The US national debt

Discussion in 'Business & Economics' started by Mrs.Lucysnow, Jan 3, 2011.

  1. Michael 歌舞伎 Valued Senior Member

    I wish I understood the process better, it`s at times counter-intuitive as well we use terms without really knowing exactly what they are, take money for example.
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  3. Michael 歌舞伎 Valued Senior Member

    I`m not sure what you mean by economic Feudalism? Life here in Japan is actually pretty decent compared with the USA and I feel things are better now than they were last time I was here. The cities are clean, people are well kept, and infrastructure seems even better than before. The problem is, like mi, all the old people have all the money and there`s a lot of them.Old people don`t invest in the future their interested in enjoying the last of the life eating out or sight seeing. They`re certainly not in the mood to invest in a long-term venture on bio fuel. 

    That said, we could never been like Japanese. While I think multiculturealism is more dynamic, I see how homogenity would probably work well in times of uncertanty and duress as people can pull together as a united whole in a way we in the West can`t.

    I was in the malls in CA and MI in the run up to Xmas as well as after Xmas and they were dead. In Japan the stores were packed (in AU the stores are always packed). 

    I think most Americans wished they hadn`t bailed out the banks now。 Just look at Iceland。
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  5. Michael 歌舞伎 Valued Senior Member

    By the Gods this keyboard is killing me! I keep hitting Shift Alt and switching font

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    Anyway, as I was saying, things are pretty good in Japan and one wouldn`t know they were in deflation other than 100 yen sushi per plate is still 100 yen.

    I was watching PulpFiction the other day and having a laugh at Vincent Vega`s exclamation when Mia Wallace orders a $5 shake! He`s like: WTF?!? 5 dollars for a shake? Do they put burbone in it???

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    I`m sure there`s a poster waiting to be made:

    What disconnects you from watching a great movie from the 1990s

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  7. jmpet Valued Senior Member

    I think we all underestimate the magical quality of the printed, in hand US dollar.
  8. joepistole Deacon Blues Valued Senior Member

    Then please explain it.

    You are definately using a different lexicon then as are those who share your political ideology.

    The Fed does not need to print money to increase the money supply and there are multiple definitions of money supply.
  9. Syzygys As a mother, I am telling you Valued Senior Member

    Sure, but what if:

    1. It didn't exist in the first place?
    2. It existed but was wasted on unnecessery wars?

    You might as well pay it back instead of spending it on warring...
  10. Syzygys As a mother, I am telling you Valued Senior Member

  11. joepistole Deacon Blues Valued Senior Member

  12. quadraphonics Bloodthirsty Barbarian Valued Senior Member

    True enough, but not (particularly) because of the relatively high level of domestic debt ownership. It was more the industrial policy that they used all that savings to finance - or, rather, the attempt to unwind such when it became too unwieldy.

    Which is to say that there are upsides to owing debt to foreigners instead. You can rely on depreciation much more heavily, since the affected parties don't get to vote in your country.
  13. Michael 歌舞伎 Valued Senior Member

    (1) The USA is probably the wealthiest nation that has ever existed - although that seems (to me) that after transferring most of it to the rich Banking oligarchy what's left is rapidly coming to an end.

    (2) Unnecessary.... hmmmmm I often wonder if the USA doesn't ultimately drop the charaide of "Nation Building" and takes military control of Iraqi oil as a hedge on China's growth? Maybe not, but it may be the ONLY way to control China? (It's either that or invade Canada)

    As I understand it, in our system we don't "print" money, as in *poof* it just appears, we could do that, but we don't, we borrow it into existence, can you borrow yourself out of debt? Secondly, as the borrowed money at low interest enters the money supply all the other money is worth less, which means wealth is destroyed, a hidden tax as they say.
  14. Carcano Valued Senior Member

    My explanation isnt any different from what you read here:

    But I know you wont bother reading it, because your EXTREME partisanism wont allow you to think independently of your favourite US vs THEM conflict.

    For example, an economic policy you might claim to HATE under Bush will sound to your ears like a revelation from heaven under Obama.

