Fed boss says US should cut budget deficit

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DenvrDave
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19 Oct 2009, 12:06 pm

"Oct 19, 2009 (10:41a CDT)
By JEANNINE AVERSA (AP Economics Writer)

WASHINGTON - Federal Reserve Chairman Ben Bernanke on Monday called for the United States to whittle down its record-high budget deficits and for countries like China to get their consumers to spend more, moves that would help combat skewed global trade and investment flows that contributed to the financial crisis.

Bernanke's remarks to a Fed conference in Santa Barbara, Calif., comes just days after the federal government on Friday reported a $1.42 trillion deficit for 2009 budget year that ended Sept. 30. The previous year's deficit was $459 billion."

What solid advice coming from the government, that must be why Bernanke gets paid the BIG bucks (sarc) :roll:



Wisguy
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19 Oct 2009, 10:13 pm

If I was the financial Poo-Bah in one of those other major countries (ie, China), I would issue an ultimatum - "Reduce your budget deficit to at least the level needed for a country to adopt the Euro (or even to ZERO) by a certain date (within a year or so) - or we will stop buying/financing your debt".

8O

Mike



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20 Oct 2009, 1:43 am

Of course, reduce the deficit, why did I not think of that?

Lets see, stop spending money that the government does not have, like those socialist programs, Social Security, unemployment, Food Stamps, education. That will stop it from growing.

Paying off the debt will only take a doubling of taxes, and a VAT at every stage of production.

Just because people are broke and unemployed is no reason not to pay, a labor tax will put them out doing public service. Working for food is a good job.

China has stopped buying American debt, and has been selling the trillion they hold. Not fast enough, for the dollar is down 14% this year, so China loses 14% of a trillion, $140 billion, and we stilll have a quarter to go.

China does think it should consume more, so it has been buying raw materials, metals, energy, and paying in American debt. As a lot of the world has debts counted in dollars, they can pay them.

Like the American consumer, they will stop buying and pay down debt.

The official national debt is $11.4 trillion, in a $15 trillion economy when it was working, which the government skimmed 20%. so they took in three and spent 4 1/2 this year.

Next year looks like they take in two, and if it was all applied to the debt, it could be paid off in ten years. That would take not spending on anything else.

$11.4 trillion at 3% interest, the interest only payments are close to $400 billion. At a trillion a year the debt could be paid in twenty years.

This means the government has to learn to live on a third to a half of what they have been spending.

That is fairly simple, half of spending goes to Social Security and Medicare. End those programs and the government can afford to continue funding their private retirement and healthcare.

Social Security can become the food stamp office, and when the FDIC closes banks, they can pay the depositors in food stamps.

The banks forward deposits to the Federal Reserve, and they spent them all buying worthless debt from their friends and co workers on Wall Street. That, plus no interest loans have allowed Goldman Sachs to buy the stock market. America has been taken private in a tax payer, bank depositer, funded buy out.

The Federal Reserve has been looting bank deposits and buying Tresuries, to keep the government running. The Tresury then give the money to Goldman Sachs at no interest. These loans are not only no interest, there is no pay back time.

It is all legal, they paid Congress a trillion to change the laws.



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20 Oct 2009, 2:04 am

Working for food? The government has to pay for that food clearly at inflated prices from gouging "entrepreneurs"... what about housing, or will these corvee labourers have to live on the street?

Cut your deficit by leaving Iraq, Afghanistan, Germany, Korea, etc... End Blackwater and end the practice of contracting government functions to the private sector which is a kickback scheme that costs far more than saves - any savings are on the backs of workers and all extra spending goes to scum like Erik Prince. Cut the insurance racket out of health care with a single-payer system. Take over the financial sector. Set up a federal-owned bank that will reap profits. Or perhaps state run banks in states other than North Dakota that already had the good sense to set one up.

Drum out the Ayn Rand cult from government and set up new high tax brackets and force the rich to pay more. Reeducation of those infected with Randist ideology. Close down the Prosperity Preachers. End the tax exemption on such rackets as these. Have public financing of election campaigns and put those who bribe politicians where they belong - behind bars.

That said, the debt to GDP ratio is best tackled by increasing GDP and cutting everything to the vast majority of the population and preserving the gains of the super-rich can't help but cause the economy to contract considerably, no matter what Citigroup says in its Plutonomy document. The Debt to GDP ratio is not as terrible as the doomsayers think.



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20 Oct 2009, 6:55 am

Fed boss says US should cut budget deficit

The Guy should get the Nobel

..and the Einstein Award for originality :?



southwestforests
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20 Oct 2009, 10:43 am

xenon13 wrote:
... and force the rich to pay more. ...That said, the debt to GDP ratio is best tackled by increasing GDP

Wait a minute, aren't the rich the folks who own the companies who would produce the output which it would take to increase the Gross Domestic Product?

And isn't Federal Reserve Chairman Ben Bernanke involved in creating that deficit of which he speaks via how many billions was it in bailouts?


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DenvrDave
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20 Oct 2009, 3:40 pm

Inventor wrote:
It is all legal, they paid Congress a trillion to change the laws.


Its the best government money can buy! (sarc)