Raising the US debt ceiling

bush_cheney2004 · March 9, 2011

... In the US last year health care costs amounted to 17% of their total GDP, using the logic that an increase in GDP improves the standard of living is to say if there were more sick and dieing people, economically, the people would be better off.

Many are better off considering the alternative. Also, you are discounting the impact of elective and cosmetic medical services / procedures. It is all part of GDP without subjective distinction.

pinko · March 9, 2011

Very incomplete context without income thresholds....already discussed in previous threads.

Correct....taxes were lowered for Clinton's recession!

What is required are more tax brackets delineating the higher income earners.

Edited March 9, 2011 by pinko

maple_leafs182 · March 11, 2011

I know my views might seem crazy or radical and I'll try to explain them better over time.

I am going to start with central banks.

The housing bubble was formed when the Federal Reserve lowered interest rates after the dot-com bubble burst, it was the Fed's attempt to stimulate the economy.

It partially worked, lower interest rates and with Frannie and Freddie backing mortgages, together they fueled the housing bubble which stimulated the economy. The wars in Iraq and Afghanistan were also a large contribution to the overall strength of the American economy.

The housing bubble collapsed when higher oil prices started cooling down the economy. Lower income families were losing there jobs or they couldn't afford the rise in the cost of living so they ended up defaulting on their mortgages...you know the rest.

Shortly after the Federal Reserved lowered interest rates to near zero in another attempt to stimulated the economy. It isn't working so they are now trying to stimulate the economy threw quantitative easing measures which simply means pump trillions of dollars into the economy. This still isn't working.

The whole time this has been going on, trillions of dollars of new debt has been created, since money is created through debt, the money supply has been expanding. An expansion in the money supply is what leads to inflation.

The real inflation rate of America is around 9%. The Federal Reserve says it is lower but they only say that because they fudge the numbers. The Federal Reserver does not include the rising food and fuel prices and they substitute higher quality goods out of the basket of goods with lower quality goods and claim there is no inflation.

On this forum about a year ago I said to buy silver, that was at $16.50 an ounce. It is trading at $35.00 an ounce. Just saying, you would have double your investment. I nearly double my investment and I am still buying silver.

I only said that because if you look at what the Fed is doing they are simply trying to create an inflationary boom.

If there was a truly free and capitalist market in America, interest rates would of naturally raised after the housing bubble because banks would be too frightened to give out loans. The market would have naturally corrected itself by getting rid of all the bad debt and malinvestment. Since the supply for loans would fall the supply curve would shift left on the demand curve leading to higher interest rates. Since the Fed has a monopoly they can artificially bring rates down.

First question, why should institutions like central banks exist?

Second question, how is the fed suppose to fight off inflation if the only weapon they have to stimulate the economy is inflation. They could raise interest rates but that would derail the economy.

andrefitzgerald · July 4, 2011

Everybody is worrying about this non-stop issue of debt limit.Some are predicting enormous reviews and political as well as economic turbulence for this.I think its about time for a better change.Actually,President Obama gave a White House news conference on Wednesday concerning the debt ceiling. He was greatly critical of GOP congressmen who refuse to vote for raising the debt ceiling if taxes are raised. "Get it done," the president said, counseling lawmakers to "take on their sacred cows.". Responses to the press conference seem predictably to be divided along party lines. The proof is here: Obama blasts Republicans on debt ceiling.

Oleg Bach · July 4, 2011

The purpose of raising the debt ceiling is NOT in order to benefit the whole nation and keep it afloat. It is much like the past bail out packages. The only ones who will benefit (temporaily) are those at the top of the finaical and social heap. This action in effect is one more huge welfare check for the super rich...who are in a panic..They panic in the thought that after being very very comforable for the last few generations that they might fall to the level of the common person.

Wealth and poverty are the two expanded ends of a natural cycle. Let nature take it's course and let the rich fall if that is the case - and let those who are capable and good managers of national wealth - rise up and take the position - IF - those in control keep blowing it - time to fire them.

Oleg Bach · July 4, 2011

THOSE in control at present are like a big fat rat that is clutching the last huge piece of cheeze and is attempting to drag the cheeze into a nest where the entrance is to small - it is futile.