    You simply dont care about true vs false, you just want to wave a party whats the point in explaining anything to you?

    Really...whats my political ideology???

    I've lived in Canada (dual citizenship) most of my life and have never associated myself with any ideology. I usually vote for the Green Party.

    I want congress to reinstate Glass-Steagle...what ideology does that fall under?

    I want a universal standard of value based on the gold gram...what ideology does that fall under?

    I want to establish international trade eqilibrium on manufactered goods...what ideology does that fall under?

    I want the US to copy Canada's wonderful health care system...what ideology does that fall under?

    I want the US to stop kissing Israel's ass and shut down the global military empire.

    I simply dont care what any of these ideas are labeled as, because unlike you Joe, I realize that ideological affiliations are usually an excuse to STOP THINKING!
  15. joepistole Deacon Blues Valued Senior Member

    Good now you defined what you meant. Now how the heck does that have anything thing to do with the national debt of the United States?

    "Money is not issued multiple times but it is COUNTED multiple times under the fractional reserve multiplier effect. When banks stop lending this process is unwound.

    Money is created AS debt ONLY when the Federal Reserve creates it to buy US treasury bonds. And even then, the interest earned on that debt is almost entirely REMITTED to the Treasury" - Carcano

    The fractional banking system is not a Ponzi scheme. The fractional bankins system works in a well regulated environment. What does not work is deregulation of the banking and financial systems.

    And I don't need to read your reference, because I studied the banking system decades ago in business school. This has nothing to do with partisanship on my part friend. Additionally, you might be interested to know that the U S Government does not pay interest to itself. That would be silly. Additionally, money is not created by adding debt.

    If your claim were true, then you should be able to point out some examples. But you cannot because you accusation is not based in fact.
    Last edited: Jan 5, 2011
  16. Syzygys As a mother, I am telling you Valued Senior Member

    True, but 2 points:

    1. Every and any wealth can be wasted, just give people enough time.

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    2. Germany was also a very wealthy country/empire and still ended up with a completely worthless currency in the 1920s. So a nation wealth doesn't always guarantee the stability of its currency.

    I guess we could agree that they (at least Iraq) were necessery for protecting the petrodollar's standing.

    I think eventually it is still just printing it, just by the Fed not by the government. The government borrowing it from the Fed is just one extra step in the process. No, we can not borrow ourselves out of debt, but we can print the situation until the debt's value goes to eventually zero.

    Remember, inflation is always good for the debtor, and bad for the creditor.

    Sure. But as long as the ruling class has its wealth in real estate, indusrty, gold,etc. they don't have to worry about the middle class' problem...
  17. joepistole Deacon Blues Valued Senior Member

    A few minor details, the story of post WWI German and the US is not comparable. Germany did not have a comperable banking/finance system nor did it have the natural wealth possessed by the U.S.

    Ultimately the wealth of a country is linked to its political stability. With the rise of the radical right; the US is certianly less stable that it used to be.

    You can make a case for the war in Afganistan. But you cannot make a case for screwing it up as George II did. And you cannot make are good case for the Iraq war or screwing it up as George II did. Not even the Arabs wanted the US to invade Iraq and install a Shite led government - just look at the Wikileaks material.

    First, the Fed is the government. And second we can "monetize" the debt. We have been doing it for a long time. And three the Fed can shrink the money supply by selling US debt. The process goes both ways. The Fed can expand the money supply and it can contract the money supply at will. Additionally, there is no evidence that the Fed is going on a printing binge. The money supply has remained stable and inflation is almost non existent.
    Last edited: Jan 5, 2011
  18. cosmictraveler Be kind to yourself always. Valued Senior Member

    I wonder why China never has to borrow any money to get out of a jam? :shrug:
  19. joepistole Deacon Blues Valued Senior Member

    Because it is a dictatorship and it is doing the same thing people accuse the Fed of doing - printing money.

    China has a wee bit of an inflation problem. I guess no one noticed.
  20. Syzygys As a mother, I am telling you Valued Senior Member

    I don't want to dwell on this for too long, but Germany was wealthy and it had a central bank. That's all we need to make the comparison valid. Also, it started eventually very costly wars...

