NationStates Jolt Archive

WHO'S RESPONSIBLE FOR THE NATIONAL DEBT?

Let us imagine for a moment that you go to a restaurant, you place an order for a hamburger. The proprietor of the restaurant tells you the cost is $5 for the hamburger, and you pay $5 for the hamburger. You get your food. No problems. Well worth the money you paid for it. No complaints.

Then when you are done eating, the owner of the restaurant shows up at your table, apologizes profusely, explains that he underestimated the real cost of providing you with the hamburger he agreed to serve you and hands you a bill for an additional sum he had to borrow in order to provide the meal plus interest since the start of your meal. Do you pay it? Of course not. You, the customer, entered into a verbal contract with the proprietor of the restaurant to provide you with your meal at the price agreed to by all parties prior to the transaction.

If the proprietor of the restaurant has miscalculated the cost of meeting his agreed-to obligation to the customer, is the customer obligated to cover the shortfall? No. The proprietor of the restaurant is responsible for the error, and if he cannot meet his agreed-to obligations for the agreed-upon price, he should declare bankruptcy, go out of business, and make way for a new restaurant with better fiscal sense.
Simple common sense.

Let us imagine for a moment that you live in a nation, and you request some benefits. The government tells you the cost is $500 for the benefits, and you pay $500 in taxes for the benefits. You get your benefits. No problems. Well worth the money you paid for them. No complaints.

Then when you have your benefits, the government shows up at your door, apologizes profusely, explains that it underestimated the real cost of providing you with the benefits it agreed to provide and hands you a bill for an additional sum it had to borrow in order to provide the services, plus interest since the start of your use of the benefits. Do you pay it? Of course not. You, the citizen, entered into a verbal contract with the government to provide you with your benefits at the taxes agreed to by all parties prior to the transaction.

If the government has miscalculated the cost of meeting the agreed-to obligation to the citizen, is the citizen obligated to cover the shortfall? No. The government is responsible for the error, and if it cannot meet it's agreed-to obligations for the agreed-upon price, it should declare bankruptcy, go out of business, and make way for a new government with better fiscal sense.

The claim is constantly made that "we" (meaning the citizens) have already spent the almost 6 trillion dollars that the Federal Government owes and that therefore "we" (meaning the citizens) must repay it.* This is nonsense. No taxpayer alive now ever voted or otherwise agreed to allow the government to borrow money on their behalf and agreed to underwrite the resultant ruinous interest obligation. No citizen spent that money. The government spent it, to keep promises it had no business making in the first place.

The Federal Reserve Act (Otherwise known as the currency act) was voted into law December 23, 1913. The people who voted in that law are all dead.
No taxpayer alive today had anything to say about repaying any money the government borrowed to keep it's promises. We did not have any choice in the matter. We did not choose to accept this obligation. It has been forced on us. It was manufactured for us.

Certainly the young people who are becoming voters and taxpayers this year have had no say at all about the almost 6 trillion dollar debt that our government hands to them and says, "This thou shalt pay". To so encumber our children without their permission is at best indentured servitude; at the worst outright slavery.
We The People didn't borrow that 6 trillion dollars. We The People, those of us alive today, paying taxes today, have never had the opportunity to decide whether or not we are obligated to cover the bad debts of a government that gets elected by selling $5 dollar hamburgers, only to tell us after election day that they really cost $7 and we are now obligated for that additional $2.

Every man, woman, retired senior citizen and even the tiniest newborn baby are being told that they owe $22,556 extra for services that were bought and paid for by an agreed-to tax rate.

Are those tiny newborn babies really obligated for $22,556 because of a law passed 84 years before they were born?
Are those tiny newborn babies really obligated for $22,556 because our government makes promises it cannot keep?
Or is it time for the Federal Government to declare bankruptcy and make way for something better?


To conceal the true size of the debt problem, the Federal Government has been returning less money to the states, forcing the states to borrow to meet their obligations. This transfers the debt from the Federal Government to the States. Taken together, the debt of the states and the debt of the Federal Government totals approximately $14 trillion. Guess who they want to pay it?

We the People.

Remember, paragraphs, citing sources and text justification are your friends.

Remember, paragraphs, citing sources and text justification are your friends.

fixed.

Your argument sorta falls on its face with the realization that if the people wanted the law to change they would vote people in to remove the law in effect.

A law in effect stays in effect until it is repealed. Otherwise every session of congress would be spent passing the same laws it passed 2 years ago, over and over again.

The government takes money from sources, and provides services. If it decides to take money on interest to pay for services upfront, and repay that with "income" then alright, that is its perogative.

Your argument again falls on its face by assuming that money paid and services given remain in a fixed 1:1 ratio, they don't.

Don't like it? Get the law changed.

Five dollars for a hamburger!? Jesus Christ, for five bucks I'd at least want a piece of cheese on it.

Five dollars for a hamburger!? Jesus Christ, for five bucks I'd at least want a piece of cheese on it.

Thats and extra 12 cents plus tax, thank you.

and hidden federal taxes due to imports....;)


[im joking by the way, in case you were wondering]

http://i15.tinypic.com/49jmkap.jpg

http://i15.tinypic.com/49jmkap.jpg

using school computer, your link is blocked.

http://i15.tinypic.com/49jmkap.jpg

I like the way they've labelled "Jimmy Carter" as decreasing the national debt ;)

But as to whose fault it is? Mine. Sorry about that, but the PIN was 1-2-3-4, I just couldn't resist...

I like the way they've labelled "Jimmy Carter" as decreasing the national debt ;)

But as to whose fault it is? Mine. Sorry about that, but the PIN was 1-2-3-4, I just couldn't resist...

5,6,7,12,9,7.....wait what are we doing?

using school computer, your link is blocked.

http://www.stealthyinternet.com/

http://www.stealthyinternet.com/

blocked! Damn!

Five dollars for a hamburger!? Jesus Christ, for five bucks I'd at least want a piece of cheese on it.

Five Guys is pretty expensive but their burgers are damned good...

I like the way they've labelled "Jimmy Carter" as decreasing the national debt ;)

But as to whose fault it is? Mine. Sorry about that, but the PIN was 1-2-3-4, I just couldn't resist...

Yeah, but still the growth of the debt under Reagan, and especially the Bushes is pretty impressive.

I am.

5,6,7,12,9,7.....wait what are we doing?

We were making a joke that the American government had chosen a particularly obvious Personal Identification Number ;)

Yeah, but still the growth of the debt under Reagan, and especially the Bushes is pretty impressive.

Indeed it is. But mislabelling an unimportant part of a graph casts doubt on the important bits, even if they are accurate. It doesn't do the message any favours by appearing dishonest :/

We were making a joke that the American government had chosen a particularly obvious Personal Identification Number ;)
:/

try 0000

The analogy fails because the government didn't agree not to borrow money and then go and do it.

In fact, borrowing money was really popular in the sixties. Keynesians ruled the day, so government debt wasn't seen as a problem.

Reagan ran for Pres. saying that under Carter the national debt had reached 1 Trill dollars.

Then we started tinkle down economics. Cut taxes for the rich and we will all get rich. Don't worry about debt, tinkle down will increase the wealth to make up for it. Don't worry about recession, just spend more money to cover up the problems.

Reagan doubled the debt and no one cared. He had a good smile and that was important.

Bush 1 did the same.

Now we have over 25 years of tinkle down and the rich are richer the middle has shrunk, the poor are poorer and the country is in debt multiple Trillions (not just Carter's 1 trillion.) An entire generation has grown that think this is normal. An entire generation thinks this is a "good" economy.

In reference to the idea that the people didn't ask for this. BS--The American people voted 5 times to incur this obligation and commit their children and grandchildren to pay off what we ordered.

Reagan's deficits were mostly the result of his extreme military spending - which won the cold war by the way.

Trickle down works. Rich people buy things from poor people.

Rich people buy things from poor people.

no. just, no. rich people pay poor people for their rental slavery, then poor people pay rich people essentially all of that money for their means to live a barely decent life.

Reagan's deficits were mostly the result of his extreme military spending - which won the cold war by the way.

Trickle down works. Rich people buy things from poor people.

This is what I mean by a generation that thinks this is normal.

Rich people spend a lot of money but they already are spending all they are going to spend. Give them more and it simply is warehoused.

