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Moody's offers different view on debt limit

Mithros said:
Sure! That's a completely legitimate position. When we set government spending levels you can advocate for those cuts.

But that's completely different from defaulting on our obligations.
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There can be no default with existing recurring revenue unless a decision is purposely made to do so by the Executive Branch, which would violate the 14th amendment...
 
Jack Hays said:
Sometimes those are dangerous words. Good afternoon, AP.:2wave:
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Good afternoon 2m. I'm feeling a bit frisky this afternoon. I've had my Percocet and raring to go...
 
head of joaquin said:
Exhibit A in why the tea party will drive the US into default and cause the second GOP economic meltdown in 5 years.
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the u.s.. is bringing in somewhere about 250 billion a month..a quarter of a trillion each month.

interest on the debt is about 25 billion a month, ...how does a default happen?

since revenue is 10 times higher than the interest.
 
When you get your hours cut back you don't pay the gym bill and the cable bill before the mortgage and then say the cutback cost you your home. You pay the most important bill first and do without the gym and cable and cover the mortgage. The same applies here. Paying for unessential stuff before the debt payment and then claiming the cuts led to not servicing the debt. It's irresponsible spending. Money is still coming in, pay the debt first. Common sense.
 
Mithros said:
Sure! That's a completely legitimate position. When we set government spending levels you can advocate for those cuts.

But that's completely different from defaulting on our obligations.
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I used "default" more for effect than anything else. Technically we really can't "default" on domestically held public debt (debt held by foreign entities is different) because all that happens in that case is we don't "pay" ourselves what we have promised to.

Ultimately what happens to the unpaid domestically held public debt is that we effectively kick the public debt can on down the road once again. At some point this just devalues the dollar. Heck, if we do it long enough we will be able to pay off existing debt quite easily because the dollar will be so devalued that a cup of coffee will be a trillion dollars.

If we want to avoid this kind of mess then the ONLY options are to reduce spending on "stuff" or increase tax revenue to the point where we can handle all of the obligations. There are a few ways to increase tax revenue but that's another issue entirely.
 
Lutherf said:
I used "default" more for effect than anything else. Technically we really can't "default" on domestically held public debt (debt held by foreign entities is different) because all that happens in that case is we don't "pay" ourselves what we have promised to.

Ultimately what happens to the unpaid domestically held public debt is that we effectively kick the public debt can on down the road once again. At some point this just devalues the dollar. Heck, if we do it long enough we will be able to pay off existing debt quite easily because the dollar will be so devalued that a cup of coffee will be a trillion dollars.

If we want to avoid this kind of mess then the ONLY options are to reduce spending on "stuff" or increase tax revenue to the point where we can handle all of the obligations. There are a few ways to increase tax revenue but that's another issue entirely.
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You left out the third option. Grow the economy...
 
head of joaquin said:
Exhibit A in why the tea party will drive the US into default and cause the second GOP economic meltdown in 5 years.
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Obviously he didn't read or completely ignored the article and decided to comment anyway.
 
AlabamaPaul said:
You left out the third option. Grow the economy...
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Sure, but the government doesn't grow the economy. It is a part of the economy. You can't plan governmental finances on something you don't control. The government has to learn to live within its means.
 
fmw said:
Sure, but the government doesn't grow the economy. It is a part of the economy. You can't plan governmental finances on something you don't control. The government has to learn to live within its means.
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The government and its resultant policies can greatly affect growth within the economy. For example, what do you think would happen in the economy if the government decided tomorrow that we would be energy independent within five years by relaxing restrictions on energy production and exploration?
 
AlabamaPaul said:
The government and its resultant policies can greatly affect growth within the economy. For example, what do you think would happen in the economy if the government decided tomorrow that we would be energy independent within five years by relaxing restrictions on energy production and exploration?
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I didn't say government policies don't affect the economy. I said the government doesn't grow the economy. Actually it is business that does. that.
 
fmw said:
I didn't say government policies don't affect the economy. I said the government doesn't grow the economy. Actually it is business that does. that.
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It's actually a partnership. Each one needs the other. Problems occur when one attempts to dominate the other as the government side is currently doing...
 
AlabamaPaul said:
Okay, I'll play. Explain how so...
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AlabamaPaul said:
Okay, I'll play. Explain how so...
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For one, the biggest single holder of US Federal debt is... the US Federal government. Individual states also hold a fair bit of Federal debt. We owe a lot of money... to ourselves. None of my credit card debt is owed to me or my family.

Next, interest rates are still basically zero. Accounting for inflation, lately interest rates have actually been negative. People actually lose money when they loan it to the United States. And yet, they're still willing to do so, but only because it's such a solid investment. The US will make interest payments. Guaranteed. And while we have some influence over this, it's really a global market. If the global market didn't think this was a worthy investment, interest rates would have to rise until it was worthy. As of now, we're still able to borrow at near-zero interest rates. My credit card does not have a negative interest rate.

And we're able to borrow essentially unlimited amounts. Let me stop what I know is your very next thought: No, I am not advocating unlimited borrowing or unlimited spending. That was a dumb thought. The world is not black and white. I cannot arbitrarily decide to raise my credit card limit.

Furthermore, our nation's spending is not like going to Best Buy and purchasing some frivolous piece of electronics. That spending doesn't evaporate. It goes somewhere. Mostly around our own country. Send someone a social security check, they buy food and pay rent. Send somebody a check because they build fighter planes at Lockheed Martin, they buy food and pay rent. Some of it even comes right back into the IRS' pockets via income taxes and sales taxes and whatnot. None of my credit card expenditures are really something you'd consider an investment.