    Sure I can. The US had no choice, because of peak oil, petrodollar dependancy (Saddam was selling in Euros). Now how much the plan was reality based is a different question.
    The original idea was a quick government takeover, the troops celebrated as giving liberty to the country, the oilrevenue paying for the costs and everything is fine. On paper it sounded so pretty...

    Or not. It is a quasi government entity, owned by the 12 regional banks. The President can not force policy on the Fed, unlike any other government agency...

    Except the government not publishing M3 anymore?? The reason inflation is low because there are several deflatory forces working at the same time, evening out the balance....
  21. joepistole Deacon Blues Valued Senior Member

    Minor details friend, but you are wrong on all counts.

    The first independent German central bank was created in 1957. And Germany did not start the WWI. It started WWII. WWI began with Austria and an assination of a member of the royal family.

    And finally, you ignored the most important point - the political instability which resulted from loosing WW I and the devistating terms of the Treaty of Versailles.

    LOL, yeah I suppose you can. But it will not be a rational reason. Peak oil had nothing to do with Gulf War II. Even if Iraq was selling oil on the side in Euros, it did not matter. For the record, the UN supervised Iraq oil sales prior to Gulf War II. It was not something controlled by Iraq.
    That might have been the George II plan, but it didn't work. And to anyone with half a brain, it would have been obvious the George II plan would not work. That is why the Arab states were against Gulf War II and why they opposed the US ouster of Saddam in Gulf War I.

    WRONG AGAIN, the Fed is not owned by the 12 regional Federal Reserve Banks. Those 12 regional Federal Reserve Banks are part of the Federal Reserve.

    The Federal Reserve was created by an act of Congress and is an independent agency of the Federal government just like many other agencies (e.g. Security and Exchange Commission).

    Yes the government is no longer publishing M3 because it is essentially redundant - not needed. I suppose you can create some baseless fantasy as to why the Fed no longer reports M3. But it is only that, fantasy and not based in fact. The Fed stopped tracking M3 back in 2005.

    Here is where you are correct. There are deflationary forces at work in the economy. And that is exactly why the Federal Reserve has acted with quantative easing. The Fed is doing exactly what it should be doing, despite all of the clamour.

    The bottom line here is that there is essentially no inflation and the money supply has remained very stable. So for all of the screaming about the sky is falling, it has not fallen. Nor is it showing any signs of falling.
    Last edited: Jan 5, 2011
  22. Syzygys As a mother, I am telling you Valued Senior Member

    Man, this is going to be fun!

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    I am seldom wrong and even more seldom on all accounts.

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    Who cares? If your point is that there was no central bank in the Weimar Republic, YOU are wrong:

    "The Reichsbank was the central bank of Germany from 1876 until 1945. It was founded on 1 January 1876 (shortly after the establishment of the German Empire in 1871)."

    See? I can quote Wiki too!

    Again, who cares? The point was that they entered on their own, not because they were attacked, thus making it a costly and unnecessary war.

    So the analogy stands, thank you.

    yeah, as a result of an unnecessary war. We are in agreement here. If you think that 2 far away foreign wars can't break the US; back, just wait. $400 gas per gallon in Afghanistan can go a long way...

    Sure, after all running out of the most important commodity has nothing to do with obtaining such reserves by military force.

    Not on the side but OPENLY, and by this creating a very dangerous precedent. read up on petrodollars. The only thing what makes other countries not to switch to other currency is the US military power.

    Completely irrelevant since Saddam did it openly. The UN couldn't force him to sell in dollars.

    Tell it to Dick Cheney and the Reps. Sometimes governments (power) are put into a position where they don't really have a smart or an easy way out. the smart way is never easy, I should say...

    I already mentioned that I am seldom wrong. Read The Creature from Jekyll Island. I can send it to you in pdf.
    But if you can tell me who owns the Fed, I am curious to hear, because that is not the US taxpayer for sure.

