## What is the real reason the US is in so much debt?

 Quote by Al68 Wanting to spend even more than Bush is a reasonable viewpoint? I say nay. I say the spending under Bush was very unreasonable, and advocating spending even more is preposterous.
Take it into context, one was unreasonable because it didn't need to happen, the other is reasonable because if it hadn't happened, our recession would've become a great depression instead of just a recession.

Spending more in general, no, not reasonable. Spending more to prevent more damage was, imo, very reasonable.

 Quote by KingNothing Here we go again.
Yes.

 Quote by Ryumast3r Take it into context, one was unreasonable because it didn't need to happen, the other is reasonable because if it hadn't happened, our recession would've become a great depression instead of just a recession. Spending more in general, no, not reasonable. Spending more to prevent more damage was, imo, very reasonable.
If you're talking about spending as in the bailout of the financial system, then yes, but if you mean the stimulus, there is no way to claim that that prevented any great depression. In fact, it may have only lengthened out the current recession we are in.

 Quote by Al68 Rarity is half the equation, but it does have high utility. It's a ductile, malleable, durable metal that does not rust or tarnish, in addition to being a good electrical conductor. Gold has more practical utility for many uses than any other metal. If it were not scarce, it would be used for everything from building materials to car parts to silverware instead of cheaper, inferior materials. It doesn't "do much" because it's too expensive (scarce and valuable) to use, not because it's not useful. Do you really think humans have valued gold so highly just because it's pretty?
Those things don't necessarilly make it valuable though. It may be great for electrical conducting and not rust at all, but it is rarely used for any of that because of its scarcity. So for all intents and purposes, it is pretty worthless. There isn't any demand for it for those particular things. It only really has value because humans say it does and because you can make shiny things with it.

It would be akin to if the world had only a tiny amount of petroleum and someone saying, "Petroleum has immense potential to be used in everything from manufacturing to consumer products to energy production. It is one of the most useful substances of all materials on Earth. If it wasn't so scarce, it would be used in almost everything to some degree." Now imagine that despite this, petroleum is valued very highly nonetheless, but is only demanded because it also is great for making shiny things.

If gold was a greyish sludge color, it probably would not be valued very highly at all.

 Quote by CAC1001 Those things don't necessarilly make it valuable though. It may be great for electrical conducting and not rust at all, but it is rarely used for any of that because of its scarcity. So for all intents and purposes, it is pretty worthless. There isn't any demand for it for those particular things. It only really has value because humans say it does and because you can make shiny things with it.
That's putting the effect before the cause. Humans say gold has value because of its value, not vice versa. Humans make shiny things out of it because it's valuable. And value (per unit) is a function of scarcity, so it makes no sense to say it's scarce instead of valuable.

Is the relationship between scarcity and value that hard to understand?
 Al, I don't think everyone carries the same definition of "value" in their head that you do.

 Quote by KingNothing Al, I don't think everyone carries the same definition of "value" in their head that you do.
I'm referring to value in the economic sense, which includes all value, not just whatever value you or I consider important or justified. And remember, we were referring specifically to value per unit mass, which logically must be a function of scarcity.

A pound of food is just too easy to produce to compare to gold. Easier to produce and plentiful means less valuable. A pound of dirt has virtually zero value, regardless of how important dirt is, because it is plentiful. That's just reality.

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 Quote by CAC1001 If gold was a greyish sludge color, it probably would not be valued very highly at all.
If the only way to use gold were to turn into gaseous carbon emissions, it probably wouldn't have the same value, either.

The fact that gold doesn't lose its value when used is important, as well.

Food is only useful for consumption, same as using petroleum for fuel. Worse yet, most food has to be consumed fairly soon or it becomes worthless even for consumption.

A better analogy of an artificially valued object would be diamonds. They're as valuable as flint. Incredibly useful provided one has the skill to cut or break it into useful objects and those objects last for a long time, but there's no way to return it to the potential it had before it was actually used. But both diamonds and flint have a longer lasting value than food.

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 Quote by Al68 Is the relationship between scarcity and value that hard to understand?
At best, it's only approximate.

Gold is $50K/kg. Rhenium, which has less than half the abundance and about 2% of the annual production is$6K/kg.

