[rogerhb]

$this->bbcode_second_pass_quote('clueless', 'I') say the US keeps on being B*******. What do you think ?

[pedalling_faster]

what i'm trying to figure out is, what will happen to rent, on residential property, apartments and homes.
from the point of people losing their jobs & not having money for rent, i would think rent trends will be deflationary. God, talk like an economist, rents will go down.
from the point of view of the "Fed", which i'm not even sure what that is, printing more money, that would seem to be inflationary.

[rogerhb]

$this->bbcode_second_pass_quote('clueless', 'Y')ou have to admit you and I can at least agree on these issues. Judgement is coming upon this people (my country), for it's selfishness.

[clueless]

$this->bbcode_second_pass_quote('', 'T')wo geologists think they know how the infamous biblical cities of Sodom and Gomorrah were destroyed.

[rogerhb]

$this->bbcode_second_pass_quote('clueless', 'T')he operative word - THINK !!!

[clueless]

$this->bbcode_second_pass_quote('', 'R')ather like believe, it's all opinion.

[rwwff]

$this->bbcode_second_pass_quote('pedalling_faster', 'f')rom the point of people losing their jobs & not having money for rent, i would think rent trends will be deflationary. God, talk like an economist, rents will go down.
from the point of view of the "Fed", which i'm not even sure what that is, printing more money, that would seem to be inflationary.

[eric_b]

$this->bbcode_second_pass_quote('clueless', '')$this->bbcode_second_pass_quote('', 'R')ather like believe, it's all opinion.

[clueless]

$this->bbcode_second_pass_quote('', 'K')nowing you know nothing

[rogerhb]

$this->bbcode_second_pass_quote('eric_b', 'K')nowing you know nothing is the most important.

[KhanCEO]

The Evening Bulletin

$this->bbcode_second_pass_quote('Walter E. Williams, a George Mason University economics professor and author', '[')In 1902, federal, state, and local government spending was $1.7 billion and the average citizen paid $60 a year in taxes. From 1787 until 1920, all government spending amounted to three percent of the GNP, except during wartime.
Now federal spending alone is $2.7 trillion, Williams said, and state and local spending is slightly over $1 trillion. The average citizen pays $8,000 in taxes per year.
From Jan. 1 until May 8, five months out of the year, the government decides how our earnings are spent. Williams likened this to slavery in the sense that someone works all year and someone else decides how the fruits of his or her labor will be used. So in effect, Americans are nearly halfway towards economic slavery.

[emersonbiggins]

Interesting website I happened upon; basically says growth of deficit is a good thing, and a surplus is the last thing a healthy economy needs.
An excerpt:
$this->bbcode_second_pass_quote('', 'T')he government borrows by offering for sale, on the open market, Treasury bonds, bills, and notes. Each of these is a promise by the government to do two things: (1) pay periodic interest payments to the lender; and (2) pay the full amount of principal back to the lender on the maturity date. If the government fails to pay the lender back, it is in default; i.e., it has effectively declared bankruptcy.
Believe it or not...
Here's a very important but widely misunderstood aspect of federal debt financing. It can be confusing, because both of the following, seemingly mutually-exclusive points are true simultaneously:
1. We must pay back all the money we borrow; and, believe it or not…
2. We'll never have to pay back all the money we borrow.
Yes, both of those statements are true. Let me explain.
We must pay back all the money we borrow:
If I buy a 30-year Treasury bond, the government must pay me back in full at the end of 30 years. No way out of that obligation, short of default and bankruptcy. Same is true of every other bond, bill, and note the U.S. Treasury sells. No way out; it must pay them all back.
We'll never have to pay back all the money we borrow:
To pay me back after 30 years, the government can sell another bond to somebody else, and give me the proceeds. In other words, it can "roll the debt over." It can liquidate my maturing bond by selling a new, fresh one. Rolling over the debt results in no increase or decrease in total debt (…deficits and surpluses cause the total debt level to change, but rollover doesn't).

[Alpaca]

As a result of deficit spending, you increase the likelyhood of inflation and a fall in the value of the US dollar, so when you go to "pay back" this investment, the government is able to use "cheaper" dollars. Reagan used these kind of pyramid schemes in the '80's. Things may have looked good at the time, but he racked up $3 Trillion in dept during his terms. (Just like spending on a giant credit card, and leaving the next guys to worry about the bill)

In a larger sense this is all about the conservatives (i.e republicans) consciously trying to bankrupt the government. Idiologically they believe that the role of government is to provide a military force and to create an economic environment to further enrich corporations and the wealthiest 1%. The way to do this is to "starve the beast" as they've been doing pretty successfully for the past 25 years (with a brief return to some fiscal sanity during Clinton's terms).

