The Next President of the United States

[MachineGhost]

Let's see how we stack up...

We're going down!!!  ALL HANDS TO BATTLE STATIONS.

[RuralEngineer]

Putting a mosque (or whatever you want to call it) at/near ground zero is a dick move IMO that is going to do anything but bring people together as this thread can attest.  What's more, I'm convinced that the people behind the project knew that upfront and if they didn't the immediate reaction showed them that their center would be more divisive than unifying.  If Muslims purchased land near the Pennsylvannia crash site for a "Community/Prayer Center," a lot of people would be pissed as hell and anyone that can't see why is an idiot.  You don't have to agree with it to understand it.

Having said that, I'm with PS on this one.  It's not the Federal Government's place to make sure that everyone is playing nice.  This isn't kindergarten.  If the mosque is offensive, go protest it.  Put up signs telling them how you feel.  Do to them like they did the Westboro crazies and buy the place next door and paint it with rainbows and crosses.  But don't ask the Nanny State to make them behave.  If they start training terrorists there or committing some other crime, then the government can shut the place down and it can be converted to a church out of spite.  Until then, it's really none of our business.

Remember, if the Federal government can come in and decide that a Mosque is "insensitive" and needs to be banned, then maybe a church in a particular location needs to be banned, or a gun store, or any number of other things.  Lets not get them in the habit of prohibiting things using the justification that it might offend someone.

[doodle]

Listening to Rand Paul interview on NPR. He is comparing government budget again to the household. Another blind man at the wheel.....

[rocketdog]

Listening to Rand Paul interview on NPR. He is comparing government budget again to the household. Another blind man at the wheel.....

Not sure what he's saying, but I'd imagine his point is that a household shouldn't spend that which it doesn't have, nor go into debt and leave their decendants to foot the bill.  Yet that is precisely how gov't operates: spend as much as you can in order to become popular and get re-elected, and let the next guy worry about how to pay for it all. 

I like how Nick Nuessle put it 20 years ago:

"The legacy of Democrats and Republicans approaches: Libertarianism by bankruptcy."

[moda0306]

Not to nit-pick, but Rosa was arrested.  If she had rightfully defended her individual sovereignty and resisted arrest, she would have been shot or beaten.

[Pointedstick]

Rosa Parks boarded a private bus driven by a racist bastard and did not comply with his racist demands, suffering the consequences of living under a racist government and being arrested, which touched off protests against both the racist bus company and the racist government.

She knew the consequences of her actions (sanction under the racist laws) but decided to bravely suffer them anyway in order to draw attention to the plight of African-Americans living under racist laws that empowered a racist society.

What she did was noble and courageous but I don't see how it applies to the situation we were describing, which concerned outrage over other people's decisions that did NOT affect you personally, restrict your choices, permit or require racism agains you, etc.

[doodle]

Listening to Rand Paul interview on NPR. He is comparing government budget again to the household. Another blind man at the wheel.....

Not sure what he's saying, but I'd imagine his point is that a household shouldn't spend that which it doesn't have, nor go into debt and leave their decendants to foot the bill.  Yet that is precisely how gov't operates: spend as much as you can in order to become popular and get re-elected, and let the next guy worry about how to pay for it all. 

I like how Nick Nuessle put it 20 years ago:

"The legacy of Democrats and Republicans approaches: Libertarianism by bankruptcy."

I dont think anyone will have to "pay for" our national debt....at least not in terms of real consumption. If our grandchildren manufacture a million cars 20 years from now, they wont have to send 100,000 of them back in time to "pay for" the debt. What if the Fed lowers interest rates to 0% on US treasuries. Is the "national debt" still a problem?

[Jan Van]

I dont think anyone will have to "pay for" our national debt....at least not in terms of real consumption. If our grandchildren manufacture a million cars 20 years from now, they wont have to send 100,000 of them back in time to "pay for" the debt. What if the Fed lowers interest rates to 0% on US treasuries. Is the "national debt" still a problem?