Oleg Bach · July 4, 2011

THOSE in control at present are like a big fat rat that is clutching the last huge piece of cheeze and is attempting to drag the cheeze into a nest where the entrance is to small - it is futile.

Unless that rat eats the cheeze - then the rat itself will be to fat to enter it's own home. It's a mess....If you as a finaical manager can not cope and no longer have any solutions then you must admit your failure. There are no austerity measures taking place in America other than taking more wealth from those that have the least in order to maintain the current state of affairs (status quo). This policy is mindless. In the end both the rich and poor will suffer. Maybe Obama can keep talking about hitting up the guys who use corporate jets for more money - but eventually the public will understand that he is lieing.

Pliny · July 4, 2011

Are you a proponent or opponent of planned obsolescence?

Planned obsolescence if I understand it is a built in fault/defect or built in duration of a product designed to create future business for repair or replacement. Any "planned" obsolescence will, in my view, end in obsolescence for the company. It may for a time show some financial benefit but competition would eventually override the benefit.

Pliny · July 4, 2011

This is why I stated in my post earlier that I disagree with the current monetary system.

This is where I disagree. I think money itself inhibits the advancements in technology. Like Bonam said, it would be too expensive to implement new technologies into cars that would then make cars more durable and efficient. It is money and the profit motive that is inhibiting technological advancement.

We now have car companies that implement planned obsolescence into the design of their vehicles to ensure that there will be further demand for their products in the future. My question is how do we expect to manage our scarce resources efficiently if we continue to produce cheap, inefficient products that end up in land fills or junk yards later.

Economics is suppose to be the study of how we manage our scarce resources. Instead of us learning how to better manage these scarce resources, the study of economics has simply become the study of money patterns. We have come to measure everything in terms of money. The Gross Domestic Product(GDP) of a nation is suppose to determine or be and indicator of the standard of living for the people in that nation, the problem with GDP is it does not incorporate leisure time or general happiness of the population. In the US last year health care costs amounted to 17% of their total GDP, using the logic that an increase in GDP improves the standard of living is to say if there were more sick and dieing people, economically, the people would be better off.

I think how we use money as a measure of success is a distortion of reality.

I agree. The use of money as a measure of success is a distortion of reality. Money is not the measure of success. It is however the only measure the government considers valid. I tihnk that is where your argument with money exists. If something is too expensive to implement, such as new technologies into cars, then there is not enough demand for it. It is not money that will decide that, it is the will to do it - money is always secondary and will follow that. The proof of that is in the fact that printing more money does not enable more technology - it simply inflates the price.

Oleg Bach · July 4, 2011

My former mother in law saw money as a gage for success. A husband had to supply the woman with a never ending supply of cash so she could gamble and shop till she dropped - I was dispised when I could not or would not cough up the lucre.

Pliny · July 4, 2011

I know my views might seem crazy or radical and I'll try to explain them better over time.

Not crazy or radical at all. At least not a parroting of the establishment.

First question, why should institutions like central banks exist?

Order and control. We don't want economic chaos and people have to pay their taxes - and not with funny money - Real money - that they make themselves. It seems the only real crime in society is not having any "money".

Second question, how is the fed suppose to fight off inflation if the only weapon they have to stimulate the economy is inflation. They could raise interest rates but that would derail the economy.

They do not realize that the economy has already been derailed and that is why it is going nowhere. They need to raise interest rates but now that they have people defaulting on their mortgages already higher interest rates will create more defaults on mrtgages and further infuriate the public. Remember they are the guardians of the poor and people who could not meet payments on an increased mortgage rate will wind up on the street.

punked · July 5, 2011

I just want to point out here NOT raising the debt ceiling as Republicans keep threating is unconstitutional.

Bonam · July 5, 2011

I know my views might seem crazy or radical and I'll try to explain them better over time.

I am going to start with central banks.

The housing bubble was formed when the Federal Reserve lowered interest rates after the dot-com bubble burst, it was the Fed's attempt to stimulate the economy.

Wrong already. That further inflated the bubble, but the bubble was already huge and ridiculous at that time. Housing prices have been rising relative to income for decades upon decades.

Moonlight Graham · July 6, 2011

Wrong already. That further inflated the bubble, but the bubble was already huge and ridiculous at that time. Housing prices have been rising relative to income for decades upon decades.

