I've commented that sooner or later the piper will have to be paid with regard to the runaway deficit spending done by our Congresses over the last 10-11 years and the humongous national debt that such fiscal irresponsibility has caused.

But maybe "sooner" will really be sooner. On top of the Chinese beginning to reduce their holdings of U.S. debt, the bond market has gotten very "frothy" in the last week or so. The rates on Treasuries have escalated by almost 4% in a single week. The bond market gurus and traders are now saying that interest rates are on their way up in a big way. In a speech yesterday, Alan Greenspan referred to the interest rates on Treasuries as the "canary in the coal mine"...the predictor of bad things to come.

How does this affect us, you ask? Well, the gross debt of the U.S. is expected to be $14,456.3 trillion by the end of this year. That's about 98% of the total gross domestic product of the U.S. this year. What's most alarming is that the average maturity of all that debt is only 4.2 years! That is, about half of that $14.5 trillion in debt will become due and payable within the next 4.2 years.

The way those simple facts affect all of us is as follows. If our deficit spending continues unabated, economists project that our national debt will be $18.35 trillion by the end of 2014. When that debt comes due and must be repaid or refinanced what happens if...

• Interest rates continue to climb and the U.S. Treasury finds it necessary to replace bills and bonds with interest rates averaging between 2.5-3.5% with new debt instruments carrying rates of 4-5-6%?

• And what happens if China, Japan and Saudi Arabia, the largest holders of U.S. debt decline to buy all the new and increased debt that is needed?

In essence, I'm describing a situation where the U.S. is definitionally bankrupt. It can't pay it's debts when they become due.

What would happen then is that the Treasury would simply print more money--increase the money supply--and use the new money it prints to pay off old debts as well as finance spending that it can no longer finance by selling debt. That would drive the value of the U.S. dollar to unheard of low levels and inflation would skyrocket.

The price of the goods, services and products would increase to reflect the decline in the value of the dollar. The inflation could be pretty bad...$7-8 a gallon gasoline, cars that now cost $20,000 could easily cost $30-40,000, the price of groceries would skyrocket, the cost of services like insurance would escalate to reflect the increased costs of those risks that insurance companies underwrite. Yes, if you think that health insurance is high now, it could appear to be a bargian in only a few years.

If you thought there is public outcry over the healthcare reform bill now, wait until runaway inflation eats away at the purchasing power of every man and woman in the U.S.

Frankly, I thought that these events would occur, but would occur slowly and not really be a problem in my lifetime. I've begun to change my mind. I think these events could easily occur sooner...much sooner than I expected.

Remember that key fact...at least half of the public debt issued by our country becomes due and payable in 4.2 years. The questions are: at what interest rate will be able to refinance that debt as it rolls over? And if the national debt keeps growing as fast as it has, will there be enough money--enough buyers of our debt--to buy all that we will need to sell to finance our spending?

I'll end this note by saying that the situation I've described could actually be a good thing. Given that situation, our elected politicians would have no choice but to drastically cut spending and probably increase taxes. There would be no alternative. No one political party, ideological group or candidate would have to take responsibility for those inevitable actions. The pain resulting from slashing spending and increasing taxes would be less than that resulting from runaway inflation.

The end result might actually be a good thing for the country....really bad for each and every one of us, but good for the country.

I heard that the deficit under Obama is already more then the previous 43 presidents combined. Maybe if he had concentrated to putting America to work instead of bankrupting us, the financial picture would be more rosy?
Social Security is dishing out more then it takes in because 20% of Americans are not contributing payroll taxes.
Simple arithmetic. I heard a new name for the health care bill called The Intolerable Act.
Maybe it will catch on?

Originally Posted by Donna2

...I heard that the deficit under Obama is already more then the previous 43 presidents combined....

Donna, with all due respect, maybe what you heard is actually true. It sounds like kind of a wild statement; I'm not going to bother to research it.

But just think about the allegation. One President and one Congress could actually do all those bad things fiscally, all by themselves, in only 430 days, about 14 months?

