"The bulk of this credit goes to the ingenuity, entrepreneurship and stick-to-itiveness of Americans who go to work everyday."
What insightful economic analysis.
I'd put it on our current account and budget deficits. You can get alot done if someone else is paying for it.
Posted by: shortz at September 13, 2006 08:09 AM
Speaking as a fiscally conservative, biz owner, I remain alarmed by the continued federal deficits.
And our govt (both parties) has allowed itself to mix obligated (SSI) & unobligated funds together which, if factored seperately, produces an even worse deficit.
Posted by: OhioOrrin at September 13, 2006 09:27 AM
Shortz & Ohio:
--Forget it, the neo-cons here are totally delusional and cannot be reasoned with. A common sense worry about deficits means nothing to them.
Posted by: Canuckguy at September 13, 2006 03:27 PM
neocons - I love it. Define that will ya mooselover?
Posted by: Kahn at September 13, 2006 04:11 PM
What exactly is an “obligated debt”? As a government fiscal analyst I’m unfamiliar with that term, as all debts are obligations, and Fund Accounting used by the Government requires appropriations match allocations. I’m also curious how deficit funds are factored, a factor would provide funding for a cost; the Government doesn't factor debts.
Perhaps you should read up a little before railing on about the “deficit” when that’s not what you mean,
Today, the Office of Management and Budget Reported the FY2006 Budget Deficit Is Forecast To Be 30 Percent Lower than the Forecast in February and the President's Goal to Halve the Deficit is on Track to be Met a Year Ahead of Schedule.
If you’re trying to sound intelligent by railing on about the debt, then say so, I’d like to identify you with the economic intellectual pygmies that frequent this blog.
Just to show how intellectually dishonest these monetary morons are, Shortz refers to the “budget deficit” as a debt paid by “someone else.” (note the irony of What insightful economic analysis.) Who would that be? If he's referring to the National Debt, that is a liability we owe to ourselves, dynamic in accounting and fungible through the issuance of securities; Notes and Bonds. Bonds can be short, medium and long term; Notes are usually 2-3 years. Because the economy continues to grow the service on the Debt continues to drop, while the payments on the securities remains the single safest investment known.
And if Canuck has a “common sense worry” he should be elated that Bush’s tax cuts have reduced the deficit. But, that would mean he’d have to actually understand the Debt and the Deficit. That’s too much to ask of a Canadian.
Posted by: Bane of Liberals' Existence at September 13, 2006 04:12 PM
Sorry Kahn, I stepped on your post.
I would also like to hear what a "neocon" is to a Canadian. If Ohio identifies himself as a fiscal conservative, what do you suppose a "fiscal neocon" stands for?
Posted by: Bane of Liberals' Existence at September 13, 2006 04:17 PM
Bane/Mark,
Great comments and I think what you have to say is golden. Unfortunately, unless we get a primer out there that explains exactly what debt/deficit really is, people will associate it with their own personal finances and it is very easy to spin in a negative manner.
I hate to go back to the days of Ross Perot and his charts, but a bit of education would go a long way and prevent successes from being spun against the positive results.
Posted by: voiceofreason at September 13, 2006 04:32 PM
"people will associate it with their own personal finances and it is very easy to spin in a negative manner."
Truer words were never spoken. I was an Accounting Teacher when I came to work for the Government; we call it an institution here. After a year or so I was institutionalized along with the rest of the Govern-mental cases.
Fund Accounting is unlike any type of accounting I knew, and now I wonder how civilians ever understand what it is we do. Suffice to say the dynamics of the debt are far more complex than spending more money than you have in your checkbook. You cannot evaluate the debt unless you evaluate the debt-holders or creditors. The amount is scary when you look at the dollars, but when you put the debt in context of the economy as a whole servicing the debt it becomes a lot less scary.
Ohio alludes to one aspect that is of great concern; the crisis brewing in the Social Security liabilities. Soon the expenditures will outstrip the income and, by law cannot be met any other way. Get it? The government can’t cut military spending to pay for Social Security; benefit cuts, raising the age to collect, eliminating Social Security programs and raising payroll taxes will have to be done. This could be the economy killer; not the debt.
Posted by: Bane of Liberals' Existence at September 13, 2006 05:09 PM
Kahn & Bane:
Neo-con (new –conservative). I normally don’t and should not use this term by itself. Normally when I want to vent my scorn for certain attitudes, I use the term “neo-con Bush Republican blockheads” which is meant to be both instructive and insulting. A “neo-con” by itself is not such a bad thing, even have good points about it but a “neo-con” who is also a “Bush Republican blockhead” is indeed a sorry creature that can wrought great harm through their pushing of delusional ideologies.
