# Yey! We just hit our debt ceiling...now what?



## midphase (May 16, 2011)

http://money.cnn.com/2011/05/16/news/ec ... htm?hpt=T1

Just when you didn't think it could get any worse...here comes more moronity from Congress!


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## Andrew Aversa (May 16, 2011)

The Republicans (and Blue Dog dems) are morons indeed. Yes, let's pass hundreds of billions in tax cuts, leave billions of dollars for rich oil companies on the table, then scream bloody murder and insist on spending cuts (which of course will not nearly make up for the deficit created by tax cuts.)

It's a strategy called "starve the beast". Look it up; that's literally what Republicans want to do. Ignore the deficit/debt while passing military spending bills and massive tax cuts, then turn around and say we need to cut spending significantly, thus 'starving the beast' (government.)


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## chimuelo (May 16, 2011)

I remember 350 Billion and TARP from the Federal Reserve, all at a perfectly convenient tò õ   ]º õ   ]Û õ   ^\ õ   ^‹ õ   á õ   áE õ   ‚ õ   ‚ õ   ‚^ õ   ‚o õ   ‚q) õ   ‚q_ õ   ‚®˜ õ   ‚®ö õ   ‚Üs õ   ‚ÜÇ õ   ‚èj õ   ‚êP õ   ƒU õ   ƒUw õ   ƒ[´ õ   ƒ[ð õ   ƒty õ   ƒt­ õ   ƒŠÞ õ   ƒŠÿ õ   ƒ’À õ   ƒ’é õ   ƒ©V õ   ƒ©s õ   ƒ©ƒ õ   ƒ©¢ õ   ƒª% õ   ƒª– õ   ƒ­; õ   ƒ­@ õ   ƒÔ õ   ƒÔS õ   ƒÛP õ   ƒÛr õ   „¢ õ   „Ã õ   „1™ õ   „2 õ   „4Ý õ   „5 õ   „; õ   „;J õ   „Cã õ   „D õ   „nD õ   „nx õ   …" õ   …"ã õ   ….« õ   ….í õ   …/¨ õ   …/Ü õ   …gù õ   …h? õ   …wV õ   …w’ õ   …¬µ õ   …¬Ï õ   …­d õ   …­‡ õ   …Á õ   …Á˜ õ   …Ãê õ   …Ä õ   …ÅŸ õ   …Åý õ   …Ú° õ   …Úä õ   …âæ õ   …ã õ   …èc õ   …è¥ õ   † [ õ   †Z õ   †fD õ   †fP õ   †h õ   †h5 õ   †©Ø õ   †ª' õ   †Ú* õ   †Ú7 õ   †ò  õ   †òÝ õ   †öÞ õ   †÷- õ   ‡h» õ   ‡i õ   ‡j¦ õ   ‡jÎ õ   ‡’[ õ   ‡’e õ   ‡˜Ñ õ   ‡˜Ô õ   ‡˜þ õ   ‡™ õ   ‡œÏ õ   ‡œÔ õ   ‡œÙ õ   ‡œâ õ   ‡œö õ   ‡n õ   ‡¯À õ   ‡°g õ   ‡×w õ   ‡×Æ              ò õ   ‡öw õ   ‡øª õ   ‡ù õ   ‡þˆ õ   ˆ
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## José Herring (May 16, 2011)

Debt and Deficit are two different things. Debt is what we owe over the long haul. Deficit is the amount we are short on our budget every year. Our debt is the accumulation of borrowing to cover the deficit since the Reagan years. Briefly eased for a few years by Clinton, then racked up again by the Bush years. Something that Obama can't seem to get a handle on yet.

Jose


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## chimuelo (May 16, 2011)

These figures are meaningless and can be used to create another " crisis " so we can cut more teachers and beneifts, as long as we don't touch the Federal Reserves partners and their military appauratus.

Have you ever seen the famous Sean Hannity Debt Clock....?

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## chimuelo (May 17, 2011)

These spending cuts are a sideshow.

Ask yourself if the new Congressional electees who went there to create jobs and change the way business is done in DC, are so hell bent on laying off so many people who are paying taxes, and turning them into more unemployed, that will not be paying taxes....??
This is total symbolistic nonsense that is just destroying the confidence in the markets as well as thousands of more families.

