Borrowing 40 cents of every dollar

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America borrowing 40 cents of every dollar spent. This is pure evil. Is a positive outcome concievable.
Will America to ever ever hope to only borrow 20%. When one of my workmate said they don't know anyone
who hates Obama, I assume they don't don't know the state America is in.

Why is the United States borrowing at this level?

Simple: Because there are people willing to buy dollars. Why are people willing to buy dollars? Because they know that the dollar is, and continues to be a safe investment.

The United States could fix most of its fiscal policy mess through simple tax measures. So far, Congress has been able to luxuriate in its political cowardice, because people are still buying dollars. When that stream runs out, then the fiscal chickens will come home to roost, and taxes will have to be adjusted accordingly.

But with an external debt of the United States is $5.3 trillion--roughly $18,000 per person. Debt owed within the United States is comparable. And finally, debt owed within the government alone is somewhat lower--at about $4.8 trillion.

Now the latter two categories are money that the United States owes itself--so what goes out of one hand comes back in the other. It's really only the external debt that is of significant concern. But since that represents only about 35% of US GDP, then it's really equivalent of a person with a $100,000 income having a $35,000 mortgage.

The United States economy is capable of servicing this level of debt. If the FOREX markets thought otherwise, the US dollar would be worthless. If the liquidity market thought otherwise, US banks wouldn't be able to borrow. If the equities market thought otherwise, no one would be buying US securities.

Obama didnt create the debt. We've been creating it for 30 years. When we finally fought our way to surplus Bush launched two wars backed with two tax cuts, passed an unfunded Medicare Part D that will cost $700 billion by 2018 and then oversaw the 2008 collapse, which crushed tax revenues.

Americans will just have to learn that they need to pay for things. It's a lesson all kids need to learn eventually.

Borrowing for the purpose of time displacement is not necessarily bad. But if one borrows one should be able to repay.

ruveyn

Time displacement? Does that mean borrow money and let people in a different time( the future) pay for it. Lets hope that they are happy enough to pay for my social security in old age also.

No. It means buy now and pay next year. And in the case of housing one buys now and repays over 20 - 40 years with interest. If one had to have all the money at hand, very few could afford to buy a house and they would be forced to be lifetime renters.

Any long term debt should be collateralized by the borrower.

The children should not have to pay for the folly of their elders.

ruveyn

But it is entirely proper that children should pay for infrastructure that they use, that was built in previous years.

When a bridge is built with a 100 year usable life, there is absolutely nothing wrong with amortizing the cost of that bridge over time.

While I agree, one can only hope it will teach the younger generation to be responsible so as to not repeat the same mistakes, though somehow I doubt it...

The cycle seems to be:
make mistake//make someone else fix it//someone else makes a mistake//someone else has to remedy it//make same mistake again//hope someone else will be there to fix it.

Time displacement is essentially what borrowing is, shifting resources in time to better enable your preferred consumption pattern. For instance, if I have $10 and I only really need 5, and you have $10 but need 15, I can lend you my leftover 5 now, in exchange for $5+interest at a later time. Interest rates being a form of "exchange rate" for different time periods.

As Visagrunt alludes to, long-term assets such as infrastructure that have a lifetime which allows them to be beneficial to multiple generations can and should be amortized over the lifetime of the asset.

The danger is in borrowing for immediate consumption, of things that rapidly lose their value or even have little value. Think of it as the difference between taking a mortgage to buy a house as opposed to paying for a 2 week vacation in Hawaii on your Visa card.

Actually at least $6 trillion dollars of the national debt is Obama's, it isn't from the last 30 years...

Well, about 3.2 trillion happened under Obama, but you have to take into account that its very hard to allocate debt to a specific administration in the manner frequently done by pundits and partisan-hacks.

This is due to the budget running into the first period of a new President, in addition to certain programs doing so also. For instance the Bush tax cuts and Medicare part D are Bush programs that are contributing to the deficit under Obama.

Also those who use the roads and bridges should bear the cost of their repair and maintinence.

ruveyn

Actually, it is about $6 trillion, Obama acquired more debt in 3.5 years than Bush did in 8 years.

I'd love to see those numbers, because the ones I have says it went from about 12 to 15.

http://www.cbsnews.com/8301-503544_162- ... nder-bush/

We were under $11 Trillion Dollars in debt when Bush left office...

We are actually over $16 Trillion in debt now.

The thing you have to bear in mind is that Porkulous was an Obama spending venture.

Yeah, but you have to allocate the Bush tax cuts, Medicare D, the whole cost of both Iraq and Afghanistan plus the first year of Obama's presidency to Bush in order for it to make economic sense.

Since those are Bush policies that continued (and still continue) to add debt to the country.