How US debt risks dollar doomsday - New England Patriots Forums

***patsfan13*** · 05-01-2012, 03:32 PM

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Former Treasury official Lawrence Goodman recently pointed out that investors are shunning US bonds and notes; the lack of other buyers forced the Federal Reserve to buy “a stunning . . . 61 percent of the total net issuance of US government debt” last year. Like many others, he warns that ballooning debt puts the US economy at risk for a sharp correction.
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With global demand for dollars falling, central banks around the world will inevitably reduce their dollar reserves. That selloff further weakens the dollar against other currencies and in turn drives up inflation.

Read more: http://www.nypost.com/p/news/opinion...#ixzz1teSHsqMX

Yep no problem running trillion plus debts as far as the eye can see, no need to reform entitlements we buy our own debt and keep the paper moving...

While at the same time we are driving away foreign investors and their capital:

RAHN: Geithner's willful negligence - Washington Times

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To put it simply, the Obama Treasury Department and Internal Revenue Service (IRS) are forcing U.S. banks to report to foreign governments that often are corrupt or worse on lawful deposits their citizens hold in U.S. banks, thus putting those citizens’ lives at risk. As the former governor of Oklahoma and now president of the American Bankers Association, Frank Keating, wrote: “While the IRS minimizes potential security issues, nonresident aliens are unlikely to feel reassured by promises that their information won’t fall into the wrong hands. These pledges could be met with apprehension when countries with questionable human rights records remain on the recipient list. This rule gives nonresident aliens every incentive to pick up and move their deposits elsewhere.”

It only gets worse. The Treasury/IRS has finalized another rule set to go into effect on Jan. 1, 2013, called the Foreign Account Tax Compliance Act. It puts a huge paperwork, cost and legal liability burden on foreign financial institutions and U.S. banks that also operate abroad.

Just great, why does that matter?
Because there is a pretty linear relationship between capital and employee incomes:

The Path to Prosperity at Steven Landsburg | The Big Questions: Tackling the Problems of Philosophy with Ideas from Mathematics, Economics, and Physics

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A tax that punishes saving (e.g. the estate tax) is a tax that encourages spending. Because of that tax, the rich buy more cars, the factories produce fewer tractors, and farm wages fall. If you doubt that farm wages depend heavily on the production of tractors, have another look at the graph.

See the graph at the above link. This plus Obamacare, plus the tax increases coming 12/1/2013 is why unemployment is still out of control.

chicowalker · 05-01-2012, 03:47 PM

Our spending is a huge problem.

It's interesting, though, that some people have only woken up (supposedly) to the problem since Obama took office. Men like Pete Peterson -- a true fiscal conservative -- have been harping on this for at least 20 years.

***DarrylS*** · 05-01-2012, 03:58 PM

You know of course that spending is down under Obama..

***patsfan13*** · 05-01-2012, 04:07 PM

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Originally Posted by DarrylS

You know of course that spending is down under Obama..

Documentation of that....

This should be a doozy.

Why?PJ · 05-01-2012, 05:20 PM

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Originally Posted by DarrylS

You know of course that spending is down under Obama..

wow, just how clueless can a person be? Are you trying to win a darwin award?

Ilikehappyppl · 05-01-2012, 07:48 PM

Democurmudgeon: Obama's Spending compared to Fiscal Conservative Republicans under George W. Bush!!

National Debt Graph by President

Ilikehappyppl · 05-01-2012, 07:52 PM

Its been proven that you can run a 120% debt to GPD ratio, we are at like 96-97, in the 1930 we were at 120%.

Right wing=Chicken Littles......

The dollar is fine, we are all going to be ok!

We run a 15 trillion a year GPD....

***patsfan13*** · 05-01-2012, 08:33 PM

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Originally Posted by Ilikehappyppl

Its been proven that you can run a 120% debt to GPD ratio, we are at like 96-97, in the 1930 we were at 120%.

Right wing=Chicken Littles......

The dollar is fine, we are all going to be ok!

We run a 15 trillion a year GPD....

Actualy the debt to GDP is >101% now. As bad as the Euro is doing the USD has been flat against the Euro for the past 5 months. Does't speak well of our economy.

Ilikehappyppl · 05-01-2012, 09:48 PM

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Originally Posted by patsfan13

Actualy the debt to GDP is >101% now. As bad as the Euro is doing the USD has been flat against the Euro for the past 5 months. Does't speak well of our economy.

PF13,

101% is too high I agree perfect world it should only be around 35-40% if that but that's the bed we made and now we have to lie in it.

I think almost everyone on this board agrees that the debt is to high and things need to be done, tax increase and cutting spending but I think most of us can agree that the sky is not falling and there is still a ways to go before we can even speculate it will.

My whole point is take it with a grain of salt, things are never as good, or as bad, as they seem at the time, somewhere in the middle is were we are.Things need to be done but causing fear is not the answer....I for one believe American will be just fine in the long run, its going to be a rough short term though with all the fear tactics going on.

PatriotsReign · 05-02-2012, 06:34 AM

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Originally Posted by DarrylS

You know of course that spending is down under Obama..

Spending isn't what matters, it's how much we spend vs. how much revenue we collect....

Bottom-line....how much we over-spend is all that matters.