[Wolfman]

How about doing the same without completly destroying our economy?

Cut the bullshit spending (we could happily live on about 40% of our national spending), but keep the same federal tax rates. Doing that would create a massive surplus, which would pay off our debts over a few years.

[Todd D.]

How much was your deposit compared to the value of the house? Regardless of actual amount, a deposit of high percent of the value of the house, is a massive deposit.

I put 5% down. Towards the low end, but between 5% and 20% is standard. I'd considering 20% to be "massive", but it's not like you borrow money to put the DP down, otherwise you'd just add it to the principle of the house, since borrowing against a 5% mortgage is preferrable to borrowing against a 25% Credit Card, right? I guess I don't really understand what your point here.

Cut the bullshit spending (we could happily live on about 40% of our national spending), but keep the same federal tax rates. Doing that would create a massive surplus, which would pay off our debts over a few years.

This.

[DubiousDan]

Wolfman:

How about doing the same without completly destroying our economy?

Cut the bullshit spending (we could happily live on about 40% of our national spending), but keep the same federal tax rates. Doing that would create a massive surplus, which would pay off our debts over a few years.

Me:
I know I’m going to regret this, but here goes once more. Do you plan on cutting the Social Security benefits and continue taking the SS taxes? That would reduce the deficit nicely . Right now, with benefits as they are, and taxes as they are, SS is 245 billion in the black. That money goes straight to treasury to fund the general insanity. This is always a popular suggestion.

The combined social security benefits and Medicare benefits are 51 billion in the black. When you look at expense, they look like juicy targets. The propagandists love to do that.

http://www.whitehouse.gov/omb/budget/fy ... ummary.pdf


Defense spending is a little hard to figure on the positive side, but it contributes. However, it is a net loss.

The interest payment on the national debt is not all red, but the part that goes outside the US is. It’s a little hard to cut.

If you add up defense and payment on the national debt, just how much of your 40 % are you going to have left over.

Much of the recent deficit spending is a desperate attempt to save the dollar. Success is in doubt. Yes, they don’t mind a weaker dollar up to a point, nobody quite knows what that point is, but we will know after we get there. Well maybe not, there seems to be no limit to the gullibility of the American public.

Our debt at present is 12 trillion, and that’s not all of it. The debt only becomes official when bonds are sold to support it. Federal guarantees don’t count until we have to pay them. They remain obligations.

However consider this. 2 % of 12 trillion is 240 billion.
4 % 480
6 % 720
8 % 960
10 % 1.2 Trillion
12 % 1.44
Most of our debt is short term because its cheaper that way. If short term interest rates hold at historically low figures, then fat city. If the dollar falls significantly they will be unable to do that. After all, that’s what inflation really is.

Now in 08, Expense was about 3 trillion.
Intake about 2.5 trillion
Deficit about 0.5 trillion
Now if you cut expense, you can’t simply say that’s how much the deficit will be cut. When you cut expense, you also cut intake. That’s one of the reasons deficit spending looks good. Intake goes up, so does the GDP, and while you come up farther in the hole, it’s not as bad as you would think, especially in relation to GDP. Of course, in an economy that’s smoke and mirrors, what does GDP really mean? Remember waste counts towards the GDP.

However, the one constant in this game that is pretty much locked in is interest on the national debt. The only significant variable other than principal is interest rates. That’s one of the reasons the Fed has been holding interest rates ridiculously low. Obviously, they can’t keep this game up. So as long as you haven’t reduced the national debt, the interest on it is going to be setting there. Slashing expense to 40% is going to play Hell with the economy. If that causes inflation to a degree that they can’t hide it, that means the interest on the national debt goes up. It also means that intake will fall. You can’t say that you are going to get a simple result, because right now, no one knows what the effect of slashing the budget to 40 % would be. If it resulted in short term interest rates going to 12% or greater, then the interest rate payment would be more than half of the annual budget. If interest rates go significantly above 12 % and stays there, the payment could reach a point beyond our means to pay. I doubt very much if the IMF could bail out the United States.

However, the point is moot, because the Obama administration is not about to do it now. Four years from now, who knows what interest rates will be? One thing is certain, the national debt will be higher, a lot higher, and the payment on it will be higher. If they replaced Obama with a competent President and replaced Congress with a competent Congress, it would still be almost impossible to straighten this mess out. The odds on that happening are close to infinity to one. On the other hand, if you get an incompetent President, always a good bet, and an incompetent Congress, almost a sure thing, then the hyperinflation bet is a reasonable possibility.

[Wolfman]

I guess I don't really understand what your point here.

Basicly. I fail.

I know I’m going to regret this, but here goes once more. Do you plan on cutting the Social Security benefits and continue taking the SS taxes? That would reduce the deficit nicely . Right now, with benefits as they are, and taxes as they are, SS is 245 billion in the black. That money goes straight to treasury to fund the general insanity. This is always a popular suggestion.

No. SS should stay in place, it just needs restructuring and some alterations. I'm not going to bother with the rest. The bullshit spending is things like pork belly spending, and there is a huge list of departments that serve no real function, and should be eliminated.

[redcarpet]

Solution= Abolish money. Easy

[Rancid]

What do we do after abolishing money?

[Wolfman]

Barter system.

However, Barter requires a double-incidence. Which is why a common value will eventually be set. For alot of cultures that common value was Shells, Gold, Silver, or Grain. Which would eventually lead to the return of a currency system.

[DubiousDan]

Redcarpet:

Solution= Abolish money. Easy

Me:
Not so easy. We can abolish money in the United States. We can’t do in the rest of the World. We would still have our international debts.

According to the Encyclopedia Britannica, 1999 CD edition.

“Gold is still accepted by all nations as a medium of international payment.”