Give a person who makes 20,000 a year another thousand and it will be spent, and the person they spend it with will spend it, and the person that then receives it will spend it and it will ripple through the economy until the rich get it.

Give Warren Buffet another thousand. Do you seriously think he will spend another thousand? I'll bet he won't spend another dime that he's not already spending. He already spends all he wants to spend.

Money only aids the overall economy when it's spent. Each time the money turns it adds to the economy. Warehoused money doesn't turn. Warren Buffet buys stock and sits on it for years. Give the rich money and the stock market goes up because of supply and demand for warehouse space. Give the poor money and product moves. Companies make money and eventually the stock market goes up do to increased profit not simply demand for stock. The market goes up slower, but it goes up justified by profit.

no. just, no. rich people pay poor people for their rental slavery, then poor people pay rich people essentially all of that money for their means to live a barely decent life.
I don't see poor countries sending a lot of money to the US.

This is what I mean by a generation that thinks this is normal.

Rich people spend a lot of money but they already are spending all they are going to spend. Give them more and it simply is warehoused.

Give a person who makes 20,000 a year another thousand and it will be spent, and the person they spend it with will spend it, and the person that then receives it will spend it and it will ripple through the economy until the rich get it.

Give Warren Buffet another thousand. Do you seriously think he will spend another thousand? I'll bet he won't spend another dime that he's not already spending. He already spends all he wants to spend.

Money only aids the overall economy when it's spent. Each time the money turns it adds to the economy. Warehoused money doesn't turn. Warren Buffet buys stock and sits on it for years. Give the rich money and the stock market goes up because of supply and demand for warehouse space. Give the poor money and product moves. Companies make money and eventually the stock market goes up do to increased profit not simply demand for stock. The market goes up slower, but it goes up justified by profit.

Yeah, that's my take on it too. Poor people spend a much higher percentage of their money than the rich do. That's why most schemes to abandon income tax in favor of a national sales tax are very regressive.

Someone else'e children ;)
Non-glib answer: There is no "government" to pay off the debt. We, the people have to do it. Sucks to be us, huh?

I blame Global Warming.


What? It's the in thing, isn't it?

O this is what I got on stats on the debt in USA not just including federal debt, but State debt, County debt and household debt. So in fact the amount of money Americans have to pay to be out of debt.

http://mwhodges.home.att.net/nat-debt/natdebt-vs-natincome.gif

Now about declaring bankrupcy, starting out clean is fine, but you are aware that you then have two options:

-The World hates USA's guts that makes how the world likes the USA today look like a christmas carol, with some nations declaring war on the USA for not paying back hundreds of billions that they lent to the USA. And after all that nobody trusts the USA enough to ever lend it a dime meaning the USA can NEVER EVER have a budget deficit not even a penny.

-The USA plays it by the rules, but because of that, many nations will come and take everything that has value in a nation to compensate for the money lost. Including most likely the entire armed forces.

I don't see poor countries sending a lot of money to the US.

we're talking countries now? i could've sworn we were talking about people just a minute ago.

and in any case, really? have you looked at debt service payments recently? or who actually owns things in poor countries? here's a hint - it ain't the poor.

sorry but we elected those who ran up this debt. they ran it up in our name.

and bottom line

we are the only ones who can pay it.

This is what I mean by a generation that thinks this is normal.

Rich people spend a lot of money but they already are spending all they are going to spend. Give them more and it simply is warehoused.
They're just storing that money in closets, are they?

No, they put in banks and invest it in businesses. That's a huge benefit to the economy. That money doesn't just sit there. It's used to create more wealth.
Give a person who makes 20,000 a year another thousand and it will be spent, and the person they spend it with will spend it, and the person that then receives it will spend it and it will ripple through the economy until the rich get it.
Why will the rich get it?

All all those people it passes through are aided by it.
Give Warren Buffet another thousand. Do you seriously think he will spend another thousand? I'll bet he won't spend another dime that he's not already spending. He already spends all he wants to spend.
As I said, he'll invest it, which is a great way to stimulate the economy.
Money only aids the overall economy when it's spent. Each time the money turns it adds to the economy.[quote]
Yes.
[quote]Warehoused money doesn't turn.
WRONG!

Where do you think the money goes when I buy stock? It goes to the companuy the issued the stock. What do they do with it? They SPEND IT. If they're not going to use the money for anything, why did they bother issuing the stock in the first place? An IPO is a way to raise capital for your business, but if you're not going to use that capital for anything why would you sell a big piece of your caompany in order to get it?
Warren Buffet buys stock and sits on it for years.
And the whole time he's doing that the money he spent on it is being used in the economy.

Do you honestly think the money just sits there? Why would they bother buying the stock, then? What would be the point? Why not just keep it in a bank?

we're talking countries now? i could've sworn we were talking about people just a minute ago.
The poorest people aren't in the US. The poorest Americans are among the richest people on the planet.
and in any case, really? have you looked at debt service payments recently? or who actually owns things in poor countries? here's a hint - it ain't the poor.
So their borrowing from us was somehow necessary and guaranteed?

sorry but we elected those who ran up this debt. they ran it up in our name.

and bottom line

we are the only ones who can pay it.

It's like giving one of your kids a credit card to go to the mall and buy a few items of clothes. Turns out they bought the whole damn mall. That is what we are dealing with. Yes we do have to pay. That is of course you are a US citizen.

It's like giving one of your kids a credit card to go to the mall and buy a few items of clothes. Turns out they bought the whole damn mall. That is what we are dealing with. Yes we do have to pay. That is of course you are a US citizen.

yuppers.

we are on the hook for this incredible debt that only gets higher every day.

its more like the kid bought the mall and we didnt take the card away from her. now she's run through several malls and we STILL dont take the card away.

Makes me laugh, a nation tries to impeach a president that payed off so much debt, that brought a record amount of jobs in his term of presidency to the USA, that gave the USA a new economic boom, just for 1 blowjob.

While a president that has launched war after war and has managed to fuck 1 up and hand the other down to NATO and has increased debt to unimaginable levels is still not even considering he might be impeached.

Makes me laugh, a nation tries to impeach a president that payed off so much debt, that brought a record amount of jobs in his term of presidency to the USA, that gave the USA a new economic boom, just for 1 blowjob.

While a president that has launched war after war and has managed to fuck 1 up and hand the other down to NATO and has increased debt to unimaginable levels is still not even considering he might be impeached.
Which one of them lied under oath?

mmm... I guess forging intelligence documents about WMD's and saying bin laden was in the country whilst Saddam was fiercly apposed to Bin Laden is not as bad as not being open about your sex life.

Bringing a country to war under false pretences or lieing about your sex life... I wonder which is worse.
I know, lieing about your sex life is worse :)

Makes me laugh, a nation tries to impeach a president that payed off so much debt, that brought a record amount of jobs in his term of presidency to the USA, that gave the USA a new economic boom, just for 1 blowjob.

While a president that has launched war after war and has managed to fuck 1 up and hand the other down to NATO and has increased debt to unimaginable levels is still not even considering he might be impeached.

the impeachment of the first shows why its a very bad idea to try to impeach the second.

Makes me laugh, a nation tries to impeach a president that payed off so much debt, that brought a record amount of jobs in his term of presidency to the USA, that gave the USA a new economic boom, just for 1 blowjob.

Clinton didn't pay down a dime of the national debt, although some of his policies did contribute to the 1990's expansion. Then again, the same is true of Bush's tax cuts and the revival of the economy after all the crap in 2001-2002.

But W's steel tariffs didn't do the economy any favours.

Makes me laugh, a nation tries to impeach a president that payed off so much debt, that brought a record amount of jobs in his term of presidency to the USA, that gave the USA a new economic boom, just for 1 blowjob.

While a president that has launched war after war and has managed to fuck 1 up and hand the other down to NATO and has increased debt to unimaginable levels is still not even considering he might be impeached.

http://i16.tinypic.com/2ugz6l0.jpg

I honestly blame: Baby Boomers, old people and the media-politico-educational complex.

Single payer health care would go a long way to sorting this mess out.

But W's steel tariffs didn't do the economy any favours.

No, but that was more political pandering than anything. On other issues he's been pretty solid on advancing free trade/.

No, but that was more political pandering than anything. On other issues he's been pretty solid on advancing free trade/.
Political pandering that cost the economy billions of dollars.

