I'm still trying to wrap my head around whether or not raising the date ceiling will have positive or negative long term affects on the overall economy. From what I can tell the overwhelming sentiment is that it was a great thing, because look at what would have happened if we didn't...

But on the other hand we basically told the world that if we can't borrow more money to pay off existing debts then we will simply default and leave everyone else holding the bag. How long is that sort of model sustainable and when/will this ever come to a head?

Probably in 20-30 years, but you never know when a surprise might happen.

Pretty sure we are going to be in a long period of stagnation like Japan has been the last 20 years, to unwind the damage that has been done.

"The nature of a crisis is that it cannot be predicted"

I delayed my inevitable death today by having lunch.

Us not paying our bills would be a bad idea.

Going deeper into debt to pay off an ever-increasing existing debt? Yeah that's probably sustainable.

If the economy grows faster as a result of increased cheap debt, this results in higher tax revenue for the government to use to pay off its debt. Increasing debt isn't bad so long as revenue is increasing with it... Many people don't understand this. Japan had a decade of stagnation because their debt is over 240% of their GDP vs America's 70-80%.

3 or 4 years ago, I created a thread asking "Dear candidate up for election: what if growth was over?" ...

needless to say, it wasn't received well... because trolls. ...

but also, because the mere mention of such a scenario creates an immediate "fatal system error" in the cranial circuitry of most every capitalism junkie in the PoFo -- which amounts to some 98% of them. The idea that growth might just have limits simply does not compute.

Do any people here ever wonder why international monetary entities and sovereign nations - some 7 years into this long-predicted crisis - have zero solutions for what ails the global economy? Or why nothing (short of buying our own bonds and magically granting greater borrowing limits) has really "worked" thus far?

For many here, it may be time to completely reprogram... and perhaps entertain the possibility that, guess what? Triple-digit oil prices really ARE seizing up the global economy.

If that can't be something you can even fathom, that's fine too. Just keep advocating more of the same. For surely we'll dig our way out of this mess any month now.

Well so far it has largely been working... but I do agree that if growth does stop despite all this it will create an issue if not corrected. The 20-30 years estimation is laughable as our debt levels are no where near any sort of crisis mode, nor on pace to be in crisis mode in the next few decades. The federal deficit is decreasing since the financial crisis peak, and growth has been fairly consistent as well. Could it be better? Absolutely.

but where would it all be without TARP, QE I-II-III and $85 billion/mo. in bond purchases?

IMO, that's not growth... that's not "working" ... that's buying time.

I still view it as growth because I also consider what the alternative is. Without TARP, QE, etc. how would our economy be now? The answer is we would have entered a depression greater than the great depression. Reversing a receding GDP into increasing is quite a victory given the circumstances that were faced.

My point is: Isn't it extremely troubling that the situation was/is so desperate that it all (money printing, essentially) needed to be undertaken in the first place?

Do we really believe this was just a short-term blip due to sub-prime lending and over-leveraged investment banks? In my view, those were merely symptoms of the underlying diagnosis.

This is new territory here, and we don't yet know what the side affects will turn out to be. But - despite an inflated S&P and DOW - the fundamentals largely look horrible.

Kicking the can down the road would be passable if there were tangible signs of changing the economic and energy paradigm in the meantime. There really aren't any of those signs. It's still business as usual.

Fortunately, the economy doesn't care about your opinion.

I wouldn't worry about it too much unless you are rich and heavily invested.

Of course it doesn't. Meanwhile, it's failing.

Fortunately, the planet doesn't much care about the economy, nor our notion of "growth".

Right. Because as history has shown, it's never the lower and middle classes who feel the brunt of collapse first.

I agree we are heading down the same path Japan took, but we are quite a ways behind them. Mainly because of the reason rainetech points out.

Household and corporate debts have bent that curve, some state governments have started to as well, and soon the federal governemnt (as always) will figure everything out last and will follow in the footsteps of individuals, corporations, and state governments.

