news.yahoo.com— "[U.S. President] Obama must sign the measure into law to prevent a market-rattling, first-ever default on U.S. obligations."
Dec 24, 2009View in Crawl 4
Yes, the U.S. army is stronger than China's. China has the largest army in the world, but largest isn't necessarily an indication that it's the strongest. I recently read an interesting article that referred to China's army as the "worlds largest military museum". They're poorly trained, poorly equipped, technologically behind, and have a weak navy. The U.S army is certainly stronger. They have us by the balls economically, which is in many ways worse then if they had a stronger military. The U.S army is certainly stronger though.
I was being sarcastic... to an extent. But there is actually a good explanation for that phenomenon.Governments finance debt through the issuing of bonds. What maintains the value of those bonds are investors. However, governments are typically limited in their ability to do this because of foreign currency exchange markets. Theoretically the whole thing should balance out through currency depreciation and other market mechanisms credit rating agencies.However, countries like China and Japan have intervened to maintain artificial exchange rates in an effort to further stimulate trade and generally the United States has let them. Essentially they have lowered their standards of living in exchange for higher standards of living in the West. This creates huge trade surpluses and deficits in the respective countries and creates the debt situation we are in now.The threat of course is if China or Japan were to cash in their currency reserves. However they are now stuck. Both rely on the United States economy and Japan has a particular interest in maintaining U.S. military supremacy.Macroeconomics is not nearly as simple as saying 'debt' is bad or 'credit' is good. In fact if you have surplus money it means you're not wisely investing and using those funds. For example while China sacrificed living conditions to gain nearly 2 trillion in currency reserves, they can't do anything with it. In contrast the United States has improved living conditions with trillions of dollars of debt that can't really be cashed in.The concern with U.S. debt is not the dollar amount (which is low by GDP standards). The real problem is that it is being used to finance consumption (wars, flat screen TVs, service industry) rather than buying capital, improving infrastructure, etc. When the currency devalues, which will happen at some point, the United States will have the currency comparative advantage but nothing else to show for years of consumption.The hope is that Obama's increase in debt to finance public healthcare, education, infrastructure, public transit, etc will help to offset these issues. It's a big job though, compared to other countries we've spent the last 20 years wasting money away and it might be too late.
Guncrazy your post was dead on accurate up to the point I cut it off here:Overwhelmingly, I blame the Executive Branch, and in particular...That is where you should have added Ronald Reagan. Though I don't blame him completely. It was Johnson (a democrat) who f**ked up the brilliantly working new deal. But it was Reagan who grabbed the 'Friedman' end of the sick and ran with it till it lead to the Bush collapse.
@erhanaltayerhanaltay "To quote Mayor Bloomberg "The question is, "What's fair?" If one percent are paying 50% of the taxes, you want to make it even more? A little over half the people, half the households who file tax returns don't pay any taxes."If those named 1% of people 'own' more then 50% of all property - esp. in the economic sector. Of course they should pay that much taxes!The 'economy' is not there for its own sake but to feed and support the society (and itself of course) - if someone owns 50% of the economy he is responsible for feeding and supporting 50% of society.
@murxAnd that 1% gets to make up all the laws because they lobby the senators into getting bills passed. Since we, normal people, could never get them to focus on what we want unless we had 'contributions' behind it.
When you say "it is very simple economics" you are implying that there is one theory of economics. In actuality, what you have described in your post is one theory in economics called the Keynesian theory. It is just a theory. It cannot be proven by the scientific method in a controlled experiment.Keynesian theory basically states that an economy needs the government and a central banking system to counter balance the private sector. I believe that it is a fatally flawed idea, and that it only leads to bigger government, more governmental control, and ultimately the abuse of the power we have granted the government. Simply put - Keynesian economics is a convinient theory for politicians to use to take more of our liberty, and to impose central control.As to your original post - we should care more about "truth" than we care about party affiliation.
LocalzUK - ah, I should have noticed the UK in your handle.I guess I wouldn't mind a big government when the economy is good ;)I have too many friends unemployed because of the crooks in DC, and the pirates on Wall Street. Then to add insult to injury the crooks bail out the pirates, and the suckers are left holding the bag.And I agree with you about spending properly. For some reason, the past 30 years of administrations in the USA have chosen to spend like drunk sailors (last 9 have been brutal).
