Out of curiosity....

[Fenton]

Our Central Bank actually owns a large part of our debt, with Countries like Japan and China only owning a fraction of what the Fed owns.

China's buying our bonds in an attempt to devalue their over valued currency and will stop when when they've reached their goal.

Japan has a large debt but the Japanese are Consumate savers with the Japanese people themselves being the primary holders of their Countries debt.

As for the Libs making the broad brush claim that Govt spending equates to economic growth, there's nothing further from the truth.

5 years of Trillion dollar deficits plus 800 billion in stimulus and 9 out of the 12 2009 spending appropriations bills being signed after Obama's 2008 election and we still have American economy thats being held up exclusively with FED printing.

Obama could rifle through another 5 Trillion by 2016, supporting the growing amount of people that are dependant on the Federal Govt and the GDP will still be flat and this Country would have gained nothing from it.

So NO, Govt spending to build up a voter base by creating more dependants doesn't have any positive economic affect and creates misery and mediocrite.

But thats Obama's America.

 

[fmw]

I wouldn't deny that for a moment. The confusion is about spending and investment, not the role of government. Government should and sometimes does address the common good. Nothing wrong with that. But investment is the wrong word to use for it and borrowing in order to do it is unnecessary.

 

[fmw]

Yep, a capital investment, not an operating expense. So when government builds road and regulates airlanes and funds education, it's investing. It's just that the productivity that accrues benefits all of us, not just shareholders in a business entity as with private investment.

No it is not investing. Governments do have assets but they do not have capital. When government builds roads and regulates airlanes it is spending. I'm not suggesting all the spending is bad. Just that it isn't investment.

 

[fmw]

Should the US go back to being a creditor nation, as it was before the Reagan Administration?

No. Loaning money to other governments is too risky. We should be a pay as you go nation with a surplus to save for future expenses such as wars or infrastructural projects.

 

[AlabamaPaul]

No. Loaning money to other governments is too risky. We should be a pay as you go nation with a surplus to save for future expenses such as wars or infrastructural projects.

The government has no need for a rainy day fund as it can create its currency at will more or less...

 

[Lutherf]

The government has no need for a rainy day fund as it can create its currency at will more or less...

If a government just prints money it devalues its currency. In order to maintain a value it has to have a basis in that currency and that basis is debt. If the Fed prints an additional billion dollars it also has to auction off a billion dollars in treasuries.

 

[AlabamaPaul]

If a government just prints money it devalues its currency. In order to maintain a value it has to have a basis in that currency and that basis is debt. If the Fed prints an additional billion dollars it also has to auction off a billion dollars in treasuries.

The debt ceiling is a self-imposed restriction on spending that serves its purpose of forcing Congress to think about where we are in relation to debt, but the government really has no need for a rainy day fund. We will never be debt free as long as individuals desire a safe place to invest excess savings and we run continuous trade deficits...

 

[Gimmesometruth]

In some cases it does. A classic example is all the money that got dumped into NASA and out ballistic missile programs. One of the pieces of fallout from those programs was the modern consumer electronics market. The trans national rail service in the 1800's and the interstate system of the 50's and 60's were other examples. Hell, the Louisiana Purchase was a prime example.

It should be noted, however, that those expenditures were for a framework into which private enterprise could expand. It was private enterprise and the risk of private investment that made these expenditures a success.

Um...the "modern consumer electronics market" had, by the 1970's, moved to Japan and the rest of the Asian Tigers....so it did not benefit the US worker, in fact with the wave of "free market" bs sold by Reagan in the next decade, it totally undercut the US worker.

 

[head of joaquin]

No it is not investing. Governments do have assets but they do not have capital. When government builds roads and regulates airlanes it is spending. I'm not suggesting all the spending is bad. Just that it isn't investment.

It's an investment in the sense that it is undertaken with the prospect of a return -- in productivity and hence economic growth and hence increased revenues. That makes it more like a capital investment than an operating expense. The return isn't in profit but in the aforementioned benefits.

 

[Lutherf]

Um...the "modern consumer electronics market" had, by the 1970's, moved to Japan and the rest of the Asian Tigers....so it did not benefit the US worker, in fact with the wave of "free market" bs sold by Reagan in the next decade, it totally undercut the US worker.

Tell that to IBM, Motorola, Apple and GE.

 

[johndylan1]

Yep, a capital investment, not an operating expense. So when government builds road and regulates airlanes and funds education, it's investing. It's just that the productivity that accrues benefits all of us, not just shareholders in a business entity as with private investment.

So tell me, how do you quantify the return objectively? Can this be broken down to sectors of investments? Which sectors are net gainers and which are net losers?

 

[head of joaquin]

So tell me, how do you quantify the return objectively? Can this be broken down to sectors of investments? Which sectors are net gainers and which are net losers?

