Borrowing

  • PolitiMAC

    Posts: 728

    Oct 09, 2013 4:37 AM GMT
    Hey everyone icon_smile.gif How's it going?

    So here in Australia, we see a lot of international news (you may do that also in whatever countries you may be in as well), and we see a lot about the hot topic of the shutdown in the US.

    Now, political ideology aside, that means let's forget about the forget that we might be Left or Right, conservative or progressivist or whatever, the whole perception of the impending day of 18th (or 19th; can't remember), meaning a default is bloody ridiculous.

    Even as an Australian, it does not require decades of experience to see that pretending that the country will go belly up because of all that has happened in recent days. Just stop spending. John Boehner said quite emphatically that the American government needs to not live beyond their means, and I'm telling you, he must have been watching Australia's recent election campaign, because that's what our Coalition said as well, and it turned out to be true.

    Borrowing money creates debt. That's why you are borrowing money; when you borrow money, you are going to pay it back. So borrowing money will create debt, NOT pay it back.

    This requires very little thought. Borrowing does not pay off debt. Slowing and lowering spending does. That's what Australia has decided upon, hence the Coalition's win.

    In any case, they've been doing this for years and years, and both American parties have reached the same outcome: more debt. So I think it's time to change tactics, because if you always do what you've always done; you'll always get what you've always got.

    So, of course, the Democrats, I predict, will not see it that way, and will dismiss this as stupid or something, but doing so defies logic, as I have described.

    Discuss if you desire, but I REALLY implore everyone, Democrat or Republican, Leftist or Rightist, conservative or progressivist; DO NOT SLANDER EACH OTHER. DO NOT BE NARKY. SPEAK CIVILLY.

    That is all icon_smile.gif
  • PolitiMAC

    Posts: 728

    Oct 09, 2013 6:15 AM GMT
    Aristoshark saidOnce again, you misunderstand what the debt ceiling is. It doesn't cap future spending, it permits the government to make good on debts it has already incurred. So to default on those debts would, in fact, be catastrophic. The deficit and the national debt going forward have nothing---that is, zero, zip, nada, niente---to do with the debt ceiling.

    Even most foreign journalists don't seem to understand this, which is why it's not surprising that this has been incorrectly represented to you.


    Make good on debts, you said. How does borrowing more money, making more debt, making good on other debt? You taking money out of one pocket and putting it int he other basically.

    They won't default, because that's not how the rules work. I have discussed this at length with my American father who knows a lot about these things, as well as other resources.

    And the way Australian media is presenting it is the way you believe it to be. They act as though the entire US is going to fall apart because of the big bad Republicans simply because Obama says so. Our state media is just as hopelessly left wing as yours is, unfortunately.
  • PolitiMAC

    Posts: 728

    Oct 09, 2013 6:46 AM GMT
    Aristoshark saidIt's not about what I "believe" it to be. This isn't about theory or ideology. It is a fact that the "debt ceiling" authorizes the government to make good on already-contracted debt (in the form of Treasury notes). This is not a point of argument.

    As to whether or not it is wise to continue borrowing, that is another subject entirely. People may disagree about that. I'm trying to make you understand that it is unrelated to the upcoming default.

    Your argument is like saying "We can't afford a new car, so I'll stop making payments on my current one."


    All I'm saying, is stop bloody spending! How is it detrimental to stop spending? You need to stop spending. Now when I say 'stop' I don't mean clamp down Protectionist style and tie everyone's hands behind their back until the debt is gone, sure, people need to pay certain things that are necessary, but the amount of debt is continuously going up and shows no sign of stopping. Borrowing will simply add to it.

    Things that MUST be paid for can be done with GDP, can't it? What's the point of having GDP without it being able to be taxed and used to pay off existing debt? Borrowing creates debt, this is no question.

    If the debt is already contracted and absolutely necessary to pay off, then sure, pay it. But borrow more money to replace that debt with another one? I don't think that's wise or smart. Plus, stop contracting more debt icon_razz.gif This can be dealt with if only the US government wanted to. (Yes, I know it's a little more complicated than that icon_razz.gif)
  • PolitiMAC

    Posts: 728

    Oct 09, 2013 7:12 AM GMT
    Aristoshark saidYou're having a very different discussion, however.