Me:
As I recall in the late 20th Century some countries refused to accept dollars and we had to pay them in gold.
However, with our present debt load, it would wipe out our gold reserves rather quickly. Of course, you can’t pay taxes without money. At least from regular folks.
I assume you were being facetious.

The standard way out is to declare national bankruptcy. The Spanish Empire did it three times under Philip II when Spain was the largest Empire on Earth. Not nice, but we would survive. Too many countries need our internal market to shut us down. We would probably have to do the standard money thing afterwards, call in our currency and reissue it after moving the decimal point two or three places to the left. The Euro would have to take over the burden of being the World’s standard currency. It’s probably heading that way now.

I still think hyperinflation would be the easiest way out, of course that would have the same monetary effect. We would still have to call in our currency, move the decimal and reissue. I suspect we will be doing that anyway before long unless something changes.

[TropicalK]

you are wrong, the US can print a bill with the denomination $1 trillion and pay off the Chinese, no gold involved.

[DubiousDan]

TropicalK :

you are wrong, the US can print a bill with the denomination $1 trillion and pay off the Chinese, no gold involved.

Me:
I assume you were addressing my post, if so, you are wrong. The Universe of Discourse was the absence of money. I was replying to redcarpet’s proposal to abolish money. Even ignoring that, if we printed a bill with a denomination of one trillion and used that as payment, that would be the same as paying them a trillion dollars. However, money from the mint is not just handed out, some authorized party has to buy it. If the federal government did that, they would increase the national debt by a trillion dollars. By the way, this topic is concerned with the national debt, which is, at the moment, for all practical purposes, 12 trillion dollars. So paying someone a trillion by borrowing a trillion would hardly cut it.

Money isn’t really all that easy to create, not even fiat money. Money isn’t created at the mint. The mint merely supplies currency for the cash portion of our economy, and that is a tiny portion. Mints don’t create money, they exchange money. Most of the wealth of nations is really in computers or on paper somewhere, and by paper, I don’t mean currency. Money is created by lending. That is why for a long time only banks could write checks without the funds to back the check. Tightening or loosening credit is done to control the amount of money in circulation.

Please note that governments don’t have to except payment in fiat money, they can demand payment in gold. If payment is not made, the debt remains open. This is especially true of nations with thermonuclear weapons and delivery systems as well as multimillion member militaries.

[TropicalK]

you are 100% wrong. America's debt is very specific in terms of bonds and notes payable in US dollars. This is in writing on every US treasury bond. And the treasury DOES just print money without taking any debt, it is called seignorage.

[DubiousDan]

TropicalK :

you are 100% wrong. America's debt is very specific in terms of bonds and notes payable in US dollars. This is in writing on every US treasury bond. And the treasury DOES just print money without taking any debt, it is called seignorage.

Me:
Learn something new every day. I thought that the US Treasury printed money under the jurisdiction of the Federal Reserve System. The is true of paper money, not coins. Maybe that’s why it says Federal Reserve Note on top of the bill.

Wonder if you could give me a source on your use of seignorage. I haven’t been able to find one. The only ones that I have found are similar to the one below. There is an article in the Wiki that may have confused you.

There is a term taken from the real meaning of seignorage and used in smoke and mirror economics. It’s probably reasonably valid if handled by experts. There is no definition that I know of that authorizes the printing of money by seignorage. Seignorage is a benefit of printing money, it has nothing to do with the authority for printing money. It would be amusing to find the seignorage gained by the printing of a trillion dollar bill.
Actually if the bill were used to pay off a trillion dollar debt, that would sort of eliminate the seignorage. I really can’t see much in the way of goods and services involved in that.

Yes, it says right on the bill that this note is legal tender for all debts both public and private, but my local 7-11 won’t accept 100 dollar bills. I guess I could call a cop, but somehow, I have a feeling that I would lose.

I may be 100% wrong but so far I haven’t seen any proof of that.


seignorage

from the Merriam-Webster’s Unabridged Dictionary CD version 3.0

Main Entry:sei£gnior£age
Variant:or sei£gnor£age also sei£gneur£age \-rij, -r*j\
Function:noun
Inflected Form:-s
Etymology:Middle English seigneurage, from Middle French, right of the lord, especially to coin money, from seigneur + -age

1 : a government revenue derived from the manufacture of coins that is calculated in the United States as the difference between the monetary and the bullion value of the silver contained in silver coins disregarding any alloy metal, all the metals contained in minor coins (as the nickel and the cent), or the silver bullion that is held as backing for silver certificates — compare BRASSAGE
2 archaic : DOMINION, POWER

[Zerogouki]

The solution to the debt problem is to stop borrowing and spending so much money.

[Northern_Englishman]

The solution to the debt problem is to take the use of this 'make believe' fiat money to another level. re-write the economy completely so all the money is where it needs to be so we can all work, spend and save until it all goes wrong again.

China probably would not even care about losing the debt because a solution such as this would mean we in the West could afford to buy enough Chinese products to employ the masses over there on a stable basis.

Economic leaders need to take a step back and admit that what they have created over the last hundred years or so is largely not even based on real wealth and is in-fact fraud, but fraud that has actually had many benefits. I see no reason why this should not be done in a more organised way so we can set up a near-perfect world economy capable of putting people in the position where they have enough money to spend (creating jobs) to save (creating capital) but still not enough money forcing them to keep working (to provide labour.)

A free-market global economy which governments or a central economic ministry could freely adjust the capital of when things go wrong could provide stable economic growth matching the worlds needs for as long as it is necessary. On a global scale it is the height of economical common sense.

Of course it would be an ultra-complex operation which would need to be carefully planned out beforehand and then slowly implemented over a period of time in a balanced way as to not wreck havoc such as sharp mass inflation or deflation on the current state of wages or prices.