When do you think the day of reckoning is coming if ever?

[gimmethesimplelife]

Just curious, when do you'all think a day of reckoning is coming, if ever, for the US now 14 trillion dollars of debt? What prompts this question for me is that I was reading an article in the Arizona Republic to the effect that with the continued tax cuts, the next two years is a good time to have breathing room to prepare for a more austere future. I am wondering though - two years from now, does the can get kicked further down the road, and when and if we deal with the debt? The consequences of either dealing with it or not dealing with it will eventually effect almost everyone it seems to me.....Any opinions? Rob of the Valley once more - VERY HAPPY to be at the new digs!:D

[kib]

I'm starting to wonder. With the economy being such a global entity with so much interdependence, and "money" apparently something that can be created at will by any government that wishes to do so, we may not see a real day of reckoning until we actually start to run into physical trouble - lack of easily available physical resources, ecosystem collapse, pollution or climate change or some other catastrophic calamity that we can't buy away with more imaginary money created with debt. I'm not sure if that's reassuring or scary. :sick:

(that's actually a sick guy with a thermometer and an icebag but he looks a bit like a Scotsman with a tam and pipe, doesn't he. Perhaps I'll go focus on something I can actually do something about: find a new smiley. Although I sorta like the Scottish guy, he's got a good worried look on his face)

[Gregg]

Conventional wisdom, as I understand it, always said that when the debt grows larger than the GDP our problems will rapidly intensify. For all practical purposes we are at that point. Kib probably has a point about commodity shortages (including potable water, energy, food stocks, clean air, etc.) driving more extreme events, but if we are able to effectively manage and begin to reduce our debt then we can absolutely forestall the economic disasters that create hardship for large parts of our population. If, OTOH, our government were to create money at will the resulting hyper-inflation would make it a good time to have a garden. Strangely enough defaulting on our collective debt would probably have a smaller impact than just printing $14 trillion or so to pay it off. Either way the "full faith and credit" of the United States would cease to have value paving the way for one or all of the BRIC nations to lead the world.

[mira]

These are the sorts of things I just tend to ignore. "Austerity" in countries like the US or UK isn't going to relegate us all to living off rations and moving into trailers. Economies are man-made and therefore flawed.

[jp1]

Conventional wisdom, as I understand it, always said that when the debt grows larger than the GDP our problems will rapidly intensify. For all practical purposes we are at that point. Kib probably has a point about commodity shortages (including potable water, energy, food stocks, clean air, etc.) driving more extreme events, but if we are able to effectively manage and begin to reduce our debt then we can absolutely forestall the economic disasters that create hardship for large parts of our population. If, OTOH, our government were to create money at will the resulting hyper-inflation would make it a good time to have a garden. Strangely enough defaulting on our collective debt would probably have a smaller impact than just printing $14 trillion or so to pay it off. Either way the "full faith and credit" of the United States would cease to have value paving the way for one or all of the BRIC nations to lead the world.

The problem is that we DO seem to be creating money at will. QE2 is being used to directly purchase 75% of the treasuries the gov't is issuing over the course of 8 months. As long as the gov't keeps spending SOOO much more than it takes in in taxes QE2 is going to either become QE-ongoing or QE3, QE4 QE5... "to infinity and beyond" as Buzz Lightyear would say. There just aren't enough investors/other countries/whoever to buy over $1T of US Gov't debt year after year after year. The Federal Reserve seems to be doing a whole lot of juggling or plate spinning or something to keep the economy rolling along. I assume the hope is that there will be some sort of pickup in real economic activity and we'll work our way out of the hole we're digging, but truthfully I don't see how that's going to happen as long as we keep digging the hole deeper and deeper. My gut instinct/fear is that with the ongoing increases in debt throughout society we're approaching the end stages of the biggest of all ponzi schemes.

[Rogar]

When it comes to predicting the economy the media gets attention by being gloomy. I think it's pretty common knowledge that our deficit is way too high. The reason it is too high is because we've dumped such large amounts to stimulate a recovery. Now that it looks like we are not going to have a depression or a double dip recession, and several economic indicators are showing some decent promise, my guess is that there will be some decent efforts to stop the start reducing the debt. As for a more austere future, the only ways I know of to reduce the debt is to cut spending or increase taxes. Hopefully in two years things will be going along just great and it will be some measures with low impact for most of us. (Seems like there are plenty of opportunities to tax the rich, but they are the ones running things. My soap box statement).

[NancyAnne]

I can't understand why America keeps giving large amounts of money to other countries when we are drowning ourselves. I believe in helping others but shouldn't we stop the handouts until our deficit is a zero balance.

