Clinton proposes PAYING OFF US DEBT BY 2015 per Reuters news. This is incredible. If this can be done, watch out and US 30 year bonds will be worthless and interest rates will skyrocket. A new Fordgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
would cost $675,000, a small home would cost $8,995,000 and a loaf of bread would cost $279.95. The Dow would be at 439,093.18. The 30 year bond worth $10,000 in 1999 would be worth $102,000 but it wouldn't buy much. The present projected surplus is $79 Billion. Of course this figure ingores the fact that the social security payments are for future payouts and can not be spent today. Does this mean that it is O K for a citizen to spend the money allocated for Federal income taxes since they are not payable until next year? Of course not.
This proves one thing. We desperately need better schools. If a Rhoades Scholar has this much trouble figuring out the future surpluses, the public believes him, and the Stock Market goes up on the news, the schools are failing miserably. The last time I checked, 2+2 does not equal $100 billion. This just happened to be the day before the Federal Reserve meets to decide whether or not to increase interest rates. The mania is running wild and the stock brokers say to buy on the dips. When does disaster arrive? Y2k may have an impact on the actual date.
Even if the savings were valid, this also ignores the current push to expand health care plans to include the costs of prescriptions.
The article can be seen at Yahoo Finance Monday June 28, 9:35 am.
-- Ray (Ray@bb.gom), June 28, 1999
The Clinton proposal to pay off the debt is at: http://biz.yahoo.com/rf/990628/of.html
-- Ray (Ray@bb.gom), June 28, 1999.
While we are taking credit for things not yet accomplished I'd like to announce to the world the I just discovered the cure for all types of cancer known to man. Details will be released whenever.
-- (amazing@BS.com), June 28, 1999.
Could it be that the "contingency plan" for extra $200 billion liquidity later this year is just the first of many printing press drives to inflate our way out of a serious Y2K recession/depression? In which the national debt in 2015 dollars would be "cheap".
-- Bill P (firstname.lastname@example.org), June 28, 1999.
I can't see how. The US national debt increased $113 billion last year. This year, the red ink is already up to $73 billion and the fiscal year still has 3 months to go. Anyone who believes the budget is balanced and that we are running a surplus doesn't have a clue. Lies and more lies. I guess anything goes with TPTB whenever and wherever "perceptions" need setting. I suppose, one day, the Feds will announce that the national debt is "paid off", yet we'll continue to be taxed to pay interest on a ballooning $15 trillion national debt. Reality is a state of mind.
-- Nathan (email@example.com), June 28, 1999.
From the man who knows how to lie and people keep eating it up. Slick expects the economy to keep going like it is now for the next 15 years. Whats behind all this BS? You have 3 people working to pay one SS person. Wake up before its too late.
-- Slicks little devil (Hearditall@home.com), June 28, 1999.
BWWWAAAHHHAAAHHHAAAHHHAAA! Hey y'all! Watch me pull a rabbit outta my hat! Nothin' up my sleeve--PRESTO!
As Bugs Bunny would say: "What an idgit! What a maroon!"
Except for a few die-hard realists out there (and here), this country has definitely gone from Melting Pot to Fruit Salad. We should rename the country Fantasy Island!
-- Jeremiah Jetson (firstname.lastname@example.org), June 28, 1999.
and if u beleive this bs ive got ocean front proptery here for sale in middle tennessee
-- tony lineberry (email@example.com), June 28, 1999.
1. BAD: Hes lying for his own political purposes, same as usual, and thinks the public is to stupid to realize it. 60% probability.
2. VERY BAD: He really believes it, so is ignorant of history and thinks as long as he's around --- heaven on earth. This would explain why he doesn't care about Y2K, Chinese spies, the Russians, Korea, or anything else --- nothing bad can happen. And if we do get nuked --- "Whoops! and Shazaam." --- "Maybe I can get rid of Hillary yet." 40% probability.
-- Jon Johnson (firstname.lastname@example.org), June 28, 1999.