That isn't even an opinion. Nothing is failing. Poverty rates in the USA are 36.6 percent lower than in the late 1950s.

GDP in real dollar terms is at an all time high, Chicken Little.



See Japan.

All their doing is continuing to push the debt down the line.

The economy is treading water mainly because the banks still don't have much incentive to loan. I haven't paid much attention to yields since November, but the yield curve was becoming steeper. Banks can borrow relatively cheap and then buy up treasuries and just collect the spread with 0 risk. Why lend money to risky business models when you can collect risk free profits? Once that turns around, there will be more money, more jobs, better tax revenue, etc. Then you can start cutting into that debt.

Also, you just have to cut expenses at some point. I don't want to get into Obamacare as it's guaranteed to start a war on here haha, but that isn't helping the budget.

Please everyone ignore this post for the sake of discussion. This is so far off base. I'm not even going to correct it, just imagine it doesn't exist here. Thanks.

I read an article about it a while ago, and i didn't think to double check my info. You are right, what I said is wrong. I should have double checked.

On the other hand, there's no reason to be a complete ass hat. Respectfully disagree and move on. No reason to be a condescending know it all...

I could have been an ass hat and shredded it to pieces. I instead chose to just ignore it and make sure others did the same. How would I get people to not listen to it in a nicer manner?

Let's just do this with the entire thread. Politards gonna tard.

That is some mind-boggling spin right there. Oh, wait, I'm sorry. Are you in the bubble of a gated community, like so many here on "Team No Problem?"

Never mind how arbitrary the "poverty line" truly is (even the ultra RW Cato Institute dismisses it as "flat wrong") ... and never mind that poverty is a global problem amid a global economy ... , but the current U.S. rates are buoyed much greater government aid (unsustainable) than the good ole days of Eisenhower. Nice try.

Pretty sure this forum has put the relevance of GDP - nominal AND real - in proper perspective long ago. We can again cover all the reasons it's not an optimal indication of economic health if you really need to.

“The welfare of a nation can scarcely be inferred from a measure of national income. If the GDP is up, why is America down? Distinctions must be kept in mind between quantity and quality of growth."- Simon Kuznets, only the creator of the GDP metric.

In any event, we were talking about growth, not GDP.

Oh, I understand now. I'm talking to a college freshman.

Right, as soon as you see Itay, Portugal, Spain, Greece, Ireland, Ukraine, and just about every Arab Spring country where the poor are rioting, just off the top of my head. ...

But yeah, nothing is failing.

[William Shatner Voice]Must resist. Urge to. Respond. Temptation is. Too strong. Can't resist.[/Voice]

Sorry.

Krugman is that you? Jesus.

We can't point to the US to have the same Stagnation as Japan. Japan has a very unique economy, very different from the western developed economies. They also had a massive run up in asset prices with decades of high growth. The economy was also not structured well to reorganize after a shock and struggled with extended deflationary pressure and monetary policy mistakes.

are you tapping out like you did in the "algae can be oil!!!" thread? ... I mean, this should be a softball for you if your convictions are true. I'm "chicken little," after all.

Respond away. You make quite an assertion, I just want to be clear.

GDP and poverty rates? Those are your main indicators for the health of the U.S. economy? Did you have anything else, or were those it?

Maybe you could tell us more about the wonders of innovation.

You started making up numbers by misreading a paper. At that point I didn't feel the need to respond.

[quoteGDP and poverty rates? Those are your main indicators for the health of the U.S. economy? Did you have anything else, or were those it?[/quote]

There are tons of economic indicators. Average Joe is better off today than in the 1950s by every measure except for obesity rates.

Public debt isn't making it grow slower, and by every measure it is far from out of hand and will decrease as a percentage of revenue and through inflation. Everyone knows that the time to borrow is when rates are low.

I didn't say what my convictions are. I said that not raising the debt ceiling would be stupid. That isn't a strong conviction, unless you consider my belief that the world isn't flat to also be a strong conviction.