If you are at all interested what neo-con stands for and its origin, google it and be prepared to be confused over the debate as summarized in Wikipedia(don't laugh) about what it really means.
Posted by: Canuckguy at September 13, 2006 10:15 PM
"Just to show how intellectually dishonest these monetary morons are, Shortz refers to the “budget deficit” as a debt paid by “someone else.” (note the irony of What insightful economic analysis.) Who would that be?"
The future. Someone else will have to make the decision to pay that debt, rather than deliver services or tax cuts. Someone else will pay the political price for that. And someone else will pay the taxes or suffer the cut in services for that.
"If he's referring to the National Debt, that is a liability we owe to ourselves,"
Other than the part that's owed to other countries. But the problem is that the "we" that are adding to the debt now is different than the "we" that will pay it back in the future. Or maybe some government fiscal analyst has figured out a way to make sure that no one dies and no-one is born between now and then
Posted by: shortz at September 14, 2006 12:38 AM
Shotz,
Keep swinging, pal.
Why do you suppose those “other countries” purchase our financial instruments? And, what happens when a country like Japan, our largest foreign investor holds a great deal of that debt? Econ 101; they become partners in the success of our economy. And, consider the investment money as payments on the service of the current debt. Foreign investment is a good thing. The Debt is not static; the payments on servicing the debt continue and as long as people, retirement funds and foreign investors continue to purchase these instruments, the payments on the debt continue. The over-simplistic idea that our children will pay for our debt is as insipid as assuming that your taxes are paying for Jimmy Carter’s ill-fated “rescue” of the Iranian hostages. That’s just nonsense. Time has a value; and we can quantify that value.
Please tell me that you don't believe anyone will "pay it back"? This isn't like borrowing money from a loan shark to buy that diamond you had put in your front tooth, then having your grandchildren make the payments.
The only worry we have vis-à-vis the Debt, is if the democrats get control of the House, punish business with absurd legislation designed to make liberals feel good about themselves, and punish achievement by instituting confiscatory taxes. The ripples through the financial world would cause investors to pull out of our market, as they did in the 1970’s, (and for a brief period from 1992 until 1995) causing the Debt to rise with limited means to service it. Of that, be afraid; be very afraid!
Posted by: Bane of Liberals' Existence at September 14, 2006 11:27 AM
"Econ 101; they become partners in the success of our economy."
They're 'partners' to the extent that our demand for their products (and their money, which we use to buy their products) is fueling their economy. To the extent they lend to us, they become owners of future production.
"Please tell me that you don't believe anyone will "pay it back"?"
Uh. Yes. Money gets payed back. Dear god.
"The over-simplistic idea that our children will pay for our debt"
I admit its simple -- its not exactly our children, and it depends on who the future tax base is. But it is a step above the ridiculousness (and flatyly wrong) "we owing it to ourselves." #1, there are different "we." #2, there are also foreigners.
Posted by: shortz at September 14, 2006 08:20 PM
Shotz,
You’re almost hopeless, now you’ve confused the trade deficit with the budget deficit. I’ll type slowly so you have a chance to read carefully; Japan’s government and buying Treasury Securities has nothing whatever to do with American consumers buying Japanese cameras. Japan buys securities as an investment and that investment is contingent upon our economy doing well. Don't forget, the US holds billions in foreign securities as well.
Foreign owned debt is less than 7% of the total liability. As to foreign investors becoming “owners of future production”, it seems you need microeconomics as well as macroeconomics. If you own stock in a company, you have a claim against the equity of the company; you don’t own any part of production. If Japanese investors own property in downtown Los Angeles, do you honestly believe they are going to move the buildings to Tokyo?
As to your children pay back the money, I can only say that you have no clue how the Debt works, it is financed primarily from dynamic sources. Here are some examples;
1) US Treasury Securities
2) Taxes
3) Duties and Tariffs
4) Sales of Services, as an example State run Universities realize the bulk of their income from providing research for business, in many cases foreign countries’ governments. Industries pay for agricultural research and (near and dear to my heart) structural engineering. A friend of mine, who also posts here from time to time works for an oceanographic institute that does research, paid for by South American and Asian governments for use in fishing and undersea mining. In addition, many governmental agencies sell their services to other local and state governmental agencies.
The Debt is not something that gets “paid back” it doesn’t work that way. The bulk of the Debt flows from one creditor to another. The more the Debt changes partners the stronger the governments ability to raise capital. Notice I wrote “changes partners” not increases in size!
