Comments on: Sanity

By: CosmicConservative

CosmicConservative — Wed, 07 Jan 2009 17:52:05 +0000

All of this discussion makes me start to wonder how "real" the "cash" in our (or any other) economy really is. The whole concept of "borrowing" from our children forces me to think that if you can spend IOUs as if they were the real thing, then what are you really spending? And what do you really owe? It's not as if there's a pile of gold coins somewhere anymore. CosmicConservative's last blog post..What good is a high school education?

By: Dave Price

Dave Price — Tue, 06 Jan 2009 23:32:58 +0000

Dave S,

No, that’s a $2 trillion deficitÂ we’re looking at– before this bailout.Â Adding another couple trillion to that trulyÂ could beÂ catastrophic.

If you think that’s hyperbolic, you don’t understand the numbers. That could mean potentially less than half of gov’t spending was actually paid for — and just when the Social Security surplus is starting to go negative. Ask Zimbabweans how that works out.

Adding 40% a year to the debt ratio is just not sustainable. People will stop lending Uncle Sam money if it looks like a bad investment.

If you think we have problems now, imagine a world in which Treasuries approach junk bond status. With no safe haven for money anywhere, we might be looking at the sort of economic panic not seen since the 1800s, perhaps even a collapse of major governments, including ours. It’s well nigh unimaginable.

By: Keith Stauffer

Keith Stauffer — Mon, 05 Jan 2009 19:54:03 +0000

~10 trillion / ~14.6 trillion = 68%

That number will go up obviously, as GDP is technically going down or staying flat, and debt will rise as the government tries to spend us out of the recession.

By: Brian Tiemann

Brian Tiemann — Mon, 05 Jan 2009 18:16:35 +0000

What is our debt-GDP ratio, anyway?

By: Dave Schuler

Dave Schuler — Mon, 05 Jan 2009 15:45:37 +0000

Just thinking one step ahead, Brian.Â When government expenditures exceed revenues the difference adds to the public debt.Â We have a way to go before we reach the level of Japan and the situation in Japan isn’t catastrophic.

Now I agree with Dave’s basic point:Â we should be more reluctant to spend beyond our means than we seem to be right now.Â I just disagree with his diction.

By: Brian Tiemann

Brian Tiemann — Mon, 05 Jan 2009 15:24:34 +0000

Dave, that’s overall debt you’re talking about, not deficit, right? Very different things.

By: Dave Schuler

Dave Schuler — Mon, 05 Jan 2009 15:11:05 +0000

The United Kingdom’s public debt to GDP ratio is about 30%, France’s about 65%, and Japan’s 176%.Â While I think that a larger public debt relative to our GDP than we have now is undesireable for any number of reasons, "catastrophic" is hyperbolic.

By: Jules Crittenden » New Deal

Jules Crittenden » New Deal — Mon, 05 Jan 2009 12:54:26 +0000

[...] Dean’s World: Yeah, but what about the spending? [...]

By: jaymaster

jaymaster — Mon, 05 Jan 2009 04:40:19 +0000

At this point in the game, I think weâ€™re just seeing trial balloons all around.Â Â

By: Brian Tiemann

Brian Tiemann — Mon, 05 Jan 2009 03:09:23 +0000

Unless memory fails me, Bush took office in 2000 shortly after the dot-com bubble burst, and he inherited the blame for the recession that followed, despite all evidence that the seeds for the collapse were a) sown in his predecessor’s tenure and b) nothing a sitting President could have meaningfully affected one way or the other.

I don’t know who would want this job. I’m surprised there haven’t been in-office suicides.