 Quote by Vanadium 50 At best, it's only approximate. Gold is $50K/kg. Rhenium, which has less than half the abundance and about 2% of the annual production is$6K/kg.
Sure, scarcity is one factor, not the only factor.

 Quote by Al68 That's putting the effect before the cause. Humans say gold has value because of its value, not vice versa. Humans make shiny things out of it because it's valuable. And value (per unit) is a function of scarcity, so it makes no sense to say it's scarce instead of valuable. Is the relationship between scarcity and value that hard to understand?
Humans have been using gold for things for thousands of years, not because it is really valuable, but because it is shiny. It is a shiny thing people like that is scarce. They didn't know about manufacturing or electrical conducting back then.

I can understand gold being valuable because there is high demand for it with very limited supply, sure, but I do not believe it has high demand because you could use it in automobiles, electronics, and so forth, as it is just too limited in supply for this. I think it is valued highly due to people just wanting it because it is gold and it is limited in supply. People value it highly because you can make shiny stuff with it. It is far too limited in supply to be valued highly as something to use in manufacturing or electronics because you can use alternatives easily in place of it.

It would only be valued highly for manufacturing and electronics if it was the only thing that could be used for those things.

 Quote by CAC1001 People value it highly because you can make shiny stuff with it. It is far too limited in supply to be valued highly as something to use in manufacturing or electronics because you can use alternatives easily in place of it.
Part of it also is that gold is malleable, durable, corrosion resistant, and very dense, all which make it very useful for it's primary historical use: money. Gold's density and scarcity make it the ultimate store of value.

But this is one debate that was over long before it started: a pound of gold is more valuable than a pound of food in an objective sense, ie in the sense in which the particular reasons for its value are irrelevant.

 Quote by Al68 Part of it also is that gold is malleable, durable, corrosion resistant, and very dense, all which make it very useful for it's primary historical use: money. Gold's density and scarcity make it the ultimate store of value.
Many things have been used as money historically. Money itself doesn't need any inherent value. Money is just what we use as a medium of exchange to exchange all the goods and services produced in society.

 Quote by CAC1001 Many things have been used as money historically. Money itself doesn't need any inherent value. Money is just what we use as a medium of exchange to exchange all the goods and services produced in society.
Yes, but unlike fiat or representative money, gold is a store of value. Not sure what your point is here, but paper fiat currency clearly does not serve the same purpose that gold or silver money does (did).

It does not store inherent value.
 Mentor Neither does gold and silver. If gold and silver both stored "inherent value", the ratio of gold to silver prices should be constant. In fact, over the last 40 years or so, this ratio has varied by a factor of ~6. Even if you ignore the silver bubble in 79-80, it's still a factor of 5.
 Actually, If the US could borrow in Gold - I wouldn't mind the printing presses running 24/7 (as much).

 Quote by Vanadium 50 Neither does gold and silver. If gold and silver both stored "inherent value", the ratio of gold to silver prices should be constant.
That's simply not true. Inherent value doesn't mean fixed or constant value. Of course the ratio between them, and other valuable commodities, varies, depending on supply and demand.

"Good store of value" just means that the commodity is compact, durable, and doesn't rust or degrade over time. It doesn't mean the value is constant relative to any other commodity.

But you bring up a good point in that the U.S. government initially tried to artificially "fix" the ratio between gold and silver at 15:1 by fiat, ie a bimetallic gold/silver standard for the dollar. (A silver dollar had 3/4 as much silver as a $20 gold coin had gold). When the actual gold/silver value ratio increased above the ratio fixed by law, silver coins started trading at a discount to gold coins relative to their marked value. They were inherently worth their metal content, and it was metal content, not a fixed value or buying power, that was guaranteed by the U.S. Mint. (I don't think I have to tell you what the penalty was for any officers of the mint who debased coinage).  Blog Entries: 1 The question is: "What is the real reason the US is in so much debt?" How's this for an answer: We spent more than we had to spend. "The National Debt has continued to increase an average of$4.03 billion per day since September 28, 2007." That's $13 a day for every man, woman, and child. Put other ways, that's$390 per month. Can you cover that debt? I can't. How about \$4,745 every year? Just a thought... With that, I could buy a replacement used car every year.