U.S. National Debt: Not so bad?

[Kill Joy]

I am not here to incite a debate, but only to offer an opinion as an economist (PhD). The U.S. Debt is not wholly evil, and indeed it is vital to the growth of our consumer driven nation. In the simplest terms, and without writing a book, it can be illustrated (never fully explained) in simple bullet form. Thus:

1) Our debt is a meter of our borrowing activity and illustrates our society’s capitalistic ventures (including business loans, consumer goods, auto loans, etc.)

2) During this economic crisis, the true danger is fear, and a sudden shift to “saving or decreasing” the national debt (often falsely related to our own personal financial position), has historically proven to both extend and exacerbate economic crisis.

3) While some claim that China is going to overpower America due to its increased stake in our “investment” (and out increased budget deficit) is completely false. The truth is that it must be viewed as it is… China simply does not have enough investors or individuals vying for loans, and thus loans the money to hopefully profitable ventures from American entrepreneurs.

Without taking too long, as well as too much space, I would just ask that you think about the above facts before criticizing the government too much… Is the increasing debt alarming? Maybe (depends on the economist that you ask)! Is it crippling and completely detrimental to our great nation? I do not believe so. However, again, this is just my humble opinion.

[Frixxxx]

Hey Kill Joy,

Nice first post...mine was kinda boring:
http://www.tsptalk.com/mb/showpost.p...71&postcount=1

But you raise some interesting points and debateable issues. I will run them through my processor tonight (brain) while I'm putting in my 3-mile run and try and respond tonight.

Hope you start an account thread and jump into the discussions now that you are not a stranger!

Welcome to the boards!

[Buster]

Howdy Kill Joy

I like your post and positive views..your Credentials are worthy of listening closely to what you have to say, so I won't be arrogant enough to even begin to debate with you....thanks man and welcome.

[nnuut]

Welcome to the Message Board Kill Joy!! Looks like your post has them thinking, that's always healthy. Hope to get plenty more of your opinions.
Norman

[WorkFE]

Good post Kill Joy,
You will no doubt get debated on this issue, solicated or not.
I happen to agree with you to some extent. Think of it as our Nations credit rating score.

[sdouglas3]

Originally Posted by Kill Joy

I am not here to incite a debate, but only to offer an opinion as an economist (PhD). The U.S. Debt is not wholly evil, and indeed it is vital to the growth of our consumer driven nation. In the simplest terms, and without writing a book, it can be illustrated (never fully explained) in simple bullet form. Thus:

1) Our debt is a meter of our borrowing activity and illustrates our society’s capitalistic ventures (including business loans, consumer goods, auto loans, etc.)

2) During this economic crisis, the true danger is fear, and a sudden shift to “saving or decreasing” the national debt (often falsely related to our own personal financial position), has historically proven to both extend and exacerbate economic crisis.

3) While some claim that China is going to overpower America due to its increased stake in our “investment” (and out increased budget deficit) is completely false. The truth is that it must be viewed as it is… China simply does not have enough investors or individuals vying for loans, and thus loans the money to hopefully profitable ventures from American entrepreneurs.

Without taking too long, as well as too much space, I would just ask that you think about the above facts before criticizing the government too much… Is the increasing debt alarming? Maybe (depends on the economist that you ask)! Is it crippling and completely detrimental to our great nation? I do not believe so. However, again, this is just my humble opinion.

Welcome, I read your post and your statements make sense to a certain degree. However, your post doesn't indicate what the plan is for a positive output. Any venture capitalist cannot borrow money without a business plan. I see that you do not want to write a novel here. What is your opinion or resolution to the situation? I understand that you have to invest money to stimuate growth. Growth promotes jobs and stimulates the economy. But, the Gov. cannot right off it's debt into it's earnings. It just sits there and builds interest. At what point does the Fed decide to start to off interest and principle on it's loan? Most compainies that can't pay debt go into foreclosure. I realize we are talking about the Fed and it is different. But, I don't even here of politicians talking about a resolution to the debt situation. Kind of scary.

Thanks,

Steve

[Bullitt]

Great first post. I think most folks relate a deficit to their own personal debt which makes them believe that deficits are unsustainable. Of the academic papers I've been able to get through, I tend to err to the side that deficits really aren't as bad as conventional wisdom thinks it is. Since most blog and market discussion is merely a reiteration of the most recent CNBC debate, there aren't too many non-humdrum thoughts brought to the table.

I agree with you on China in that it's a pipe dream reminiscent of Japan, Tech and Housing. I'll bet that 80% of China is on the brink of poverty, and I'm not talking the American definition of poverty either. Yup, China is going to save us all.

Ride the fad for now, I'm not too sure about the crooks who say, "Well... if I had to look long term I would look at China".

Maybe you can answer this one. If the Chinese manipulate their currency to mirror the dollar, then do they really get any benefit to a 'weaker' US dollar when they purchase our goods or any other nation's goods?

How many folks on Medicare/Medicaid complain about the national debt? Bernanke and Co. saved the world after Lehman, so no, it's not bad as the media wants us to believe.

[lacaprup]

The NY Times had a nice article today about Japan's dept to GDP ratio. We are heading on their path right now. Currently 10% of their budget is used to pay interest on their national debt whereas we pay at 5% right now. There are also mitigating factors in Japan that do not exist in the U.S.

1) Japanese dept is held, by and large, by the Japanese. American dept is help by asians and arabs.

2) Personal saving in Japan is far higher than in the U.S.

On the same token:

1) Both nations have an aging population that will draw do any currency reserves there are.
2) Both nation's governments are spending at historically high levels.

Can we be in for our own lost decade?

[2EASY]

You want to fix the debt - quit giving money to other countries in need. I really don't see how we are allowed to do it - since we are broke. If a tsunami hit some island, and they need financial aid, the United States should say "sorry, we are broke". If some country needs any other financial aid for any humanitarion reasons - the United States should say "sorry, we are broke". I am not trying to be cold blooded here, but we do the same with our own personal check books don't we?

Imagine all the tax dollars saved.

[Frixxxx]

Originally Posted by 2EASY

You want to fix the debt - quit giving money to other countries in need. I really don't see how we are allowed to do it - since we are broke. If a tsunami hit some island, and they need financial aid, the United States should say "sorry, we are broke". If some country needs any other financial aid for any humanitarion reasons - the United States should say "sorry, we are broke". I am not trying to be cold blooded here, but we do the same with our own personal check books don't we?

Imagine all the tax dollars saved.

Agreed!

[phil]

I agree with almost everyone here! That's great, I think. The national debt is out of control!

www.costofwar.com

The Iraq war, by some estimates, has cost our country 3 trillion dollars. With just a fraction of that, we could have paid off our debts and would have enough left over to pay off healthcare reform.

I can readily see where the money has gone. Wasted. All we did in Iraq was completely lose control of the war on Al-Qaeda, and create numerous other threats. Was this some sort of bizarre jobs program? After Afghanistan, Al-Qaeda was on the run! After Iraq, well I guess they were able to reconstitute themselves.

[Viva La Migra]

Originally Posted by 2EASY

You want to fix the debt - quit giving money to other countries in need. I really don't see how we are allowed to do it - since we are broke. If a tsunami hit some island, and they need financial aid, the United States should say "sorry, we are broke". If some country needs any other financial aid for any humanitarion reasons - the United States should say "sorry, we are broke". I am not trying to be cold blooded here, but we do the same with our own personal check books don't we?

Imagine all the tax dollars saved.

Agreed and well said! I would add that we should stop funding the UN and kick their sorry a$$es off our property! Their like the ungrateful roommate who eats your food and you always have to clean up after!