I am so very tired of the talk that the nation is broke and needs to cut spending

[LiberalArkie]

When a family is broke there are 2 ways to make ends meet.

1. What the Republicans say is cut spending. This sounds alright unless you have already cut spending and it becomes a decision of not buying food or paying the light bill.

2. Increase your income. A family member would get a second job.

None of the them seem to want to raise the income because of the old "tax and spend" diatribe that dogged the Democratic party for so long.

I would like to just go back to the Reagan tax rates, take SS deductions & Medicare deductions from everyones pay.

[darkangel218]

1. We do need to cut spendings.

On stupid wars and foreign aid that is.

.

[Bigmack]

6. Wars and defense... you bet... $Trillions in savings there...

.. but foreign aid is less than 1% of the budget. And Israel gets the biggest slice. No real savings possible.

As long as Israel exists the US will send them money.

[SharonAnn]

7. In December of 2000, we were in surplus and on track to have the entire debt paid by 2009.

On track to have the entire National Debt paid by 2009! And there surpluses predicted "as far as the eye could see!".

The big worry was what the effect of no more national borrowing, nor mor T-Bills, would have on investments, interest rate calculation, etc.

Can you imagine?

What on earth happened? Oh yeah, the GOP went in big for huge tax breaks and then several wars on the national credit card.

And these people are worried about the debt? REally?

No, I don't believe that..

[FarCenter]

2. The nation is broke - we've been running trade deficits greater than half a trillion dollars a year.

[A HERETIC I AM]

4. This nation can NEVER go broke.

Want to know why?

Because we manufacture our own money, that's why.

If you could print your own money, you wouldn't ever go broke either.

[FarCenter]

5. We can print our own money, but we can't force others to take it

At present we can print our own money and send it to other countries and they send us things like crude oil and smartphones. They then recycle the money back to us by buying Treasury bonds.

If they stop buying Treasury bonds, then the price of Treasury bonds falls. This means that interest rates rise. As we continue to print money, prices rise and inflation rises. Assets denominated in dollars become worthless. The shit hits the fan.

Therefore, we can't indefinitely run fiscal and trade deficits by printing our own money.

[A HERETIC I AM]

8. I understand the implications of printing money willy nilly...

but the fact is, all US Treasury securities are denominated in Dollars, and they all mature at a par value of $1000 each. It matters not what those dollars are worth, as a bond holder is only going to get a thousand of them for each bond he holds.

The worldwide financial system relies on US Treasury debt as a risk free security, so yes, you are correct that if large purchasers of those securities pull back or refuse to buy, then we have a real problem. The upside however.....



Is....

Where else are they going to go?

[FarCenter]

10. A Treasury is not worth its par value of $1000 -- it is worth what the market says it is.

So if buyers anticipate that the par value of $1000 that they get at maturity will be worth less in actual goods and services, they will mark the bonds down immediately. This automatically raises interest rates, causes losses in investment accounts such as pension funds, and causes a contraction of the economy.

[AceWheeler]

3. Increase income/revenuw

I agree that it is important to increase the government's income. And one way to do that is by increasing government spending, especially when it puts taxable income into the hands of consumers. http://www.reality-check-online.org/budget.htm

[Initech]

9. We need to drastically cut the damn military budget.

We spend like 10 times as much on our military as the next 45 countries combined. And it's all for greed and profit. When is this shit going to end?