The Debt needs to be reduced, on that you’ll find no argument; the functionality of the Debt loses its luster when it exceeds the countries production (which hasn’t happened.) But it is not like the money you owe, it is a function of the size and strength of the American economy.
Posted by: Bane of Liberals' Existence at September 15, 2006 11:16 AM
"You’re almost hopeless, now you’ve confused the trade deficit with the budget deficit."
I started off by saying the two of them are involved.
"If you own stock in a company, you have a claim against the equity of the company; you don’t own any part of production."
Owners of equity get returns on that equity: ie, future profits.
"If Japanese investors own property in downtown Los Angeles, do you honestly believe they are going to move the buildings to Tokyo?"
No. Just the rent they collect. Rent being the future production of real estate.
"1) US Treasury Securities"
When I'm talking about debt being paid back, I'm not talking about pay
"The Debt is not something that gets “paid back” it doesn’t work that way."
When the net flows are towards the creditor, its getting paid back. When they are towards the debtor, its getting increased. So yes. They get payed back. And eventually every bit we borrow is paid back. Unless we pull an argentina and start cancelling it.
Posted by: shortz at September 16, 2006 01:08 AM
"You’re almost hopeless, now you’ve confused the trade deficit with the budget deficit."
I started off by saying the two of them are involved.
"If you own stock in a company, you have a claim against the equity of the company; you don’t own any part of production."
Owners of equity get returns on that equity: ie, future profits.
"If Japanese investors own property in downtown Los Angeles, do you honestly believe they are going to move the buildings to Tokyo?"
No. Just the rent they collect. Rent being the future production of real estate.
"1) US Treasury Securities"
When I'm talking about debt being paid back, I'm not talking about paying it back with issuing more debt. I'm talking about net debt.
"The Debt is not something that gets “paid back” it doesn’t work that way."
When the net flows are towards the creditor, its getting paid back. When they are towards the debtor, its getting increased. So yes. They get payed back. And eventually every bit we borrow is paid back. Unless we pull an argentina and start cancelling it.
Posted by: shortz at September 16, 2006 01:12 AM
Not only did you not say “the two of them are involved” you did not draw any distinction whatsoever.
Stockholders may receive payment on dividends which are certainly not “future profits” and none of the dividends are a ”claim against production”. That is patently absurd. Rent is consideration for a contract, it is not production, and in any event your convoluted logic and poor syntax underscore your lack of understanding.
The "net debt"? what the hell is that? Is that what you use on the Loan Shark? It's not a debt, Guido, it's a 'net debt!'"
“When the net flows are towards the creditor, its (sic) getting paid back.”
Do you ever actually read what you write? When a creditor redeems a Treasury instrument, only a penny-ante investor, a liberal or a banker from a phony Nigerian Trust Account would get “paid.” In most cases they exchange the instrument for another instrument, or they exchange the instrument with a third party who then uses the instrument to alleviate a debt with another party to the transaction. In other cases, creditors exchange debt for consideration of other kinds; a security from an aligned creditor, or they might use the appreciated value (or equity) prior to its maturity, as leverage against another debt.
Do yourself a favor, stick to paying your own credit card bills and leave the National Debt to people that understand the dynamics; vote Republican.
Posted by: Bane of Liberals' Existence at September 18, 2006 01:55 PM
"The bulk of this credit goes to the ingenuity, entrepreneurship and stick-to-itiveness of Americans who go to work everyday."
What insightful economic analysis.
I'd put it on our current account and budget deficits. You can get alot done if someone else is paying for it.
Speaking as a fiscally conservative, biz owner, I remain alarmed by the continued federal deficits.
And our govt (both parties) has allowed itself to mix obligated (SSI) & unobligated funds together which, if factored seperately, produces an even worse deficit.
Shortz & Ohio:
--Forget it, the neo-cons here are totally delusional and cannot be reasoned with. A common sense worry about deficits means nothing to them.
neocons - I love it. Define that will ya mooselover?
What exactly is an “obligated debt”? As a government fiscal analyst I’m unfamiliar with that term, as all debts are obligations, and Fund Accounting used by the Government requires appropriations match allocations. I’m also curious how deficit funds are factored, a factor would provide funding for a cost; the Government doesn't factor debts.
Perhaps you should read up a little before railing on about the “deficit” when that’s not what you mean,
If you’re trying to sound intelligent by railing on about the debt, then say so, I’d like to identify you with the economic intellectual pygmies that frequent this blog.