I'm certainly not arguing that all of the decisions made since January 20, 2009 were fiscally sound. But some of the current President's predecessors provided a little "wind at his back", not the least of which were the financial crisis and the costs of beginning to clean it up, an economy careening into recession, and the two wars that came along with the job. Whatever the deficit was during Obama's first year in office, $1.2 trillion of it was the result of a budget signed by George Bush.

Having said that, I still believe that things will have to change in a very big way that none of us is going to like very much.

Originally Posted by Villages Kahuna

I've commented that sooner or later the piper will have to be paid with regard to the runaway deficit spending done by our Congresses over the last 10-11 years and the humongous national debt that such fiscal irresponsibility has caused.

But maybe "sooner" will really be sooner. On top of the Chinese beginning to reduce their holdings of U.S. debt, the bond market has gotten very "frothy" in the last week or so. The rates on Treasuries have escalated by almost 4% in a single week. The bond market gurus and traders are now saying that interest rates are on their way up in a big way. In a speech yesterday, Alan Greenspan referred to the interest rates on Treasuries as the "canary in the coal mine"...the predictor of bad things to come.

How does this affect us, you ask? Well, the gross debt of the U.S. is expected to be $14,456.3 trillion by the end of this year. That's about 98% of the total gross domestic product of the U.S. this year. What's most alarming is that the average maturity of all that debt is only 4.2 years! That is, about half of that $14.5 trillion in debt will become due and payable within the next 4.2 years.

The way those simple facts affect all of us is as follows. If our deficit spending continues unabated, economists project that our national debt will be $18.35 trillion by the end of 2014. When that debt comes due and must be repaid or refinanced what happens if...

• Interest rates continue to climb and the U.S. Treasury finds it necessary to replace bills and bonds with interest rates averaging between 2.5-3.5% with new debt instruments carrying rates of 4-5-6%?

• And what happens if China, Japan and Saudi Arabia, the largest holders of U.S. debt decline to buy all the new and increased debt that is needed?

In essence, I'm describing a situation where the U.S. is definitionally bankrupt. It can't pay it's debts when they become due.

What would happen then is that the Treasury would simply print more money--increase the money supply--and use the new money it prints to pay off old debts as well as finance spending that it can no longer finance by selling debt. That would drive the value of the U.S. dollar to unheard of low levels and inflation would skyrocket.

The price of the goods, services and products would increase to reflect the decline in the value of the dollar. The inflation could be pretty bad...$7-8 a gallon gasoline, cars that now cost $20,000 could easily cost $30-40,000, the price of groceries would skyrocket, the cost of services like insurance would escalate to reflect the increased costs of those risks that insurance companies underwrite. Yes, if you think that health insurance is high now, it could appear to be a bargian in only a few years.

If you thought there is public outcry over the healthcare reform bill now, wait until runaway inflation eats away at the purchasing power of every man and woman in the U.S.

Frankly, I thought that these events would occur, but would occur slowly and not really be a problem in my lifetime. I've begun to change my mind. I think these events could easily occur sooner...much sooner than I expected.

Remember that key fact...at least half of the public debt issued by our country becomes due and payable in 4.2 years. The questions are: at what interest rate will be able to refinance that debt as it rolls over? And if the national debt keeps growing as fast as it has, will there be enough money--enough buyers of our debt--to buy all that we will need to sell to finance our spending?

I'll end this note by saying that the situation I've described could actually be a good thing. Given that situation, our elected politicians would have no choice but to drastically cut spending and probably increase taxes. There would be no alternative. No one political party, ideological group or candidate would have to take responsibility for those inevitable actions. The pain resulting from slashing spending and increasing taxes would be less than that resulting from runaway inflation.

The end result might actually be a good thing for the country....really bad for each and every one of us, but good for the country.

There is nothing in your post VK that is surprising. I posted a few days ago that Social Security is going into deficit this year, and first of all, allow me to say that BOTH parties have raided this account for years for social programs and war. I say that so that folks dont say I am blaming Obama for this situation directly...that, of course is not true.