    How? I'm talking about how borrowing money creates debt and how it's not a smart thing to do, as the title of the post implies.

    I am also tying in how the debt ceiling doesn't have to mean that if it doesn't move, then the US defaults. You just need to prioritise paying it down and stop spending. That's the key. To stop spending. That's all I'm saying.
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    Oct 09, 2013 7:21 AM GMT
    lol borrowing money creates debt, duh genius
  • PolitiMAC

    Posts: 728

    Oct 09, 2013 8:07 AM GMT
    somersault saidlol borrowing money creates debt, duh genius


    Well, yeah! That's what I'm saying! icon_razz.gif So why do it more? It would make sense to just stop borrowing more, right? It seems so straight forward to me...
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    Oct 09, 2013 8:13 AM GMT
    you would think so, but they really don't care, they like to spend other people's money (for good reasons and for bad reasons). It happened in many ways. I can explain if you want, but essentailly:

    Clinton fucked up
    Bush fucked up even more
    Obama fucked up yet more

    ask for details if you want
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    Oct 09, 2013 10:20 AM GMT
    Of course the US needs to curb its spending, but the scale of the solution is more like an aspirin for a headache, rather than radiotherapy for a brain tumour.

    Over the next 20 years, the baby boomers are going to feel the squeeze, as the Social Security Trust Fund won't have enough to cover the retirement benefits promised. Taxes in general will have to rise.
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    Oct 09, 2013 10:35 AM GMT
    Be careful, too much common sense in this thread...


    Not enough radical liberals....


    And if you can't afford the current car payment, sell it and buy a cheaper car. Yes I know it's a metaphor, my answer applies.
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    Oct 09, 2013 2:17 PM GMT
    What's wrong with this picture. Hmmmmm.....

    image001-1_0.png
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    Oct 09, 2013 2:30 PM GMT
    Borrowing is ingrained in the US economic system. It was the system of financing the government started under Washington and Hamilton and until the past few decades it has worked well. (Though the argument for and against Hamilton was more divisive then than what is going on in Congress today. Before his Presidency was over, Washington was not even on speaking terms with Jefferson and Madison, but I digress.) As Hamilton knew, it can be a way of projecting national power. In today's world economic environment, one way this power is shown in the USD being the world's reserve currency; it creates a dependency by other governments on the US. But at some point, at least in theory, there has to be a way to pay off bond holders. And that is where the debt is too high. We are reaching the place where we can't pay it off unless we make the USD worthless by inflating it. Neither the GOP for all of their rhetoric or the Dems will stop spending what we don't have and unfortunately for those of you who are younger, we have mortgaged your future.
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    Oct 09, 2013 2:42 PM GMT


    *coughs politely*

    Politinerd, your new Conservative gov't is going to raise the Australian debt ceiling...

    http://www.reuters.com/article/2013/09/27/us-australia-debt-idUSBRE98Q03I20130927


    "Australia to raise A$300 billion national debt ceiling before Christmas"


    "Australia's new conservative government will introduce laws to lift its current A$300 billion ($280 billion) debt ceiling to head off concerns Australia could reach its limit before Christmas, Treasurer Joe Hockey said on Friday."

    cheers! icon_biggrin.gif
  • mybud

    Posts: 11837

    Oct 09, 2013 3:44 PM GMT
    The republican's weren't thinking about our kids future when they decided to lie to us and go into Iraq....
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    Oct 09, 2013 3:45 PM GMT
    mybud saidThe republican's weren't thinking about our kids future when they decided to lie to us and go into Iraq....


    Nor were the Democrats, who overwhelmingly supported / voted for us to go into Iraq.
  • mybud

    Posts: 11837

    Oct 09, 2013 3:48 PM GMT
    franktats said
    mybud saidThe republican's weren't thinking about our kids future when they decided to lie to us and go into Iraq....


