Right On Brother.

Wow.............two posts back-to-back.

And all future price increases compound of a much higher base, double OUCH!!!

Oh you pay taxes on them alright, through the corporations that sell them paying taxes on their profits. BTW, in New Mexico you would pay gross receipts tax on groceries, medical and legal bills, literally any service you pay for or item you buy. Its gross receipts tax is essentially a sales tax on steroids and one of the reasons NM has failed to attract businesses and otherwise develop.

Oh, I almost forgot. NM taxes social security, too!

Stop it, you're starting to scare me... :thumbup:

i'm not sure if i'm happy or not. you know the way they like to fudge these numbers to get a positive outlook. is it really what i'm seeing, or something else that occurs every 4 years?

don't you love the way they try to blame boomers for the economy? what had we been telling them for years growing up? it can grind my gears

we tried, Girl! some kids listened but most didn't. we as parents started teaching them credit is the way to live by racking up debt instead of using cash $$. when they saw all those credit cards coming it was a magic payday spending spree! file bankruptcy? why not, everyone else does. have no money? worry not, just borrow & borrow until you can no more.

People keep saying "our grandchildren are going to inherit our debt". While its true, its misleading. The fact is each time our government borrows money, which it has been doing like crazy for decades and especially of late, we immediately begin paying interest on that money. Just like when you take a car or home loan, you immediately get charged with interest. Same thing. And rather than the nice ~1-2% loan rate Obama and Trump had, Biden is borrowing at ~5% rates, meaning not good news for us taxpayers.

The Congressional Budget Office has already announced that this year, we will pay more interest on our current debt than our ENTIRE defense budget! They project that in 5 years $.50 out of each $1.00 we pay in tax will go to pay the interest on our debt (due to current borrowing rates - see those generous student loan payoffs, and crazy handouts, aren't actually free after all).

Without massive change, within a decade or so they project 100% of our tax revenue will go to pay the interest on our debt. No more money for SS, Medicare, Defense, Welfare, etc. Depressing I know, but its the state we are in.

2.5% of GDP
 

It cost about 2.5% of GDP to service the US debt. The real problem is adding 1 trillion to that debt every 100 days or the equivalence of 10%annually with the current debt at 34 trillion. This can’t be sustained. The US government wins out when we have inflation, because yesterday’s dollar doesn’t cost as much as today’s. It hits the people hard, but politicians bask in it.

As long as the Fed keeps trying to fight inflation with higher interest rates, I couldn’t be happier. I know that might not be the most popular opinion but I'm strictly looking at it from a financial perspective.

And foolishly the same people who are causing this keep getting reelected

I think GDP is a largely irrelevant metric. Really its our government's tax revenue that matters. That amount that we the people have agreed upon to pay them annually, under the assumption that they will spend wisely. I know many economists and politicians use GDP often, but I think they do so to downplay the seriousness of our financial situation. Its sort of like if a family member going to the bank for a loan has tons of debt, but tells the bank not to worry because their siblings and cousins and aunts and uncles, etc. have lots of money. The bank cares only about the borrowers (governments) assets, and cares not for the rest of his family's financial situation (the taxpayers). Unless of course the other family members agree to co-sign the loan (all of the US citizens agree to pay WAY more in taxes).

...I am open to another train of thought though regarding 'GDP's value' in US debt discussions, if you care to discuss.

Yes, I agree. The gov wants, ...needs, inflation. But our debt is now so big, and still growing due to the unending handouts from this administration, that I don't see how even mass inflation makes the numbers work out.

Some time ago did just a little reading on the issue of sovereign debt, all the "money" that was borrowed by governments, that the governed owed , depressing, the numbers high and getting higher with no practical solution, and certainly not just this country. Doom and gloom prediction are easy to find, practical solution not so. Faced with a worst case scenario of a international financial systemic failure you can be sure that governments would exert their sovereign powers for "easy" short term solutions that would create long term problems, oh well.

Unique
 

I would concur on tax revenue. We are on a unique path from the rest of the world. We have a Fed that sets interest rates to reduce inflationary pressure separate from what our spend happy leaders want. Or at least so it SEEMS.

Our FED has dictated a 2% goal for a healthy economy and so far the soft landing seems to be obtainable. The exception is the housing market which they could care less about. I foresee a slight increase in the lending rate or current status quo at least till year’s end. We need to get inflation down from 3.3%. This should keep current servicing rates predictable.

The twist is continued borrowing. How high can this go? I’m not thinking the average citizen can afford much more due in large part to inflation at the grocery stores and the rising cost in home purchases and borrowing. This leaves the following questions: Can Americans pay more in taxes? How much debt is solvent?