HOWEVER, this congressional leadership...these people who brought us "bail outs" and now a large political boondoogle with an health care bill that doesnt even address cost control (and in fact pawns off the paying of the bill until someone else is in office while they pat themselves on the back), just will not stop spending and recall in Jan of 2005 right after Bush asked for ideas on Social Security and offered his own of privatization because as he said later it was a problem that future generations will need to address...didnt make much news...Pelosi on the other hand did make news with this in Jan of 2005 "“That tradition is embodied in the Democratic Party’s commitment to Social Security.

“Social Security is the most visionary example of what President Franklin Roosevelt called ‘bold, persistent experimentation.’ Its goal was to ensure that the prospect of retirement was not met with the specter of poverty.

“It has been an incredible success. It has enabled our seniors to enjoy independence. And it has enabled our country to obey the commandment: “honor thy father and thy mother.”

“Not only does Social Security improve the lives of the more than 33 million senior citizens who receive its benefits, it also provides a measure of independence for workers who have become disabled, and the children and spouses of those who have become disabled or passed away.

“Social Security does face problems down the road. We need to solve them. But we have the time to do it right.

“We can solve this long-term challenge without dismantling Social Security, and without allowing this Administration’s false declaration of a crisis to justify a privatization plan that is unnecessary, unaffordable, and unwise.

“To be sustainable, any long-term solution must be bipartisan. And as a first step, we must work off the same set of numbers.

"The President talks about a crisis, but according to the nonpartisan Congressional Budget Office, Social Security will be solvent for nearly 50 years.

This is the mindset we are faced with. We continue to give unions breaks...we continue to talk about more spending....and yes, I am talking about all Democrats....that does not mean I do not understand that Republicans have raided this account also, but I am speaking of who is in control RIGHT NOW.

Folks, they are going to have to raise the age of retirement again, while reducing medicaire benefits...what do these people think is going on out here in the real world.

Sorry....I am ranting...lost focus and just mumbling now but still going to post this and just hope that people see what is going on in this country right now. The perfect storm (This President and this congress) at the totally wrong time in history from my perspective and I see NO chance of let up.

This President, as he has done his entire career, will CREATE another crisis to involve our government spending and controlling and he will then have this congress act on it !

Sorry...shouldnt post it but going to anyway and then just back off. But be aware of Social Security !

Sorry VK...I did not address your post very well, but whats new

Originally Posted by Villages Kahuna

Donna, with all due respect, maybe what you heard is actually true. It sounds like kind of a wild statement; I'm not going to bother to research it.

But just think about the allegation. One President and one Congress could actually do all those bad things fiscally, all by themselves, in only 430 days, about 14 months?

I'm certainly not arguing that all of the decisions made since January 20, 2009 were fiscally sound. But some of the current President's predecessors provided a little "wind at his back", not the least of which were the financial crisis and the costs of beginning to clean it up, an economy careening into recession, and the two wars that came along with the job. Whatever the deficit was during Obama's first year in office, $1.2 trillion of it was the result of a budget signed by George Bush.

Having said that, I still believe that things will have to change in a very big way that none of us is going to like very much.

VK...I will not get into a who did what when....seems it all is Bush's fault, BUT MY POINT IS THIS...

This President is the one in office NOW....this congress is in office NOW and they dont seem to understand what they are doing to this country !

Reagan cut taxes and revenues to the federal government almost doubled. The situation you describe doesn't have to be that way. The current administration is putting us in that situation... on purpose I believe.

STOP SPENDING AND GET THE PRIVATE SECTER HIRING AGAIN.

Ain't gonna happen with these crooks.

Originally Posted by Bucco

the other hand did make news with this in Jan of 2005 "“That tradition is embodied in the Democratic Party’s commitment to Social Security.

“Social Security is the most visionary example of what President Franklin Roosevelt called ‘bold, persistent experimentation.’ Its goal was to ensure that the prospect of retirement was not met with the specter of poverty.

