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Why is America in debt and how can we fix it?

  1. Sep 5, 2015 #101
    if you owe a million you are in trouble, if you owe a trillion your creditors are in trouble
     
  2. Sep 5, 2015 #102

    mheslep

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    In the case of national debt "you" and the "creditors" are largely the same thing.
     
  3. Sep 5, 2015 #103
    ah, that depends on who "you" are.

    who is really going to call in the USA's debt...? nobody... storm in a teacup.

    its only money. there was a time when there was no money. today there is more money than 100 years ago. Its ponzi.
     
  4. Sep 5, 2015 #104

    mheslep

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    See Greece. Nobody calls national debt. What happens is that the payments on the debt grow so large they eat tax revenues and government borrowing crowds out credit to private enterprise that slows the music. Suddenly citizens find their pensions cut off, the government employees are laid off. The government's only resort is to go beg for more loans to keep the music playing, and then the loans come under stringent conditions.
     
  5. Sep 7, 2015 #105
    Alexander Hamilton thought it very important that the government be in debt. The creditors would support the system, thus stabilizing the government.

    The US govt is the ultimate too-big-to-fail.
     
  6. Oct 1, 2015 #106

    WWGD

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    David Vine argues US has way too-many overseas bases and there is no serious cost-benefits analysis on these bases, most of which he argues could close causing little if any harm to preparedness. He claims that $200 billion is a conservative estimate for the cost of keeping a total of around 800 overseas bases open. May not fully solve the problem, but $200 billion/year is a nice chunk of change.

    http://www.davidvine.net/base-nation.html
     
  7. Oct 1, 2015 #107

    Vanadium 50

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    Then he's an idiot. That's greater than the entire Navy and Marine Corps budget. That's greater than the Air Force budget. It's almost equal to the Army budget. There is no way that this costs what he says. I do agree with him on one point - "there is no serious cost-benefits analysis on these bases." Including his.
     
  8. Oct 1, 2015 #108
    The gov't is continually paying off bonds as they mature. It sells new bonds to pay off the maturing bonds.

    The US gov't can't sell all the bonds it needs to at an interest rate that it thinks it can afford. So the Federal Reserve pretends to buy 900 billion US bonds a year, with imaginary money. It's call "quantitative easing." It used to be called "printing money."
     
  9. Oct 1, 2015 #109

    russ_watters

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    Since a good fraction of those "bases" are several hundred embassies and consulates, with a small handful of USMC guards, maybe he's including most of the State Department budget ($57b) in that estimate?

    A lot of the others are probably one or two mid-level officers hanging around foreign cities and allied bases, acting as liasons.
     
    Last edited: Oct 2, 2015
  10. Oct 1, 2015 #110

    PeterDonis

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    It's easy to say that when there's nothing going on in those parts of the world. But if there is, those bases suddenly become very valuable, and not having them certainly does harm preparedness.

    The problem with trying to do cost-benefit analysis on the military is that you pay the costs every year, but you only get the benefits if there's a war.
     
  11. Oct 2, 2015 #111

    mheslep

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    Those who would use these large figures are playing loose with the definition of "base" by including the like of a single 12'x12' room leased by the US DoD in Canada (http://www.acq.osd.mil/ie/download/bsr/bsr2010baseline.pdf [Broken], or ~60'x60' of space in Aruba.
     
    Last edited by a moderator: May 7, 2017
  12. Oct 2, 2015 #112

    phyzguy

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    I think it's interesting to look at the debt of the US and the UK over historical time. Paul Krugman is fond of pointing out that the UK has been continuously in debt since the 1600's, and is still there and prospering, so obviously it isn't a problem to be in debt per se. Also, the statement that is often made that debt just inexorably grows with time is just not true, at least when looked at as a percentage of the economy. I think the attached charts help keep it in perspective. The US was in greater debt after WW2 as a percentage of the economy than it is today, and the period after WW2 wasn't an economic disaster, in fact it was an economic boom that has been unmatched before or since. Countries are different from individuals. An individual has to eventually pay off debt, since an individual has a finite life. But there is no reason that a country can't be in debt indefinitely.


    ukgs_chart4p02.png usgs_chart4p02.png
     
  13. Oct 2, 2015 #113

    WWGD

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    Why dont you read at least the argument offered for why this is not the case. You may not agree with it, but Vine argues otherwise, using research from the Rand Corp., not what you would call a bunch of peaceful hippies.