If either of these false parties would mention cutting the Pentagons budget or auditing the Federal Reserve, I'd believe we still have a democratic process, but their continued silence on this topic, while laying off thousands of people who are contributing to the Federal income via taxes, just enforces my beliefs that the wealthiest families, banks and corporations run our policy, and back it with military force.
Thankfully my Union dues bought Obama and the Liberals though. I finally got some payback.
My unlimited Dental benefits and 13 pension checks a year are most welcomed.
Thankfully we are exempt from having to buy the Peasants Health Care plan.
The exempted Unions and Businesses list is growing and unless you are a friend or political ally, you will get the scraps left over by the elites.

Those scraps are Health Care for free, where there will never be enough doctors to implement.
Great public schools, well the elite won't send their kids there, but they know what's best for the peasants.
And extended welfare and food stamps for all races and religions.


God Bless The USA............... _-)


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## Nick Batzdorf (May 17, 2011)

> On a serious note I believe there should be a constitutional amendment limiting how far into debt congress should be allowed to take us.



That would be a disaster for many reasons, but probably the biggest one is that not all debt is the same. Investment is good; waste is bad.


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## George Caplan (May 17, 2011)

wait until august.


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## NYC Composer (May 17, 2011)

The sky is falling! The sky is falling!


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## Ah_dziz (May 18, 2011)

Nick Batzdorf @ Tue May 17 said:


> > On a serious note I believe there should be a constitutional amendment limiting how far into debt congress should be allowed to take us.
> 
> 
> 
> That would be a disaster for many reasons, but probably the biggest one is that not all debt is the same. Investment is good; waste is bad.



First off I don;t see any reason for such an amendment to cause any sort of disaster. If the government has important spending to do let them raise taxes or cut the budget. Let them run the programs they have with the care and responsibility shown by even the most modest small business. I have no problems paying more taxes to fund things that are important. I also have no problem cutting things that are meant to address important issues but fail consistently to do so (like most military spending along with around half of the middle management morons who run our lovely government agencies). I read a funny stat locally recently saying something to the effect that if 35% of the local school system administrative staff (the people who have no contact with children whatsoever) in my town took a 20% pay cut, they could hire 5 teachers per school and give every teacher a 15% raise. The policy makers and bureaucrats have full job security and health insurance along with higher wages, while the people doing the real work get laid off and have their benefits cut. There in lies the problem. That is not a problem that gets solved by borrowing money, and that is the type of problem that is most prevalent in every aspect of our government. I would love to pay extra taxes if there was any mechanism in place to insure that the money would be spent in a way that would make sense to anyone that has ever had to manage money i their life.

Secondly, the government has no business "investing". If they were able to run any part of their own organizaò    [email protected];    o~•    o~Æ    o«F    o«T    p#æ    p$:    p*'    p*3    p3}    p3ž    p4è    p5    pÌ‚    pÍ-    pÑ‘    pÑ²    q
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## Nick Batzdorf (May 18, 2011)

Ah-diz...if the government doesn't invest in public education and infrastructure, where will we be?

But more importantly, the whole world would be thrown into a massive depression if the US decided to balance its budget overnight - whether or not you see it. 

Remember: a government budget is totally different from a household or small business budget. At that level, money (which means several things) is not simply a stand-in for resources, it allows goods and services to be created and exchanged in the first place.


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## Nick Batzdorf (May 18, 2011)

> A government budget is in no way different than a household or small business budget.



Ah_dziz, I don't want to be rude, but there's not really any point in having this discussion if you don't understand why they are very different.


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## chimuelo (May 19, 2011)

Think of the Federal Reserve as John Gotti.
Surrounded by layers of insulation in the form of seperate groups that run prostitutes and gambling, and the groups that sell drugs.

Now imagine Obama as Gottis Underboss and that lackey Holder as the mob lawyer Cutler.
Then you have the Ravenite crew as Congress, and the Bergen Hunt and Fish Club as the Senate.

They operate under rules and laws which they themselves can break, but nobody else. Similar to the DC elites.
When they spend too much money, its stolen from somebody else or they raise the price of the 8 balls for a couple of months. 
This is known as kicking the can down the road in DC.

The mob guys get witness protection for being rats, and our retired politicians get Secret Service protection for not spilling the beans to the public about all of the dirt they have on each other and how much money is really stolen and wasted.

THe elite never get jailtime for their crimes, and I can think of 5 off of the top of my head as an example.
THe IMF leader, Schwarzeneggar, Rangle, John Edwards, Senator Ensign.......Those are just within the last month.
While Schwarzeneggar lied, what would he have done to keep this a secret....? Maybe let a Gangmember off the hook because Daddy knew what Arnold was doing...?

So just like the Mafia guys our leaders don't need to obey laws, they are merely suggestions.

