How long can the U.S. continue to live on borrowed money?

[Sandpiper]

Ok you economics gurus, a question for you.

Since Ronald Reagan popularized credit card economics as national fiscal policy, the national debt has increased more in the past 25 years than in any other period of U.S. history.

My question is, how long will this be sustainable? How long will we be able to keep spending more money than we take in before it catches up with us?

[junker]

1. Feb 1. Market impacts after that cause a collision of interests between

china the US and euzone. Plus we have only 1 cent of 'value' left in the dollar originally issued as a portional part of an ounce of gold in 1913. So the Fed Reserve bank which is not part of the federal government, has no reserves, and is not a bank, is forced to drastically raise rates to try a last ditch effort to rescue the dollar. This will fail. With it goes the financial system. Of the globe. Events will really pick up on Tuesday, feb 1.

Actually the chinese already are announcing that they are buying things like euros and gold as they no longer think the dollar is stable.

Stability fails, followed rapidly by confidence, then the institutions who suck blood through public confidence.

Can't happen here? Well, remember, four (4) paper currencies have already collapsed in the USofA in its history. And nine currencies have recently collapsed, including the ruble, the fixed value currency of the second largest superpower.

Don't be so cocky. Federal reserve dollar be toast. Almost done, the spring about ready to send it flying out of the toaster...

[illflem]

2. Not a guru but here's a good article

Revealing just how dangerous the Bush administration's far-right economic policies are, the United Nations today issued an alarming report asking other industrialized countries to help the United States deal with its exploding trade and budget deficits because they threaten the health not just of America's economy, but of the global economy. While President Bush continues trumpeting the benefits of "free trade," he has little to say about the fact that his administration has sat idly by while America's trade deficit hits historic highs ($600 billion for 2004 alone). http://www.nytimes.com/2005/01/26/business/26trade.html

[mopinko]

3. until our creditors ask for something besides dollars

as long as they will take dollars, we're good. we can print them up some fresh ones. when they start demanding euros or other currency, which they are starting to do, we are screwed.

[Yupster]

12. I went to hear an economist

who was analyzing the financial markets for a mutual fund company last week.

An interesting thing he said was the social security privatization idea would cause an extra $ 2 trillion in borrowing, and he said "did you notice the reaction in the bond market to that? The biond traders said 'bring it on'." He said right now there is plenty of demand for US bonds that could even absorb another $ 2 trillion on the market.

I asked him a quesion about privatization. My worry is a few years of hyperinflation. If everyone does right, puts together a $ 400,000 FICA account, but then what if inflation runs 20 % a year for three years. Then everyone's buying power is wiped out together.

He said I should keep asking that question because it was a good one, but he explained a proposed privatization idea differntly than I had heard before.

He said each person would have two tracks going, a guaranteed defined benefit plan like today, but a lower amount, and their own private account. They would get whichever ended up bigger but not both, so in my inflation scenario, people would still have their pension account which would go up with inflation. He thought it would be about 75 % of what is promised today.

I hadn't heard it put that way before.

It was an interesting talk. The audience were all financial people and stockbrokers. The younger people were all enthusastic supporters of privatization in theory. The only skeptical questions came from us older guys.

I also asked him if private accounts would not be an invitation for the government to throw more regulations on our industry which is under intense scrutiny right now. He poo pooed that.

My company however has just gotten into trouble because we had a policy that if a customer was in the office and told the broker to buy something before 3 cst, the broker could enter the order until 3:45 at the close of the day's price. This has been deemed "after hours trading" and we're going to get fined and lots of bad press for it.

I tried to do it last week but the home office guys asked me if I was crazy. I had a grandmother bring her two grand-kids in and gave them each $ 200 to open an account. She left at 2:55. I put the orders in right away and one went in at 2:59 and the other at 3:01. I aksed the home office if they couldn't put them both in before 3:00 and they thought I was nuts. Do you know how much trouble we've gotten in because of this kind of stuff?

Interesting times at my job.

[EVDebs]

4. Until Pres. Bush has to take a David Stockman behind the woodshed

like Reagan had to do in order to make sure the truth wasn't going to get out about the tax cuts of 1981 having to be paid for with tax hikes later ... and so the M/I complex could get its trillion dollar increase. Later, in 1982, 1984, 1986, 1990, and 1993 Congress had to raise taxes or as they euphemistically called them 'revenue enhancements' ! And in 1982-3 the Social Security reforms were enacted so the raiding could proceed in earnest.

DUers this is the same M.O. as in the Reagan years. The repubs trash the economy and the 'bad guy' dems have to come in and restore fiscal order, just so the repubs can then claim the dems are causing all this fiscal pain. History is repeating itself.

They love to show that JFK did a tax cut in '62. What they don't tell you is LBJs surtax to pay for Vietnam in '67.

Wars have to be paid for and there is no free lunch. No matter what they tell you.

[Vinnie From Indy]

5. Let's Just Say You Better Start Addressing China as MISTER China ! n/t

[lectrobyte]

7. Yeah, check the "stable currency" thread...

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=104x3010038

[realFedUp]

11. How do you say that in Chinese?

It would be interesting to know
how many Chinese owned companies
are switching to other currency
in this country or does that
happen?

[cliss]

6. The question was how long we can carry on

using borrowed money. I'm assuming here you mean running the government, financing the war in Iraq and Afghanistan.

Answer: about 2 more years. There are still some funds hidden here and there. Some more accounts that can be ransacked. There are some entitlement programs that can be gutted.

The Bush administration has not created anything of value. They've only drained the treasury. The entire war in Iraq which I believe is up to $280 billion or maybe $300 billion, has not been paid for. All we've done is borrow the money to fund it. It doesn't even show up in some figures, like the general account. It was always counted separately.

We're currently spending about $4.9 billion per month in Iraq alone. We simply cannot sustain this level of spending. Not much longer. That's the REAL reason Bush had trickles of sweat on his forehead at the press conference today.

He knows the sands of the hourglass are running low.......

[LuCifer]

8. why do y'all thing they so badly want to...

... "privative" Social Security? More money to rip off.

Lu Cifer
http://www.LU13.TK
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[KissMeKate]

9. hopefully it will hit the fan before bush is out of office,

otherwise history will try to blame Dems.

[ComerPerro]

10. Until a Dem is in the White House again

Then, look out. All of sudden we will be required to have budget surpluses every year, and even that won't be good enough.

[Liberal In Texas]

13. Good question.

I'm very worried about my 401K stuff.

I'm looking into some funds that are based on the Euro.

In 2000 when I was in Europe, the Euro was like 60 cents...Now it's a buck and a half. And the Pound Sterling...nearing 2 dollars again.

I firmly believe the dollar is going to fall like a rock.

God help us.

[Lengsel]

14. hmmmm

If the shiznit is really about to hit the fan then why is this only being talked about here and not the "liberal" media like everywhere else on earth than Fox which is obviously middle of the road and projects everything fairly and not slanted to Bush? ;)