China > USIf China dumped US bombs, the US couldn't supply its military with fuel or paychecks after a week.China has SAVINGS. Its a concept most liberals don't understand, b/c they think going into debt makes our country prosperous if it has a euphemistic name like "stimulus".
phatlip012Dec 26, 2009
Yes, the U.S. army is stronger than China's. China has the largest army in the world, but largest isn't necessarily an indication that it's the strongest. I recently read an interesting article that referred to China's army as the "worlds largest military museum". They're poorly trained, poorly equipped, technologically behind, and have a weak navy. The U.S army is certainly stronger. They have us by the balls economically, which is in many ways worse then if they had a stronger military. The U.S army is certainly stronger though.
zelldDec 26, 2009
I was being sarcastic... to an extent. But there is actually a good explanation for that phenomenon.Governments finance debt through the issuing of bonds. What maintains the value of those bonds are investors. However, governments are typically limited in their ability to do this because of foreign currency exchange markets. Theoretically the whole thing should balance out through currency depreciation and other market mechanisms credit rating agencies.However, countries like China and Japan have intervened to maintain artificial exchange rates in an effort to further stimulate trade and generally the United States has let them. Essentially they have lowered their standards of living in exchange for higher standards of living in the West. This creates huge trade surpluses and deficits in the respective countries and creates the debt situation we are in now.The threat of course is if China or Japan were to cash in their currency reserves. However they are now stuck. Both rely on the United States economy and Japan has a particular interest in maintaining U.S. military supremacy.Macroeconomics is not nearly as simple as saying 'debt' is bad or 'credit' is good. In fact if you have surplus money it means you're not wisely investing and using those funds. For example while China sacrificed living conditions to gain nearly 2 trillion in currency reserves, they can't do anything with it. In contrast the United States has improved living conditions with trillions of dollars of debt that can't really be cashed in.The concern with U.S. debt is not the dollar amount (which is low by GDP standards). The real problem is that it is being used to finance consumption (wars, flat screen TVs, service industry) rather than buying capital, improving infrastructure, etc. When the currency devalues, which will happen at some point, the United States will have the currency comparative advantage but nothing else to show for years of consumption.The hope is that Obama's increase in debt to finance public healthcare, education, infrastructure, public transit, etc will help to offset these issues. It's a big job though, compared to other countries we've spent the last 20 years wasting money away and it might be too late.
roguegeniusDec 27, 2009
Amen! Rhodydog. Amen!But it's hard not to assign blame to the blunt (and I mean BLUNT) instrument of the peoples stupidity.
roguegeniusDec 27, 2009
Guncrazy your post was dead on accurate up to the point I cut it off here:Overwhelmingly, I blame the Executive Branch, and in particular...That is where you should have added Ronald Reagan. Though I don't blame him completely. It was Johnson (a democrat) who f**ked up the brilliantly working new deal. But it was Reagan who grabbed the 'Friedman' end of the sick and ran with it till it lead to the Bush collapse.
murxDec 27, 2009
@erhanaltayerhanaltay "To quote Mayor Bloomberg "The question is, "What's fair?" If one percent are paying 50% of the taxes, you want to make it even more? A little over half the people, half the households who file tax returns don't pay any taxes."If those named 1% of people 'own' more then 50% of all property - esp. in the economic sector. Of course they should pay that much taxes!The 'economy' is not there for its own sake but to feed and support the society (and itself of course) - if someone owns 50% of the economy he is responsible for feeding and supporting 50% of society.
worldgate989Dec 27, 2009
@murxAnd that 1% gets to make up all the laws because they lobby the senators into getting bills passed. Since we, normal people, could never get them to focus on what we want unless we had 'contributions' behind it.
ifpk454Dec 28, 2009
When you say "it is very simple economics" you are implying that there is one theory of economics. In actuality, what you have described in your post is one theory in economics called the Keynesian theory. It is just a theory. It cannot be proven by the scientific method in a controlled experiment.Keynesian theory basically states that an economy needs the government and a central banking system to counter balance the private sector. I believe that it is a fatally flawed idea, and that it only leads to bigger government, more governmental control, and ultimately the abuse of the power we have granted the government. Simply put - Keynesian economics is a convinient theory for politicians to use to take more of our liberty, and to impose central control.As to your original post - we should care more about "truth" than we care about party affiliation.
ifpk454Dec 28, 2009
LocalzUK - ah, I should have noticed the UK in your handle.I guess I wouldn't mind a big government when the economy is good ;)I have too many friends unemployed because of the crooks in DC, and the pirates on Wall Street. Then to add insult to injury the crooks bail out the pirates, and the suckers are left holding the bag.And I agree with you about spending properly. For some reason, the past 30 years of administrations in the USA have chosen to spend like drunk sailors (last 9 have been brutal).
tmbrownJan 1, 2010
China > USIf China dumped US bombs, the US couldn't supply its military with fuel or paychecks after a week.China has SAVINGS. Its a concept most liberals don't understand, b/c they think going into debt makes our country prosperous if it has a euphemistic name like "stimulus".