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sreeb
ParticipantIt sounds like the cell phone problem is knocked.
Participant[quote=CA renter]
Wealth is relative, and most “poor” people don’t compare themselves to others halfway around the world; they compare themselves to those who are visible around them — in their own countries.[/quote]If your standard for “poor” is relative to the population as a whole, we can give up on doing anything about poverty right now.
If you can come up with some absolute goals then progress is possible.
If your goal is “no one in the lower 10%” then it isn’t.
Participant[quote=briansd1]no such reality, the employer and employee payroll and social security taxes together is 15.300%. The $30,000 employee generates that percentage to the government.
Property taxes are higher than 1% most states of the Union. Consider NJ and TX.
A “tax” would include the education of the kids also, maybe community college and university tuition.
My point is that people don’t “pay nothing”. Working people pay a large percentage of the income in “taxes” and “fees” just to get by.
Fair is all relative and proportional, IMHO.
Maybe you think I implied the rich don’t pay enough, but I didn’t even say that. Regardless, using words such as “pay nothing” is disingenuous.[/quote]
You are ignoring credits and transfer payments from the government. Yes they are taxed at some level but there are many programs that return the money.
If you are going to create tax payers by adding in social security taxes, you need to remove those whose social security income exceeds their taxes.
Participant[quote=kcal09]Sooo…now we know that Mitt plays a mini-tax [/quote]
Mitt appears to be paying $3M per year. That is a lot more than I pay.
How much should one person have to pay?
I don’t feel I get the government I want and I resent my much smaller bill.
I find it disturbing when I read that 80% of the population thinks the rich don’t pay their “fair share” while 50% of the population pays nothing at all. Lots of people who pay nothing at all think that those who do pay don’t pay enough? How is that right?
Why would Mitt even stay in the US?
Participant[quote=DomoArigato]Rich’s article is retarded. If interest rates go up, the value of existing U.S. debt will go down and the Federal Reserve can actually buy that old debt back at a cheaper overall cost than if interest rates were to go down or stay the same. This is just a simple present value analysis.
[/quote]Absent, hyper-inflation, the debt won’t go down that much because it is very short term. Average maturity is ~4 years.
The government is currently borrowing 40 cents of every dollar it spends. We have to borrow or print a lot just to stay in business. We won’t be able to just print enough to just buy back the debt without massive inflation.
Participant[quote=DomoArigato][quote=SD Realtor]What do you mean in the US?
The jury is still out. The question about the US will not be resolved for years. Check back with me in 20 years about the US.
[/quote]Can you show me a country that had its debt denominated in its own currency where a high debt-to-GDP ratio led to large increases in interest rates? Maybe interest rates are dependent on something other than just the size of the public debt?[/quote]
“This Time it is Different” lists 66 countries that “defaulted through inflation” between 1800-2008. 25 of these experienced inflation of greater than 40%/year for multiple years.
Defaulting through inflation is pretty much what you do when you can no longer borrow. “Can no longer borrow” roughly translates “interest rates are too high”.
There of course lots of factors in interest rates. At some point the size of the outstanding debt relative to the size of the economy or the governments income becomes a concern. Historically, it becomes a serious issue for lenders once it reaches ~90% of GNP.
ParticipantHyperinflation is directly related to money creation. You can’t get one without the other. All other aspects of Zimbabwe relate only to the motivation of the government to create the money.
Do you believe that the EUROZONE can solve its collective problems by simply creating money and buying up the debt? It is certainly possible that we may get a ring side seat on the result in the next year or two. Why do you think it hasn’t occured to them?
[quote=DomoArigato][quote=sreeb]
I agree that our situation is not now similar to Zimbabwe although I would argue that it could become similar if we engage in large scale monetization.
[/quote]Nope. In order for the U.S. situation to become similar to Zimbabwe manufacturing capacity would have to fall by 63%. I feel very confident that debt monetization alone would not cause manufacturing capacity to drop by 63%.
[quote=sreeb]
As for Portugal, Italy, Ireland, Greece, and Spain, it isn’t clear that we are much better off and in some areas we are worse.
[/quote]The U.S. is better off than all these countries because our debt is denominated in dollars and we own a dollar printing press that will allow us to print money and pay off our debts. Each of the above countries has their debt denominated in a currency which they do not control.
FY2010 U.S. Federal Tax Receipts = $2.1T
FY2010 U.S. Federal Spending = $3.5TIncome tax (corporate and individual) was only $1.1T. Did you also intend to double Social Insurance taxes $0.9T?
[quote=sreeb]
Even doubling our tax rate wouldn’t completely eliminate the deficit if it actually doubled revenue (which it wouldn’t).
[/quote]Wrong!
FY2010 U.S. Federal Tax Receipts = $2.1T
FY2010 U.S. Federal Spending = $3.5T2.1 x 2 = 4.2
[quote=sreeb]
We would have immediate severe problems today if we had to pay the interest rates those countries are currently paying. Interest rates that are similar to those we have historically paid.Historically, we have paid an average of about 6% on federal debt. At 6% * $15T = $900B in interest alone. The average maturity of federal debt is ~4 years. If interest rates went above 6% we would be completely screwed.
[/quote]Ahhh, yes, the problem of the invisible bond vigilantes. The Federal Reserve has already shown that they can lower interest rates by buying Treasury bills. Problem solved.[/quote]
Just because they can do this in the short term at a time when our currency appears relatively safe does mean they can do this forever, particularly as our financial condition continues to deteriorate.