Yes, it is a staggering claim. Too bad it isn't true. We have had nine years of peacetime economic expansion (the longest in U.S. history); the Dow has gone from around 3200 to around 10,700 on Clinton's watch; and yet, if I'm not mistaken, today's $5.8 trillion national debt is larger than when Clinton first assumed office. This tells you something about the difficulty of paying down that national debt. My prediction is that in 2015 the national debt will be even greater than it is today, for all sorts of obvious reasons. With a U.S. stock market insanely overvalued by even the Federal Reserve's own stock valuation model, it is extremely naive to project endless budget surpluses based on the assumption that this stock market will continue to grow at 15-20% per year (while corporate profits lag far behind, incidentally). But if the stock market slows or even falls, there goes the economy, because capital (stock) gains have been driving consumer spending. In short, our economy is now led by, and largely dependent upon, an extremely overvalued stock market--a most dangerous situation. Yet Mr. Clinton seems to think that this situation can continue, nay, grow and grow, for many years to come. This is appalling ignorance of basic economics. Once the huge stock market bubble bursts (and like all such previous bubbles, it will burst, sooner or later, whether Y2K is the culprit or not), down comes the economy--and down will come tax revenues, and then we are right back to huge federal budget deficits, with the national debt growing each year.
One other point: after dutifully reporting tonight the lowest U.S. savings rate since records were initiated in 1959, "ABC World News Tonight" went on to reassure its viewers by saying that some economists (who must have flunked Econ 101) think the old method of measuring savings is now obsolete. (We now have a New Age paradigm for savings, I guess, just as we now supposedly have for the stock market!) According to these economists, "savings" should also include stocks and real estate. A moment's reflection will show you the inanity of this assertion: in any severe economic downturn, those "savings" in equities and in real estate tend to shrink dramatically. Stock prices plunge, and, as the recession or depression deepens, so do real estate prices. Ask Japan, which has seen its assets (equities and real estate) shrink in value by over $8 trillion U.S. since 1990: the largest loss of wealth in world history. What has saved Japan (and its banks) from utter economic meltdown is the fact that the average Japanese family has about $150,000 to $250,000 U.S. salted away in savings. Americans, on the other hand, don't; indeed, Americans now have record consumer debt (average household credit card debt is $15,000 and growing), to go with a record personal bankruptcy rate. In the past, Americans traditionally saved in good times for future bad times. Not now. So if (when) a severe economic downturn does come, you're going to see a lot of Americans going belly up financially very quickly.
But hey, the good news is that the national debt will be paid off in 2015. I know that I'm marking my calendar.
-- Don Florence (email@example.com), June 28, 1999.
??????? OK, color me stupid, but I will be damned if I see how paying off govt. loans is going to drive interest rates up. The money in bonds has been in circulation - that is what the bond market is for. You can borrow against them, resell them - they are nearly as liquid as cash. So how are you going to get this hyperinflationary effect if they are going to pay back the debt by keeping the size of govt. down?
-- Paul Davis (firstname.lastname@example.org), June 29, 1999.
You cannot pay off a debt with borrowed money! Every dollar in your wallet has been borrowed and that's the federal debt! That's like robbing Peter to pay Paul! Don't let Klinton scam you!
-- Clinton is an idiot! (Clinton@isanidiot.com), June 29, 1999.
Either your intelligence really is questionable, or your so used to arguing the y2k no big deal scenerio you are blind to reality. snip/
Clinton's Miraculous Tonic Deficit Financing for Dummies
copyright James Gunn By James Gunn 06/28/1999
---------------------------------------------------------------------- ---------- Bill Clinton today announced the end to the Federal Deficit. Most Americans are a little puzzled about the whole thing, so I have taken the time to outline a similar plan for the Mr and Mrs America that will operate on the same principles as the Federal Government. Now you too can spend your way into profitability! Here's how...
Go down to the store and get yourself a lock box, maybe even one that's fireproof. Now, set this box somewhere in the house where you can always keep it, but where it is readily accessable.
Let's say you make 50,000 a year. Either just one of your, or maybe both of your work. It really doesn't matter. That's the beauty of it.
Each year you will put into your special retirement account $5,000.00 dollars. Any form of account will do. Savings passbooks, money funds. etc. Fancier options will work, but I want to keep it simple for the sake of this presentation of the Bill Clinton eliminate the debt plan. Keep the records of that account in the lock box.
"Ah ha!" you say. "We don't have $5,000.00 to put in every year." Here's the beauty of it. Deposit that money into the accounts $100.00 dollars at a time.
Now, here's the trick that will make your budget work. Each week when you deposit that $100.00 into the account, write yourself a check for $100.00 on that account and take that money and spend it. Now you have to replace the $100,00 that your took out of your special retirement account. Easy, just write yourself a check!
Now I know what your going to say, your going to say "James, that won't work, your'e just borrowing from Peter to pay Paul
Wrong. Because when you write that check to the retirement account, you use a check from your regular checking account (not your savings account), and make that check out to your retirement account, and put that check safely in the lock box. You have now added the $100,00 back into your retirement account. To make it work, you promise yourself that you won't bounce your own check, and you don't cash that check until years later. ...