I estimate the peoplez on this here board own about half of that national debt in their PPs...

[rocketdog]

National Debt = $16.8 trillion and counting:

http://www.brillig.com/debt_clock/

[moda0306]

A government might be like a household if:

- The household has a printing press in the basement.
- the debt is at rates between 0% and 2.9%
- the occupants of the house mostly just owe money to each other, and the household's debt is mostly owed to the occupants
- the non-occupant owners of our debt rely on our basement full of guns and artillery to defend the neighborhood, and rely heavily on our demand for their goods.
- the occupants mostly buy and sell to and from each other
- the household should exist in perpetuity barring some giant war or ecological disaster.  Household doesn't "retire" and therefore needs no "surplus" for some future draw-down.

[annieB]

And there is no greed in the house?
No layabouts?

[rocketdog]

You're making straw man arguments here.  The bottom line is that you shouldn't spend more than you make.  Anybody who runs a household knows that (and if they don't they quickly find out the hard way).  The same should hold true for a gov't.  But more often than not it doesn't, much to the detriment of its citizens. 

[Pointedstick]

You're making straw man arguments here.  The bottom line is that you shouldn't spend more than you make.  Anybody who runs a household knows that (and if they don't they quickly find out the hard way).  The same should hold true for a gov't.  But more often than not it doesn't, much to the detriment of its citizens.

That would be true if a government shared the characteristics of a household, right? I think what you're missing is that the government runs a debt-based monetary system; a household doesn't. And if it did, it could spend "beyond its means" as well, so long as other people accepted its newly-printed private household currency.

[moda0306]

If a currency is fiat, there's nothing really to "take in."  There is also a very different reason to go into debt.

The very nature of taxation and debt to a government that controls it's currency is very different than could ever be described as a household. Even moreso than the traditional macro "fallacy of composition" reasoning that points out the differences between an open and closed economic system.

[RuralEngineer]

It's true that our descendents don't necessarily have to pay off the debt.  It's equally true that if they choose not to that the alternative will be increased taxes or a devalued currency.  So even if people who want to pretend that tax and spend policies and a massive debt are nothing to worry about, there are negative consequences that will have to be faced at some point by someone, assuming debt grows faster than GDP (a safe assumption).

Even saying "we mostly owe the debt to ourselves" is a meaningless statement, because interest payments on the debt still consume funds that compete with other spending, like defense or entitlements.  Again, it's possible to print more money to cover this, but at some point this will become inflationary.

[MachineGhost]

There's no better example of the fallacy of the debt being thrust on the backs of grandchildren than to consider....  did you personally pay or were effected by any of the humungous World War II debt?

Case solved!

[doodle]

There's no better example of the fallacy of the debt being thrust on the backs of grandchildren than to consider....  did you personally pay or were effected by any of the humungous World War II debt?

Case solved!

Funny how I can strongly agree with MG on one topic and be so diametrically opposed on another. If you read one thread certain people are going for each others jugulars, and in the very next one the same group is patting each others backs in agreement  .....just an observation.

[doodle]

How will our children pay for this debt? Will our living standards no longer be determined by our productivity and the quality of our infrastructure, schools, and hospitals? Will our children have to sacrifice the amount they can produce and consume because the government has a certain amount of paper debt outstanding? I dont understand quite yet this link between the real economy of goods and services with the representation of that wealth in the form of money.

I keep thinking of the following zen parable....however with the words Truth and words replaced by wealth and money.

Truth has nothing to do with words. Truth can be likened to the bright moon in the sky. Words, in this case, can be likened to a finger. The finger can point to the moon’s location. However, the finger is not the moon. To look at the moon, it is necessary to gaze beyond the finger, right?"

[rocketdog]

How will our children pay for this debt?

It just occurred to me: why can't we just default on the debt like so many other countries have done?  Maybe I'm on to something here...

