View Single Post
  #14 (permalink)  
Old October 12th, 2013, 03:32 PM
Kuki's Avatar
Kuki Kuki is offline
Join Date: Aug 2000
Location: Right here :)
Posts: 22,495
Send a message via AIM to Kuki

The default is a myth. The Gov. takes in millions each week, and is more
than enough to pay the interest on our loans. Not the way to get this country
out of this mess, but would prevent a default.
First off, let's admit the fact the U.S. has created a deficit. The country is in debt. Even if they could pay off the interest, the principal of that remains. And, if interest rates go up, the amount the U.S. has to pay on that debt goes up... just like it does on a personal mortgage.

Every economist acknowledges there is a deficit. The U.S. does not have enough money to pay for all the programs it has in place (including the debt). So, even if were to pay the interest on its debt, there are programs (expenses) in place, that it would have not have the ability to pay.

Those expenses didn't just materialize out of the blue, they were all created by choice by the government. And every government along the way has made those choices along the way.

As I understand it, when Bush Jr. became President the government actually had a surplus, and along the way, before he left office, and before Obama was elected, they chose to spend more money than they had coming in, including spending what they had in the bank (surplus). So they kept borrowing to keep paying for everything they wanted.

So, naturally the solution is to either choose to cut back on expenses, or find sources for more income (taxes) to cover them.

The problem then, of course, is who decides what expenses to cut? During the last attempt no one could agree, and sequestration was the result they fell into.

The thing is the entire process is quite different from personal finance management, because the government is expected to do much more for the people than pay the mortgage, car loan, utilities, groceries etc.

One can say that it doesn't have the money it should simply quit buying, but in terms of a government, that means austerity. .

Austerity, when it translates to a government, means the nation "does without". And when the nation does without, that means people have to do without, which translates to businesses doing without because there is no demand for what they do, and what they sell.

That's a very simplistic explanation, and I'm not saying austerity is not needed or even necessary. But, it needs to be understood that austerity definitely does not grow an economy, and grow jobs, it means sacrifice.

If the government simply quit spending anything on anything I think that nation as a whole would be up in arms.
Reply With Quote