There are many in Washington that claim increasing the debt effects our children. Both increasing debt and cutting taxes provides a short-term sugar rush. But, when that debt money works its way through the economy it will lead to inflation and a rise in gdp.

Exactly 30 years ago the debt was 0.826 trillion. Today the debt is 11.9 trillion. Plugging it into a Rate of Return Calculator, I get 9.3% yearly increase. Thank you Laffer and Reaganomics for cutting taxes. Thank you stimulus spending.

It is my view this increase will lead to 9.3% CPI inflation. The population growth has been 1% over this period. Thus, adjusted 8.3% inflation.

The federal government offers 4.01% percent interest on the t-bond. Thus, we are ripping off anyone that holds these bonds at 5.3% rate. Foreign governments own 27.9% or $3.21 billion.

Basically we are ripping off foreign governments 175 billion annually because they buy our debt. 7% is held by state and local governments, and 13% by investors, and 50% by the federal government/fed itself.

So in summary sell your bonds and buy aluminum, gold, copper, steel, stocks, land, farms, something that is a real asset and has less taxes than cash flow.

Thank me later when you still have your life savings. Don't buy someone else a boat, factory, or building. Buy your own.

Thank me later.

BTW, I was listening to radio saying it is not American to bet against the dollar or to buy foreign stocks. My response is it not American to support crooks. Don't paint Tom Sawyers fence, make him do it.

END THE FED!

The debt doesn't correlate 1 for 1 for inflation. You can't just subtract the population increase as well.

Your points may be right, but your math is way off. Or at least needs explaining.

Any other numbers you want to simply make up with no economics background while you're at it?

Say the debt is $10 trillion. Say you have a balanced budget, but you decide to run a war, and float $1 trillion in bonds. Bonds, are not currency, but basically a future tax. You pay the debt back and the interest.

However, the $1 trillion is pure cold hard cash. The serviceman gets a check that can be cashed in federal reserve notes. The bridge worker gets a check in federal reserve notes.

Thus, the economy is now $11 trillion, with the debt.

However, the government does not and will never pay off or balance the budget. They only add more debt. Claiming it will hurt your childrens future. It will not hurt your childrens future it will hurt your future, once material stocks realize there is more money, 10% more money out there. To compensate they will increase prices exactly 10%. As the same amount of work is required, but there is 10% more units of work (dollars) out there. So the material stocks increase their prices 10%, then the retailers increase their prices 10%. Everybody gets a 10% pay increase.

Who gets screwed. The savers the mom and pop trying to save for a car, house, or business. Anyone with liquid assets who is slowing accumulating wealth. People living paycheck to paycheck don't. Stocks will increase revenues and earnings, thus they are immune. Metals and materials will go up they are immune.

Thus the middle class hoping to gain wealth and move to the high class gets screwed. The business owner won't because his wage will go up with inflation.

It created this nation of zero savings rate, living paycheck to paycheck.

Apparently there indeed were more numbers you wished to make up.

Maybe you'd like to use some numbers to prove how OP is actually wrong, rather than just simply asserting that he is wrong. So far his logic seems sound.

His economic reasoning is pretty flawed...he's definitely just making **** up even though some of his general conclusions are right.

Really? The logic that if the debt increases X% then CPI increases X%? Why don't you Google the last 30 years of CPI and see if it corresponds directly to monetary supply or debt. It isn't hard. OP made this assertion without data. It takes 5 seconds to Google and refute with historical data. I already have done so for myself but will leave it as an exercise for you to learn how to find facts.

If the facts involved are so simple and indisputable, why can't you provide a summation of them? This is a discussion board, after all. Just dropping in and saying "this guy's wrong" and "if you question my assertion that he is wrong, you're being negligent for not using Google." I don't need your exercise in fact-finding, but thank you anyway, Professor.

So let's recap:

OP claims that if the debt increases 9.3% annually (as it has last 30 years), then CPI should as well.

You accept this theory, while others point out that it is pulled from OP's ass. And you never think about Googling what actually happened to CPI over last 30 years? Perhaps you do need an exercise in fact finding.

