Deflation followed by hyperinflation?

[Big Daddy]

You have to admit the Y2K thing was fun. I rarely stay up past 9, but I stayed up till 10 that night to see if anything happened. I think the people responsible did a great job of being sure it was fixed. I've pretty much dropped out of this debate. It's too much like beating your head against the wall. This problem is going to get fixed. Just like all the problems that have preceded it. We are not Iceland. I have faith that the current administration will get it fixed even with all the wrenches the other side keeps throwing in the gears to be sure it's not fixed by 2010. If it is on the road to being fixed by then they'll never get a majority again. I just wish they would quit prefacing every statement with "We want Obama to succeed." It's such a bold faced lie. Why do they bother. Their way didn't work it's time to try something new.

 

[CJHames]

Depending on someone else's tax money to live off of isn't self sufficiency. It's the exact opposite.

Anyway, I was only pointing out that while you claim "Tax cuts work, ALWAYS," they didn't last time. And many would argue that Bush didn't "have" to fight one of these wars, the one that has added incredibly to the nation's debt. Also wondering where you've been meeting "those on the left who are giddy that the economy is bad." Those on the left that I have met are heartsick at the state of our nation (take your pick: economy, world relations, pollution, terrorism, civil rights) and just hoping for something to turn around ASAP.

We can have a civil disagreement on the viability of tax cuts, but let's see if we can agree on the truly scary part: In this scenario, our political views don't matter. We can not tax our way out of paying for this un-serviceable debt we are taking on. Because the economy is a living, breathing "thing" (so to speak), regardless of whether the U.S. top marginal tax rates were 94% (1944-45) or 28% (1988-90), the amount of revenue collected remains pretty much constant between 19-22% of our GDP.

Obviously, this means when tax rates were immorally high people didn't make as much money and therefore didn't pay as much tax and vice versa. The only way to generate enough revenue to come close to paying this debt off - regardless of the top marginal rates - is to dramatically grow our GDP. I haven't computed what that would take - and won't bother to - because it isn't going to happen, particularly under an administration that seems intent on penalizing businesses and making profits a dirty word. My guess is we'd have to quadruple (at least) our GDP to come close to making our debt manageable, forget paying it off. Since we couldn't even do it under Reagan, we are not likely to ever pull this off.

This is suicide. Can we all agree on that?

We reached the point in November, 2008, according to the GAO and former U.S. Comptroller of the Currency David Walker, that if every bit of wealth in the U.S. was confiscated and turned into liquid assets we could not pay our current liabilities and our future-looking obligations through the year 2021, I believe it was. And the forward looking obligations only include SS and Medicare. Not a dime for education, defense, roads, AFDC, etc.

Only one other time in American history has this happened: 1929.

Also, around last November, if you added up the total household debt of all Americans it exceeded our total GDP. Again, that has happened only once in American history: 1929. And that percentage has to be worse now because our GDP is contracting.

Look, I don't know when exactly this time bomb is going to really go off, but what we are seeing now (I predict) is nothing. A day will come that we will look back at winter 2008-2009 as the good old days. But it is coming. Might take another two years. We may even have one more "boom" cycle before the debt comes home to roost, although I doubt it.

The only thing you and I can do is become as self-sufficient as possible in every aspect of our lives. 'Cause the government ain't gonna help us then. Those on the left will get all the government they ever dreamed of. But it won't be in the form of help, it will be in the form of restriction and confiscation far worse than anything most of us could have ever imagined.

 

[me&thegals]

I guess when you're in debt up to your eyeballs, you can generate more revenue or you can cut your spending. I see our defense spending as one place to cut an enormous amount of spending.

ETA: I keep hearing about "all this gov't that those on the left want." I have never in my (admittedly rather short) life seen as much gov't as the last "right" administration. I have never seen gov't into every little nook and cranny of personal and public life as the last administration. So, while the left supposedly wants more gov't, the right supposedly less, I think the real issue is WHERE each side wants the gov't involved, and serving whose interests.

 

[CJHames]

You make a good point, let me clarify my "left vs. right" argument. In my mind, there isn't a dime's bit of difference between "normal" R's & D's, until we start talking about Maxine Waters, Schumer, Boxer, Pelosi, Frank .... et al. Maybe I should say "all the government socialists want."

As an aside, I seem to remember the economy being rather healthy and robust until the mid-term sweep of the elections, which went to the D-party. Just noticing. Again, not opinion, just fact. But regardless, the FNMA and FRMC mortgage problem would have killed even the R-s if they had control of both houses. Maybe they would have done something about it, although I doubt it.