It isn't easy and that's why we have economists. I suspect there are sophisticated models for this, but my knowledge of them is zero.

That said, in a general way you can test it in examining the relationship between increased infrastructure spending and GDP and revenue, but obviously isolating infrastructure in the complex components that result in economic growth is difficult. Historically, the more infrastructure spending the more economic growth over time. Further, when there are catastrophes such as wars that destroy infrastructure on a wholesale level, we see drops in economic growth.

None of this is dispositive, but it certainly suggest that spending on infrastructure produces economic growth, especially since the causation is easy to identify and is measurable (people with more education are more productive; better roads produce more commerce; pollution regulation reduces externalized costs, and so forth)

Is this really in doubt?

 

[washunut]

...if 29 of the 34 OECD nations are spending more than they take in then who are we going to borrow money from?

Last night I decided to look at the economies of the 34 OECD nations to see who we could borrow money from and my jaw pretty much hit the floor. Only 5 of the 34 member nations show more in revenue than expenses. Those 5 nations account for something like $110B in excess revenue. The other 29 nations....$1.9T in excess expenses.

Now I just want to note that the OECD was formed to stimulate international economies and trade. I mean, these are the guys we're supposed to be looking to for our model of economic excellence and as a whole this group is $2T in the red (half of that is just the US).

Anyway, after looking at that mess it occurred to me that everything will still be OK as long as some of the non-OECD nations are available to pick up the slack. So, with happy thoughts in mind I looked at China...$100B+ in the red. I looked at India.....$100B+ in the red. Brazil? They'd actually be good for about $60B but that's only 3% of the way to even.

So what does that leave us with?

Well, Saudi Arabia is roughly +$90B. The UAE could be good for another $30B. Kuwait should be good for about $60B and Russia should be available for another $55B......hell, if we wrapped them all up we'd be covered for......well....less than 25% of what we need to break even as a world economy.

So anyway, what's the answer? If the whole freaking world is spending more money than it makes then who are they paying it to? I mean all that extra expense is going somewhere so who has it and, more to the point, will they let us borrow more?

The Federal Reserve has stepped up for $1 trillion a year.

 

[Oftencold]

. . .
So what does that leave us with?
. . .

Servitude.

 

[fmw]

The government has no need for a rainy day fund as it can create its currency at will more or less...

Then why does it borrow?

 

[Gimmesometruth]

Tell that to IBM, Motorola, Apple and GE.

IBM was focused almost exclusively on mainframes and their PC's were built from OEM components and used monitors from their Japan division and printers from Epson. Motorola, who my father worked for, was focused on govt contracts and sold its TV and radio business to Panasonics' parent in 1974. Apple was a designer, its components were primarily out of Singapore (1981, circuit boards) with Motorola CPU's (Malaysia)....but their share was tiny compared to PC's. GE ended TV production in 1986.

 

[Vern]

...if 29 of the 34 OECD nations are spending more than they take in then who are we going to borrow money from?

silly cons really really really like the silly narrative that gov't should be run like a business. Please name one company you've invested in that doesn't use debt to leverage its business.
(thank goodness America has a CEO that's reining in the previous CEO's out of control spending)

 

[johndylan1]

It isn't easy and that's why we have economists. I suspect there are sophisticated models for this, but my knowledge of them is zero.

I find it somewhat curious that you have such strong political leanings,as is apparent in your posts, while at the same time admitting zero knowledge. Economists have theoretical models that predict and collect real data that they disagree on what it means. The school of economic thought that one subscribes to guides their interpretation of the data. Therefore, history is our teacher. Keynesian economics popular with the left and with European democracies has proven to be a weak theory for the long term. In the short term it improves the economic condition based on providing stimulus and velocity at the expense of a devalued currency and risk of future inflation. This was meant in theory to be a temporary condition to smooth slow downs, however it has become a permanent addiction that endangers economies globally.

That said, in a general way you can test it in examining the relationship between increased infrastructure spending and GDP and revenue, but obviously isolating infrastructure in the complex components that result in economic growth is difficult. Historically, the more infrastructure spending the more economic growth over time. Further, when there are catastrophes such as wars that destroy infrastructure on a wholesale level, we see drops in economic growth.

Of course infrastructure spending is an investment. It is the production of real property that benefits the general welfare, this is good government. Of course this spending is going to show in GDP, because all government spending (investment or not) increases GDP as it is a component of GDP. I am with you on infrastructure spending as a general and appropriate function of governmental investment (also most conservatives are). I think the objection is in the way the funding and contracting process has turned into pork, pocket padding, and useless projects (roads to nowhere and light rail) that has created an opposition to it.

None of this is dispositive, but it certainly suggest that spending on infrastructure produces economic growth, especially since the causation is easy to identify and is measurable (people with more education are more productive; better roads produce more commerce; pollution regulation reduces externalized costs, and so forth)

Is this really in doubt?