Companies could be taxed, but they won’t operate at a loss, they will raise prices on their goods. We’ve seen the failure of VAT taxes in Europe and the pickle they are in. Perhaps a straight forward taxing system is needed? Flat taxing for everything on everybody?

The Fed separation from government will continue, it has to. It’s the only system that keeps our financial system stable. Debt will be paid down only after consequences are felt by all of us and we demand something be done. Only then will politicians stand on that platform. Till then, we will have a special interests taxing system with thousands of loopholes and the spend, spend, spend giveaway attitude by politicians.

another failed upload

It is a real problem for young families. But should not be a problem for seniors who have adequate income and savings. That being said I don't smoke or drink. But I do see the price of beer, wine, and liquor has gone thru the roof. Beef prices too. Not so much chicken or produce. So those senior who smoke, or drink, or eat beef every night are really hurting. Oh well...

The real problem is the basis of the rate. When your government uses a rate that removes food and energy price inflation as they are "too volatile", the politicians get to skate on those items that affect you most. If you are like me, with a private pension that makes up the majority of my income, the 19% accumulated inflation over the past three years will never be recouped in any manner. It's gone. My pension is worth 19% less than it was worth three years ago (plus the food and energy inflation that has been removed from the rate).

In retrospect, you could have taken a lump sum payment from your pension.

Hindsight is 20/20

Four years ago people were hoarding toilet paper, chlorine wipes and paper towels.

...and rubbing alcohol, bread, aloe vera juice, packaged foods, bottled water, canned foods, neoprene and latex gloves, ammonia, masks, paper napkins, sponges, Lysol spray and other aerosol air disinfectants.

Prices need to be REDUCED to get back to the pre-Biden level of inflation....

I'm not going to read all the posts in this thread so mine may be a duplicate. Theres also a good possibility this post will get deleted......

The federal government collected nearly $4.5 trillion in revenue in fiscal year 2023. They spent ~$6.2 trillion in FY 2023. This is not a one or the other party problem, its an all government and all citizen issue.

Who can spend more than they make year after year and stay solvent?
Who in their right mind thinks this is 1 little tiny bit ok?

FWIW....

https://www.youtube.com/watch?v=zzVmuiXVa7Y

Really the only way out of state slavery.

Is inflation really down to 3.3 ? They can tell us anything, but how do we prove it ? Face it, our leaders lie to us.
Go the the food store, or buy gas or a new car, prices are still high, and that's inflation to me.

Gas in June 2023 was right about $3.30/gal. Today it is close to $3.00/gal. That would be about a 10% DECREASE.

According to here, the price of a dozen eggs in 2023 was $2.80 but only $2.70 in 2024. That would be about a 3.6% DECREASE. WinnDixie is advertising $2.99 and Walmart is $2.06 so $2.70 is believable.

Inflation numbers are calculated on more than just one particular item on one particular day. There is more than one inflation index and certain items are specifically excluded from certain indices. I believe the 3.3% number for the year-over-year increase for a particular index for a particular month... I just don't know which month or which index or what that index includes/excludes.

Hah, nice try! Now compare your "today" prices with those of five years ago.
Eggs in 2019 = $1.40
Gasoline in 2018=$2.74 2019=$2.64 2020=$2.17
Anyone that shops and/or pays their monthly bills, knows when someone is lying to them when they are told that they are living better now than sometime in the past. When the price of products is 30-50% more than another given time, and their fixed income only increases 1-3% and they have to start sacrificing, they know that it's not raining when someone is peeing on their shoes.
3% inflation only means that it has only INCREASED that much since last year. It does not mean that prices have gone down.

Thank you for that explanation but I'm pretty sure that's exactly what I wrote.

Yes, INflation means prices have INcreased.

As for fixed income, much to my surprise it appears that SS fixed income has increased slightly MORE than inflation over the past three years (a range chosen by another commenter).
Inflation: 7.0%, 6.5%, 3.4% -> compounded increase of 17.8%
SS CoLA: 5.9%, 8.7%, 3.2% -> compounded increase of 18.8%
Over the past five years, both inflation and SS CoLAs saw a compounded increase of 22.2%.

It looks like egg prices are slightly below a trend of increases that started in 2001 and gas prices are slightly below a trend that began in 2015. There have been periods of extremes, both high and low, within those time periods but the general trend is clear.

Every time the price of a barrel of West Texas Intermediate Crude Oil goes up, the price of just about everything else goes up with it. When the price of WTI goes back down, just about everything else stays elevated. It’s a better measure of inflation to look at prices of things like food, health care, insurance, and utilities.

Labor
 

Labor prices keep prices up also.

I bet that 3% figure is not a true reflection and that the real inflation is a much higher percentage than that