 

[sylvie]

You have to admit the Y2K thing was fun. I rarely stay up past 9, but I stayed up till 10 that night to see if anything happened. I think the people responsible did a great job of being sure it was fixed. I've pretty much dropped out of this debate. It's too much like beating your head against the wall. This problem is going to get fixed. Just like all the problems that have preceded it. We are not Iceland. I have faith that the current administration will get it fixed even with all the wrenches the other side keeps throwing in the gears to be sure it's not fixed by 2010. If it is on the road to being fixed by then they'll never get a majority again. I just wish they would quit prefacing every statement with "We want Obama to succeed." It's such a bold faced lie. Why do they bother. Their way didn't work it's time to try something new.

We loved the Y2K! Or rather the leading up to the Y2K. We invested in many items that have more than paid for themselves in the years since. It had opened our eyes as to how unready and how not self sufficient we found ourselves. It was a dry run for things to come.

I agree with your analysis. Preachin' to the choir.

 

[Big Daddy]

Where were all the critics of massive deficit spending when Bush was in office? His final farewell was a 760 billion dollar bailout for the wealthy. He used his usual scare tactics.

At the time when the big concern was all the money going into Iraq all the right wingers were telling us that the deficit is just a figure on paper. Now that they NEED to spend some money to put America back to work, the reps on the right are all the sudden frugal. It's not a matter of what's right for America it's a matter of making sure it gets worse with the current majority. Then the other side can get back in in 2010, cut taxes for the wealthy even further and eliminate any entitlement programs out there. That will truly be the end of the middle class which is what they are striving for.

If you look at a graph, Clinton is the only President that had a surplus in the last 40 years. He did it by raising taxes on the wealthy from the lows that Reagan put in place.

 

[Homesteadmom]

If you look at a graph, Clinton is the only President that had a surplus in the last 40 years. He did it by raising taxes on the wealthy from the lows that Reagan put in place.

Mainly because he raided the social security & medicare funds to pay for his liberal agenda!

Can't speak for others but for us when Bush put his tax cuts into play we started getting the biggest tax returns we had ever gotten. We have never made over $45k/yr when we were a 2 income family & now as a 1 income family at $40k we still get big tax returns, not sure for the next filing though as all those breaks will be gone.

For the solar tax credits, they will be gone too as of this yr, the (left side) wanted them out & they are now.

 

[patandchickens]

It would be nice if all problems in life, both personal and national, could be foreseen and avoided by astute policy decisions. And obviously it is best to try to do as much foreseeing and avoiding as we can.

But you know what, sh*t happens. Even if you (you, me, the other person over there, anyone in particular) were in charge of running the show, things would still go wrong, sometimes vividly. And there would be a different set of people huddled in a different corner shouting about how outrageous it is that such stupid mistakes were made to get us into this situation.

You think the Great Depression was so bad? Look at how many -- in a statistical sense, MOST -- people on this planet live EVERY DAY OF THEIR LIVES. Most people in the Great Depression still had it *gooooood*, comparatively speaking. And look at how 99.999% of the people on this planet lived, up until about 100 years ago. Think about it.

The world goes on. People cope. People survive, mostly.

It seems to me that, given the inevitability of bad things happening from time to time (as are happening right now, leaving Americans STILL better off than most of the rest of the world's population), we should focus on coping and surviving.

JMHO,

Pat

 

[CJHames]

It would be nice if all problems in life, both personal and national, could be foreseen and avoided by astute policy decisions. And obviously it is best to try to do as much foreseeing and avoiding as we can.

But you know what, sh*t happens. Even if you (you, me, the other person over there, anyone in particular) were in charge of running the show, things would still go wrong, sometimes vividly. And there would be a different set of people huddled in a different corner shouting about how outrageous it is that such stupid mistakes were made to get us into this situation.

You think the Great Depression was so bad? Look at how many -- in a statistical sense, MOST -- people on this planet live EVERY DAY OF THEIR LIVES. Most people in the Great Depression still had it *gooooood*, comparatively speaking. And look at how 99.999% of the people on this planet lived, up until about 100 years ago. Think about it.

The world goes on. People cope. People survive, mostly.

It seems to me that, given the inevitability of bad things happening from time to time (as are happening right now, leaving Americans STILL better off than most of the rest of the world's population), we should focus on coping and surviving.

JMHO,

Pat

Amen. Well said.

 

[CJHames]

Where were all the critics of massive deficit spending when Bush was in office? His final farewell was a 760 billion dollar bailout for the wealthy. He used his usual scare tactics.

I don't know. I think most of us cried about the "No Bank Left Behind Act". I know I called 64 Senators personally. 64. Did me no good, but atleast when my grandkids say "what did you do about this debt I've been given ..." I could look them in the eye and say I did all I could do without shooting people.

Hey, is anyone buying any gold these days?