[Mrs-M]

Personally, I believe the day of reckoning has arrived (for many), yet people continue to choose to carry on as if nothing is wrong while ignoring the realities of it.

[bae]

It might be prudent to take a look at the financial crisis that hit Argentina 1999->2002.

[freein05]

No body wants to give up anything. People don't want to pay higher taxes and they do not want government benefits cut or military spending cut. It will take more than a little recession or a large deficit for people to change. I said people not politicians, we the people are the ones that need to change.

[jp1]

I can't understand why America keeps giving large amounts of money to other countries when we are drowning ourselves. I believe in helping others but shouldn't we stop the handouts until our deficit is a zero balance.

The percentage of the federal budget that is direct foreign aid is tiny. However, the amount we spend on our military and other indirect forms of aid is MASSIVE. The 2 1/2 wars we've got going in the middle east aren't about terrorists. They're about supporting Israel and supporting Saudi Arabia, our biggest oil supplier. One could argue that oil is vital to what Dick Cheney called our "non-negotiable way of life", but the bottom line is that in the over 9 years since 9/11 we could have made significant strides in reducing our oil dependence without compromising much other than the size of our cars, and therefore reduce our concern about what happens in the middle east period.

A huge opportunity was lost after 9/11 when no one, most importantly not GWB, came out and said "we need to make efforts to reduce our oil dependence". The dems were just as bad with Kerry telling people to go out and buy a freakin' SUV to support the economy. But oil companies in the US are part of "Big" as kib calls it. They have political power and will do everything in their power to make sure that politicians on both sides of the aisle are bought and paid for and will do their bidding regardless of what's in the best interest of the american people overall.

[kib]

"We Are Addicted To Oil." He did say it, pretty firmly. What he failed to mention was that, like any good addicts, our course was set to do anything necessary to feed our addiction, not free ourselves from it.


...oh, seriously, don't cry for us, Argentina ... we're right behind ya.:help:

[jp1]

"We Are Addicted To Oil." He did say it, pretty firmly. What he failed to mention was that, like any good addicts, our course was set to do anything necessary to feed our addiction, not free ourselves from it.


...oh, seriously, don't cry for us, Argentina ... we're right behind ya.:help:

If only we could do like Argentina and crash and default on our debt. Then we could move forward. Unfortunately I suspect we'll be doing like Japan and drag this ugly situation out for years and years and years. In the meantime I imagine we'll watch Iceland recover and move on and Ireland not recover and drag out their problems for years and years.

[Mangano's Gold]

I would be very reluctant to compare the US to Japan, Argentina, or anyone else.

Since 2008, spending is up about 16% and revenues are down about 14%. This is within bounds of what we'd expect in a bad recession, and the US Balance Sheet can handle it. Ideally, we would have been in a stonger position prior to the recession, but we can't do anything about that now.

The economy obviously needs to recover, though. If it doesn't, then nothing else, fiscally, really matters.

[Gregg]

I agree that comparisons to Argentina are probably unfounded. Japan is maybe a little more accurate, but we're a long way from that situation right now. The national debt is most bothersome to me because (IMO) we are spending money on the wrong things. In YMOYL type terms we're using our credit cards for perishables and not making investments in our future. Reworking our national infrastructure, everything from railways and bridges to the grid and fiber optic networks to pipelines and alternative energy generation, would have significant and long term benefits. Millions of jobs would be created. The country would be safer and more secure. We would be less dependent on outside sources of almost everything. If a shift in spending were comprehensive enough it may not even require much more than we are already spending (although yes, that is too much). As it is we just don't seem to be making any progress at all.

[gimmethesimplelife]

I agree that comparisons to Argentina are probably unfounded. Japan is maybe a little more accurate, but we're a long way from that situation right now. The national debt is most bothersome to me because (IMO) we are spending money on the wrong things. In YMOYL type terms we're using our credit cards for perishables and not making investments in our future. Reworking our national infrastructure, everything from railways and bridges to the grid and fiber optic networks to pipelines and alternative energy generation, would have significant and long term benefits. Millions of jobs would be created. The country would be safer and more secure. We would be less dependent on outside sources of almost everything. If a shift in spending were comprehensive enough it may not even require much more than we are already spending (although yes, that is too much). As it is we just don't seem to be making any progress at all.

I agree with you that mucho more spending in the infrastructure would be in everyone's best interest.....I guess the obvious question is, how do the nations's priorities shift so that this seems clear to more than you and me and scattered others.....Rob of the Valley once more