Just to show how intellectually dishonest these monetary morons are, Shortz refers to the “budget deficit” as a debt paid by “someone else.” (note the irony of What insightful economic analysis.) Who would that be? If he's referring to the National Debt, that is a liability we owe to ourselves, dynamic in accounting and fungible through the issuance of securities; Notes and Bonds. Bonds can be short, medium and long term; Notes are usually 2-3 years. Because the economy continues to grow the service on the Debt continues to drop, while the payments on the securities remains the single safest investment known.
And if Canuck has a “common sense worry” he should be elated that Bush’s tax cuts have reduced the deficit. But, that would mean he’d have to actually understand the Debt and the Deficit. That’s too much to ask of a Canadian.
Sorry Kahn, I stepped on your post.
I would also like to hear what a "neocon" is to a Canadian. If Ohio identifies himself as a fiscal conservative, what do you suppose a "fiscal neocon" stands for?
Bane/Mark,
Great comments and I think what you have to say is golden. Unfortunately, unless we get a primer out there that explains exactly what debt/deficit really is, people will associate it with their own personal finances and it is very easy to spin in a negative manner.
I hate to go back to the days of Ross Perot and his charts, but a bit of education would go a long way and prevent successes from being spun against the positive results.
Fund Accounting is unlike any type of accounting I knew, and now I wonder how civilians ever understand what it is we do. Suffice to say the dynamics of the debt are far more complex than spending more money than you have in your checkbook. You cannot evaluate the debt unless you evaluate the debt-holders or creditors. The amount is scary when you look at the dollars, but when you put the debt in context of the economy as a whole servicing the debt it becomes a lot less scary.
Ohio alludes to one aspect that is of great concern; the crisis brewing in the Social Security liabilities. Soon the expenditures will outstrip the income and, by law cannot be met any other way. Get it? The government can’t cut military spending to pay for Social Security; benefit cuts, raising the age to collect, eliminating Social Security programs and raising payroll taxes will have to be done. This could be the economy killer; not the debt.
Kahn & Bane:
Neo-con (new –conservative). I normally don’t and should not use this term by itself. Normally when I want to vent my scorn for certain attitudes, I use the term “neo-con Bush Republican blockheads” which is meant to be both instructive and insulting. A “neo-con” by itself is not such a bad thing, even have good points about it but a “neo-con” who is also a “Bush Republican blockhead” is indeed a sorry creature that can wrought great harm through their pushing of delusional ideologies.
If you are at all interested what neo-con stands for and its origin, google it and be prepared to be confused over the debate as summarized in Wikipedia(don't laugh) about what it really means.
"Just to show how intellectually dishonest these monetary morons are, Shortz refers to the “budget deficit” as a debt paid by “someone else.” (note the irony of What insightful economic analysis.) Who would that be?"
The future. Someone else will have to make the decision to pay that debt, rather than deliver services or tax cuts. Someone else will pay the political price for that. And someone else will pay the taxes or suffer the cut in services for that.
"If he's referring to the National Debt, that is a liability we owe to ourselves,"
Other than the part that's owed to other countries. But the problem is that the "we" that are adding to the debt now is different than the "we" that will pay it back in the future. Or maybe some government fiscal analyst has figured out a way to make sure that no one dies and no-one is born between now and then
Shotz,
Keep swinging, pal.
Why do you suppose those “other countries” purchase our financial instruments? And, what happens when a country like Japan, our largest foreign investor holds a great deal of that debt? Econ 101; they become partners in the success of our economy. And, consider the investment money as payments on the service of the current debt. Foreign investment is a good thing. The Debt is not static; the payments on servicing the debt continue and as long as people, retirement funds and foreign investors continue to purchase these instruments, the payments on the debt continue. The over-simplistic idea that our children will pay for our debt is as insipid as assuming that your taxes are paying for Jimmy Carter’s ill-fated “rescue” of the Iranian hostages. That’s just nonsense. Time has a value; and we can quantify that value.
Please tell me that you don't believe anyone will "pay it back"? This isn't like borrowing money from a loan shark to buy that diamond you had put in your front tooth, then having your grandchildren make the payments.
The only worry we have vis-à-vis the Debt, is if the democrats get control of the House, punish business with absurd legislation designed to make liberals feel good about themselves, and punish achievement by instituting confiscatory taxes. The ripples through the financial world would cause investors to pull out of our market, as they did in the 1970’s, (and for a brief period from 1992 until 1995) causing the Debt to rise with limited means to service it. Of that, be afraid; be very afraid!
"Econ 101; they become partners in the success of our economy."