“It has been an incredible success. It has enabled our seniors to enjoy independence. And it has enabled our country to obey the commandment: “honor thy father and thy mother.”

“Not only does Social Security improve the lives of the more than 33 million senior citizens who receive its benefits, it also provides a measure of independence for workers who have become disabled, and the children and spouses of those who have become disabled or passed away.

“Social Security does face problems down the road. We need to solve them. But we have the time to do it right.

“We can solve this long-term challenge without dismantling Social Security, and without allowing this Administration’s false declaration of a crisis to justify a privatization plan that is unnecessary, unaffordable, and unwise.

“To be sustainable, any long-term solution must be bipartisan. And as a first step, we must work off the same set of numbers.

"The President talks about a crisis, but according to the nonpartisan Congressional Budget Office, Social Security will be solvent for nearly 50 years.

This is the mindset we are faced with. We continue to give unions breaks...we continue to talk about more spending....and yes, I am talking about all Democrats....that does not mean I do not understand that Republicans have raided this account also, but I am speaking of who is in control RIGHT NOW.

Folks, they are going to have to raise the age of retirement again, while reducing medicaire benefits...what do these people think is going on out here in the real world.

Sorry....I am ranting...lost focus and just mumbling now but still going to post this and just hope that people see what is going on in this country right now. The perfect storm (This President and this congress) at the totally wrong time in history from my perspective and I see NO chance of let up.

This President, as he has done his entire career, will CREATE another crisis to involve our government spending and controlling and he will then have this congress act on it !

Sorry...shouldnt post it but going to anyway and then just back off. But be aware of Social Security !

Sorry VK...I did not address your post very well, but whats new

You hit the proverbial nail right on the head. There will be another created crisis (non-crisis) and they will act on it. What was that expression they got caught saying? "don't let any crisis go to waste" or some thing like that.
Darn, this administration makes my stomach tie up into a big knot.
I really feel that they don't have the USA in their best interests.

are not inclined to pay much attention to anything that is not on their agenda. And perhaps an America in melt down is his means to an end. Is there any other explanation for the continuation of big spending with absolutely no regard for where the money will come from.....just schmooze, wheel and deal, back room dealing and prostitution of principals.
So now he is out campaigning once again trying to convince we the people that we will like the bill we said we did not support. Does he think he wields some sort of magic by coming out to visit us?
These are not numbers people. They could care less. Haven't heard much about un employment or the wars the last few weeks....too busy on his health care reform agenda......


Yes Captain Obama is rearranging the deck chairs on the Titantic....he is personally conducting the orchestra, while making wonderful speeches about the bump we just experienced was not an ice berg.....

btk

Boy ain't the truth.

Originally Posted by Donna2

I heard that the deficit under Obama is already more then the previous 43 presidents combined. Maybe if he had concentrated to putting America to work instead of bankrupting us, the financial picture would be more rosy?
Social Security is dishing out more then it takes in because 20% of Americans are not contributing payroll taxes.
Simple arithmetic. I heard a new name for the health care bill called The Intolerable Act.
Maybe it will catch on?

You are correct Donna. I have done the research.

VK always tries to lump Bush With Obama and always suggests raising taxes.

People continue to loose their jobs because people quit buying things. What's the best way to get people consuming again? Tax the crap out of them so they have even less money to spend. Now there's an idea!

Originally Posted by dklassen

People continue to loose their jobs because people quit buying things. What's the best way to get people consuming again? Tax the crap out of them so they have even less money to spend. Now there's an idea!

Yea Mr. dklassen. And we can take more money out of circulation by penalizing people (especially the young) for not buying insurance. But on the bright side, we may have to hire more prison guards for the people who refuse or can not afford to pay the fines.

Originally Posted by Bucco

Folks, they are going to have to raise the age of retirement again, while reducing medicaire benefits...what do these people think is going on out here in the real world.

I still would remind all that Medicare is not free for those already on it, either. Everyone pays a Medicare premium out of their SS which continues to rise.....the same people that paid into it year after year while they were working or still do.

