEnlightenmentSCP]

Feb 4, 2012 12:37:12 GMT -5 billisonboard said:

Feb 4, 2012 12:29:26 GMT -5 usaone said:

He was the right guy for the time. He broke the country out of the Malaise of the 1970's.

Post Watergate, run away inflation,Nixon,Carter,Iran Hostages, we needed a guy like him.
Being an actor helped him greatly.

No President is perfect but he did more right than wrong.

He certainly was a "feel good" guy.

What did he do right?

The main thing he did right was reform the tax code to make it flatter, less progressive, and fairer.

Step one was to take the top marginal tax rate from 70% down to 28% and step to, the tax reform act of 1986 eliminated loopholes and raised the payroll tax. Step three- he couldn't quite manage, and that is to cut federal spending. Unfortunately all Reagan budgets were declared dead on arrival by the Democrat controlled congress. The Democrats did, however, promise $2 in spending cuts for every $1 in tax cuts-- they did not deliver.

[AgeOfEnlightenmentSCP]

Feb 4, 2012 14:39:47 GMT -5 usaone said:

Well Mitt will be a centrist If he gets elected and what's left of the Tea Party are furious.

There's almost no way Mitt gets elected. If he gets the nomination, and it looks like he will, he will lose.

[AgeOfEnlightenmentSCP]

Feb 4, 2012 8:27:45 GMT -5 @wrongsideof30 said:

Help me out with this please. Somebody mentioned they were a Ron Paul supporter and that they were concerned about the country having a $15 Trillion deficit. Here are 2 responses that I read. I'd really like to hear your thoughts on the replies. I didn't realize so many people were supportive of our debt. Thanks in advance. I only lurk on p&m because I have so much to learn.


1. I laugh at people who are overly alarmed at our debt cause it shows a lack of understanding of debt budgets and economics. Our debt is big but manageable. It's used to rile up the uneducated and uninformed.

2. The devaluation of the dollar makes our exports cheaper therefore more competitive which is exactly the right thing in an economic downturn. If we're at full or near full employment with reasonable growth and inflation I'd be worried about a devalued dollar as well. Now not the time. Let alone the fact that we are in a liquidity trap so inflation is not an issue with this particular expansionary policy the fed has pursued. Monetary expansion was and is the right thing to do at the present. As long as the liquidity trap remains inflation will not be an issue which is exactly what we're seeing.

Sorry I called you a troll. The way I read it is that you laugh at those of us who are concerned about the deficit because it shows our ignorance of economics?

Anyway:

#1 has some validity, however what is manageable now will not always be manageable if we don't stop borrowing over a trillion a year. Long term liabilities right now- that don't factor in silliness like ObamaCare are somewhere between $100 trillion and $120 trillion depending on the estimate. As a practical matter, this is already well past the point of no return- there's no way all this money gets paid to whom it is owed-- mostly in the form of entitlement program costs (not necessarily payments because remember the government has to "administer" the programs). But yes, essentially as of now the $14 trillion to $16.2 trillion we count as "national debt" is manageable. And of course, all assumptions based on interest rates being close to 0% are subject to change, aren't they?

2. Also has some validity, but there is a difference between devaluing the currency and deliberately monetizing the debt. The former I think should happen to some degree in the free market because I think the US Dollar has been over-valued for far too long.

With respect to the Dollar being the reserve currency of the world, I'm not sure I understand the implications of the world moving off the dollar as the reserve currency of the world. But I have a feeling we are going to find out. The theory is that the demand for US Dollars would plummet because nobody would need them to do business and the world would be flooded with US Dollars and the dollar would become worthless overnight. Will that happen? I don't know.

[mmhmm]

You're missing an important part of wrongside's post, paul. I'll highlight it for you:

Help me out with this please. Somebody mentioned they were a Ron Paul supporter and that they were concerned about the country having a $15 Trillion deficit. Here are 2 responses that I read. I'd really like to hear your thoughts on the replies. I didn't realize so many people were supportive of our debt. Thanks in advance. I only lurk on p&m because I have so much to learn.


1. I laugh at people who are overly alarmed at our debt cause it shows a lack of understanding of debt budgets and economics. Our debt is big but manageable. It's used to rile up the uneducated and uninformed.

2. The devaluation of the dollar makes our exports cheaper therefore more competitive which is exactly the right thing in an economic downturn. If we're at full or near full employment with reasonable growth and inflation I'd be worried about a devalued dollar as well. Now not the time. Let alone the fact that we are in a liquidity trap so inflation is not an issue with this particular expansionary policy the fed has pursued. Monetary expansion was and is the right thing to do at the present. As long as the liquidity trap remains inflation will not be an issue which is exactly what we're seeing.

In other words, wrongside didn't make those comments. She read them.

Thanks, though, for the apology you made to her. That shows some character.

[AgeOfEnlightenmentSCP]

Feb 4, 2012 17:59:34 GMT -5 mmhmm said:

You're missing an important part of wrongside's post, paul. I'll highlight it for you:

Help me out with this please. Somebody mentioned they were a Ron Paul supporter and that they were concerned about the country having a $15 Trillion deficit. Here are 2 responses that I read. I'd really like to hear your thoughts on the replies. I didn't realize so many people were supportive of our debt. Thanks in advance. I only lurk on p&m because I have so much to learn.


1. I laugh at people who are overly alarmed at our debt cause it shows a lack of understanding of debt budgets and economics. Our debt is big but manageable. It's used to rile up the uneducated and uninformed.

2. The devaluation of the dollar makes our exports cheaper therefore more competitive which is exactly the right thing in an economic downturn. If we're at full or near full employment with reasonable growth and inflation I'd be worried about a devalued dollar as well. Now not the time. Let alone the fact that we are in a liquidity trap so inflation is not an issue with this particular expansionary policy the fed has pursued. Monetary expansion was and is the right thing to do at the present. As long as the liquidity trap remains inflation will not be an issue which is exactly what we're seeing.

In other words, wrongside didn't make those comments. She read them.

Thanks, though, for the apology you made to her. That shows some character.

I got that. That's why I apologized.

[usaone]

What's Japan's debt to GDP 200%?

[Virgil Showlion]

1. I laugh at people who are overly alarmed at our debt cause it shows a lack of understanding of debt budgets and economics. Our debt is big but manageable. It's used to rile up the uneducated and uninformed.

It's Krugmanitis! Bad case, too. We may have to amputate.

Please tell me this person isn't in a job or position that allows him to spend other people's money.

As long as the liquidity trap remains inflation will not be an issue which is exactly what we're seeing.

Totally untrue. Commodities across the board have experienced massive price increases since 2008. "Inflation" is kept in check only by plummeting home prices which largely determine the core CPI.

You and I cannot print money at will. There are good reasons that the CIA and American troops are active in various countries. There are good reasons why anti-American leaders wind up with bullets in their heads.

...or invasions of their countries.

In a few years our debt will hit 20 Trillion. But our GDP will also be 20 Trillion.

The US national debt is growing at 1.4 trillion per year (10%), and surged past 100% GDP late last year as most people here know.

The US GDP grew at about 1.7% annualized over 2011, and at about 3% the year before. Hence, assuming the US GDP ever makes it to 20 trillion, it will be a "few years" (few decades) after the public debt does.

What did he do right?

He appointed Milton Friedman as an economic adviser. That's worth something.

With respect to the Dollar being the reserve currency of the world, I'm not sure I understand the implications of the world moving off the dollar as the reserve currency of the world. But I have a feeling we are going to find out.

I have a feeling you're right.

What's Japan's debt to GDP 200%?

And even with austerity to hold it there for several years, they've been stuck in a negative growth morass for nearly two decades.

[Phoenix84]

What bothers me about the national debt isn't the size of it. In the grand scheme of things, relative to our GDP and to the rest of the world, it is manageable.

What does bother me how much it's exploded since since the liberals took over congress in 2006. The fact that it's almost doubled in less than ten years should be very concerning.

[Virgil Showlion]

In the grand scheme of things, relative to our GDP and to the rest of the world, it is manageable.

It isn't wise to ignore the size of the debt in absolute terms either.

There are limits to how much debt the world can buy. Greece, Italy, etc., are paying 7%, 10%, 13% in some cases to borrow tens of billions of dollars. The world is a big place and there is a moderate appetite for this amount of debt at these yields.

But the more debt you supply, the more the price drops. And if the world knows that a country is desperate to issue a new 1.4 trillion in debt, the appetite for all such debt at reasonable interest rates could dry up very, very quickly.

[djAdvocate]

Feb 5, 2012 10:11:10 GMT -5 Virgil Showlion said:

In the grand scheme of things, relative to our GDP and to the rest of the world, it is manageable.

It isn't wise to ignore the size of the debt in absolute terms either.

There are limits to how much debt the world can buy. Greece, Italy, etc., are paying 7%, 10%, 13% in some cases to borrow tens of billions of dollars. The world is a big place and there is a moderate appetite for this amount of debt at these yields.

But the more debt you supply, the more the price drops. And if the world knows that a country is desperate to issue a new 1.4 trillion in debt, the appetite for all such debt at reasonable interest rates could dry up very, very quickly.

that is an excellent point, Virgil. so far, there has been no attenuation in demand, however. debt interest is near record lows.

[usaone]

Feb 5, 2012 4:56:40 GMT -5 Phoenix84 said:

What bothers me about the national debt isn't the size of it. In the grand scheme of things, relative to our GDP and to the rest of the world, it is manageable.

What does bother me how much it's exploded since since the liberals took over congress in 2006. The fact that it's almost doubled in less than ten years should be very concerning.

It exploded because of the recession.

[usaone]

Feb 4, 2012 16:21:20 GMT -5 @toughtimes said:

Paul Volcker had a lot more to do with any improvements in the economy than Reagan.

And Paul Volcker was appointed by who?!

And who started the substantial increase in Military spending?

Jimmy Carter.

[Don Perignon]

Feb 5, 2012 13:51:07 GMT -5 usaone said:

Feb 4, 2012 16:21:20 GMT -5 @toughtimes said:

Paul Volcker had a lot more to do with any improvements in the economy than Reagan.

And Paul Volcker was appointed by who?!

And who started the substantial increase in Military spending?

Jimmy Carter.

Carter took office in an era of double-digit inflation, brought on by rapidly increasing oil prices and the bills that came due because the war in Vietnam ended.
Spending on everything had to be substantially increased just to maintain the status quo.

[formerexpat]

It exploded because of the recession.

It exploded due to failed Keynesian policies.

thenewamerican.com/economy/commentary-mainmenu-43/10368-keynesian-economists-rip-obama-for-failed-keynesian-policies

Maybe we should have followed Hardings course

And then maybe not. The Recession of 1920-21 was one of the sharpest in U.S. history with GDP dropping by nearly seven percent and prices declining by nearly 18 percent. Unemployment rose to nearly 12 percent from pre-recession levels of five percent. When Warren Harding was inaugurated in March of 1920, the recession was well underway.

That’s where any parallel with President Obama and his Keynesian cohorts ends. In his acceptance speech for the Republican Party nomination, Harding said:

We will attempt intelligent and courageous deflation, and strike at government borrowing which enlarges the evil, and we will attack high cost of government with every energy and facility which attend Republican capacity. We promise that relief which will attend the halting of waste and extravagance, and the renewal of the practice of public economy, not alone because it will relieve tax burdens but because it will be an example to stimulate thrift and economy in private life.

Included in his policies was a determination to cut income taxes. Starting in 1921, the top marginal tax rate was cut from 73 percent to 25 percent, while those in lower brackets also enjoyed lower tax rates. And he cut government spending with a vengeance. According to historian Thomas Woods, “Harding cut the government’s budget nearly in half between 1920 and 1922…. The national debt was reduced by one-third. The Federal Reserve’s activity, moreover, was hardly noticeable,” and the economy began to rebound by the summer of 1921. By 1923, unemployment was down to just 2.4 percent. According to other economists who have studied that recession, Harding’s policies “produced the most vibrant eight year burst of manufacturing and innovation in the nation’s history.” And the combined declines in inflation and unemployment were also the sharpest in U.S. history.

A Keynesian historian, Robert Gordon, admitted that despite Harding’s hands-off approach, “recovery was not long delayed.” Another Keynesian economist, Kenneth Weiher, also agreed that “despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction … [but] the economy rebounded quickly … and entered a period of quite vigorous growth.”

Woods supplied the answer to what should be done now to reverse the Keynesian course being forced on the economy by the Fed and the White House:

If the Austrian [economic] view is correct — and I believe the theoretical and empirical evidence strongly indicates that it is — then the best approach to recovery would be close to the opposite of these Keynesian strategies. The government budget should be cut, not increased, thereby releasing resources that private actors can use to realign the capital structure. The money supply should not be increased. Bailouts merely freeze entrepreneurial error in place, instead of allowing the redistribution of resources into the hands of parties better able to provide for consumer demands in light of entrepreneurs’ new understanding of real conditions. Emergency lending to troubled firms perpetuates the misallocation of resources and extends favoritism to firms engaged in unsustainable activities at the expense of sound firms prepared to put those resources to more appropriate use.

We've got a group of huge fuck ups in DC right now on both sides of the aisle. We'll continue to collectively suffer until we fix that.