[Pointedstick]

How will our children pay for this debt?

It just occurred to me: why can't we just default on the debt like so many other countries have done?  Maybe I'm on to something here...

Do you want to lose half the money in your PP? Does the entire rest of the world want to lose all the dollars they've accumulated as reserves? Sure, we could default on the debt. But there's no reason to. It would hurt a very large number of people and destabilize the world financial order for little real gain, since unless we stop deficit spending, a new debt will simply begin building up immediately and another country would probably take up the mantle of reserve currency issuer and embark on the same path that we have.

[doodle]

How will our children pay for this debt?

It just occurred to me: why can't we just default on the debt like so many other countries have done?  Maybe I'm on to something here...

Sorry, sarcasm doesnt work well in a written forum...when I asked that question I meant to imply that they wouldnt have to pay for the debt. As PS pointed out, that debt comprises 50% of our savings. Govt liability equals our private asset.

[rocketdog]

How will our children pay for this debt?

It just occurred to me: why can't we just default on the debt like so many other countries have done?  Maybe I'm on to something here...

Do you want to lose half the money in your PP? Does the entire rest of the world want to lose all the dollars they've accumulated as reserves? Sure, we could default on the debt. But there's no reason to. It would hurt a very large number of people and destabilize the world financial order for little real gain, since unless we stop deficit spending, a new debt will simply begin building up immediately and another country would probably take up the mantle of reserve currency issuer and embark on the same path that we have.

I'm no economist here, so I don't know what the repercussions would be.  So you're saying we couldn't just tell the countries we owe money to, "Sorry guys, we've decided not to pay you back.  Better luck next time!"?

If that happened, how would we then lose half the money in our PP?

[Pointedstick]

I'm no economist here, so I don't know what the repercussions would be.  So you're saying we couldn't just tell the countries we owe money to, "Sorry guys, we've decided not to pay you back.  Better luck next time!"?

Sure, we could do that. And then all the banks all over the world that hold bonds or reserve accounts at the Fed would have to write off those defaulted-on assets, making their balance sheets a lot less asset-heavy. We've seen how unbalanced banks especially in Europe already are; that kind of sudden hit would drive a panic and probably reveal the all the banks are insolvent. It could cause a lot of pain and misery as the world dug out from under that mess.

If that happened, how would we then lose half the money in our PP?

25% stocks
25% gold
25% bonds
25% cash

The government would default on the bonds and the cash too if it's held as T-bills, T-notes, I-bonds or if you've got it in short-term treasury funds. All those assets would go to zero. I mean, that's what a default does, right? It wipes out creditors. Well, we're the creditors! 

Other casualties would include private pension funds, total bond market funds, people with old-fashioned savings bonds. Everyone who thought they had a U.S. Treasury asset would have a worthless piece of paper or fewer zeroes in their brokerage accounts.

[RuralEngineer]

A default by the # 1 economy in the world isn't going to help the stock allocation of your PP either.

[melveyr]

Why would anyone choose default though? The US has literally infinite borrowing capacity through the Fed (with primary dealers acting as market makers making risk free profits). The US always has the ability to borrow more to pay back previous debts. And any debt that ends up getting owned by the Fed is effectively money that the government lent to itself because almost all of the Fed's profits go back to the Treasury.

Hell just listen to Harry Browne. He will tell you the same thing. Treasuries are risk free in nominal terms. The symbiotic relationship between the Fed, Treasury, and primary dealers ensures that the US Treasury can always procure more funds to spend, effectively functioning like a printing press.

Besides that round about way is just with our current legal structure. With the stroke of pen congress could force the Fed to allow its checking account to go negative indefinitely. Our entire monetary system is just computer entries at the Fed. There is no gold coin that gets shoved into a floppy drive; this is pure fiat money.... There is no operational constraint to prevent the US government from spending currency into existence. The true constraint is spending more money than the economy can bear, creating inflation.