Congress Asked to Lift Debt Ceiling... again..

[Publius]

Originally Posted by SoFlaJDM

i know how you feel about bush... that wasn't the issue

Then why do you keep trying to bring up how I feel about Bush as a president, if that isn't the issue to you?

[Publius]

Originally Posted by SoFlaJDM

i'll take my chances with the non violent option

or we could do neither, have a budget surplus, pay down our national debt, and be a better nation for it.

[SoFlaJDM]

Originally Posted by Publius

or we could do neither, have a budget surplus, pay down our national debt, and be a better nation for it.

true.

just out of curiousity, when's the last time that's happened?

[Publius]

Originally Posted by SoFlaJDM

true.

just out of curiousity, when's the last time that's happened?

During the 90s when there was a Democratic president that was more moderate than socialist and a Republican-controlled Congress that was more conservative than neo-conservative.

[SoFlaJDM]

Originally Posted by Publius

During the 90s when there was a Democratic president that was more moderate than socialist

i know what you mean by the second part, but what do you mean here ?

[Ardentfrost]

Originally Posted by motivez

Congress Asked to Lift Debt Ceiling: Financial News - Yahoo! Finance

So what do you guys think about this? I mean, obviously defaulting on the debt payments would be bad for our image, but can someone lay out the practical consequences of such an action?

Would people really stop loaning money to us or something? I can't imagine that happening..

Do you think they should do it? Or refuse to until we get the national debt more under control?

Do you know where the debt of the nation is?

Everyone gather around the fire, I'll tell you the story of our monetary system.

There are two methods by which the government can borrow money: bonds and the printer.

There are a few types of bonds which are basically short term (T-bills which mature within 1 year), medium term (T notes which mature within a few years), and long term (T bonds which mature in many years). These are all seen as low risk investments, and as such, they all have fairly low return. They all go on sale at different times depending on the type: for instsance, T-bills go on sale every monday from the fed, but of course there's a huge market for them so can hence be bought second hand from whomever has some they want to sell).

The bonds are basically the government's way of saying "you give us $X now, and we'll give you $X+interest later." The long term EE Bonds, for instance, mature for 30+ years and return double what you put in to them (that is an interest rate of less than 2%). You can buy a $1000 EE Bond today for $500 and get $1000 when it fully matures, and some percentage of that total amount if you decide to sell it before that.

So, here, the people who are lending money to the government are people who want to buy these things. This really isn't middle America... they all come in denominations of $1000 (up to $1,000,000), and I'm certainly not going out wasting money on these things with piddly return. They're more for people or, more likely, companies who have large amounts of excess cash that they need to invest in something secure. For instance, if I have a company and we have a few weeks before payroll goes out, but we have all the money in cash right now, then I'll spend the money on t-bills and sell them when it's time to pay my employees. I don't get a lot in return, but it's something, and since it's safe, I don't have to worry about the market taking a downward turn and then not being able to make the payroll in that short amount of time.

Obviously you can see the implications here: if the government decides to not pay back those notes, then the notes are worthless... and a lot of people who wanted short (or long in the case of the other two types of bonds) safe investments now no longer have that money. This is a MAJOR bad thing for the economy, especially since there are billions and billions and billions of dollars worth of bonds currently in the market. Unemployment would sky rocket, businesses would shut down, rich people would suddenly lose just about everything. Treasury bonds are so low risk, that on company balance sheets they're often calculated as cash, not investments... that would all go to shit if the gov't defaulted on the bonds. Not to mention people would lose faith in bonds and probably wouldn't buy them so freely in the future. That would fuck government spending in its current form.


Anyhow, that's an obvious one. The other way the government borrows money is just to get the fed to print more. This is a way of borrowing money from the American people (and anyone who uses our money) as a whole. That creates inflation and all the bad shit that happens with that. Defaulting on that loan isn't something that would cause huge immediate consequences like defaulting on the bonds, but it would certainly devalue our dollar even further as the fed would have to respond.


So, there you go. That's how we can deficit spend and increase our debt: we just print more "things" and magically have more money. Eventually (theoretically), the government will no longer be able to sell all the bonds it prints because the market will be saturated with them with no willing and available buyers. Speculatively, that happens when the amount owed in bonds exceeds the GDP, but who knows, because it could probably sustain itself for a while after that. Who knows what happens after that I'd guess economic collapse

[Publius]

Originally Posted by SoFlaJDM

i know what you mean by the second part, but what do you mean here ?

Bill Clinton was, during his presidency, pretty middle-of-the-road. He wasn't conservative by any stretch, but he wasn't a far left socialist like most Democratic party leaders (Boxer, Pelosi, Hilary Clinton, etc.) are today. He was a left-leaning moderate in the way he presided while in office.

[SoFlaJDM]

Originally Posted by Publius

Bill Clinton was, during his presidency, pretty middle-of-the-road. He wasn't conservative by any stretch, but he wasn't a far left socialist like most Democratic party leaders (Boxer, Pelosi, Hilary Clinton, etc.) are today. He was a left-leaning moderate in the way he presided while in office.

people want to paint hillary like she's some kind of communist... the fact is, she's closer than any other dem candidate to the center

[Publius]

Originally Posted by SoFlaJDM

people want to paint hillary like she's some kind of communist... the fact is, she's closer than any other dem candidate to the center

[IMGhttp://www.politicalcompass.org/images/usprimaries_2007.png[/IMG]

I disagree. But even if she were, that says a lot more negative about the other Dem candidates than it does positive about her.

[SoFlaJDM]

Originally Posted by Publius

I disagree. But even if she were, that says a lot more negative about the other Dem candidates than it does positive about her.

it's very simple... she's the biggest threat to the GOP, so naturally they will create a misinformation campaign against her

[Publius]

Originally Posted by SoFlaJDM

it's very simple... she's the biggest threat to the GOP, so naturally they will create a misinformation campaign against her

i listen to the GOP even less than I listen to the Democrats. I prefer to make my decisions based on what I see of an individual's own actions. Clinton may be trying to make herself look like a centrist right now, but her political history is filled with far-leftist beliefs and actions.

[motivez]

Originally Posted by Publius

i listen to the GOP even less than I listen to the Democrats. I prefer to make my decisions based on what I see of an individual's own actions. Clinton may be trying to make herself look like a centrist right now, but her political history is filled with far-leftist beliefs and actions.

But her legislative career has not been, and if you look at her voting record, she's been very centrist, if not a little to the right on things like defense, etc.

I don't think there's any reason she would govern as President differently.

[SoFlaJDM]

Originally Posted by Publius

i listen to the GOP even less than I listen to the Democrats. I prefer to make my decisions based on what I see of an individual's own actions. Clinton may be trying to make herself look like a centrist right now, but her political history is filled with far-leftist beliefs and actions.

voting counts as actions, right? you might wanna check that out