I found that graph very interesting - interesting because no President has been able to see a cut to debt levels - all it has been doing is increasing. Personally I think the United States needs something like the Fiscal Responsibility Act down here in New Zealand - the Act stipulated that government was to remain in surplus until our debt levels (back then very high) came down. Now the only reason why the government is still in surplus is because Michael Cullen (Minister of Finance) wants to make Alan Bollard's (Reserve Bank Governor) life easier.

I do think that, however, Clinton's run was made much easier by the economic changes instituted by Reagan - it takes about ten years for major policy changes to trickle through the economy and start to have an impact.

Single payer health care would go a long way to sorting this mess out.
As long as you don't make Canada's mistake and insist on single provider, as well.

Most western countries offer a universal system with a single payer, but Canada is unique in restricting private provision of health care services. But government provision is really inefficient, so we get rationing.

WHO'S RESPONSIBLE FOR THE NATIONAL DEBT?

Let us imagine for a moment that you go to a restaurant, you place an order for a hamburger. The proprietor of the restaurant tells you the cost is $5 for the hamburger, and you pay $5 for the hamburger. You get your food. No problems. Well worth the money you paid for it. No complaints.

Then when you are done eating, the owner of the restaurant shows up at your table, apologizes profusely, explains that he underestimated the real cost of providing you with the hamburger he agreed to serve you and hands you a bill for an additional sum he had to borrow in order to provide the meal plus interest since the start of your meal. Do you pay it? Of course not. You, the customer, entered into a verbal contract with the proprietor of the restaurant to provide you with your meal at the price agreed to by all parties prior to the transaction.

If the proprietor of the restaurant has miscalculated the cost of meeting his agreed-to obligation to the customer, is the customer obligated to cover the shortfall? No. The proprietor of the restaurant is responsible for the error, and if he cannot meet his agreed-to obligations for the agreed-upon price, he should declare bankruptcy, go out of business, and make way for a new restaurant with better fiscal sense.
Simple common sense.

Let us imagine for a moment that you live in a nation, and you request some benefits. The government tells you the cost is $500 for the benefits, and you pay $500 in taxes for the benefits. You get your benefits. No problems. Well worth the money you paid for them. No complaints.

Then when you have your benefits, the government shows up at your door, apologizes profusely, explains that it underestimated the real cost of providing you with the benefits it agreed to provide and hands you a bill for an additional sum it had to borrow in order to provide the services, plus interest since the start of your use of the benefits. Do you pay it? Of course not. You, the citizen, entered into a verbal contract with the government to provide you with your benefits at the taxes agreed to by all parties prior to the transaction.

If the government has miscalculated the cost of meeting the agreed-to obligation to the citizen, is the citizen obligated to cover the shortfall? No. The government is responsible for the error, and if it cannot meet it's agreed-to obligations for the agreed-upon price, it should declare bankruptcy, go out of business, and make way for a new government with better fiscal sense.

The claim is constantly made that "we" (meaning the citizens) have already spent the almost 6 trillion dollars that the Federal Government owes and that therefore "we" (meaning the citizens) must repay it.* This is nonsense. No taxpayer alive now ever voted or otherwise agreed to allow the government to borrow money on their behalf and agreed to underwrite the resultant ruinous interest obligation. No citizen spent that money. The government spent it, to keep promises it had no business making in the first place.

The Federal Reserve Act (Otherwise known as the currency act) was voted into law December 23, 1913. The people who voted in that law are all dead.
No taxpayer alive today had anything to say about repaying any money the government borrowed to keep it's promises. We did not have any choice in the matter. We did not choose to accept this obligation. It has been forced on us. It was manufactured for us.

Certainly the young people who are becoming voters and taxpayers this year have had no say at all about the almost 6 trillion dollar debt that our government hands to them and says, "This thou shalt pay". To so encumber our children without their permission is at best indentured servitude; at the worst outright slavery.
We The People didn't borrow that 6 trillion dollars. We The People, those of us alive today, paying taxes today, have never had the opportunity to decide whether or not we are obligated to cover the bad debts of a government that gets elected by selling $5 dollar hamburgers, only to tell us after election day that they really cost $7 and we are now obligated for that additional $2.

Every man, woman, retired senior citizen and even the tiniest newborn baby are being told that they owe $22,556 extra for services that were bought and paid for by an agreed-to tax rate.

Are those tiny newborn babies really obligated for $22,556 because of a law passed 84 years before they were born?
Are those tiny newborn babies really obligated for $22,556 because our government makes promises it cannot keep?
Or is it time for the Federal Government to declare bankruptcy and make way for something better?


To conceal the true size of the debt problem, the Federal Government has been returning less money to the states, forcing the states to borrow to meet their obligations. This transfers the debt from the Federal Government to the States. Taken together, the debt of the states and the debt of the Federal Government totals approximately $14 trillion. Guess who they want to pay it?

We the People.


At the avoidance of going through all the myriad problems in your assessment one by one, let me focus on one single, if rather glaring, problem: Who owns the government in a democracy (or "democratic republic", if you are into anal sophistry about government)? Oh yeah, we the people.

Your analysis falls flat when you stop to consider that the store owner and the eater of the hamburger, if you take the context of government agent and citizen voting those agents in seriously, are one and the same. There is no "other guy" that did all the dirty work that we're not responsible for when we are the guy who every two years gave a "Okay, swell job" stamp of approval on his practices. We may be able to justify some of that based on contingent factors at the time: the Cold War wasn't exactly a picnic, and maybe 2 trillion in debt was a small price to pay for beating the commies. But let's not pretend that we aren't then culpable when the bill comes due.

Do you honestly think the money just sits there? Why would they bother buying the stock, then? What would be the point? Why not just keep it in a bank?

It's not that stock doesn't benefit the economy at all. In an IPO the money is turned to build a bigger business. But then that money is spent. The company then needs to have sales to bring in profit to justify their stock to buyers. Those sales come from the bottom of the economy. The rippling of money from the bottom to the top. Stock prices are set by two things, profit and demand. Pouring money in the top increases demand without increasing profit. Note: The .com bubble burst. Money was chasing stock that didn't have profit to justify the cost. The supply of money at the top was chasing a limited number of stocks so more stocks were created to sop up the money without justification in profit terms for the price. When a bump hit the road, people pulled back and the stock went down to a justifiable price, which in some cases was zero.

Stock is needed to build companies, but the money in stock doesn't turn often as compared to the money at the bottom. It's the turn of the money that makes for a strong economy. Example: Let's say a loaf of bread has a 10% mark up. The money a grocer spends to buy that loaf turns (the loaf sells and is replaced) 300 times per year. Effectively that money turns a 3000% gross profit. (I know the grocer has expenses, like paying some of that 3000% to workers that will buy bread) And when those workers buy bread the money goes to bakers, who spend money on flour from millers, who spend money on wheat from farmer, who spend money on seed, fertilizer, etc,........
Now lets look at a diamond ring: The ring might have a 1000% mark up but it only sells and is replaced once each year. So which is better for the economy, selling bread or diamonds? Bread is like giving money to the bottom. It ripples and turns many times each year. Stock is like a diamond. It turns very, very slowly. And the people that provide diamonds only aid the economy each time it turns.

Now if you really want to get into economics. Part of "tinkle down" was to build a "service economy". Well service passes around money and turns money but it doesn't add to the foundational wealth of a nation. The only three things that add to the foundational wealth of a country is Mining, Manufacturing, and Agriculture. The only one that is truly sustainable is Manufacturing. Mining the ore, oil, etc runs out. Agriculture, even with the best practices, lowers the soil. So what jobs have we exported during tinkle down? The only ones that are truly renewable.

Clinton didn't pay down a dime of the national debt, although some of his policies did contribute to the 1990's expansion. Then again, the same is true of Bush's tax cuts and the revival of the economy after all the crap in 2001-2002.

The question is which is worse in the long run:

Tax and spend Democrats

or

Borrow and spend Republicans


A question to ask your children, grandchildren, great-grandchildren.......

WHO'S RESPONSIBLE FOR THE NATIONAL DEBT?

Let us imagine for a moment that you go to a restaurant, you place an order for a hamburger. The proprietor of the restaurant tells you the cost is $5 for the hamburger, and you pay $5 for the hamburger. You get your food. No problems. Well worth the money you paid for it. No complaints.

Then when you are done eating, the owner of the restaurant shows up at your table, apologizes profusely, explains that he underestimated the real cost of providing you with the hamburger he agreed to serve you and hands you a bill for an additional sum he had to borrow in order to provide the meal plus interest since the start of your meal. Do you pay it? Of course not. You, the customer, entered into a verbal contract with the proprietor of the restaurant to provide you with your meal at the price agreed to by all parties prior to the transaction.

If the proprietor of the restaurant has miscalculated the cost of meeting his agreed-to obligation to the customer, is the customer obligated to cover the shortfall? No. The proprietor of the restaurant is responsible for the error, and if he cannot meet his agreed-to obligations for the agreed-upon price, he should declare bankruptcy, go out of business, and make way for a new restaurant with better fiscal sense.
Simple common sense.

Let us imagine for a moment that you live in a nation, and you request some benefits. The government tells you the cost is $500 for the benefits, and you pay $500 in taxes for the benefits. You get your benefits. No problems. Well worth the money you paid for them. No complaints.

Then when you have your benefits, the government shows up at your door, apologizes profusely, explains that it underestimated the real cost of providing you with the benefits it agreed to provide and hands you a bill for an additional sum it had to borrow in order to provide the services, plus interest since the start of your use of the benefits. Do you pay it? Of course not. You, the citizen, entered into a verbal contract with the government to provide you with your benefits at the taxes agreed to by all parties prior to the transaction.

If the government has miscalculated the cost of meeting the agreed-to obligation to the citizen, is the citizen obligated to cover the shortfall? No. The government is responsible for the error, and if it cannot meet it's agreed-to obligations for the agreed-upon price, it should declare bankruptcy, go out of business, and make way for a new government with better fiscal sense.

The claim is constantly made that "we" (meaning the citizens) have already spent the almost 6 trillion dollars that the Federal Government owes and that therefore "we" (meaning the citizens) must repay it.* This is nonsense. No taxpayer alive now ever voted or otherwise agreed to allow the government to borrow money on their behalf and agreed to underwrite the resultant ruinous interest obligation. No citizen spent that money. The government spent it, to keep promises it had no business making in the first place.

The Federal Reserve Act (Otherwise known as the currency act) was voted into law December 23, 1913. The people who voted in that law are all dead.
No taxpayer alive today had anything to say about repaying any money the government borrowed to keep it's promises. We did not have any choice in the matter. We did not choose to accept this obligation. It has been forced on us. It was manufactured for us.

Certainly the young people who are becoming voters and taxpayers this year have had no say at all about the almost 6 trillion dollar debt that our government hands to them and says, "This thou shalt pay". To so encumber our children without their permission is at best indentured servitude; at the worst outright slavery.
We The People didn't borrow that 6 trillion dollars. We The People, those of us alive today, paying taxes today, have never had the opportunity to decide whether or not we are obligated to cover the bad debts of a government that gets elected by selling $5 dollar hamburgers, only to tell us after election day that they really cost $7 and we are now obligated for that additional $2.

Every man, woman, retired senior citizen and even the tiniest newborn baby are being told that they owe $22,556 extra for services that were bought and paid for by an agreed-to tax rate.

Are those tiny newborn babies really obligated for $22,556 because of a law passed 84 years before they were born?
Are those tiny newborn babies really obligated for $22,556 because our government makes promises it cannot keep?
Or is it time for the Federal Government to declare bankruptcy and make way for something better?


To conceal the true size of the debt problem, the Federal Government has been returning less money to the states, forcing the states to borrow to meet their obligations. This transfers the debt from the Federal Government to the States. Taken together, the debt of the states and the debt of the Federal Government totals approximately $14 trillion. Guess who they want to pay it?

We the People.

You titled your manifesto "WHO'S RESPONSIBLE FOR THE NATIONAL DEBT?"

Then you tell some weird story about the Federal Reserve selling 5$ hamburgers at below cost.

But then you never tell us who is responsible! I am on the edge of my seat... who is responsible????

Frickin' tease!

America has a $300 trillion economy.

If I earn $1000 a month and I'm overdrawn $150, is that a problem?

Clinton benefitted from the end of the cold war, he could draw down increased spending as well as benefit from the technology boom.

Bush came in during a recession as well as having to increase spending.

For any economist out there, is that correct?

EDIT: Seems I am COMPLETELY wrong - 13.2 trillion economy, uh oh.

America has a $300 trillion economy.

If I earn $1000 a month and I'm overdrawn $150, is that a problem?



If you earn $12,000 per year and you go into debt by $150 per month at 5% interest compounded--in 6 years you will owe--$12,616.99.

I would say that was a problem.

The economy can look great when you don't worry about the credit card bill.

If you earn $12,000 per year and you go into debt by $150 per month at 5% interest compounded--in 6 years you will owe--$12,616.99.

I would say that was a problem.

The economy can look great when you don't worry about the credit card bill.

Agreed, except the analogy isn't quite like that.

Currently, disregarding my incorrect figures, it would be total debt that has risen to $150, some months the budget is balanced, many months it rises by another $3-4. It's not a rise of $150 per month.

We also have two other factors. The dollar is at an all-time low, so debt has risen in comparison. So it would be like owing $150 in GBP - previously you were paying $1.50 - $1.70, now it's $2.

Secondly, oil has risen from around $30 a barrel in the Clinton years to $60-70 now. Admittedly that can be attributed to the Middle East situation.

The point is the economy is a tricky thing.

EDIT: Correct figures would mean I'm earning $1, 000 per month but owe $5, 000

EDIT: Correct figures would mean I'm earning $1, 000 per month but owe $5, 000


Ok, you make $12,000 per year owe $5,000 and increase debt $5/mo--in 15 years at 5% compounded--you owe $11,910.43

The point is someday someone will pay the piper. The US will not continue to be a world economic power or a top living condition area with the burden of debt that has accumulated since tinkle down. Either we pay the taxes for what we buy or our children will inherit a nation that is a shadow of what we inherited. No generation in the history of the US has been so greedy that they gave their children less than their parents gave them. The wealth of 225 years is being squandered in 30 years under the banner of lower taxes and increased spending. Because as Reagan said, "People don't care about deficits. They vote on taxes." In 5 of the last 7 elections he was correct.

I honestly blame: Baby Boomers, old people and the media-politico-educational complex.

Me too.

What's worse is that it's their fear that drives the "War on Terror", and will continue to do so, since they vote in larger numbers.

...but who does the fighting?

:mad:

Ok, you make $12,000 per year owe $5,000 and increase debt $5/mo--in 15 years at 5% compounded--you owe $11,910.43

Ouch!

Good thing the bank can't afford to call my loans :)

The point is someday someone will pay the piper. The US will not continue to be a world economic power or a top living condition area with the burden of debt that has accumulated since tinkle down. Either we pay the taxes for what we buy or our children will inherit a nation that is a shadow of what we inherited. No generation in the history of the US has been so greedy that they gave their children less than their parents gave them. The wealth of 225 years is being squandered in 30 years under the banner of lower taxes and increased spending. Because as Reagan said, "People don't care about deficits. They vote on taxes." In 5 of the last 7 elections he was correct.

Thanks for that.

Well my fear is what will America do when China and Europe say: We wont lend you anymore money untill we see some of the previous loans payed back.

What will America do then? Get mad and nuke us all? Or increase taxes and/or cut spending dramatically (and Im not talking about a 1% tax increase on all levels and a 2,5% budget cut on defence/healthcare/education).

Well my fear is what will America do when China and Europe say: We wont lend you anymore money untill we see some of the previous loans payed back.

What will America do then? Get mad and nuke us all? Or increase taxes and/or cut spending dramatically (and Im not talking about a 1% tax increase on all levels and a 2,5% budget cut on defence/healthcare/education).
As far as I'm aware, most of the debt is with private institutions.

I don't think there should be too much of a problem; depending on what assets the United States Government owns. I know here in New Zealand, the government sold Air New Zealand, the Bank of New Zealand, Postbank, Telecom, New Zealand Railways, Contact Energy, Auckland International Airport, Wellington International Airport and many other businesses to pay off its huge debt.

Just regarding all this "we voted for it" stuff...exactly how many government departments did you vote into existence? Which money-making scheme in the local traffic police department did you decide on?

Government is a whole of a lot more than the politicians we occasionally get to choose the least bad from.

Now about declaring bankrupcy, starting out clean is fine, but you are aware that you then have two options:

-The World hates USA's guts that makes how the world likes the USA today look like a christmas carol, with some nations declaring war on the USA for not paying back hundreds of billions that they lent to the USA. And after all that nobody trusts the USA enough to ever lend it a dime meaning the USA can NEVER EVER have a budget deficit not even a penny.

-The USA plays it by the rules, but because of that, many nations will come and take everything that has value in a nation to compensate for the money lost. Including most likely the entire armed forces.

You are forgetting the third option: Try to continue your economic and military presence in the world. This will for at least another fifty years force the rising economic powers such as China, India and Russia (mainly China) to continue to invest really low interest bonds and other investments to prop their economy up and stop it collapsing (which would wreck their own).

If you earn $12,000 per year and you go into debt by $150 per month at 5% interest compounded--in 6 years you will owe--$12,616.99.

I would say that was a problem.

The economy can look great when you don't worry about the credit card bill.

Would that be credit card interest? Seems pretty low to me...

Well my fear is what will America do when China and Europe say: We wont lend you anymore money untill we see some of the previous loans payed back.

What will America do then? Get mad and nuke us all? Or increase taxes and/or cut spending dramatically (and Im not talking about a 1% tax increase on all levels and a 2,5% budget cut on defence/healthcare/education).


If I remember rightly the loans are with people like Bank America, for whom a major economic recession that could be caused by calling in the loans would be very damaging. So things might not be as bad as they seem.

The question is which is worse in the long run:

Tax and spend Democrats

or

Borrow and spend Republicans


A question to ask your children, grandchildren, great-grandchildren.......

Tax and spend is incredibly much cheaper to do since you don't have to pay rent on taxes.

When Hilary or Barack win the next election the Iraq war will be over. Oil prices will go down somewhat.

The worst thing with the public is in a presidential election if you say you are going to raise taxes you won't get elected. If you say you won't raise taxes but then end up having to you won't get re-elected. That's why George Bush senior wasn't elected. He didn't put off raising taxes which would have been good for his re-election but bad for the country. And he lost an election because he didn't put it off.

We then got Clinton who largely rode on the coattails of his predecessors economic policys. Took the credit for it, lied under oath and is one of the major factors of his wife's popularity in the polls.

Then there is George W. Bush. He did some good things with the economy in his first term which were cancelled out by the Iraq war which is a strain on the economy.

So all in all pretty much every President of the last 20 years has done something wrong to contribute to the current state of our debt.

As far as I'm aware, most of the debt is with private institutions.

Indeed, European and Chinese companies, mainly central banks.

Or is it time for the Federal Government to declare bankruptcy and make way for something better?


A nation doesn't go bankrupt. What it does is print money. Then through supply and demand it pays it's bills with inflated money. This gets the bills payed up front but ruins the credit of the nation much like bankruptcy. The one thing that the US had going for it in the past was a good reputation. Bills were paid through only slightly inflated money. That opened doors to borrowing even more money. But as I could live like a king for a while if I maxed my credit cards, sooner or later the bills come due.

As we tell our children:

A good reputation is hard to get; easy to lose; impossible to recover.

As long as you don't make Canada's mistake and insist on single provider, as well.

Most western countries offer a universal system with a single payer, but Canada is unique in restricting private provision of health care services. But government provision is really inefficient, so we get rationing.

The helicopter that airlifted me to a hospital after my nasty crash sure was inefficient. I swear, it wasn't brand new! I bet I could have got there maybe three minutes faster with a better one. That is THREE minutes! Travesty! *wails*

Or, you know, you Albertans could stop bitching about a healthcare system that people all over the world admire. If you are so horny to pay for your own bills or get private services why don't you head to the US to get all your medical issues handled? I am sure those private providers are WAY more efficient than our government system. Or not.

http://findarticles.com/p/articles/mi_m0815/is_10_28/ai_108994048

Now if you really want to get into economics. Part of "tinkle down" was to build a "service economy".
First of all, that's how economies mature.

An economy starts out being primarily agricultural. Then, the manufacturing sector starts to grow at the expense of the agricultural sector. This persists for some time. Then, the manufacturing sector levels off but the service sector starts to grow, still at the expense of the agricultural sector. The agricultraul sector has been in steady decline since the beginning of the growth of manufacturing (I'm counting all of these as portions of the whole, so its a zero-sum game). As the agricultural sector becomes negligible, the service sector continues to grow, this time at the expense of the manufacturing sector. Eventually the service sector dominates the economy.

There are whole nations built on service industries. Tourism is a service industry. Banking is a service industry.
The only three things that add to the foundational wealth of a country is Mining, Manufacturing, and Agriculture.
How do you figure?
So what jobs have we exported during tinkle down? The only ones that are truly renewable.
Exporting jobs is more a result of free trade, but you exported jobs that other countries can do more efficiently. But those nations that are doing your manufacturing for you still need services. You can provide them.

The helicopter that airlifted me to a hospital after my nasty crash sure was inefficient. I swear, it wasn't brand new! I bet I could have got there maybe three minutes faster with a better one. That is THREE minutes! Travesty! *wails*

Or, you know, you Albertans could stop bitching about a healthcare system that people all over the world admire. If you are so horny to pay for your own bills or get private services why don't you head to the US to get all your medical issues handled? I am sure those private providers are WAY more efficient than our government system. Or not.

http://findarticles.com/p/articles/mi_m0815/is_10_28/ai_108994048
AAARRGH!

Why are you comparing it to the US system? The US system isn't single-payer, so it's not even remotely comparable. Why not track down comparisons between Canada and other OECD countries with universal systems. Both Japan and Iceland have healthcare systems that make ours look sick.

I'll even help you out here. OECD countries with universal health coverage:

Australia
Austria
Belgium
Canada
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Italy
Japan
Luxembourg
Netherlands
New Zealand
Norway
Poland
Portugal
Slovakia
South Korea
Spain
Sweden
Switzerland
Turkey
United Kingdom

Find me a study that compares the outcomes and efficiency of these countries and then we can talk. Even bringing up the US in a discussion of universal healthcare is idiotic, or a blatant attempt at misdirection.

The government.

The universal healthcare in New Zealand is shit - our waiting lists are enormous and they grow bigger courtesy of strikes by some group of medical professionals.

First of all, that's how economies mature.

An economy starts out being primarily agricultural. Then, the manufacturing sector starts to grow at the expense of the agricultural sector. This persists for some time. Then, the manufacturing sector levels off but the service sector starts to grow, still at the expense of the agricultural sector. The agricultraul sector has been in steady decline since the beginning of the growth of manufacturing (I'm counting all of these as portions of the whole, so its a zero-sum game). As the agricultural sector becomes negligible, the service sector continues to grow, this time at the expense of the manufacturing sector. Eventually the service sector dominates the economy.


The basis of the American economy is still agriculture. Even though the employment in farming as such has been dramatically reduced, the major export of the US is agricultural products. It is still the primary source of new foundational wealth. The balance of trade (although continually in the red) would be totally unbalanced without agriculture. Without agriculture, the US dollar would be worthless. Without mining (oil drilling, coal) the US fuel prices would match or outstrip those of Europe and severely cut what is left of the economy. The only other source of foundational wealth in the world is manufacturing (a major US export the last 25 years).

Service passes wealth around and is a big part of the ripple that takes place as money moves through the economy, but it is not and never will be the stone that was thrown in in the first place. While it is true some very small countries base an economy on tourism or banking (there is even one African country that bases it's economy on registering ships) there is not a major country that can do this. What those countries are doing in effect is draining agricultural, mining, and manufacturing wealth from larger economy countries. They are part of the ripple of spent money, but they are not creating wealth for the overall world economy.

A waitperson at a cafe does work, gets tips and buys items and passes those tips onto other people that do the same. But s/he does not create anything of value. It is only the creation of things of value that creates wealth that goes into that tip and is passed on to others. Creation only takes place in Agriculture, Mining, and Manufacturing.

They're just storing that money in closets, are they? Might as well.

No, they put in banks and invest it in businesses. That's a huge benefit to the economy. That money doesn't just sit there. It's used to create more wealth. FOR THE ****ING RICH!


Why will the rich get it? Because they're the ones making the money!


All all those people it passes through are aided by it.

[Quote]As I said, he'll invest it, which is a great way to stimulate the economy. Only if you're an investor. If you're not you can starve in the streets according to you.

Money only aids the overall economy when it's spent. Each time the money turns it adds to the economy.
Yes.


Where do you think the money goes when I buy stock?
I don't have stock. Sucks to be me right?

It goes to the companuy the issued the stock. What do they do with it? Give it to their Board of directors.

They SPEND IT. If they're not going to use the money for anything, why did they bother issuing the stock in the first place? Because that's what companies are expected to do.

An IPO is a way to raise capital for your business, but if you're not going to use that capital for anything why would you sell a big piece of your caompany in order to get it? To make yourself richer...
They warehouse that money as well. If companies are doing so well from "High stock" why are they outsourcing to cut costs? Answer that? If companies are doing SO well why do they outsource. Why cut costs? Because it's the upper class who will get more money without giving a damn about the rest.


And the whole time he's doing that the money he spent on it is being used in the economy. By doing nothing... Hmmm...


Do you honestly think the money just sits there? Why would they bother buying the stock, then? What would be the point? Why not just keep it in a bank? Because people are stupid. They'll hold money simply for the fact they'll have more money. Even if they NEVER use it they'll continue to hoard money.

Who is responsible for the national debt?

If we're talking about the cumulative national debt which has built up over many decades, then there's no one person you can point the finger at. Most (but not all) administrations end up issuing US Government Bonds (the way government borrows money) in order to cover a budget shortfall.

However, if you want to examine which administrations added the most to the debt, then there are two clear answers: Ronald Reagan and George W Bush.

Reagan? Pushed through huge tax cuts for the richest few percent of the population. Justified this with a bogus economic theory (that just about every professional economist laughs at even now) called "Supply Side Economics", also known as "Rosey Scenario" or "Trickle Down Economics".
The basic premise is: If you take care of the rich, sooner or later everyone else will be taken care of too. Apparently, giving the rich more money means more investment in the economy, creating a boom, more jobs for everyone, and hey presto, everyone ends up happy.
Trouble is, it didn't work like that. The rich simply simply invested the extra money in international hedge funds, which (while they may help the world economy in the long run) don't do anything to help the economy very fast.

GWB? Has pushed through tax cuts even bigger than what Reagan managed.
Completely eliminated the inheritance tax, costing the treasury $20 billion a year. Sold that policy as "helping small businesses and farmers". Never mind that the inheritance tax threshold was $2.3 million per estate (twice that for couples). Never mind that only 3000 people each year paid any inheritance tax at all.
He's also just about eliminated all taxes on capital gains - another tax that overwhelmingly affects the rich. There's also the indirect tax cuts - in the form of the massively reduced IRS budget - effectively preventing the IRS from cracking down on affluent tax cheats. Bush has made America safe for rich people who don't feel like paying taxes, that's for sure.
That's just a few examples of how the Bush Tax Cuts, just like the Reagan Tax Cuts, overwhelmingly favour the richest few percent of the population. But has Bush, like Reagan, adopted the "Trickle Down" theory? Not a chance. Even he's not that stupid. Everyone knows it's bullshit. No, instead, Bush markets his tax cuts as being aimed towards the "average joe".

The current cavernous fiscal deficit the USA has is almost entirely a result of the Bush Tax Cuts. Hence the national debt must increase to cover the shortfall, meaning the US Government has to issue more bonds. A good question raised is: Who buys them?

There are two main buyers for US Government bonds:

1. International bond traders. A large percentage of the bonds issued are held by international investment banks (on behalf of the richest people in the world). A sizeable percentage is held by Saudi Arabia, for example. But many other countries also invest ing US Government bonds. In principle, any individual can buy one, although you're more likely to own one indirectly if you have a savings account.

2. The US Government itself. What? You mean the government lends money to itself?
Well, sort of. The branch of the government that issues the bonds is the Treasury. The branch that buys the bonds is Social Security. Why? Well, everyone knows about the looming "pig in the python" demographic crisis - the baby boomer generation who will be retiring soon, putting enormous strain on the social security system. This is why, since the 1980's, the system has been building up an enormous trust fund to try and cope with the increased demand. Most of this trust fund was invested in US government bonds - the reason being that these were considered the safest and most secure sort if investment.
What we didn't bank on was the Bush Administration claiming that US government bonds are "worthless" if accummulated by government agencies. No, I'm not joking - he really does think like this. Never mind that every dollar that the trust fund lends the Treasury is a dollar it doesn't have to borrow from other sources. Apparently, the US government bonds in the Social Security Trust fund aren't real assets. [How about this for an idea - let's launder the trust fund by putting it in private banks, who then buy US government bonds. Will that make the assets "real"?]

Ok - I've probably bored everyone to tears by now. But who pays back the debt? Yes, that's right. We do. Or more precisely, our taxes do. That's why Government bonds are considered a secure investment - because the Government can always raise taxes to pay them off.

There's three ways out of this mess:

1. The government behaves sensibly - reinstitutes inheritance tax, capital gains tax etc. and pays off the debt. And just for the record, Clinton DID pay off some of the national debt, and he left the budget with a $200 billion surplus when he left office.

2. International bond markets lose confidence and stop buying US government bonds. The government is forced to balance the budget properly, without borrowing money, and will sooner or later have to adopt (1.)

3. The government tries to make the debt go away by printing more money and causing mass inflation. This is how a lot of Latin American countries tried to resolve their debt crises in the 1970's / 1980's - the result then was soaring interest rates of 30% or more, causing economic collapse. Not a pretty thought.

FOR THE ****ING RICH!
What do you think the bank does with it?

They hand it out again, in the form of a home loan for you to buy a house, or a business loan for your neighbour to start that car wash.

Only if you're an investor. If you're not you can starve in the streets according to you.
Actually, the investor is handing money to someone else to do something with it that brings extra money.

So that someone else is making money as well, and often he or she just plain couldn't do that without the investor.

Because that's what companies are expected to do.
Dude, please, you're being silly. There are millions of companies out there that are not publically listed.

Fact of the matter is that most public listings are done to raise extra capital to finance that next expansion or new strategy or new factory. The only recent listing I can think of that is a bit different is Blackstone, a formerly private hedge fund that earns money by investing in the markets and in companies to them tell them how to clean up their act.

Blackstone probably wouldn't have needed the funds raised by the listing for an expansion plan, instead the accountants and finance specialists came to the conclusion that offering on the share market will be another revenue stream in and for itself.

But no one in their right mind goes public without doing a whole lot of research and making sure they're doing the right thing. You're essentially selling the company and the potential risks are enormous.

This is a great article explaining what I mean. It's about the various producers of luxury goods in Italy (which are still mostly privately owned by families) being afraid that the growing markets in Asia will leave them behind. Going public is the only way to get the capital they need to get into China and secure a place there: http://www.economist.com/business/displaystory.cfm?story_id=9005244

They warehouse that money as well.
There is no such thing. Theoretically they could put it in the bank (where again it would become available for home loans etc), but they don't do that because the return they would get by investing it in their own operations is generally greater.

If companies are doing so well from "High stock" why are they outsourcing to cut costs? Answer that?
Just because someone is doing well doesn't meant that they shouldn't try to do better.

And besides, high stock prices are first and foremost an indication of high stock prices and not much more. It's the reports, the figures and the future prospects of a company (and a bit just being speculation) that influence why investors would buy those shares.

There've been cases of companies that had great share prices doing quite badly. Potential take-over candidates for example get a boost to share prices just for financial reasons, but it says nothing about the company itself. And then there's companies that publish misleading numbers, of course.

If companies are doing SO well why do they outsource. Why cut costs?
Because a company is founded to create a return to those who own it. That's the reason you start that lemonade stand as a kid, that's the reason some guy starts a corner store, that's the reason Mr Ford started a company to make cars.

That's the absolutely fundamental reason a company exists. It's not a morally or ethically bad reason, and it's good enough a reason for those people to put their money in it.

Any company that refuses to take advantage of the opportunities offered by outsourcing parts of its operation, and doesn't make as much profit as it could have, is failing its owners.