But you see the business model is the same.
DC elites can spend billions daily because they know their back is covered by the Federal Reserve and it's global membership.
As long as we supply the military muscle to keep them alive, the elites know they can use the tricks they learned from the Mafia.

Afterall, look at our partners we support in Mexico. The reason why DC isn't concerned, and shines the Governors in the border states is becasue there are too many Cartels, and only one will be left standing when the music stops. I wonder if Calderones wifes' brother might be that guy........hmmm.
Then those wife beaters in Afghanistan sell Opium by the ton and have our military knocking off their competition......of course those drug dealers are terrorists.
But we sure can pick 'em 'eh.... 0oD 

So you cant expect the elites in DC to spend less when they know there's really no crisis.
They also know there's no end to the flow of cash from the Federal Reserves bros...
They have such cool names like QE 2, and TARP, the stimulus.....That one went so bad they can't ever name the next one stimulus 2, it will be called Infrastructure or something like that..................wait a minute...........that was what the first one was suppose to do I think.
Aw well, they'll think of some politically correct name.

Aint it great to live in America though, our poor are wealthy in most 3rd world shitholes....


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## Ah_dziz (May 19, 2011)

Nick Batzdorf @ Thu May 19 said:


> > A government budget is in no way different than a household or small business budget.
> 
> 
> 
> Ah_dziz, I don't want to be rude, but there's not really any point in having this discussion if you don't understand why they are very different.



I don't think you are being rude at all. The planning in advance for spending of funds and resources, which is pretty much the textbook definition of budgeting, is a pretty simple concept of which I am fairly certain I have a working understanding. I also understand pretty extensively the process by which funds are allocated on the local and federal governmental levels. Just because the government chooses not to run their accounting in the way that they deem appropriate and in some cases legally mandate for the general public does not mean that they are using some magic form of budgeting that is different from everybody else's. They take in money and have to decide how to spend it. The fact of the matter is that they have proven over time to be very bad at this.

To say that there is a fundamental difference in the way a budget can be sustainably maintained between an individual or corporation and a government is just not true. An entity that spends money with complete disregard for where the money ultimately is coming from will run into serious trouble and eventually fail whether that entity is your friend Bob or the US government. The Government has access to way more tricks to keep itself and it's budget afloat than the average LLC does, but that does not mean it is immune to basic economic principals. 


I read a very interesting proposal the other day which I hope will be published in the near future. It was written by a fairly hard right leaning republican libertarian type who is very far off from my own views on most matters, but It was one of the most pragmatic approaches to government reform that I have ever heard of. It was an outline for a law that eliminated social security from the date of it's passing and replaced the social security tax with a new flat rate tax that was a couple of points higher, but completely tax deductible. That tax is collected like a payroll tax and divided equally into interest bearing accounts for every citizen of the united states. The interesting thing about this to me is that it eliminates almost every federal assistance and entitlement program and therefore a huge amount of the federal budget but does so without screwing the poor. People simply won't qualify for those programs any more because they will be making money every month by default. It also generates a concrete incentive in every member of our society to see the economy do well and to see their fellow citizen do well. Somewhere in the neighborhood of 90% of Americans would be financially better off than they are now at a very small cost to the rest of society. The other cool thing about the proposal is it doesn't generate debt or inflation because the money is real money made by real people for doing real work. 

I really enjoyed reading it and I know something like this wouldn't stand a chance of being passed, but I read the proposal and all the research that went with it and it would work. The social security crisis would be solved completely. Taxes could be kept at their current low rates or lowered further if that's what people wanted. The best part to me is that it would take a large portion of the government's spending power away from them and put it into the hands of the American people. The proposal was called "The Lifelong Endowment" you should check it out if the guy ever publishes it. if you are interested in that sort of thing I could see if he minds if I send you a copy.


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## Nick Batzdorf (May 19, 2011)

Chimuelo, that's the financial industry - which takes something like 20% of all business profits! - but not at all the Fed.

I disagree with what you're saying about QE and TARP. They were the absolutely right things to do, and we desperately need a much bigger TARP 2.

It was in getting to the point at which we needed them that your oligarchy came into play.


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## Nick Batzdorf (May 19, 2011)

Ah_Diz, it's much more complicated than taking in money and paying it out. Your "real money" concept is wrong, to put it bluntly. If that needed proving, look at what Paul Volker did in the '80s in an attempt to lower inflation - which did go down, but not because of his raising interest rates; it caused a massive recession. Bad.