If the federal government spends much more than it takes in and goes so deeply into dept (as it now has), they can throw up their hands and say, "we have no money for all these 'descrescionary' spending and social welfare programs!!" That means no funding for education, healthcare, the environment, or any social safety net for the bottom 2/3rds of the population. Right now, the Pentagon and Defence budgets are bigger than everything in the rest of the Federal budget combined.

So, I guess the question becomes...growing US Deficit good for whom?

[mefistofeles]

That's what all my professors in school would say when I got my degree in economics. Trade deficits per see don't matter.
A current account deficit is simply an accounting mechanism if the local economy produces 100 units of production but consumes 105 units of production we have a 5% current account deficit. The country is simply consuming more than it produces.
Of course the profs are technically correct. If a country is spending money on infrastructure and development trade deficits do no matter. This would probably describe the US at the end of the 19th and begining of the 20th centuries.

However with the US manufacturing sector in decline its hard to see how the current trade deficit could be so benign. Yes if we borrow but invest we can make more but just look at the US.
For a country that spends more than any OECD nation we rank 20th in primary education.
Our tradeable goods sector is decreasing in size so even as our trade deficits mount our ability to earn foreign currency decreases.

Unlike Japanese and Korean companies that borrowed heavily in order to create strong capital bases in order to create more revenue.
Of course too many dollars can be a very bad thing. read Richard Duncan's "Dollar Crisis" to find out more.
For years the US benefitted from a net inflow of capital its investments overseas brought more capital into the US than went to foreigners. However with US issuing more bonds to foreigners we will see an outflow of capital from the US.

For a non technical person(in terms of your financial/economic background) the best piece is Warren Buffet's Squanderville Essay .

[firestarter]

It's the old Keynesian, sprinkled with a dash of monetarism, canard that sets up worshipers at the alter of the "free marketers" religion called economism. Laffer, Kudlow or any other group of well positioned hustlers erect for us the god of "economic growth" as the sine qua non of human action, and come hell or high water all must be done to preserve this bloodless abstaction. Being that this unnaturallly accelerated "growth" has led us down the road to population overshoot, perhaps these true believers can help us start a negative growth industry which puts them and their ilk opposite a firing squad.

[mmasters]

If all the debt is paid off then the money supply disappears.
In our current system we create new money only by taking on debt.

The metaphorical printing press, or supply of money floating about the economy is constantly being expanded. The FED has absolute control over this process. Just last week the FED introduced 1-2 billion new extra dollars into the economy. They do this because adding more money makes everyone feel richer or gives the illusion of prosperity and therefore people feel more inclined to spend. If people en mass understood that this is really FED inflation and our money is being devalued more while we're tricked into prosperity the system would be in jeporady. Our money system is a faith based system.

Additionally, if the debt becomes too excessive the FED can reduce the amount of new money being introduced (since we are most always used to new money being introduced we don't notice it). This is the primary mechanism of inducing a recession and/or depression. The more the money we are constantly used to being added ceases the worse things will be.

[lee]

Yes, everything you included in the excerpt was true. BUT......
There are other consequences of high budget deficits. When you put out TBills, you are asking people to buy them. If you put out too many, then you have to sell them for cheap, resulting in a higher long term interest yield. Eventually, the more you borrow, the higher interest rates go. This affects mortgage interest rates as well because if a bank is going to lend somebody money, it has to pay more than the yield on a Treasury or it's not worth the risk (why chance a default on a home loan, if you can get the same rate with guaranteed TBills/Treasuries?)

Right now, we have a seemingly contradictory situation. We have high budget deficits and low interest rates. What's going on here? Well, we also have a large trade deficit, and so the foreign lenders are buying lots of Treasuries and thus keeping demand high and the yield low.
BTW: Money does NOT enter the system via the budget deficit. Money enters the system through the Fed. Banks borrow money from the Fed and use the rollover to continue making the payments on the debt. So money enters the system when banks borrow from the Fed, and money exits when they pay back the interest and the balance. Money enters and exits through the Fed, not the US budget. They are two different things.

[lee]

$this->bbcode_second_pass_quote('', 'O')ur money system is a faith based system.

[Dreamtwister]

$this->bbcode_second_pass_quote('lee', '1')0 horses

[Clouseau2]

$this->bbcode_second_pass_quote('lee', 'O')ur money system is a faith based system.