    Nor were the Democrats, who overwhelmingly supported / voted for us to go into Iraq.
    Ya because they were lied to..You know the definition of "lie"?
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    Oct 09, 2013 3:52 PM GMT
    The vote for the Authorization for Use of Military Force Against Iraq Resolution of 2002 was:

    House:

    GOP for 215; against 6
    Dem's for 82; against 126

    Senate:

    GOP for 48; against 1
    Dem's for 29; against 21
  • mybud

    Posts: 11837

    Oct 09, 2013 3:56 PM GMT
    neuergriff1 saidThe vote for the Authorization for Use of Military Force Against Iraq Resolution of 2002 was:

    House:

    GOP for 215; against 6
    Dem's for 82; against 126

    Senate:

    GOP for 48; against 1
    Dem's for 29; against 21
    They were lied to...
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    Oct 09, 2013 3:57 PM GMT
    The impact on the debt has been almost 1 Trillion. In every war since the War of 1812, there was a tax to pay for it. In the Iraq War, taxes were cut with economic consequences we are still feeling today.
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    Oct 09, 2013 4:00 PM GMT
    mybud said
    neuergriff1 saidThe vote for the Authorization for Use of Military Force Against Iraq Resolution of 2002 was:

    House:

    GOP for 215; against 6
    Dem's for 82; against 126

    Senate:

    GOP for 48; against 1
    Dem's for 29; against 21
    They were lied to...


    Of course they were! Lies! Lies! Lies!
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    Oct 09, 2013 4:23 PM GMT
    Rumsfeld's memo of 11/27/2001 was recently declassified. In it, he begins planning for the invasion and coming up with a pretext for war. When Bush's first Sec. of the Treasury, Paul O'Neill, said that they were trying to come up with a pretext for war, he could not provide this memo. It is the smoking gun.
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    Oct 09, 2013 4:23 PM GMT
    mybud said
    franktats said
    mybud saidThe republican's weren't thinking about our kids future when they decided to lie to us and go into Iraq....


    Nor were the Democrats, who overwhelmingly supported / voted for us to go into Iraq.
    Ya because they were lied to..You know the definition of "lie"?


    "Lied" to by whom?







    another 600 or 700 times should do it.

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    Oct 09, 2013 4:37 PM GMT
    Members of Congress of both parties had no choice but to use the intelligence provided by the Bush administration. We know now, a lot of it was either made up or manipulated.

    The Clinton policy of containment of Iraq was working. The natural buffer to Iran was Iraq. With the destruction of Iraq as a regional power by the US, we have had to deal with Iran head to head.
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    Oct 09, 2013 4:38 PM GMT
    mybud saidThe republican's weren't thinking about our kids future when they decided to lie to us and go into Iraq....


    and the democrats weren't thinking when the Clinton Admin's HUD started forcing Fannie Mae, Freddie Mac, FHA and the banks into making mortgages to every fool who wanted to buy a house - leading to housing boom/bust, foreclosures and bankruptsy
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    Oct 09, 2013 4:41 PM GMT
    somersault said
    mybud saidThe republican's weren't thinking about our kids future when they decided to lie to us and go into Iraq....


    and the democrats weren't thinking when the Clinton Admin's HUD started forcing Fannie Mae, Freddie Mac, FHA and the banks into making mortgages to every fool who wanted to buy a house - leading to housing boom/bust, foreclosures and bankruptsy


    And the Bush administration tried to reign that in, had it not been for the CBC taking it as an attack on Franklin Raines resulting in ferocious opposition from the left
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    Oct 09, 2013 4:48 PM GMT


    Now then back to Politinerd and Australia; apparently the new Aussie Conservative gov't is blaming the Labor Party (left) for failing to address the debt ceiling (refusing to raise it) while they were in power.

    The Right is putting their foot down!

    ""We have to increase the debt limit, because I'm advised we will go extremely close to the debt limit of A$300 billion before Christmas. Labor refused to deal with it. We will deal with it."

    In its pre-election budget and economic update, Treasury forecast the face value of government securities would peak at A$350 billion in April 2015, and then A$370 billion in April 2016, ending at A$370 billion by June 30, 2017.

    Parliament is expected to hold its first sittings under conservative Prime Minister Tony Abbott in late October, giving the new government up to six weeks to pass the new debt limit."