patrick.net

It actually doesn't count that much. The consequences of a government spending more than it takes in revenue are nothing like that of an individual or business doing the same.

If the government weren't also the authority printing and regulating the value of our money (and, no, the Fed isn't independent enough to treat it separately), it might matter.

Defaulting on the entirety of the debt is a very real option. So is moderately high inflation. So are high tax rates.

Pretty much the only thing that isn't likely is reducing spending, particularly with a giant group of frightened baby boomers about to retire. The three biggest expenses of the federal government (SS, Medicare, and the military) are all loved by boomers:

- SS to make up for the pensions that they no longer get and their 401(k)s which were wiped out in the crash.

- Medicare because our health care system is fucked

- The military because these people were raised during the cold war and think that diplomacy is for sissies.

Well, so here's the problem with massive deficit spending. In the past, the U.S. had a relatively small population relative to its natural resources. Our economy was largely manufacturing, mining and agriculture based (I'm talking like the 1900's-1920's here). In short, we had a lot of productive assets to mortgage in the middle 20th century.

In the present decade, we are much more of a service, information and debt society. Our population is far larger and our standard of living (measured by per capita cost) is much higher. The drain of our manufacturing and certain technology sectors overseas is a major problem. If on average we all start consuming more than we produce, in the very long term view, we're effectively just writing an IOU based on our physical resources. Unlike manufacturing sectors, you can't renew those, so you have to be very careful when using them as collateral. Developing countries want our metals, our minerals, our corporations and our intellectual property. They don't want our houses, our possessions or Americans themselves.

Bottom line---the longer we consume more than we produce (i.e. deficit spend), the more of our currency leaks overseas, and eventually our physical assets will begin slipping through our fingers. Even inflation is somewhat irrelevant, since the leak is a relative percent of our consumption, and not a fixed amount.

And now that I've finished this post, I guess I should add that I'm obviously more concerned with the trade deficit than with the "spending" deficit. Internal inflation just impoverishes the middle class. Trade deficits impoverish the nation. The former is the way of stagflation; the latter the way of Rome.

After a quick check of 'the books' he realized we'd already mortgaged our souls,,,,what the hell can we use to 'pay down the deficit' ? Could we just ship any Asian type country a couple megatons of lumber and call it even?

I like what they've done with the place in the past, we just gotta figure out a way to get this truck out of the mud and back on the tracks.

Brand says

Well, so here’s the problem with massive deficit spending. In the past, the U.S. had a relatively small population relative to its natural resources. Our economy was largely manufacturing, mining and agriculture based (I’m talking like the 1900’s-1920’s here). In short, we had a lot of productive assets to mortgage in the middle 20th century.
In the present decade, we are much more of a service, information and debt society. Our population is far larger and our standard of living (measured by per capita cost) is much higher. The drain of our manufacturing and certain technology sectors overseas is a major problem. If on average we all start consuming more than we produce, in the very long term view, we’re effectively just writing an IOU based on our physical resources. Unlike manufacturing sectors, you can’t renew those, so you have to be very careful when using them as collateral. Developing countries want our metals, our minerals, our corporations and our intellectual property. They don’t want our houses, our possessions or Americans themselves.
Bottom line—the longer we consume more than we produce (i.e. deficit spend), the more of our currency leaks overseas, and eventually our physical assets will begin slipping through our fingers. Even inflation is somewhat irrelevant, since the leak is a relative percent of our consumption, and not a fixed amount.
And now that I’ve finished this post, I guess I should add that I’m obviously more concerned with the trade deficit than with the “spending” deficit. Internal inflation just impoverishes the middle class. Trade deficits impoverish the nation. The former is the way of stagflation; the latter the way of Rome.

The only physical assets that matter are natural resources, and we have an abundance of those -- not that there's really a scarcity of any major resource other than oil.

IP is bogus. If China, or any other country, wants "our" IP, they'll just take it. Once they have it, what does it matter? The strength of our economy is not in having a monopoly on IP, it's on constantly churning out new IP. Anyone can duplicate manufacturing capabilities if they have a blueprint, but coming up with the blueprint in the first place is very difficult.

These are the exact same fear mongering concerns that have been raised since the country was founded. I think people just like to bitch about the status quo.

@Trout

"We" have to get you into some grammar courses at a local JC...you are making good points but it doesnt matter if they are not articulated properly. I mean, really, I have never seen any one person ramble about so many valid points. I think I agree with your post, however, I can not clearly say that I do since it would take Nicholas Cage's character in National Treasure to decipher the code.

Wait, let me guess...your a computer engineer that likes all the tech speak?

@Kevin

Pretty much the only thing that isn’t likely is reducing spending, particularly with a giant group of frightened baby boomers about to retire. The three biggest expenses of the federal government (SS, Medicare, and the military) are all loved by boomers:

Finally, someone that knows the facts and uses fact filled statements to make a point. If we cut those 3 we would be deficit free in 3 long years.

Here is the federal budget CY2007

Kevin says

These are the exact same fear mongering concerns that have been raised since the country was founded. I think people just like to bitch about the status quo.

Amen.

This is an Internet forum Moose, there is a great chance that every word typed on this whole damn site will be pitched out like yesterdays mackerel wrap tomorrow. I'm just getting my thoughts out, nothing more nothing less. I certainly don't think the post a work of literature, neither should you.

You know who I"ve found that I annoy the most, through out the years with my scrawl? Overly educated types that even with years in surplus general education, lacks talent of the smallest amount of creativity.

Go ahead and copy it into notepad and make all of the grammatical changes that you think they need. But remember all of those beeps and squeaks mean something.

4X says

“We” have to get you into some grammar courses at a local JC…your making good points but it doesnt matter if they are not articulated properly.
---
Wait, let me guess…your a computer engineer that likes all the tech speak?

That's funny. It would be "you're" not "your".

You know who I”ve found that I annoy the most, through out the years with my scrawl? Overly educated types that even with years in surplus general education, lacks talent of the smallest amount of creativity. Go ahead and copy it into notepad and make all of the grammatical changes that you think they need. But remember all of those beeps and squeaks mean something.

ROTFLAMAO

@Reniam

Why, I do not know what you are speaking of...you may want to check again. LOL