News Will the U.S. Economy Collapse Without Government Debt?

[ParticleGrl]

But this brings about another point. If our gov't tanks due to overspending, there won't be a lot of jobs when you get out of school. You'll be flipping burgers with a degree on your application.

Why? If the government collapses, we will have dramatically less government, so won't that fix all our problems?

Easy to get, hard to pay back. I hear you. Just like all the folks that bought houses they couldn't afford. IMO, we could scale back a lot of the Feds involvement in our finances and do better as a country.

The difference being that this is a federal loan, whereas the overwhelming majority of the bad housing loans were private.

 

[drankin]

Why? If the government collapses, we will have dramatically less government, so won't that fix all our problems?



The difference being that this is a federal loan, whereas the overwhelming majority of the bad housing loans were private.

If the gov't collapses, our currency will go to dirt. Everything imported will be too expensive. Then were screwed.

The way I understand it, the government doesn't provide the loan money, they just back it. Just like the housing loans.

 

[Char. Limit]

We can all calm down now:

http://news.yahoo.com/s/nm/pl_nm/us_usa_budget

 

[lisab]

We can all calm down now:

http://news.yahoo.com/s/nm/pl_nm/us_usa_budget

...but I was already pretty darn calm...

 

[Char. Limit]

...but I was already pretty darn calm...

Now you can be more calm! :D

 

[ParticleGrl]

The way I understand it, the government doesn't provide the loan money, they just back it. Just like the housing loans.

Most of the sub-prime housing loans that went bad were NOT backed by the government. The bubble was NOT a government subsidized issue, it was private securitization of privately issue non-standard loans. See this, for instance: http://modeledbehavior.com/2010/08/27/fannie-freddie-acquitted/

If the gov't collapses, our currency will go to dirt. Everything imported will be too expensive. Then were screwed.

So exports will go up and we'll have to manufacture our own stuff again.

 

[warwick23]

So exports will go up and we'll have to manufacture our own stuff again.

If the currency collapses it's true our exports will be in greater demand, but it's not clear that exporting goods can simply be turned on again. If the Chinese continue to peg their currency to ours, that market will continue to be a difficult export market.

The real potential time bomb is municipal default: http://online.wsj.com/article/SB10001424052748703409904576174933066991472.html

 

[BobG]

All I see are Tea Party Republicans opposing and blocking an entire budget because they disagree with something that's not in the budget.

This is a problem for Republicans since most Americans are a little ambivalent about their attitudes regarding abortion. You have a few that are ardently against it and reducing or eliminating abortions is more important than one annual budget. You have a few that are ardently for it and making it freely available is more important than one annual budget.

Most Americans generally frown on the idea of abortion, but don't care enough to generate much momentum either way. Attaching the abortion issue to something most Americans feel is important is the only way to push pro or anti abortion laws through Congress. It's a common tactic and even a smart tactic in most situations.

There's some blowback for both sides if that becomes the issue that holds things up, though. In this case, while most Americans may not have strong opinions on abortion, they do lean toward the idea of making federal money available to planned parenthood. So, even if both sides are responsible for letting the issue hold up the budget, the side most Americans disagree with would take the brunt of the blame.

Polling report on abortion

Personally opposed to abortion: Morally wrong - 50%; Morally acceptable - 38%; depends or unsure - 12%
Legality of abortion: Legal in all or most cases - 54%; illegal in all or most cases - 42%; unsure - 4%
Cutting off federal funding for planned parenthood: Support - 43%; Oppose - 53%; unsure - 5%

 

[jtbell]

We can all calm down now:

http://news.yahoo.com/s/nm/pl_nm/us_usa_budget

Now I can put away the popcorn until the end of next week.

 

[JDStupi]

All right, I'll just quit college and get a job flipping burgers for the next 20 years. Maybe I'll live in a crappy one-room apartment too! And have no chance of getting up to those jobs that I aspire to that you know, require a college degree. It will be great!

I think that this gets to the heart of one of our most potentially pressing modern economic issues. The very peculiar modern situation that is characterized by racking up a massive debt being nearly a pre-requisite for economic mobility.

First, our contemporary society is suffering massively from educational-inflation, x amount of years ago you could get a *decent* job without a college degree, and not necessarily have to worry about a glass-ceiling limiting you to a crawl-space.
And no, it is not because "the modern world demands more education", many jobs do not require college education, including newly created-jobs that didn't exist "x amount of years ago".

In order to properly enter the workforce, you nearly MUST put yourself in a situation where you are massively in debt before you can ever begin to get a decent paying job.
This is a problem with the structure of our economy and social situation.

It seems to work fine now, but what if there is a long-term crisis? The very structure of the economy must change, not just "cut government funding to students" that could be disasterous to our advantage in the global market, nor just "fund everything with government". Something has to be thought up, and the problem with politics is political inertia. Nobody wants to radically re-conceptualize the way we conduct our economy and, in turn, its ramifications for social structure.

That should be the first on our list. Not abortion, not drugs, or a slew of other banal crap that gets passed off for politics.

 

[Char. Limit]

I think that this gets to the heart of one of our most potentially pressing modern economic issues. The very peculiar modern situation that is characterized by racking up a massive debt being nearly a pre-requisite for economic mobility.

First, our contemporary society is suffering massively from educational-inflation, x amount of years ago you could get a *decent* job without a college degree, and not necessarily have to worry about a glass-ceiling limiting you to a crawl-space.
And no, it is not because "the modern world demands more education", many jobs do not require college education, including newly created-jobs that didn't exist "x amount of years ago".

In order to properly enter the workforce, you nearly MUST put yourself in a situation where you are massively in debt before you can ever begin to get a decent paying job.
This is a problem with the structure of our economy and social situation.

It seems to work fine now, but what if there is a long-term crisis? The very structure of the economy must change, not just "cut government funding to students" that could be disasterous to our advantage in the global market, nor just "fund everything with government". Something has to be thought up, and the problem with politics is political inertia. Nobody wants to radically re-conceptualize the way we conduct our economy and, in turn, its ramifications for social structure.

That should be the first on our list. Not abortion, not drugs, or a slew of other banal crap that gets passed off for politics.

I would love to see that happen. But I know that it won't happen. So in the meantime, I'll build up my massive stock of debt.