The time to cut back and balance budgets *on current expenses* (as opposed to past obligations, which are fixed, and future investment, which is important) is when the economy is booming, not when we have massive unemployment.

Never mind balancing the budget, cutting back right now will shrink the economy, cause lots of people unnecessary pain, and result in lower tax revenues so that the debt goes up, not down. As I just said, we need a massive public works program that will increase the deficit, but only in the short term. We can and should borrow for that, because it will pay itself back.

As to taxes, I agree that we should raise the marginal rates, but not the overall rates. The big problem is that so much of the country's wealth is concentrated at the top - at the expense of the people below, who don't have the spending power to sustain our economy anymore.

The fact that we're even having this conversation at all is a Republican victory. Their diversion and fear tactics have changed the subject yet again.


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## Nick Batzdorf (May 19, 2011)

I don't understand the difference between monetary and fiscal policy? Okay.


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## Ah_dziz (May 19, 2011)

Nick Batzdorf @ Thu May 19 said:


> I don't understand the difference between monetary and fiscal policy? Okay.



Okay  

I'm really not trying to argue with you. I am sure you are an awesome guy and you seem to know plenty about the American economy, but I grew up around economists and accountants and having these concepts discussed with me at great length from a pretty early age I know that the Federal budget does not = the American economy. The federal budget _is_ a budget like any other budget. My only point is that running the federal budget more like the budget of a business is not inherently impossible due to fundamental differences in the two systems. It is a choice that was made by congress. Talking about steps taken by the federal reserve to decrease inflation has no relevancy to the matter of government budgeting and the problems inherent in the methods congress uses to budget the money it has access to. No more no less. 

You bringing up an example of monetary policy gone badly while we were discussing fiscal policy led me to believe that perhaps you _were_ a bit fuzzy on the matter. 

To finish off as clearly as possible, I am of the opinion that the government has a very bad track record with fiscal policy and that regardless of what the fed is doing (which is indeed a whole other discussion) a long term goal of every American should be that congress takes their spending decisions more seriously in general. 

That being said I do agree with much of what you said a couple posts ago. Now is not the time for huge financial upheaval in federal budgeting, taxes, monetary or fiscal policy. Now is the time for pulling Americas financial ass out of the fire by any means necessary and dealing with the consequences of that when we are in a position to. 

I would love to get you a copy of that proposal I described earlier. It was given to me by my uncle who is an economics professor and written by a friend of his who I subsequently contacted to discuss the paper with. 

Anyways it's been fun babbling back and forth with you about this and have a good night. o-[][]-o 

JJ


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## Nick Batzdorf (May 19, 2011)

Why the Fed is not a bunch of oligarchs who do nothing good:

http://www.nytimes.com/2011/05/20/opini ... &seid=auto


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## Nick Batzdorf (May 19, 2011)

Paul Volker is a "hard money" economist, and that was why I brought up the example.


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## Ah_dziz (May 20, 2011)

Nick Batzdorf @ Thu May 19 said:


> Paul Volker is a "hard money" economist, and that was why I brought up the example.



My point was that the reference to "real money" was not a reference to a reinstatement of "representative" or commodity backed money, but to actual earned income made by real people not borrowed money. I suppose with our current monetary system all money is "borrowed" in a sense. I just meant that the program/ law would replace nearly all government entitlement programs which are to a large extent funded through money our government borrows, with money that was actually made by Americans and with no chance for congress to spend the money elsewhere.

Also I think the recession that Paul Volker started was due to his absurdly fast and high interest rate hikes rather than his particular economic beliefs.



Nick Batzdorf @ Thu May 19 said:


> Why the Fed is not a bunch of oligarchs who do nothing good:
> 
> http://www.nytimes.com/2011/05/20/opini ... w-NytimesK rugman&seid=auto




It's amazing to me how many people will bash the use of a fiat currency, and our particular implementation of it without having any viable alternative solution. I guess the fact that the Fed is a large powerful entity that is not very well understood just brings out the conspiracy nut in a lot of folks.

Okay I'm really done now. Have a funderful evening. :D


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## Nick Batzdorf (May 20, 2011)

> Also I think the recession that Paul Volker started was due to his absurdly fast and high interest rate hikes rather than his particular economic beliefs.



He hiked the interest rates because he's a hard money type who believed that it was necessary in order to get rid of inflation - knowing full well that it would cause a recession.

The mistake - and many people still don't understand this - is that he was using the wrong medicine. The inflation was overhang from the Vietnam war and the Nixon Shock (ending gold convertibility), not because money was in too much supply.


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