No doubt that benefits can be had, but that doesn't make for a sound investment. The net return being larger than the outlay of funds plus interest is the part that has to make sense. As is self evident, the net return as a whole is 17 trillion short. There are another 90 Trillion in future liabilities already on the books; will our return on investment produce enough growth to overcome this? Our history, our current status and our recent returns that produced insufficient growth says no.

 

[Fenton]

silly cons really really really like the silly
narrative that gov't should be run like a business. Please name one company you've invested in that doesn't use debt to leverage its business.
(thank goodness America has a CEO that's reining in the previous CEO's out of control spending)

Trillion dollar deficits every year, 800 billion in "stimulus", that only stimulated debt, and Obama signing 9 out of the 12 spending approproations bills from Bush's 2009 budget is "reigning in spending " ??

Lol !!

Given the money's Obama's blown through you would think the economy would be doing better right ?

Because " Government spending promotes economic growth " ??

But its a disaster and we have the multitudes of the easily manipulated Obama supporters to thank for that.

You included Vern, I think you could start with an apology for the rest of us here, and then promise to never vote again.

For reasons of atonement I think its a decent start.

 

[Lutherf]

Trillion dollar deficits every year, 800 billion in "stimulus", that only stimulated debt, and Obama signing 9 out of the 12 spending approproations bills from Bush's 2009 budget is "reigning in spending " ??

Lol !!

Given the money's Obama's blown through you would think the economy would be doing better right ?

Because " Government spending promotes economic growth " ??

But its a disaster and we have the multitudes of the easily manipulated Obama supporters to thank for that.

You included Vern, I think you could start with an apology for the rest of us here, and then promise to never vote again.

For reasons of atonement I think its a decent start.

It is kind of sad the way that democrats have consistently just thrown money at various problems. They've been that way for decades and, frankly, dragged a bunch of republicans into that way of thinking too.

 

[head of joaquin]

Trillion dollar deficits every year, 800 billion in "stimulus", that only stimulated debt, and Obama signing 9 out of the 12 spending approproations bills from Bush's 2009 budget is "reigning in spending " ??

Lol !!

Given the money's Obama's blown through you would think the economy would be doing better right ?

Because " Government spending promotes economic growth " ??

But its a disaster and we have the multitudes of the easily manipulated Obama supporters to thank for that.

You included Vern, I think you could start with an apology for the rest of us here, and then promise to never vote again.

For reasons of atonement I think its a decent start.

Yeah, when you start two unfunded vanity wars and cut taxes on billionaires, and then deregulate the banking industry so it almost collapses, you get deficits.

Why did Bush and the GOP do that?

 

[Fenton]

Yeah, when you
start two unfunded vanity wars and cut taxes on billionaires, and then deregulate the banking industry so it almost collapses, you get deficits.

Why did Bush and the GOP do that?

More left wing boiler plate HOJ ??

I sometimes think you're just a bit of spam code that's programed to spit out warmed over DNC approved talking points whenever a Conservative points out the truth.

Blaming a President who hasn't been in office for nearly 5 years now for Obama's failure does wonders for your credibillity.

But something tells me you're not too concerned about your credibillity.

 

[iguanaman]

Obviously not.



I don't think there is a correlation. I think governments of the largest economies borrow because they can. Borrowing is only a sound fiscal policy when its purpose a profit making investment. Otherwise it is an unsound one. Everywhere. For everyone. As a former businessman you know that. I realize that businesses borrow to get past cash flow binds but that doesn't make it a sound fiscal policy. Only a necessary one. It isn't necessary for governments. It is only convenient.

You must have had a very small business if you don't know the value of credit. Credit enables business and countries to invest in the future when they might not have the capital today. This allows business to capitalize on market demand when it occurs not after the fact. Countries who invest in education, infrastructure and technology through borrowing are preparing for the future. Those that balance budgets instead will surely be left behind.

 

[Moot]

What used to be called third world countries borrowed from the IMF and got their economies moving and paid off their debt and are now buying US debt. The worm has turned.


The US still owns most of it's own debt.

The US also owns other countries debt.....to the tune of around $6 or $7 trillion....I think. So I'm guessing the US is collecting interest on it's holdings of foreign debt, too.


Click on Britain and find the US owns a large portion of their debt.....while almost every country in Europe own a piece of US debt with the largest being Britain.

BBC News - Eurozone debt web: Who owes what to whom?


They're all just passing the buck.

 

[rabbitcaebannog]

More left wing boiler plate HOJ ??

I sometimes think you're just a bit of spam code that's programed to spit out warmed over DNC approved talking points whenever a Conservative points out the truth.

Blaming a President who hasn't been in office for nearly 5 years now for Obama's failure does wonders for your credibillity.

But something tells me you're not too concerned about your credibillity.

The debt didn't start in a vacuum.