19 Replies to “It’s Probably Nothing”

  1. You’re right Kate.It is absolutly nothing. I mean,look how well that kind of debt spending is working out so well for the PIIGS. Obummer is just trying to catch up to his socialist betters.After all,they have so many more years of practice then him.

  2. It really IS nothing to Obama and the talking heads of the MSM currently residing as polyps in Obama’s colon.

  3. The US can use a lot of methods to increase cash flow if they wish so that chart is not as scary as it appears.
    However, if that was Canada’s chart, it would be a different story. Our gov’t is running out of room to tax without realizing painful cuts and tax increases, whereas the US has various means of taxation by which to reduce their deficit.
    NOT that I advocate taxes — I don’t. All I am saying is that Canada is in a much more precarious situation than the US when it comes to personal and gov’t forms of debt and how they can be addressed.
    People should be using low interest rates to pay off debt.

  4. The US has a multitude of ways to reduce that chart through taxation. Now if that was Canada, it would be really scary.

  5. @aizlynne – They ain’t taxing their way back. They’re going to inflate the problem away. That’s always been the plan. 2008 just accelerated the problem. Taxes can’t be raised high enough and fast enough with cratering the economy, spending won’t be cut because people don’t want it cut. If you listen to Romney, Obama, Bernanke, any of them – it’s clear that they have no solution other than inflation.
    It’s the only option they have.

  6. Looks like the Total Debt line is going to surpass GDP by spring time.
    Well, I’m off to the liquor store.
    Might as well enjoy life while I can.

  8. aizlynne – according to various US pundits on this issue, increasing taxes – the remedy of Obama – on ‘the rich’ (that amorphous set of people who make money in their basement Magic Cauldrons) – won’t solve the debt problem.
    After all, it’s not simply the debt – which is one issue; it’s also the GDP.
    The debt is a problem because of the emergence of entitlements as a basic ‘human right’. No society can afford to fund its population for the expanding use of entitlements such as welfare, food stamps, unemployment, medicare, social security etc etc – all of which are expanding in population use.
    But this is precisely what has been happening. Rather than dealing with this problem of exploding use of entitlements, the US (and Europe) have moved into debt, borrowing trillions to fund these entitlements.
    Then, there’s the problem of GDP. This refers to wealth production in the economy.
    Govt public service has greatly expanded in the US and Europe – and the public service is an enormous drain on the taxpayer. These unionized jobs-for-life produce no wealth.
    Then, the unions in various big industries such as autoworkers, steel and others, have driven the costs of production so high that manufacturing industries have moved out of the nation.
    And, finally, the refusal of these quasi-socialist govts to acknowledge that a robust economy has three phases has been disastrous. An economy has three phases: Investment, Production and only then, Consumption. The socialist Democrats have focused only on enabling Consumption (by entitlements, and please note – by 47% paying no taxes)…
    Rather than leaving wealth in private hands, of small and medium businesses, these Democratic socialist govts have taxed the wealth away. This means there’s nothing for Investment in new businesses and for hiring more workers. Nothing for producing more goods and services. The economy and GDP grinds to a halt.
    Finally, expanding regulations on small and private businesses has effectively killed them off – so – no growth in GDP.
    An economy is a complex system; it doesn’t function in a mechanical way – and so, just taking more in taxes from the Magic Cauldron won’t do a thing for the GDP. Or the debt.

  9. “The US has a multitude of ways to reduce that chart through taxation.”
    Wow! Taxation! I wish I’d thought of that. Have you let obozo know of your magic solution?
    Seriously, the situation is too far gone for that one now – you do realize there is a point at which taxation begins to cripple the economy and the hopes and dreams of citizens? Many would say that point has already been reached.

  10. ET wrote: “Then, there’s the problem of GDP. This refers to wealth production in the economy.”
    Not necessarily.
    GDP is economic ACTIVITY, not wealth production.
    A surgeon removing a bullet from an inner-city diversity, contributes to GDP.
    As does, cleaning up a building that was torched.
    Or the manpower employed in prosecuting a child molester.
    Or arresting drug dealers.
    Or fabricating a dick for Chaz.
    VAST amounts of GDP are really just fixing social ills.

  11. Let the Bush tax cuts expire.
    Make the 49% who pay no tax pay 10%.
    Get rid of food stamps.
    Freeze all spending for three years.
    Freeze discretionary spending for ten years.
    Get the inflation rate up to 4%.
    Problem solved.

  12. “inflate the debt away”
    No, no, no!!
    The magic debt is just a tool of further consolidation. A takeover by a radical faction.
    “They” aren’t planning on paying ANY of it back!!
    Who do they ‘owe’ the already-stolen money to?
    The old.
    Simpler for the political class to ‘save themselves’ by eliminating….
    (It’s already law- a proviso in Obamacare declares that any readmissions means automatic hospice. 3 months on a morphine drip and you’re done. Add in lack and rationing for attrition.
    Just as a new ‘law’ enables the Treasury to tax unspecified % all pensions funds.
    Slipped into the stimulus package.)
    Money ain’t power-
    the authority to enFORCE ‘law’,
    to call out the cops, TSA, ATF, and Army is power

  13. GDP is economic ACTIVITY, not wealth production.
    Yes, all real wealth comes from primary production. Without that, the cities would soon wither.
    Grass would grow in the streets without something to service. Cities are only a service centre, with accompanying spinoffs from the same wealth accrued from primary production.

  15. Optimist – I’ll disagree with you. I consider that the GDP of a robust economy must produce wealth, ie, surplus above the cost of investment and production and the market value of consumption. That’s the net value. The GDP, to my understanding, measures the total value of all final production in an economy.
    AND, of course, the GDP must not be subsumed by the increase of debt! That’s the situation in the US and Europe.
    Your examples are stable-state, they maintain a system but do not expand its capacities for generating wealth, ie, these activities do not generate that surplus money that can be used for Investment and Production. These actions don’t create more doctors, more police..etc.
    Any processes that reduce this capacity-to-generate wealth (surplus) reduces that economy’s capacity for more Investment and Production. I listed some of these processes that harm an economy’s capacity for wealth production.

  16. Why doesn’t the USA just do what Iraq is about to do with the dinars? If you haven’t heard of this crazy scam go google “iraqi dinar scam” it’s pretty funny and not for the reasons you might think. It’s funny because the USD is as worthless as an iraqi dinar but people amazingly haven’t figured that out yet. The USD is the iraqi dinar scam in reverse.

  17. ‘Twas a very historic week we just had and the MSM is totally silent about it…the U.S. debt to GDP ratio hit 101%.

  18. Remember David Dingwall’s line, “I’m entitled to my entitlements”? It would seem he was but a harbinger of things to come. The old line, Pay me now or pay me later” also comes to mind.

  19. Slaw, you are right that the fix they intend to use for this is inflating the problem out of existence. But it’s not new. The US has been following a weak dollar policy for well over 10 years. Effectively they have been trying to export deflation to the rest of the world. What this means is making US citizens take a large real pay cut.
    The policy is failing for several key reasons. First, their largest supplier, China, pegged their currency to the US dollar. All the nations of the world complained about China’s false currency rigging, but no one blamed the US for initiating the currency wars in the first place back in the late 1990s.
    Second, the collapse of the EU economy into recession under a welter of sovereign debt has triggered a flight to US securities, boosting the dollar value and precisely reversing the US intent of exporting deflation. Even the massive TARP program didn’t halt the flood into US securities for essentially zero interest rates.
    What’s coming is the Japan disease. Massive public debt, negligible economic growth, and investment capital fleeing to other jurisdictions looking for real rates of return.

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