How can a populace be educated to true responsibility with leadership like this? And congress goes allong with it, heaven forbid the damn will break and the herd wakes up.
-- R. Wright (email@example.com), June 29, 1999.
Paul, I think your intuition is correct. Ray, who is usually correct about most things, may have gotten his signs reversed in this one instance. When the Fed borrows, it competes with others (you and me) for credit. This competition drives rates up and indirectly causes inflation (too many borrowers chasing to few dollars). When the Fed repays its loans, there is that much more credit for others and (supply and demand) rates fall.
Now, I am not an economist by trade, so I may not know all the equations. But, doesn't this just make sense?
-- Uhmm... (firstname.lastname@example.org), June 29, 1999.
"When the Fed borrows, it competes with others (you and me) for credit. This competition drives rates up and indirectly causes inflation (too many borrowers chasing to few dollars). When the Fed repays its loans, there is that much more credit for others and (supply and demand) rates fall."
POPPYCOCK!! to put it lightly.
The Fed does not borrow, it creates. It costs the Fed $.03 to make $1. Out of thin air the money is created and then lent to the Federal Government at an interest rate. The Federal Gov. guarentees repayment of the amount borrowed by taxation of the civilians. This has nothing to do with interest rates to the public. You and I will never aquire a loan from the Federal Reserve, and it is a fallacy to think the Fed rate has anything to do with the market. This is FCC propoganda. Therefore, the only thing repayment of loans to the Fed does is reduce our rate of taxation. (bwahahahhahahah) As someone else said, maybee we should rename ourselves Fantasy Island.
-- R. Wright (email@example.com), June 29, 1999.
Oh Yess It does!If he hands the entire surplus to SSA, SSA hands it to treasury for T-bills. then the next year the surplus will be twice as large. The surplus compounds 100% per year, doubling in each year. 100 billion in 2001 200 bil in 2002 400 bil in 2003 800 bil in 2004 1.6 trillion in 2005 3.2 in 2006 6.4 in 2007 In 2008, not only will the surplus dwarf the total US debt, and SSA will be well stocked in T-bills to last the next century (about 12 trillion). but treasury will be able to retire the entire current debt of 5.5 Tril or whatever it grows to in the interim by using a teeny portion of the 12.8 Tril. SSA will be saved. Treasury will have created the money "out of thin air" US debt will be zero. Social security will be the ONLY liability. (and there wont be any way to pay for it.) An added benefit is that SSA will have SO MUCH they'll be able to buy up the rest of the world's T-bills should those sneaky japs even THINK of dumping theirs. Greenspandex was right. Giving the money to SSA wont increase savings.
It increses DEBT
-- Real Voodoo (firstname.lastname@example.org), June 29, 1999.
You can scream as loud as you want. The Federal Reserve does not borrow money, it invents money out of nothing, then lends it to the gov.
-- R. Wright (email@example.com), June 29, 1999.
Why don't we just keep rolling it over and pay off everybody in the worlds debts? You picked a good name. Voodoo economics indeed.
-- R. Wright (firstname.lastname@example.org), June 29, 1999.
RW and Voodoo - I think you are confusing 'monetizing' the debt with paying the debt with tax money. Running the printing presses to create money from nothing would have the effects you are citing. Tax money is money that is taken out of circulation in the private sector and used by the govt. Since it is taken out of circulation, it REDUCES the cash available in the private sector by that amount. See my pocketbook for full details. :)
When the treasury issues bonds, they do indeed create money to a certain extent. As I pointed out above, the bond market is pretty liquid. This creation of money does indeed drive inflation.
Destruction of money - a contracting money supply - causes deflation, whereby money buys more each year.
But, money is measured against the actual production of society, which we call the GDP. If the GDP grows at 5% per year, and the money supply remained static, we would have deflation despite a stable money supply. So if Clinton actually paid down the debt (which I certainly support, but find doubtful), I would expect a deflationary scenario, not an inflationary scenario.
-- Paul Davis (email@example.com), June 29, 1999.
Paul, you actually think that the GDP is going to grow by 75% in the next 15 years? -giggle-. So where do you come up with that little factoid? Sounds like Clinton has got some 100 hour work weeks in store for every American for the next two decades.
-- (firstname.lastname@example.org that guy...), June 29, 1999.