    Here it is, according to them:

    "Who owns the Federal Reserve?
    The Federal Reserve System is not "owned" by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects."

    "The twelve regional Federal Reserve Banks, ... are organized much like private corporations. For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company."

    Even they acknowledge that the US taxpayer doesn't own them.

    There are so many things not needed, whom publishing little M3 was hurting? It gave a picture of the money supply, and since they knew they are going to print, the just stopped publishing it.

    The stockmarket must be going up then because of the strong economy.

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    Last edited: Jan 6, 2011
  23. joepistole Deacon Blues Valued Senior Member

    LOL, you may not think so in a few minutes.

    Well I will take your word for it. But on this topic, you have been all wrong as previously proven. And I think you should ask yourself, is it that you are not wrong or that you rarely admit that you are wrong?

    The point was you were wrong. I said Germany did not have a modern central banking system. And as previously posted, Germany did not have a modern central banking system until 1957 - as previously proven.

    The point is that you were wrong again. Germany did not start WW I as you previously claimed.

    As for wither WW I was necessary, that is a topic for another thread. And frankly wither the war was or was not necessary has nothing to do with comparing post WW I Germany with the current state of the US.

    The unpleasant fact remains, that comparing the two is like comparing apples to cats. The US has not been defeated in War. The US economic base is still intact. And the US is not constrained by a Treaty forced upon it by winners of WWI or any other war for that matter. And the US is not grossly expanding its money supply.

    The US fought two world wars around the globe in WW II that make the Iraq and Afganistan wars look like childs play by any measure. And WWII did not break the back of the US. Your reasoning here is based on fantasy and extreme partisan politics...not reality.

    We have not run out of "the most important commodity". You can go down to the local gas station and buy all of it you can afford. New oil is coming on line all the time. And it is not like there are not alternatives out there like natural gas.

    You have made a claim, but you have not supported it with fact. I will agree that the decision to go to war was likely done in order to satisfy certian political interests here in the US.

    But it was a stupid decision that was not supported by Arab states for reasons previously stated and which should be very obvious by now.

    The only dangerous precident was in your mind. There was and is no danger that oil exporters will change the currency used to transact oil prices because a rennagade outcast like Saddam wanted to sell a little oil to support his life style in Euros.

    I don't care if Iraq sold all of its oil in Euro's it would not make a difference. And certianly was no reason to go to war. It sounds like you are hanging around too many conspiracy whackos.

    Extraordinary claims require some kind of evidence.

    How is that relevant? The fact is the George II administration was incredibly incompetent.

    The government owns the Federal Reserve System. Now who owns the government? Can you say the American people?

    The point is you were wrong yet again. You claimed that banks owned the Federal Reserve....not the government. And you were wrong as I previously proved by pointing you to the Federal Reserve's web site. The site that you are now using to prove my point.

    Do you remember your post #37?

    "Or not. It is a quasi government entity, owned by the 12 regional banks. The President can not force policy on the Fed, unlike any other government agency... - Syzygys post 37

    I repeat and you now seem to acknowlege that the Federal Reserve is not owned by the 12 regional Fed banks as you initially claimed. So you were wrong. And as previously pointed out, the Federal Reserve is an independent agency similar to the many other independent goverment agencies (e.g. Security Exchange Commission).

    If you have to tell people that you are seldom wrong, perhaps you are wrong more than you would like to admit.

    It not only stopped publishing it, it stopped tracking it per my previous post and Federal Reserve Press Release.

    The Federal Reserve, the agency charged with managing the nation's money supply, felt that M3 no longer provided any meaningful information. So the Federal Reserve not only stopped publishing it, they stopped tracking it in 2005.

    Indeed it is. If you have not noticed, sales and profits are up virtually across the board. The nation is now adding jobs versus loosing almost a million jobs a month as it was when Obama was sworn into office. Gross national product has been consistently growing for more than a year now.

    And just today, the ADP employment numbers were unexpectedly good, forecasting an increase in jobs last month that was three times higher than expected.

    Not to mention the ISM manufacturing index has been on a tear and continues to rise.
    Last edited: Jan 6, 2011

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