You are right that there already was a rising bubble prior to the dotcom crash and subsequent fed interest-rate drop. However, the interest-rate drop was one of the major reasons that made the housing bubble increase big-time in the 2000's. It made subprime mortgages almost double, helping cause the subsequent drastic increases in housing prices. The % of total US mortgages that were subprime went from 13% in 1999 to 20% in 2006. From wikipedia:

Subprime mortgages amounted to $35 billion (5% of total originations) in 1994, 9% in 1996, $160 billion (13%) in 1999, and $600 billion (20%) in 2006.

These graphs show how US housing prices rose drastically right after the dotcom bust. That said, the federal reserve is certainly not the only ones to blame for the bubble & bust.

bush_cheney2004 · July 6, 2011

I just want to point out here NOT raising the debt ceiling as Republicans keep threating is unconstitutional.

Then you better tell the Democrats too:

House torpedoes unconditional hike to $14.3 trillion debt ceiling

By Russell Berman - 05/31/11 08:39 PM ET

The House overwhelmingly voted down an unconditional increase to the $14.3 trillion debt limit Tuesday, as the Republican majority delivered a symbolic rebuke to President Obama ahead of a meeting at the White House.

The vote was 318-97, with 82 Democrats joining every Republican

in rejecting legislation that would have authorized $2.4 trillion in additional borrowing by the federal government. Seven Democrats voted present on the legislation.

maple_leafs182 · July 7, 2011

Planned obsolescence if I understand it is a built in fault/defect or built in duration of a product designed to create future business for repair or replacement. Any "planned" obsolescence will, in my view, end in obsolescence for the company. It may for a time show some financial benefit but competition would eventually override the benefit.

Sounds like GM and Chrysler.

maple_leafs182 · July 7, 2011

I agree. The use of money as a measure of success is a distortion of reality. Money is not the measure of success. It is however the only measure the government considers valid. I tihnk that is where your argument with money exists. If something is too expensive to implement, such as new technologies into cars, then there is not enough demand for it. It is not money that will decide that, it is the will to do it - money is always secondary and will follow that. The proof of that is in the fact that printing more money does not enable more technology - it simply inflates the price.

Are you saying that the market isn't demanding that technology that is why it is not being implemented?

maple_leafs182 · July 7, 2011

]Order and control. We don't want economic chaos and people have to pay their taxes - and not with funny money - Real money - that they make themselves. It seems the only real crime in society is not having any "money".

How does it divert chaos and what do you mean by not with funny money?

Oleg Bach · July 7, 2011

Raising the debt ceiling is actually like a poorly managed bank extending it's own line of credit..There are limits to lending...If you falter once - it can be forgiven - twice it must be examined - three times and your line of credit is cut off! To extend credit to those at the top is like borrowing money to pay someone who did a horrible job.

Shady · July 7, 2011

Then you better tell the Democrats too:

Not to mention Obama. He voted against raising the debt ceiling in 2006. Looks like he's changed his tune, yet again. :lol:

BubberMiley · July 8, 2011

Not to mention Obama. He voted against raising the debt ceiling in 2006. Looks like he's changed his tune, yet again.

Yep. He even admitted he was wrong. Imagine if you had such cojones? :lol:

Shady · July 8, 2011

Yep. He even admitted he was wrong. Imagine if you had such cojones?

Or you! :lol:

How convenient for him. It's wrong now that HE'S president. :rolleyes:

BubberMiley · July 8, 2011

It's wrong now that HE'S president.

You really think it wouldn't be wrong to default on their debt? And you consider yourself to be economically literate (whatever that means)? :lol:

Oleg Bach · July 8, 2011

Yep. He even admitted he was wrong. Imagine if you had such cojones?

He does not know the difference between right and wrong - but he is a master political pandering fool.

Shady · July 8, 2011

You really think it wouldn't be wrong to default on their debt? And you consider yourself to be economically literate (whatever that means)?

That's a false choice. There isn't going to be any defaulting. However, it would be even more wrong to raise the debt limit without addressing the issues driving the debt itself. Or is your solution to somebody with debt problems to increase their credit limit? :blink: