National Deficit

[kmack]

Alan Greenspan spoke to a congressional committee today. His main concerns are about the rising deficit. " as the latest projections from the Administration and the Congressional Budget Office suggest, our budget position is unlikely to improve substantially in the coming years unless major deficit-reducing actions are taken."

http://www.bloomberg.com/apps/news?pid=10000103&sid=apPTxPToSMXg&refer=us

Thoughts?

 

[GhostFox]

Obviously a deficit out of control is a bad thing, but in reality somewhat of a deficit is the sign of a healthy economy, so it's not "the sky is falling" as people usually think it is.

 

[kmack]

Obviously a deficit out of control is a bad thing, but in reality somewhat of a deficit is the sign of a healthy economy, so it's not "the sky is falling" as people usually think it is.

yup, except what Greenspan is saying is that the sky is very very wobbly. He suggests tax increases :dozey: . I think the Bush administration will put the deficit at $427 Billion this year (not exactly sure, heard that number on world news tonight).

 

[GhostFox]

I'm not denying there is some danger in the US economic system. I just wanted to make sure from the the start that it was clear that deficit's aren't necessicaily a bad thing, which is the knee-jerk reaction from people with limited knowladge of economics.

 

[The Mullinator]

I'm not denying there is some danger in the US economic system. I just wanted to make sure from the the start that it was clear that deficit's aren't necessicaily a bad thing, which is the knee-jerk reaction from people with limited knowladge of economics.

It also depends on who the money is owed too. Debt where the money is owed inside the country is far better than debt being owed to foreign countries. I don't know how much of the US debt goes to other countries but I remember reading somewhere that it was only around 14% in 1999. Of course that has probably changed alot since then.

 

[kmack]

I'm not denying there is some danger in the US economic system. I just wanted to make sure from the the start that it was clear that deficit's aren't necessicaily a bad thing, which is the knee-jerk reaction from people with limited knowladge of economics.

Surplus is better than deficit. But deficit is normal, just when it gets out of hand is the problem. If you read the article you will see that that is what Greenspan fears. $427 billion is a big number.

 

[GhostFox]

It also depends on who the money is owed too. Debt where the money is owed inside the country is far better than debt being owed to foreign countries

It can depend. Foriegn debt can actually in investemnt in the future, as the eventual returns will outweigh the original debt (see China, India etc.)

I read an excellent, excellent, article about the deficit of the G8 nations and it's positive affects of the global economy a couple months ago. I wish I could remember where. Maybe the economist. Anyone here read it and remember it?

 

[GhostFox]

Surplus is better than deficit.

Only short term.

 

[kmack]

Only short term.

You are absolutely ridiculous. It is better for us to owe no one money, to have a surplus of money to spend. How in the sweet name of God is it better to not have money? We are not an upstart nation who needs foreign money to exist.

 

[GhostFox]

You are absolutely ridiculous.

Study some economics and then come back to this thread.

 

[Bodacious]

The deficit has been far worse as a percentage of GDP and we have bounced back. No reason why we can't in the future.

 

[willyd]

You are absolutely ridiculous. It is better for us to owe no one money, to have a surplus of money to spend. How in the sweet name of God is it better to not have money? We are not an upstart nation who needs foreign money to exist.

Yeah actually Ghost Fox is kind of right.

 

[bliink]

Having a surplus is good because it means you have money.
However, this can be a bad thing because it means you are not gearing your economy to maximum efficiency.
Ideally, equity can be used to maximise the amount of available funds by using your assets as leverage to obtain loans, which allow you more overall wealth to use.

Deficit is ok as long as it never outweighs the assets of the country- if that happens, you are "negatively geared" and in a big mess.
Think of it as having 3 mortages and a job where the income is at best 99% of what you need.

 

[kmack]

Having a surplus is good because it means you have money.
However, this can be a bad thing because it means you are not gearing your economy to maximum efficiency.
Ideally, equity can be used to maximise the amount of available funds by using your assets as leverage to obtain loans, which allow you more overall wealth to use.

Deficit is ok as long as it never outweighs the assets of the country- if that happens, you are "negatively geared" and in a big mess.
Think of it as having 3 mortages and a job where the income is at best 99% of what you need.

Exactly, but please read the entirity of Greenspans report. WE have too much deficit, a deficit like this results in necessary tax raises (Greenspans suggestion, not mine). We also are importing more than exporting, we need to establish a decent balance (I think we were ok during Clintons years). Right now, all I am saying, is that our deficit is a bad thing.

 

[bliink]

Exactly, but please read the entirity of Greenspans report. WE have too much deficit, a deficit like this results in necessary tax raises (Greenspans suggestion, not mine).

Tax rises are used to control interest rates though...

 

[kmack]

Tax rises are used to control interest rates though...

Ya sorry, the report is really intense and I'm trying to do homework at the same time as my nursing and history homework my brain is fried. Just read the whole report and you will get a sense of where I am coming from.
Congressional Budget Office reported that President Bush, in the budget he delivered to Congress will have a harder time keeping his promise to cut the deficit in half during his presidency.

The CBO's annual report on the budget outlook foresees a deficit of $400 billion this year. It also forecast a cumulative deficit of $1.3 trillion from 2005 to 2014, an increase of nearly 60% from the CBO's $861-billion estimate of just four months ago.

These figures take into account some of the administration's request today for another $80 billion for the war in Iraq, but they do not assume an extension. Nor do they assume the likely extension by Congress of some major tax cuts that were enacted in 2001 and 2003 and are scheduled to expire in 2009 and 2011.

 

[bliink]

regardless of this, the US economy is pretty unhealthy compared with where it has been, and where the rest of this world is heading.