Because it's the upper class who will get more money without giving a damn about the rest.
I believe in the US the percentage of "lower class" people who own shares is among the highest in the world, if not the highest.

Even if you were to decide that you were blind and couldn't see the fact that the money, when it is invested or put in a bank, will indeed end up benefitting normal people, then the sheer penetration of stock ownership in the US means that a well-done outsourcing strategy can deliver billions into the pockets of ordinary Americans.

Because people are stupid. They'll hold money simply for the fact they'll have more money. Even if they NEVER use it they'll continue to hoard money.
There are more ways of "using" money than just going out and buying consumer goods with it.

Even if you were to decide that you were blind and couldn't see the fact that the money, when it is invested or put in a bank, will indeed end up benefitting normal people, then the sheer penetration of stock ownership in the US means that a well-done outsourcing strategy can deliver billions into the pockets of ordinary Americans.


There is a difference between money in the bank and money in the stock market.

As you said, money in the bank is loaned out and continues to circulate.

That is not true of the stock market.

Example:
Many years ago Dairy Queen needed money to expand and buy more milk and hamburger. So they sold stock. They used that money to buy milk and hamburger and it continued to circulate. But what happened after that? The money became a piece of paper that was put in someone's file cabinet. Then he sold it to someone else and the paper moved from one file to another. And each time the paper was sold it moved but none of that money went into milk and hamburger. The value of the paper increased, and as long as there was capital gains tax some of it was returned to circulation through government spending, but most of it remained in that piece of paper. And that paper added no new production. It reflected the value of the company but it didn't buy milk and hamburger. Then Warren Buffet decided to buy Dairy Queen. The paper moved to Omaha and there it sits. Warehoused forever. The more money that was poured into the richest of the rich, the more Dairy Queen paper Buffet was able to warehouse in Dairy Queen stock. The more paper he bought the less cash there is available to circulate. The only winners were those that build filing cabinets. Of course, the paper doesn't even exist today. It's all blips on a computer someplace.

What do you think the bank does with it?
They hand it out again, in the form of a home loan for you to buy a house, or a business loan for your neighbour to start that car wash. And loans have to be paid back. Who pays the loan back?


Actually, the investor is handing money to someone else to do something with it that brings extra money. Like handing it to another investor?


Dude, please, you're being silly. There are millions of companies out there that are not publically listed. I wasn't talking about them.




But no one in their right mind goes public without doing a whole lot of research and making sure they're doing the right thing. You're essentially selling the company and the potential risks are enormous.
No argument there.


This is a great article explaining what I mean. It's about the various producers of luxury goods in Italy (which are still mostly privately owned by families) being afraid that the growing markets in Asia will leave them behind. [ *Blinding flash of the obivious*

Going public is the only way to get the capital they need to get into China and secure a place there: http://www.economist.com/business/displaystory.cfm?story_id=9005244
Sad.

There is no such thing. Theoretically they could put it in the bank (where again it would become available for home loans etc), Again
Loans require being paid back... More debt for the middle, lower, and small business.

but they don't do that because the return they would get by investing it in their own operations is generally greater.
Therefore the money stays with their little group... Lot of good that does.


Just because someone is doing well doesn't meant that they shouldn't try to do better. And who cares who gets screwed in the process.

And besides, high stock prices are first and foremost an indication of high stock prices and not much more. It's the reports, the figures and the future prospects of a company (and a bit just being speculation) that influence why investors would buy those shares. Thank you for proving my point. It's all about the investors.


There've been cases of companies that had great share prices doing quite badly. Potential take-over candidates for example get a boost to share prices just for financial reasons, but it says nothing about the company itself. Thus to the benifit again of the upper groups.

And then there's companies that publish misleading numbers, of course. Which is unethical and should be illegal if it is not already.

Because a company is founded to create a return to those who own it. That's the reason you start that lemonade stand as a kid, that's the reason some guy starts a corner store,And you do it by selling PRODUCT, not your stock.

that's the reason Mr Ford started a company to make cars. To fire employees to make his stock better?


That's the absolutely fundamental reason a company exists. It's not a morally or ethically bad reason, and it's good enough a reason for those people to put their money in it. Like said before, It's only about the investors. And screw everyone else.

Any company that refuses to take advantage of the opportunities offered by outsourcing parts of its operation, and doesn't make as much profit as it could have, is failing its owners. (Copy/Paste)
Again, It's only about the investors. And screw everyone else.

I believe in the US the percentage of "lower class" people who own shares is among the highest in the world, if not the highest. Source?

Even if you were to decide that you were blind and couldn't see the fact that the money, when it is invested or put in a bank, will indeed end up benefitting normal people, For putting them in more debt from loans... Right...

then the sheer penetration of stock ownership in the US means that a well-done outsourcing strategy can deliver billions into the pockets of ordinary Americans. Tell that to the guy who lost his job to China.
"Hey because of the stock market you'll do better!!!" Right... Only if your an investor. Which might I add again, not everyone is.


There are more ways of "using" money than just going out and buying consumer goods with it. But it tends to be the most direct way. Instead of a bunch of "Maybe's" and "Eventually" and "Sometimes". People don't have time to wait 20+ years for it to MAYBE get back to them.
In conclusion "Trickle down" takes to damn long. If it ever comes down at all.

And who cares who gets screwed in the process.

Thank you for proving my point. It's all about the investors.


Not really. The thing is, you're competing; if other companies outsource and cut costs, they can undercut you and steal market share. Revenue and profit plunge, the stock tanks, and eventually the company will either be bought, cut massive number

Better to outsource those 1000 jobs (to say nothing of its indirect benefits) and stay competitive than fall behind and end up losing 10,000 when the company's bought or it goes under. Remember, even companies that outsource still hire large numbers of domestic workers; if anything, in the past year or two the trend has reversed because outsourcing is becoming less affordable and less attractive than highly-trained, fluent domestic workers.

Mostly the military-industrial complex.

As you said, money in the bank is loaned out and continues to circulate.

That is not true of the stock market.
Well, of course what you described will be true of some people in some situations. Indeed, some people hold cash as well, I believe, and don't always immediately spend it.

But in most cases money finds its way to somewhere where it makes more money. And ultimately that has to end in physical goods or services at some point. Even something that "doesn't add value" actually does: if some hedge fund buys a corporation, splits it up and sells the pieces, the money made represents the value of the pieces being able to produce goods or services more efficiently and/or effectively than they were before.

And loans have to be paid back. Who pays the loan back?
So because a loan has to be paid back you say that it makes no difference whether loans exist or not?

Tell that to every home owner out there.

Like handing it to another investor?
Or your neighbour who wants to start his car wash.

I wasn't talking about them.
Of course not. You'd rather ignore reality to continue saying false things about evil Wall Street fat cats.

Sad.
You can call it sad, but it's a fact. Much like I won't be able to buy a home without a loan, Armani can't expand into China without getting money from somewhere.

And they have the choice between taking up a loan (which would be huge, cost a lot of interest and will probably be too risky for any bank to just approve anyways), or selling something.

And how does a company sell something? Well, the best way is to sell a piece of itself as a share.

Therefore the money stays with their little group... Lot of good that does.
Actually, it does. If Armani goes public and gets all this cash, then chances are that they'll do the world even greater a favour if they use it to offer more and better Armani goods to China, than if they just stick it into a bank.

And who cares who gets screwed in the process.
A company does normally care to some extent, but its duty is first and foremost to the people who own it. But as Vetalia said, in the long run no worker is being helped if the company goes bankrupt, which is why in Germany for example unions have agreed with big car manufacturers that some lay-offs were necessary and wouldn't be opposed, because it meant greater security for everyone else.

Thank you for proving my point. It's all about the investors.
I don't think your point was "it's all about the investors". I think your point was that if a company's stock prices are high, it's doing well and it shouldn't be thinking about outsourcing.

Thus to the benifit again of the upper groups.
And all the mum & dad shareholders of course.

Which is unethical and should be illegal if it is not already.
It is. That's pretty much what several Enron guys are sitting in jail for now.

And you do it by selling PRODUCT, not your stock.
[...]
To fire employees to make his stock better?
Apart from some private equity companies, investment firms and hedge funds, companies sell products, yes.

The share price is nothing but the value of the company on the market. So if the share price goes up, the owners of the company have a greater return.

