Now let’s talk about the debt. Today, interest rates are low, lower than the rate of inflation. People are practically paying us to borrow money, to hold their money for them. But it will become a big problem when...interest rates start to rise. We’ve got to deal with this big long-term debt problem or it will deal with us. It’ll gobble up a bigger and bigger percentage of the federal budget...He almost sounded like Peter Schiff.
Now, it is interesting that Clinton provided this warning in the Obama nomination speech. It means he knows it is a BIG problem and wants to be on record warning about it, but it also means, both Democrats and Republicans are going to use the debt crisis as a tool to instill fear in the public and call for higher taxes.
In truth, a government that is spending at out of control rates should face the consequences and default, but, instead, they are going to squeeze the money out of the people. Clinton knows the debt crisis is coming, but don't for a minute think he considers default an option. Clinton is a big government thinker. When he sees the government in trouble, e.g. a looming government debt crisis, he isn't thinking cut back the government, he is thinking the people need to bailout the government. Bottom line: higher taxes are coming. The bailout of governments at state, local and federal levels is going to make the recent bailout of the banksters as a pocket change bailout.
If you were paying attention last night, Bill Clinton was warning you that this is exactly what is going to happen. Be prepared.
...when will we see that criminal in the ICTY? ( never I guess,it's only for Bosnians, Serbians and Croats)
ReplyDeleteIt amazes me how many dummies continue to idolize this murderous thief and liar because, I guess, he can make his self contradictory speeches sound pretty or something. Try to get these dummies to check into the highly curious doings in Mena, Ark., during Bubba's guvnaship as just one example, and of course you just be hatin' on they man Bill!
ReplyDeleteWhy are otherwise intelligent people so readily fooled by flim flammers like Clinton?
The problem with tax increases is that they won't solve the problem. A fiscally responsible welfare state is certainly preferable to an irresponsible one, but tax increases will not lead to fiscal responsibility.
ReplyDeleteFrom a strictly fiscal point of view, the real problem is not the LEVEL of government spending. It is the projected GROWTH in that spending. A tax increase is only going to grow at roughly the same rate that the economy grows, but our true fiscal problem is that spending growth has been increasing greater than revenue growth. A tax increase will only increase the rate of revenue growth for the year in which it is enacted. To maintain increasing revenue growth, you would need to increase taxes every year, and that would soon become counter-productive.
The primary engines of budgetary growth are the big entitlement programs: medicare, medicaid, and social security. The benefits provided by those programs need to be cut, not necessarily for existing recipients but certainly for future recipients. If we act now, the reductions do not need to be draconian, but delay will make the problem much worse. Then we would find ourselves in the situation that California is in where draconian cuts are now being proposed by a Democrat governor and even those cuts are probably inadequate.
Cuts here, cuts there, there will be no real cuts in spending, unless we consider cuts in proposed spending increases real cuts....pffffft!!!!... We need to default. We have no choice.
ReplyDeletePull the damned band aid ALL the way off, let's get this over with for God Sakes!
The U.S. $16 trillion debt
ReplyDeleteSince there is nothing backing the dollar the act of spending by the government merely involves electronically crediting bank accounts with dollars (or debiting them, when it collects taxes) and there is no limit to the degree that it can do this. All dollars in the world today, whether they be held by individuals, firms or foreigners (and even foreign nations) are created when the government spends and that is the ONLY way that dollars can come into existence. Furthermore, in order for the non-government (you, me, businesses, rest of the world, etc) to have dollars in our pocket or bank account the government has to spend more than it taxes. If it did the opposite—tax more than it spent—then all dollars in the world would soon disappear.
The $16 trillion national “debt” is not really a debt, but merely the sum total of all dollars spent minus all taxes collected over the past 234 years. In other words, $16 trillion of net dollars have been created in the past 234 years and they are floating around out there in the global economy. There are all kinds of reasons that the government spends, but the main reason is that people, firms and foreign nations desire to hold dollars so they end up selling their goods and services and labor to the government in order to accumulate and “have” dollars. This is really what creates deficits, not some arbitrary decision by the government to spend such and such, but rather, the desire by people to “net save” in the government’s unit of account, namely, the dollar.
While the $16 trillion may be a debt or liability to the government, it is not a liability it can never meet because it is denominated in its own currency.
The debt of the government ($16 trillion, whatever) represents a debt or promise that the government has absolutely NO PROBLEM satisfying or keeping, but remember, for every debt (liability) there is a credit (asset). Then who holds the asset side? That’s us, the people. The government’s debt equals the private sector’s asset. The $16 trillion of dollars spent in excess of taxes collected reside with the public and the public holds these dollars, mostly, in the form of Treasury securities that are like government savings accounts or CD’s (Certificates of Deposit). If the government were to “balance” its books or eliminate its debt, it would have to take back, probably through taxation or some other confiscatory measure, those $16 trillion that the public holds. That would reduce the public’s wealth by $16 trillion. That is the ONLY way that the government can eliminate its debt. Would that be a good thing? Hard to see how it would, yet that’s what people are calling for.
So that’s it, an explanation of the government “debt.” And the next time someone tries to scare you about this or point to that Debt Clock in Times Square, you ask them where the Asset Clock is. There is none, but there should be, because for every liability there is an asset. It’s just basic accounting. The fact that there is never a discussion of the asset side of the balance sheet is proof that the fear mongers who talk about the debt are either ignorant or intentionally trying to manipulate you into believing something that is not true.-Mike Norman
Dollar Index on 9/19/2011: 77.14
Gold price on 9/19/2011: $1803 per ounce
Dollars "printed" in past year according to US Treasury: $65 TRILLION
Dollar Index today: 79.05
Gold price today: $1770 per ounce
Dollar is up.
Gold is down.
But don't worry...dollar debasement and inflation are coming!
GDP=Federal Spending+Private Spending+Net Exports
"Smaller Government" advocates are either ignorant, purposely trying to sabotage the economy or are simply sucking up to rich people. There are no other alternatives.