(no, i'm not going to google up sources for that; so dont ask)

 

[kmack]

regardless of this, the US economy is pretty unhealthy compared with where it has been, and where the rest of this world is heading.

(no, i'm not going to google up sources for that; so dont ask)

Source?

:E

seriously though, I agree with that, so does the CBO and Alan Greenspan so I posted that, now i have a ton of people saying deficit isn't bad (it isnt when it is controlled) without having read the article, which is telling us it is bad

 

[bliink]

Source?

:E

* Punches kmack :hmph:

EDIT: yes, deficit and debt are financial instruments only when they are heavily controlled; if you have unchecked debt forming, its a bad thing: always.

 

[seinfeldrules]

I wouldnt read too much into it at this point. All economies go through natural cycles.

 

[kmack]

I wouldnt read too much into it at this point. All economies go through natural cycles.

yup, the great depression was a natural cycle, does that mean we should just set ourselves up for one of those? (not gonna happen, but you see my point.)

 

[seinfeldrules]

yup, the great depression was a natural cycle, does that mean we should just set ourselves up for one of those? (not gonna happen, but you see my point.)

No, I really dont. You kinda contradicted yourself mid post.

 

[bliink]

yup, the great depression was a natural cycle, does that mean we should just set ourselves up for one of those? (not gonna happen, but you see my point.)

well, thats the reason they're raising taxes.. to stop rapid inflation

No, I really dont.

playing dumb/ignorant never wins arguments... why does everyone do it!?

 

[kmack]

No, I really dont. You kinda contradicted yourself mid post.

Depression is part of the natural cycle that plays out in economies, it does not make it less harmful. I was using a much more drastic scenario than the one at hand to illustrate the point that we cannot take things like this lightly. It is a common literary term, I will make an effort to be more literate when making a point, perhaps i can draw a picture. :|

 

[kmack]

playing dumb/ignorant never wins arguments... why does everyone do it!?

because it's they best they have?

 

[seinfeldrules]

playing dumb/ignorant never wins arguments... why does everyone do it!?

Because he did say two different things! It makes no sense to make a point, then say "Oh it wont ever happen though, but it still should be taken seriously".

because it's they best they have?

Coming from the kid who thought Baathist members were a race?

 

[kmack]

Because he did say two different things! It makes no sense to make a point, then say "Oh it wont ever happen though, but it still should be taken seriously".


Coming from the kid who thought Baathist members were a race?

I didn't think they were a race, I simply thought that calling all the Baa'thists terrorists and murders was racist (i didnt know what else to call it sorry) as they are not limited to Iraq and generalizations like that are a form of intolerance.

So here you are going ridiculously off topic to prove a point that has nothing to do with anything here, congratulations on proving Bliink and my point. :cheers:

 

[seinfeldrules]

So here you are going ridiculously off topic to prove a point that has nothing to do with anything here, congratulations on proving Bliink and my point.

I was merely proving that your own opinions are not quite as superior as you pass them off to be. I had no intention of debating Baathists at all, it was merely to prove a point. If you had left the little jab out of this topic, I would have had no need to bring it up at all.

 

[kmack]

I was merely proving that your own opinions are not quite as superior as you pass them off to be. I had no intention of debating Baathists at all, it was merely to prove a point. If you had left the little jab out of this topic, I would have had no need to bring it up at all.

are you still trucking off topic? what does this even mean?

 

[seinfeldrules]

are you still trucking off topic? what does this even mean?

I was responding to your post, if you want it to end here, then dont post something that needs a response.

If you were questioning the jab:

because it's they best they have?

Entirely unnecessary.

 

[GhostFox]

regardless of this, the US economy is pretty unhealthy compared with where it has been, and where the rest of this world is heading.

It is growing at a much faster rate then any other G8 nation, so I don't think it is doing too badly. Granted, it's not outstripping them as much as it used to, but that can't continue forever and once they get the deficit and greenback stabilized it will do even better.

 

[kmack]

once they get the deficit and greenback stabilized it will do even better.

The CBO's annual report on the budget outlook foresees a deficit of $400 billion this year. It also forecast a cumulative deficit of $1.3 trillion from 2005 to 2014, an increase of nearly 60% from the CBO's $861-billion estimate of just four months ago.

The deficit is not stabalizing. At least not until after 2014

 

[GhostFox]

Baa'thists terrorists and murders was racist (i didnt know what else to call it sorry)

Biggoted is a good general word for it. Not that your idea was right, but you should have been calling us bigots, not racists.

 

[GhostFox]

The forcast went up by just 60% in just 4 months. Why couldn't it go down just as fast?

 

[kmack]

The forcast went up by just 60% in just 4 months. Why couldn't it go down just as fast?

You obviously did not read Greenspans report. It is because we are increasing spending, in the four months we got Bush's requests for money. Things he has already asked for will lead us to the figure in 2014. It can't go down because we are already spending the money. Please read the report.

 

[K e r b e r o s]

Coming from the kid who thought Baathist members were a race?

Spoiler

Mein Gott, Herr feld! (Seinfeld) That ... was ... check your pm's

You obviously did not read Greenspans report. It is because we are increasing spending, in the four months we got Bush's requests for money. Things he has already asked for will lead us to the figure in 2014. It can't go down because we are already spending the money. Please read the report.

Acknowledging the report, we were debating simple economic principles. However, simply only by definition -- but it takes a mastery to sort it out.

 

[GhostFox]

It can't go down because we are already spending the money. Please read the report.

So if the US was to cut spending, nothing would happen? This is a projected (very loosely I might add) deficit. It can change on a minute by minute basis. I don't know why you think it would be impossible for the US to stablize it simply because current projections predicit it getting worse for the next 9 years.