And if we both accept that the reason companies get started is to make the people who own them richer, then we both accept that a higher share price is a big part of what a company should aim for.

Source?
http://www.house.gov/jec/tax/stock/stock.htm
http://www.businessweek.com/the_thread/wellspent/archives/2005/11/stock_ownership.html

Looks like half of the US households are stockholders. Hardly only the rich.

Tell that to the guy who lost his job to China.
Look, you will never ever see me shed a tear for anyone who loses their job because there's someone else who can do it better or more cheaply. That's how the market works.

Fact of the matter is that if that guy hadn't lost his job, if that factory hadn't closed, if that company hadn't moved its main departments to Guangzhou, then we would all end up paying more for whatever they produce.

Problem is that lower prices at the supermarket aren't news. We just take them for granted. But some sad story about a closed factory: now that is news.

In conclusion "Trickle down" takes to damn long. If it ever comes down at all.
Trickle down economics is not about cash falling into your hands. It's a tad more complex than that.

It's about GDP as a whole rising, pulling GDP per capita with it. It's about lower prices, meaning every one of your dollars goes a longer way. It's about lower interest rates, meaning you actually can afford to get that loan and start your big project, whatever it may be. It's about better technology and more efficient provision of vital services like healthcare (interesting note on the side: Wal-Mart walk-in health clinics => will save millions of people a lot of pain and money, but as soon as something goes wrong the "protectors" of the poor will try to get them banned).

not a who but a what. putting the concept of money ahead of the very reason people ever banded togather to form villages in the first place.

you could even say money itself.

yes of course you can scapegoat the printing of more money which devalues it.

certainly militarism is responsible for the lions share of it. however much the blame is always attempted to be transfered by those who are fond of it, to any expendatures of it that are actualy useful to anybody.

but at the very root of it is the whole of economic phylosophy itself.

an economics self isolated from the gifts and realities of nature, without which none of us would exist, and thus making its own point utterly moot.

=^^=
.../\...

It's about GDP as a whole rising, pulling GDP per capita with it. It's about lower prices, meaning every one of your dollars goes a longer way. It's about lower interest rates, meaning you actually can afford to get that loan and start your big project, whatever it may be. It's about better technology and more efficient provision of vital services like healthcare (interesting note on the side: Wal-Mart walk-in health clinics => will save millions of people a lot of pain and money, but as soon as something goes wrong the "protectors" of the poor will try to get them banned).

What it's about is Ayn Rand's philosophy in "Atlas Shrugged" and "The Fountainhead". A total reactionary response to communism. Going as far as possible from communism and in doing so failing at the other extreme. It's about the good of greed. It's about looking out for yourself and no one else. It's about "Objectivism". Reagan, Greenspan, Clarence Thomas, Limbaugh, and others of influence have pointed to this as the philosophy of economics they follow. A completely unregulated survival of the fittest economic system that rewards the rich because they are rich and have been able to work the system without concern for anyone else. A system that totally strips any concern for others.

Then they call themselves "Christian".

The United States has a national debt. I am not sure that I am happy about that. However, the nice thing is that because we have always honored our debts our credit is the best in the world. Accordingly, we pay some pretty low rates of interest.

If we are going to have debt it might as well be at a low interest rate. What the OP seems to imply is that we should default on our debts. This would result in higher rates of interest. Although, I would not shed a tear over Communist China not being paid the interest that we pay them for all the government bonds they own, I am not sure that I would feel anything but outrage for the screwing over of American investors and non-Communist financial institutions who invested in US debt. I hate Commie China as much as the next guy but a default would not only hurt them. It would also hurt financial institutions and private investors throughout the free world. A high interest rate on future debt obligations would also be awful.

This reminds me of our history lessons in Middle School about the first ministry of the Treasury, Alexander Hamilton. At the conclusion of the Revolutionary War, the new nation had a considerable debt that it incurred by raising the continental army. There were some who argued for the default of the old government's debt once the constitution was ratified. Alexander Hamilton had the forethought to recognize that the debt should be assumed by the new government.

The only time that any "American" non-municipal (I call local and state bonds "municipal") debt was defaulted was when the US government decided never to assume the debt of the Confederate States of America in order to punish those who funded the rebellion.

The only reason the USA still gets loans is because its a damned large economie, if it were to do the same thing as any other country, it'd have the credit value of freaging Kenya.

So this is what I noticed when I lived in the USA and it's something I just can't understand, to me as a European it's almost brainless.

America has the infrastructure like Europe to opperate both an ATM and a credit card system. The differences between Europe and the USA is that Europeans mainly pay via ATM while Americans seem to have fallen in love with the Credit card.

Now I need this explained:

ATM: You directly pay with the money on your bank account, if there's nothing left the bank will allow you to pay but it will be a small loan (in my country you can pay 1000 euros more with your ATM card then what there is on your bank account a month). The money that you already had on your bank account is now gone, its used to pay the money you borrowed extra has to be payed back with interest.

Credit Card: It's an automatic loan whether you have money on your bank account or not, and everything you pay for gets interest put on it.

So in essence a paying with a credit card while you have a positive figure on your bank account is useless cause all it does is ask a higher amount of money for the product.

Now my question is: Why in godsname would you pay extra if you don't need to? And the subquestion: Is it because Americans are to stupid to remember a 4 digit code that secures your ATM card? I think and hope not.

What it's about is Ayn Rand's philosophy in "Atlas Shrugged" and "The Fountainhead". A total reactionary response to communism. Going as far as possible from communism and in doing so failing at the other extreme...
Now, firstly I'd prefer if I weren't thrown into the same pot as Reagan or Limbaugh. They can claim whatever they want, but the fact of the matter is that Reagan didn't exactly reduce national debt...

Objectivism is a powerful personal philosophy. Many people interpret it as meaning that you can be a bastard to other people, but I don't. I see it as trying to myself come as close to that heroic being as possible, as seeing myself as worthy of everything I get and not blaming anyone else if something doesn't work out for a change. And that's not a bad philosophy to have, in my opinion.

Then there are the Austrian economists, one of whom was among Maggie Thatcher's inspirations.

And then there is just normal mainstream economics (and of course the somewhat more extreme market-version of that, which is the Chicago School). I hope you'll have a look at my current project, explaining the basics of microeconomics and the market: http://forums.jolt.co.uk/showthread.php?t=524908

I think for the second two your point about communism is probably wrong. The Austrians were around before the commies, and mainstream economics doesn't really belong to any ideology other than that of trying to formalise everything and express everything mathematically. Not to mention that many of today's mainstream theories about production were actually developed in the USSR by brilliant economists trying to work out how to run a state-controlled economy efficiently.

I see that you're not yet at the stage at which you can actually believe that your "adversary" actually believes in what they say. But let's just look at it this way: Reagan and Thatcher were politicians in a democracy. If they didn't have the welfare of the public in mind when they implemented their policies, and they didn't help or at least convince something approaching a majority of voters, then they wouldn't have been in office for long.

But even today Reagan is probably one of the most popular presidents there have ever been (at least among Republicans), after winning two elections in landslides of epic proportions. And Thatcher stayed in office for 11 (!) years, only being removed by her own party over an internal issue and not by the voters choosing someone over her.

Now my question is: Why in godsname would you pay extra if you don't need to? And the subquestion: Is it because Americans are to stupid to remember a 4 digit code that secures your ATM card? I think and hope not.

First off most people do not buy everything on credit. That is a myth in my opinion about Americans. The ones that do buy with credit have large credit debts. Alot of the credit figures quoted out of the US include credit cards, car loans, home loans and student loans. The number does not take into account that cars and homes have a net value. So it may not look to the average person looking at some of the reports that Americans have any cash. What you need to look at is average net worth. The vast majority of Americans have a net worth.

An answer to your last comment. We have a credit system here in the states that uses a numerical value. The higher your credit score for example the lower interest you pay. Now one has to have credit to up the score. There is a long explanation but I am lazy to really spell it out word for word. So basically people will put 1000 USD on there credit card and pay it off in a month or two. You pay some interest and if your smart you find a credit card with 0% introductory interest. Typically for the first year of the card. So when you charge and then show a pattern of paying off your debts your credit card score rises. If you don't then it goes down. So basically when you buy a home you want the best credit score. You then can purchase a more expensive house with the same payment that someone with a poor credit score can buy. So there is a system and there is a way to work it.