Participant[quote=DomoArigato][quote=walterwhite]
Is there any other endgame?[/quote]Raising taxes and cutting the defense budget would easily solve the budget issue. But like you said, that’s unamerican.[/quote]
May I ask how much you would cut from the defense budget and how much you would be willing to raise taxes?
Ideally expressed in % or billions.
Participant[quote=DomoArigato][quote=sreeb]
Yes, it is true that poor government policy destroyed the Zimbabwe economy (just as poor government policy is destroying ours) and damage to the economy preceded hyperinflation. [/quote]Anyone who compares the U.S. to Zimbabwe, Portugal, Italy, Ireland, Greece, and/or Spain is an idiot.[/quote]
I agree that our situation is not now similar to Zimbabwe although I would argue that it could become similar if we engage in large scale monetization.
As for Portugal, Italy, Ireland, Greece, and Spain, it isn’t clear that we are much better off and in some areas we are worse.
As of today, 40 cents of every dollar the federal government spends is borrowed. I believe that is worse than all of those countries (although much better than Japan). Italy is even running a primary surplus.
Even doubling our tax rate wouldn’t completely eliminate the deficit if it actually doubled revenue (which it wouldn’t).
We would have immediate severe problems today if we had to pay the interest rates those countries are currently paying. Interest rates that are similar to those we have historically paid.
Historically, we have paid an average of about 6% on federal debt. At 6% * $15T = $900B in interest alone. The average maturity of federal debt is ~4 years. If interest rates went above 6% we would be completely screwed.
In my view, we have the choice between cutting spending now, which will hurt the economy now and be very painful to all, and risking the destruction of the dollar in the not too distant future which would be catastrophic.
We have dug a big hole. Because of demographics, it will get worse. There are no easy answers. If there were, we would act on them.
ParticipantDomoArigato,
Did you actually read the whole article you quoted from?
Yes, it is true that poor government policy destroyed the Zimbabwe economy (just as poor government policy is destroying ours) and damage to the economy preceded hyperinflation. However the failed economy did not cause hyperinflation, it only reduced government revenue. Hyperinflation started when the government responded by printing money to pay current expenses rather than altering policy or reducing spending.
Hyperinflation can’t occur in the absence of a huge expansion of the money supply.
[quote=DomoArigato][quote=paranoid]If you want to becom another zimbabwe, go for it.[/quote]
Hyperinflation in Zimbabwe was due to destruction of productive capacity, not due to monetization of existing debt:
Hyperinflation in Zimbabwe began shortly after destruction of productive capacity in Zimbabwe’s civil war and confiscation of white-owned farmland. Food output capacity fell 45%, manufacturing output 29% in 2005, 26% in 2006 and 28% in 2007, and unemployment rose to 80%.
http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
It’s important to understand differences in economic situations so that you aren’t so easily fooled.[/quote]
Participant[quote=DomoArigato]So we’d get some inflation which would cause the value of any remaining debt to go down, further alleviating any ‘debt crisis’. Additionally, the value of the dollar would likely go down, no? This would increase the competitiveness of American exports and likely lead to higher employment.
What are the bad things that would happen, if any? Would we just be trading fear of invisible bond vigilantes with fear of the inflation boogeyman? Maybe the only thing we have to fear is fear itself?[/quote]
How much debt do you intend to monetize and how much inflation do you expect to get?
I believe it is impossible to predict with confidence but allow me to throw out some numbers.
Lets assume that on Friday, you announce that you are monetizing $15T (the nominal federal debt) thereby creating $15T in new money in addition to $10T of existing money (M2). You have effectively devalued the dollar by $25T/$10T so each dollar is now worth 40 cents.
On Monday morning, gas will cost $10/gal and everything in Walmart will have doubled over the weekend (although the shelves are empty of anything you need as those with available cash or credit already bought everything). World trade collapses as importers and exporters find that either they are bankrupt or their suppliers refuse to honor their contracts.
Government revenue plummets as wages lag and corporate profits disappear. Government expenses, market based and indexed to inflation grow. Lenders, concerned about inflation or default, demand high interest rates. More monetization occurs to finance the government which leads to further dollar devaluation. You can trade a box of cereal for a slightly used pair of re-released Air Jordans.
ParticipantYour wine cooler seems really high. High enough that I expect it is broken. You should put the meter on it for a day to be sure though.
Electricity rates in CA are really high. Assuming that you have gas heat, it is probably cheaper to use the furnaces than space heat. Especially if you heat to an oven like 78.
As has been mentioned, incandescent light are expensive.
October 24, 2011 at 8:09 PM in reply to: Low Mortgage Interest Rates For Everyone!!!: U.S. May Back Refinance Plan for Mortgages #731254ParticipantWill refinancing an underwater house get you a brand new non recourse loan? These might not be that great a deal if you loose the option to default.
September 10, 2011 at 3:06 PM in reply to: You know you’re an old-timer from San Diego when… #728792Participant[quote=UCGal][quote=SD Realtor]UCGAL how bout going to see the Beat Farmers at the Bachanal?[/quote]
Yep.
Country Dick actually came to a party at my house in college (mid 80’s). A friend was dating him.When I moved to Bellingham in 1990 I was pleasantly surprised to discover they played Vancouver a LOT.
I agree, RIP Dan McClain
Actually the Bachanal was a great place to see music… X, Blasters, Nina Hagen, Los Lobos, Bad Radio (Eddy Vedder’s band before Pearl Jam)…[/quote]
Yeah it was. Also the scene of a rather unfortunate bet with a friend of mine. I really thought he was screwing with me when he claimed the construction in the back corner would become a sushi bar. $100 was real money to me back then.
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