>>The Federal Reserve does not borrow money, it invents money out of nothing, then lends it to the gov.<<
Some people in this argument seem to be confusing the US Treasury and the Federal Reserve. Maybe I can help clarify matters.
It is absolutely correct to say that the Federal Reserve doesn't borrow money. It is the US Treasury that borrows money to cover the difference between what it gathers in taxes and what the government spends. This is the national debt.
And, yes, the Fed does invent money and lend it to the government, in a sense. It does this indirectly, by buying US Treasury bonds on the open market and holding them. The money used to buy the bond is simply created by the Fed. The seller of the bond is given money that simply didn't exist until the Fed wrote the check. This is called monetizing the debt.
This gives the Fed vast power over the economy, and over the US government. The Treasury can't invent new money to retire its debt, and it can't force the Fed to create it, either. That is why the Fed was created - to deprive the US Treasury of the power to create money.
But what has not been explained by anyone in this thread is that the Fed only creates money to buy a very *small* percentage of the US bonds that are circulating. The rest of the US bonds are in private hands, or in central banks of other nations. These bonds are subject to the "discipline of the market."
If the holders of US bonds believed they would be repaid in grossly devalued dollars, they would dump their bonds in the open market as quickly as possible. The effect of this would be to drive interest rates sky high and choke off any borrowing by the US Treasury. This would be a financial calamity of the highest order. The Fed knows this.
But - unlike the suggestion by Ray at the beginning of this thread - PAYING OFF the debt would NOT drive us into hyperinflation. It would be deflationary. (Yes. Deflation is probably coming to a town near you!) Only MONETIZING the debt would cause hyperinflation to occur.
Ideally, the Fed creates money at a pace that closely tracks the growth of "real" wealth in the US economy, as measured in the goods and services the economy creates. This is only possible when the economy is stable and growing.
It was demonstrated during the Depression that, if the economy contracts and the Fed then contracts the money supply to match the new, smaller size of the economy, it causes the economy to contract further and initiates a vicious cycle. Since the Depression, the Fed has nominally adopted a policy of "leaning against the prevailing wind" - or, pumping up the money supply to counteract a recession, on the theory that the new growth this stimulates will offset the inflationary effects, later on. In reality, the Fed rarely gets it right, but it sometimes gets close.
A good book on this subject is "Secrets of the Temple" by Wm. Greider.
-- Brian McLaughlin (email@example.com), June 29, 1999.
This is a great thread. Although I ususally try to ignore Polly's, I have new respect for Paul. Maybe he falls into a new class - Pually's, perhaps. Brian, thank you for clarifying this mess. I think your's is the definitive post. How did you get so smart?
Thanks to all,
-- Uhm... (firstname.lastname@example.org), June 29, 1999.
Well, folks, this housemouse has finally given up. We ARE living in wonderland. I can't figure out whether Hillary is playing the Cheshire Cat or the crazy queen.
I can't for the life of me figure out what is going on economically at this point. I was trying to explain to my grown children why certain financial decisions we made under certain tax rules no longer make sense, but we are stuck with the decisions we made, unless we want to live by a very different set of rules than we were taught to live by.
They don't comprehend, of course. They have been adults only since the "boom" began, and they think that we're "clueless"....
I feel sorry for them. They are going to inherit our tolerating this crap from our government, and we are leaving them a mess that they can't clean up without serious pain. I have gotten to the point now where I feel that the world has gotten so nutso that a well-bedecked colander on my head is not enough...
And I thought raising 4 teenagers was tough! It can't compare to watching the "news" and trying to figure out what on earth is going on in these "ALice" minds in Washington...
Somebody cheer me up so I can keep on truckin', please!!!
Jackie Joy, the hous
-- housemouse (email@example.com), June 29, 1999.
Giggles - don't laugh too hard. Production has grown a lot faster than you think.
Delibrately INCLUDING one of the worst growth periods in US history, and taking the years from 75 to 90 we get
GDP Deflator Constant GDP Year 1,509.8 0.4758 3173.2 1975 5,481.5 1.1295 4853.0 1990
So, without accounting for inflation, we would claim a growth of 363% in that period. Factoring in inflation (which was horrible, I lived through that mess and it was not a damn bit of fun) we get a more reasonable rate of 152% or, the way you put it, an increase of 52% over 15 years in constant dollars. And that includes some pretty bad years in the middle of that period. 75%, or a 23% greater increase over the next 15 years does not seem all that unreasonable. That would be an extra what? - .5% per year over 15 years? Something like that.