    And then there is the fact that they do not exactly create good will towards the U.S. How about letting, say, Poland have a basis near Miami?

    Still, I expected people to actually read the excerpts or cite references in disagreeing with my posts.

    EDIT: Seems on the far left one cannot criticize the poor, and on the far right, one cannot criticize the military. Thought we were above that here in PF.
     
    Last edited: Oct 2, 2015
  14. Oct 2, 2015 #114

    WWGD

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    So please give us the details on how these bases are funded, because there are many sources who state it even higher. Who knows, they maybe funded from the $1 trillion+ military budget.:

    http://fpif.org/the_cost_of_the_global_us_military_presence/

    https://www.laprogressive.com/defense-budget/

    There are some who believe it is around $100 billion

    http://www.forbes.com/sites/lorenth...lgium-sweden-or-switzerland-spend-on-defense/
     
  15. Oct 2, 2015 #115

    mheslep

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    WWGD, you are confusing the cost of bases and the cost of the foreign deployment of US forces, to include hundreds of thousands of soldiers, airmen, marines, and seamen, and their equipment. Those links (1st and 3rd at least) do not claim the US "bases" themselves cost hundreds of billions. And the $1 trillion estimate for the US military budget, which includes a large share of healthcare and pensions, is high by ~$200B.

    Edit: Of the current ~$814B/yr - 2014 spent on defense, $161B/yr in 2014 goes to veterans.
     
  16. Oct 2, 2015 #116

    PeterDonis

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    Your graph shows that, while the debt was greater after WW2 than it is now, it went down pretty fast in the post-WW2 period. That's not happening now.

    Yes, there is. The reason the US has not had to pay off its debt is that its debt is denominated in its own currency, dollars. That means the US can reduce the real value of its debt by printing more dollars, which it has been doing at a pretty impressive clip. But printing dollars doesn't create wealth, and it certainly doesn't give wealth back to the people who loaned it to the US in exchange for dollar-denominated debt. At some point, the people holding US dollar-denominated debt are going to realize that, and stop taking on that debt.
     
  17. Oct 2, 2015 #117

    PeterDonis

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    As far as I can tell from the links given here, I would have to buy his book to do that.
     
  18. Oct 2, 2015 #118

    PeterDonis

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    They don't create good will, right up until the point where the people in those locations want US protection. Then the bases suddenly create a lot of goodwill. Nobody was complaining about US overseas bases when they wanted us to enter WW II. The complaint then was that we were too isolationist.
     
  19. Oct 3, 2015 #119
    All nations are in debt permanently. The debt creates the money supply. Andrew Jackson paid off the debt, and it was a fiasco. There weren't enough dollars. States and banks started to create their own money, and it was a mess.

    The smallest debt is North Korea, which has a national debt of ten million dollars or so.

    I'm curious how communist countries did it. Did they have banks at all?
     
  20. Oct 3, 2015 #120
    All nations are in debt permanently. The debt creates the money supply. Andrew Jackson paid off the national debt, and it was a fiasco. There weren't enough dollars. States and banks started to create their own money, and it was a mess.

    The smallest debt is North Korea, which has a national debt of ten million dollars or so.

    I'm curious how communist countries did it. I would think that banks would be merely a place to keep your money safe. They didn't have mortgages because the state owned all housing. Did banks lend money at all? I would think not. Where can I get info about this?

    In a truly communist country its not even clear that you would have money.
     
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