The US government also borrows money in a currency it controls and prints. If we wanted to, we can literally print a trillion dollars and reduce our debt by the same. Second dumb thought prevention: No, I am not advocating unlimited printing. Going nuts printing currency creates inflation problems. A little inflation is ok, even beneficial because it motivates investment. A lot is not good. I cannot print dollars to pay to my credit card company.

US treasury bonds are a fixed, pre-determined interest rate and timeframe. China cannot "call in" our debt. They aren't a bookie. They are owed specific amounts of money at specific times. Not a penny more, and not a day sooner. And even if for some suicidal (economic and literal) reason some nation wanted to call in its debt, we own a lot of tanks. A lot.

Past here is the point, if you've been too lazy to read this discussion just start here.
America is spending too much, and too much debt is a problem. However, the problem is not nearly as catastrophic or as immediate as many people seem to think.
 
AlabamaPaul said:
It's actually a partnership. Each one needs the other. Problems occur when one attempts to dominate the other as the government side is currently doing...
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I don't think so. I'm a businessman and I've never considered the government anything but an adversary in terms of business and economics. What businesses want is freedom from government. Obviously, they can't have that but calling it a partnership is naive, I think. The course of the federal government is very inimical to business and business is the source of every single nickel of net wealth in our society. I wish it were a partnership. The countries in which it is a partnership seem to be on an upward path - Germany, China, Japan etc. No question in my mind that we are on a downward path here.
 
Deuce said:
For one, the biggest single holder of US Federal debt is... the US Federal government. Individual states also hold a fair bit of Federal debt. We owe a lot of money... to ourselves. None of my credit card debt is owed to me or my family.

Next, interest rates are still basically zero. Accounting for inflation, lately interest rates have actually been negative. People actually lose money when they loan it to the United States. And yet, they're still willing to do so, but only because it's such a solid investment. The US will make interest payments. Guaranteed. And while we have some influence over this, it's really a global market. If the global market didn't think this was a worthy investment, interest rates would have to rise until it was worthy. As of now, we're still able to borrow at near-zero interest rates. My credit card does not have a negative interest rate.

And we're able to borrow essentially unlimited amounts. Let me stop what I know is your very next thought: No, I am not advocating unlimited borrowing or unlimited spending. That was a dumb thought. The world is not black and white. I cannot arbitrarily decide to raise my credit card limit.

Furthermore, our nation's spending is not like going to Best Buy and purchasing some frivolous piece of electronics. That spending doesn't evaporate. It goes somewhere. Mostly around our own country. Send someone a social security check, they buy food and pay rent. Send somebody a check because they build fighter planes at Lockheed Martin, they buy food and pay rent. Some of it even comes right back into the IRS' pockets via income taxes and sales taxes and whatnot. None of my credit card expenditures are really something you'd consider an investment.

The US government also borrows money in a currency it controls and prints. If we wanted to, we can literally print a trillion dollars and reduce our debt by the same. Second dumb thought prevention: No, I am not advocating unlimited printing. Going nuts printing currency creates inflation problems. A little inflation is ok, even beneficial because it motivates investment. A lot is not good. I cannot print dollars to pay to my credit card company.

US treasury bonds are a fixed, pre-determined interest rate and timeframe. China cannot "call in" our debt. They aren't a bookie. They are owed specific amounts of money at specific times. Not a penny more, and not a day sooner. And even if for some suicidal (economic and literal) reason some nation wanted to call in its debt, we own a lot of tanks. A lot.

Past here is the point, if you've been too lazy to read this discussion just start here.
America is spending too much, and too much debt is a problem. However, the problem is not nearly as catastrophic or as immediate as many people seem to think.
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All good points, especially the last one. The point is that any debt is basically a claim on future productive output maintaining an ability to pay interest on the debt while eventually retiring it. Now, do I believe the the US will ever be debt free? No, as it wouldn't be in its best interest to do so, but there is be a point where debt could out of balance with the country's productive output. This is where inflation and other consequences might become a problem...
 
fmw said:
I don't think so. I'm a businessman and I've never considered the government anything but an adversary in terms of business and economics. What businesses want is freedom from government. Obviously, they can't have that but calling it a partnership is naive, I think. The course of the federal government is very inimical to business and business is the source of every single nickel of net wealth in our society. I wish it were a partnership. The countries in which it is a partnership seem to be on an upward path - Germany, China, Japan etc. No question in my mind that we are on a downward path here.
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That's why I stated the the system is currently out of balance. To say you don't need or want government affecting your business is the naive point of view. Without it you have no currency, no national payment clearinghouse, no protection for your property, etc...
 
Erod said:
Live updates: The shutdown



Just like the empty threat to discontinue paying social security, it looks like Obama's default scare tactics are bogus, too.

And this is the WaPo reporting this, of all sources, which is perhaps the real story here.
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I've been telling liberals this for days - they don't care - they like being ignorantly, blissfully, dependent upon the word of the chosen one. Jim Jones is looking up from hell admiring Obama's hold on them.
 
CanadaJohn said:
I've been telling liberals this for days - they don't care - they like being ignorantly, blissfully, dependent upon the word of the chosen one. Jim Jones is looking up from hell admiring Obama's hold on them.
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It's not easy being different...

Good evening jcj...
 
CanadaJohn said:
Good evening V1.1 - another day, another wasted day of talking to brick walls. Hope you're having fun too.
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Well, I got a late start, so I haven't been bruised as of yet...
 
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