Now just for fun, why don't you figure up 1984 through the estimate for this year and post it!
-- Paul Davis (firstname.lastname@example.org), June 29, 1999.
Good arguments guys. Just don't forget that WJC is the very best troll out there. Leaving a legacy of just the proposal gives him the stage of the "I would'ves and could'ves". LEGACY. The man's a snake. It ain't gonna happen.
-- Carlos (email@example.com), June 29, 1999.
Klinton's playing the Y2K Trump Card!
He can promise everything in the world, there's all probability that next year this time, it won't matter diddly squat! All of the promises about spending money here and there can be erased by another one of those statements like he made on his tax cut promise that got him elected in the first place.
"I've worked as hard as I ever have over the last two weeks and there's just no way we can find to do it. My predecessor lied about how bad things really were (with the deficit) and the money to do this with just isn't there for a tax cut." And his "Why we can't live up to all his promises" speech ought to sound the same.
"It pains me greatly to have to say that our government cannot live up to the obligations that you, the American people have asked me to make on your behalf. But this Y2K crisis has so seriously impacted the nation's economy that we cannot meet those lofty goals you had me establish only last summer. As of this moment we must shelve our plan for the federal government pay to for any and everything the non- working population of our country could ask for."
"But many of the working population has used this Y2K issue as a smokescreen to hide behind as they shirk their responsibility to earn a living and provide the government with their investments in their national home. Instead these people have spent their time and money to selfishly prepare for their families' survival through this crisis. Plus these people have irresponsibly quit their jobs, been layed-off or died rather than help us meet our goals of insuring perpetual Democratic (Party) rule in this land..."
Hey, that's his excuse for Y2K too! "Since I was told about this horrible, tragic Y2K mess just last month, I've worked as hard as I ever have to fix it. But it just couldn't be done. So, my fellow Americans I'm afraid all we can do to handle Y2K is declare a National Emergency and invoke Martial Law."
"And since we can't hold an election without computers, we'll have to cancel the 2000 elections, too. Under such circumstances, I will have to shoulder the burden of staying in office past the end of my regular term until the situation has been stabilized and things return to normal. That should be sometime in the next fifty years, they tell me..."
Watch Klinton's lips and see what he thinks Y2K means to him. It's the greatest excuse ever for the man to do what he's best at. He can lie to the public without any chance of being caught. And his lackeys can come up with bogus figures to support his lies all they want.
They all know it doesn't mean a damn either way in the end. There's no way in Hell they will ever be held responsible for Medicare, Social Security or any other voter-manipulation program that's crushed by Y2K.
And besides, who's going to be left around to worry about it when they crawl out of their FEMA bunkers? I only hope they don't realize that their hatch opens into the middle of a camp full of one of those "roaving cannibal gangs" the worst-case scenarios allude to.
And I hope those cannibal muties don't die of heartburn or give up because they'd rather eat something better tasting, like buzzards, before they're done with the whole bunker bunch.
In fact, maybe we better stock some Tums and barbeque sauce for those guys. Go muties!
-- Wildweasel (firstname.lastname@example.org), June 29, 1999.
(1) Good point above. The FED really does own the money supply...
(2) President Clinton can project whatever payoff time he wants...but you may notice that he will be long out of office before it happens. I could claim that it'll be paid off in 2014...but that doesn't mean that the Congresses and presidents between now and then would follow my agenda...just as they won't follow his!
-- Mad Monk (email@example.com), June 29, 1999.
What a thread! I can think of 3 things to ask that have not been addressed above:
1) Got cash?
2) Got gold?
3) Got silver?
-- Jack (firstname.lastname@example.org), June 29, 1999.
But don't forget, that this "newfound trillion dollars on the come" is also a desperate bid to prop up Al Gore who is sagging badly in the poles. As for Bill the mad bomber, I think he's delusional at this point. Surely he thinks he's invincible. He's never been held accountable. Has always been able to skate out of any crisis by coming up with a bigger lie or bombing aspirin factories in sovereign countries when the scandal gets too close. He is truly dangerous. This is another reason why it is good to be prepared with such craziness at the wheel of the Ship of State. "Oh captain, my captain" indeed. (Does anyone have this great poem? to post?)
-- S. David Bays (email@example.com), June 30, 1999.
How can you tell when klinton is lying??? His lips are moving...
We could lose the national debt by disbanding the Federal Reserve, and allow the government to print their own money like the Constitution says.... but that will never happen.
-- Dog (Desert Dog@-sand.com), June 30, 1999.