Originally Posted by cashman

You are correct Donna. I have done the research.

VK always tries to lump Bush With Obama and always suggests raising taxes.

I'm not trying to lump anyone with anyone. Our elected political leadership over a long time has gotten us into this financial mess. But the facts can't really be avoided. At the beginning of George Bush's first term the federal budget was not only balanced, but generating more revenue than was being spent. Alan Greenspan was very concerned that the national debt would actually be completely paid down in only a year or two and he was diligent in avoiding pointing out to Congress that they would actually have a lot more money to spend...because he believed that they would!

Eight years later, when Bush left office, the national debt was $10.7 trillion, the federal budget was creating year-over-year deficits that were growing dramatically, the economy was careening into recession, we were fighting two wars, and even the Republican candidate for President observed that Congress was "spending like drunken sailors". The national debt right now is about $12.6 trillion and economists project that it will grow to $14.6 trillion by 2014. Each year we are spending more than a trillion dollars than the government takes in in taxes. That deficit is growing each year.

For the first six years of Bush's term the Congress was controlled by the GOP, and for the final two and into the present, it's been the Democrats. And yes, the Democrats seem to be spending at a rate not seen during even the most profligate years of GOP controlled Congresses.

Those facts are unassailable. And they demonstrate what I've been trying to say--but folks like you seem to think I have a liberal agenda. Read that into my forewarnings if you wish. But the federal budget cannot be balanced with only cuts in spending. I've pointed out before that even if ALL spending by the federal government other than defense, Social Security, Medicare and the interest on the national debt was eliminated we would still be almost $1 trillion short of a balanced budget. Even if we then completely eliminated all spending by the Defense Department, we still wouldn't have a deficit-free budget.

Do you think I want to pay more taxes? No way. But I'm telling you all that the arithmetic tells us that taxes will have to be increased, and probably fairly substantially. The arithmetic shows that it's unavoidable.

Study the numbers yourselves, folks. It doesn't take a college degree in math. But to just keep ranting that by electing conservatives who will cut spending, the problem of the deficit and the national debt will be solved is just plain incorrect. BOTH the liberals and those who called themselves conservatives got us into this mess. That includes George Bush as well as Barack Obama and Congresses lead by Denny Hastert and Bill Frist as well as the Reid-Pelosi duo.

Read a recent statement by a well-known former GOP Presidential candidate who is known to be more conservative than middle of the road, Pat Buchanan. In his column last month in the conservative online publication The American Cause entitled, "Obama's Problems--And Ours", he concludes his review of the shortcomings of several previous administrations and the Obama administration by saying...

"... in 2012, the party of Sarah Palin, Mitt Romney and Ron Paul will have to tell the country how it proposes to end these wars without losing them, how to bring manufacturing back and how to cut spending by $1 trillion a year, if taxes are off the table.

That Republicans failed under George W. Bush few Republicans today deny. That Obama and his White House are failing today few Democrats will privately deny.

The question raised by the successive failures is whether either party has a cure for the maladies that afflict America. Or are those maladies beyond the power of politics to heal?

Have we become a people incapable of accepting the sacrifices previous generations made, and of producing leaders with the vision and strength of character that our leaders of old possessed?"

Again, I implore you all to look at the numbers, just as Pat Buchanan has. See if you can figure out how ANY candidate from ANY party can cut $1 trillion out of the federal budget...how ANY candidate or party can begin to resolve our fiscal crisis without raising taxes.

If you can find a way, please post your ideas here. We're headed for a trainwreck and there's no way any of us can get off. We keep changing engineers and one is worse than another.

You can read Buchanan's entire column at http://www.theamericancause.org/inde...t01returnid=29 Or, you can read all of his columns in The American Cause at http://www.theamericancause.org/index.php

OK. Kahuna has been beating the drums to raise our taxes.

Any other ideas on how to solve our money problems?


Seems like the USA keeps on giving and giving money to the world and we get nothing back. Maybe call in our chips and have other countries pay us back?

Sell some land ? Any ideas beside raising our taxes?