They're 'partners' to the extent that our demand for their products (and their money, which we use to buy their products) is fueling their economy. To the extent they lend to us, they become owners of future production.
"Please tell me that you don't believe anyone will "pay it back"?"
Uh. Yes. Money gets payed back. Dear god.
"The over-simplistic idea that our children will pay for our debt"
I admit its simple -- its not exactly our children, and it depends on who the future tax base is. But it is a step above the ridiculousness (and flatyly wrong) "we owing it to ourselves." #1, there are different "we." #2, there are also foreigners.
Shotz,
You’re almost hopeless, now you’ve confused the trade deficit with the budget deficit. I’ll type slowly so you have a chance to read carefully; Japan’s government and buying Treasury Securities has nothing whatever to do with American consumers buying Japanese cameras. Japan buys securities as an investment and that investment is contingent upon our economy doing well. Don't forget, the US holds billions in foreign securities as well.
Foreign owned debt is less than 7% of the total liability. As to foreign investors becoming “owners of future production”, it seems you need microeconomics as well as macroeconomics. If you own stock in a company, you have a claim against the equity of the company; you don’t own any part of production. If Japanese investors own property in downtown Los Angeles, do you honestly believe they are going to move the buildings to Tokyo?
As to your children pay back the money, I can only say that you have no clue how the Debt works, it is financed primarily from dynamic sources. Here are some examples;
The Debt is not something that gets “paid back” it doesn’t work that way. The bulk of the Debt flows from one creditor to another. The more the Debt changes partners the stronger the governments ability to raise capital. Notice I wrote “changes partners” not increases in size!
The Debt needs to be reduced, on that you’ll find no argument; the functionality of the Debt loses its luster when it exceeds the countries production (which hasn’t happened.) But it is not like the money you owe, it is a function of the size and strength of the American economy.
"You’re almost hopeless, now you’ve confused the trade deficit with the budget deficit."
I started off by saying the two of them are involved.
"If you own stock in a company, you have a claim against the equity of the company; you don’t own any part of production."
Owners of equity get returns on that equity: ie, future profits.
"If Japanese investors own property in downtown Los Angeles, do you honestly believe they are going to move the buildings to Tokyo?"
No. Just the rent they collect. Rent being the future production of real estate.
"1) US Treasury Securities"
When I'm talking about debt being paid back, I'm not talking about pay
"The Debt is not something that gets “paid back” it doesn’t work that way."
When the net flows are towards the creditor, its getting paid back. When they are towards the debtor, its getting increased. So yes. They get payed back. And eventually every bit we borrow is paid back. Unless we pull an argentina and start cancelling it.
"You’re almost hopeless, now you’ve confused the trade deficit with the budget deficit."
I started off by saying the two of them are involved.
"If you own stock in a company, you have a claim against the equity of the company; you don’t own any part of production."
Owners of equity get returns on that equity: ie, future profits.
"If Japanese investors own property in downtown Los Angeles, do you honestly believe they are going to move the buildings to Tokyo?"
No. Just the rent they collect. Rent being the future production of real estate.
"1) US Treasury Securities"
When I'm talking about debt being paid back, I'm not talking about paying it back with issuing more debt. I'm talking about net debt.
"The Debt is not something that gets “paid back” it doesn’t work that way."
When the net flows are towards the creditor, its getting paid back. When they are towards the debtor, its getting increased. So yes. They get payed back. And eventually every bit we borrow is paid back. Unless we pull an argentina and start cancelling it.
Not only did you not say “the two of them are involved” you did not draw any distinction whatsoever.
Stockholders may receive payment on dividends which are certainly not “future profits” and none of the dividends are a ”claim against production”. That is patently absurd. Rent is consideration for a contract, it is not production, and in any event your convoluted logic and poor syntax underscore your lack of understanding.
The "net debt"? what the hell is that? Is that what you use on the Loan Shark? It's not a debt, Guido, it's a 'net debt!'"
“When the net flows are towards the creditor, its (sic) getting paid back.”
Do you ever actually read what you write? When a creditor redeems a Treasury instrument, only a penny-ante investor, a liberal or a banker from a phony Nigerian Trust Account would get “paid.” In most cases they exchange the instrument for another instrument, or they exchange the instrument with a third party who then uses the instrument to alleviate a debt with another party to the transaction. In other cases, creditors exchange debt for consideration of other kinds; a security from an aligned creditor, or they might use the appreciated value (or equity) prior to its maturity, as leverage against another debt.
Do yourself a favor, stick to paying your own credit card bills and leave the National Debt to people that understand the dynamics; vote Republican.