(Hint: It doesn't track with debt.)

Op is right. If the population increase is 9.3 %, then the debt increase is 0 adjusted for inflation.

So would it be better if he just said inflation instead of CPI since most here know that the CPI does a pretty crappy job of actually measuring real inflation?

There are other factors like true productivity. Below is a excerpt.

Birmingham Steel's four minimills rank among the most efficient in the nation, producing a ton of steel in 1.4 worker-hours. And, data would suggest that Nucor employees have not come close to exhausting these enhancements to the learning curve: As shown in the figure, productivity – measured as tons produced per employee – doubled during the period from 1990 to 1995 (626 tons/worker and 1,269 tons/worker respectively) and continues to climb. In 1997, productivity per employee exceeded 1,400 tons/worker. How are they able to realize such productivity gains in this mature industry? Between 1973 and 1986, worker-hours per ton of steel decreased from 14.07 to 7.4.

These are not small gains. I would put productivity at steel mills over 5% per annum. Now you have 9.3% money inflation minus 1% population deflation, and say 4% productivity deflation. We are also in the position where rich people have accumulated wealth. So the people owning us debt might only see a break-even return on their investment in terms of steel prices.

However, if the government decided to balance the budget. There would be no money inflation and your money under the mattress would appreciate at 5% per year due to deflation. Most people working would see no pay increases but their true wages would rise 5% per year due to productivity and population growth.

Instead, the government takes your money and gives it to banks to pay for some donks boat. They default on their loan and we are left with the bill via inflation.

I had 100K in 1990, at 5% per year I could buy a nice home. Instead I paid for some guy at the fed so he could wear a nice suit and go to meaningless federal reserve meetings.

END THE FED, balance the budget, increase taxes, eliminate wasteful government spending, eliminate credit.

yeah.

Your graph only goes to near the end of Febuary, though. That's very misleading considering what's happened since then.

Can we all just agree that the Federal Reserve is a private central bank that has been bankrupting the U.S. since 1913 and move on to more important things. I mean, who cares about the math at this point?

This has nothing to do with fed. It has to do with government spending. Debt/gdp ratio means nothing. Basically it is a measure to determine how much they can increase debt and people will still work. It also measures hyperinflation risk as debt/gdp rises this risk increases.

The guy complaining about math is most likely the one living paycheck to paycheck and taking out massive loans at savers expense.

Yeah, ok. If you don't understand that this wouldn't even be possible with the Fed and fiat money, then you are just spouting talking points with no real understanding of the situation. Sorry but you should check out this book, I think you'll like it:

http://endthefed.us/

.

No.

Fiat money is good, if you balance the budget. Watch the money masters.

Thepurpose of this thread is to inform you to take all the cash around your house, money in the bank, and savings/treasury bonds sell them and put them in real assets like PM, houses, IBM, KMB, gold, land. As you will lose 9% annually. Make sure your shares outstanding of your stocks are stable and they increase the dividend 10% annually.

Gold is not that good as they are finding new gold and it is tearing down the wilderness to get it. It is picking winners.

Fiat currency with a balanced budget is ideal. I think I read today Obama wants another stimulus, to take money out of your bank account and give it to government overpaid contractors. You can pay for it not me.

I would consider getting all your money out of liquid assets and apply for food stamps and welfare. Ask not what you can do for the country, ask what has the country done for you. Kennedy got to live like a king and bang groupies on our dime.

You are all over the place.

Gold is picking winners?
Fiat currency is ideal?

Where did that Kennedy line come from? Kennedy was the last president who realised what the banking cartel was doing to america and he might have tried to do something about it. But of course he was stopped before that could happen.

How do you percieve the role of the FED and what, if anything, would you like change in monetary policy?

problem is: we haven't invented politicians yet who know how to balance a budget


What makes gold better than paper money, is that people in the end, will always, under almost every circumstance, trust gold as a medium of exchange. Also: you can't print gold, which is a big plus.

They know how to balance the budget. They just don't do it.