I’m not all that well versed when it comes to international finance. Am I right in thinking that the US strategy when it comes to the business of having and paying off $14 trillion + of debt is to essentially raise their self imposed overdraft limit and borrow even more money?

The current political arguement being one similar to a husband and wife arguing about increasing the O/D not being /being a good idea?

I can’t help thnking that this seems a little worrying.

They’ve done the same thing a number of times, and it’s their only option really, well by far the least bad option anyway (this is what I was told last week by an employee at the World Bank, I am not an economist).

No point worrying about something you have absolutely no influence over

They’ve done the same thing a number of times…

Indeed…..and the only reason we are really hearing about it this time is because of the partisan grandstanding that is currently taking place. Which appears to be being caused by the Republicans having painted themselves into a corner.

It’s what governments/countries do. The question is whether to tax people to raise money, or stop giving so much out.

lets hope we see Americans fleeing over the border to Mexico with in the next few years, that would be truly epic!

lets hope we see Americans fleeing over the border to Mexico with in the next few years, that would be truly epic!

😐

The question is whether to tax people to raise money, or stop giving so much out.

Is it really a question? Both are the only way out of it unless you just keep borrowing more and more and more and more…

If I were skint I’d stop borrowing money and curb my spending or is that too logical?

If I were skint I’d stop borrowing money and curb my spending or is that too logical?

You better give Obama a call. Looks like you’ve cracked it.

joolsburger – Member
If I were skint I’d stop borrowing money and curb my spending or is that too logical?

yes,yes it is!

Both are the only way out of it unless you just keep borrowing more and more and more and more…

No that’s not the only choices. Get your economy up and running again – and people back to work, and government spending will diminish as tax returns increase.

We have been sold the false claim that there is not alternative by the present UK government, it doesn’t make it true though. There are always alternatives, the only issue is whether you like them or not.

No that’s not the only choices. Get your economy up and running again – and people back to work, and government spending will diminish as tax returns increase.

yea but it takes brain power to do that, and they sold that to china

I’ve been following this with interest over the last couple of weeks. Although raising their deb ceiling would appear to be the sensible option, it really really does appear that the most fervent of Republicans are actually convinced that a US default wouldn’t be that bad a thing, and if it was they can blame it on Obama anyway.

It’s properly un-nerving. Have a read here for an inkling of the arguments involved on either side. Makes this place seem like a field trip to a kitten factory.

Also, and quite disappointingly, it would appear that the Democrats have pretty much capitulated and offered everything the Republicans asked for in return for pretty much nothing of the original Democrat requirements. If the Republicans vote against this plan – and it seems as though they will simply because the Dems have put it on the table- then the shit will really hit the fan.

If I were skint I’d stop borrowing money and curb my spending or is that too logical?

It’s not too logical, it’s completely illogical – your domestic budget does not bear any semblance with the economy of a country. It’s quite illogical to think that it does.

I appreciate it is simplistic however surely there are some parallels.

Well I guess it’s logical to think that there should be some similarities between a domestic home budget and a country’s economy – it’s certainly often presented as if there were. But I honestly don’t think there are any serious similarities worth considering. In fact I think it’s quite misleading to make the comparison, which is probably why it is often made.

i want to see them shooting each other in the streets over it.

I see that but can you explain the difference please?

Earnings
Debt
Balance
Growth
Long term stabilty
Costs

All seem applicable at both micro and macro level.

I’ve still never figured out where all the worlds richest nations borrow all this **** money from. It can’t be from the poorer ones, Lloyds TSB don’t have that much dosh and my grandad keeps his under the bed.

I’ve still never figured out where all the worlds richest nations borrow all this **** money from. It can’t be from the poorer ones, Lloyds TSB don’t have that much dosh and my grandad keeps his under the bed.

I wonder this too, every country seems to be in debt, but who too, each other? can we just cancel every debt and start over again?

have you seen the debt figures for the U.K?
both sovereign and personal.
i would be far more worried about that than the U.S.

I’ve still never figured out where all the worlds richest nations borrow all this **** money from. It can’t be from the poorer ones, Lloyds TSB don’t have that much dosh and my grandad keeps his under the bed.

It doesn’t really exist. It’s fictional money. There’s more debt than money.

The system only works on an assumption of infinite growth. Which needs infinite population growth.

Unfortunately the planet’s resources are finite which I think is a flaw in the model.

According to the IMF, UK debt is lower than USA debt as a ratio of GDP:

http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt

Federal budget is not a household budget

Ernie, how can you believe government spending would diminish AND also be a socialist?

The UK figure in that table is misleading, as in fudged and understated, footflats. The UK Government has conveniently excluded the money it handed over to the financial sector. If you Google it I think you’ll find most economic sources and commentators give a figure around 150% of GDP when the financial sector bailout is included.

that’s a good link but the other thing is the governments budget and the economy are intrinsically linked. It may make more sense to spend more [ borrow] to reduce your debt. If you get extra growth and avoid recession then the GDP % may be lower and your income [ taxes ] higher so you are in a better position [ earning 10 k whilst paying debts of 5k is not better than earning 20 k and owing 8 k for example]. Low growth here for example affects the deficit hence why some think you spend our way out of recessions
Stoner [ dont hurt me] this is simplified …I would like to argue for the reader but it would be a lie.

Ernie, how can you believe government spending would diminish AND also be a socialist?

I don’t know what you’re on about – I suspect you’ve misunderstood a comment that I made. Still, never mind 🙂

This book:

is well worth a read. Why everyone owes everyone and no-one can pay. Surprisingly it doesn’t make it *too* complicated, it’s actually quite interesting. Explains the banks, the mortgage models across the US, UK and Europe and the concept of fictional money/debt very well.

I’ve still never figured out where all the worlds richest nations borrow all this **** money from. It can’t be from the poorer ones, Lloyds TSB don’t have that much dosh and my grandad keeps his under the bed.

They borrow it from China. China makes a lot of money manufacturing stuff and then their government buys US government bonds making the US banks awash with cash which they then lend out to people who cant afford to pay them back.

Very ugly things will happen if the US gets downgraded from AAA. It’s hard to believe that responsible politicians would play so fast and loose.

how much has waging two wars cost the US ?

lots

What Ernie is getting at is that even if you pay off no debt it’ll get smaller and smaller from inflation, AND your economy will continue to grow so the debt will become less significant, and you’ll be able to pay it off much more easily because your tax takings will go up – even if you don’t raise the tax percentages.

This works for people as well as countries. When I was a student a £400 credit card bill was huge, now I could pay it off easily with a month’s paycheque surplus.

Most of the debt isn’t borrowed from china or the gulf states, its effectively borrowed from the future.

I was told recently when talking about this that Clinton had one of his budgets denied by the Republicans who at that time had a majority in Congress. They thought it would all be blamed on Clinton, but it backfired and everyone blamed the Republicans, and Clinton got a second term. You would think that would put them off trying to use this to do Obama over, but then again.

whether you agree with the global debt merry-go-round or not, dont be fooled into thinking that the republicans are doing this because they dont want the debt ceiling raised,
theyre just so completely insulated from the wolrd in their tea party/fox news bubble that they think that raising taxes is perfectly avoidable and unacceptable despite america’s debts

and re the uk debt/gdp thing, i thought that the bank bailout was being repaid quicker than expected and was already down to 100% of gdp, 150% is an old figure