American National Debt Crisis
So... we're 10 days from defaulting on everything and China coming over to repo our car and break our kneecaps (caution to those in the kneecap states). Democrats have chosen an unfortunate time to grow a spine, and Republicans are being less agreeable than usual. Republican leaders have given up on talking with the White House all together, which will only lead to the process taking even longer. Are there any alternative's left other than pooling for an apartment in Montreal?
Comments
I understand the core philosophy of Keynesian economics is that you borrow a ton of money to make even more money down the road, spend it on improving the country, and then borrow increasing ammounts to repeat the charade. Yes, you have to spend money to make money, and this system keeps credit trickling down to let all the businesses both big and small run tight operations, but I still find it sad that it is the only way. Evetually it leads to exponential growth of your debt, but no other country can ever actually call in these debts or it would be mutually assured/global economic destruction. In the end I just hope we get a balanced plan that jacks up taxes but also cuts a lot of gov't services, while agreeing to some sort of balanced budget ammendment that puts us on the honest path.
This is why I can't stand politics. Both sides want to put themselves forward as the savior, but one is just the lesser of two evils. You're still evil.
/endrant.
The rest don't want any deal with any increased revenues because it goes counter to the 'Starve the Beast' strategy that they've been using. (Let's face it, it's been working to a large extent.)
I believe the Dutch say that countries with problems like these are in "Amerikaanse toestanden," or American Conditions. Pleasant.
I've seen some of what is happening with Turkey, but I get the impression their default was being handled by the European Union.
I've read a lot of interesting theories that point to gov't control of interest rates as the source of recent financial pains, and causing the need for big bailouts. Artificially low interest rates were used as a tool to stave off some of the risks in how we manage the coutry's budget, but artificially low interest means that it actually makes financial sense for people and corporations to take out huge loans and gamble with the money. Sometimes you lose when you gamble, though.
Re: IMF, I have little uderstanding below a very high level as to how that all would actually work.
I expect to be quickly corrected about how money actually works, because I apparently don't know how this works either.
In other words, the economy is similar to Tinkerbell in that it is sustained by us clapping our hands and believing.
Thank you for the correction Agnara.
EDIT: my response seems tangential to the quote, but there was some relationship that got my head on those questions.
DBL EDIT: I think I am conflating inflation with recession.
We're dooooooommmmed.
The fact of the matter is though, there is nothing you can cut that will fix this. The government needs more income.
There's some crazy logic like that behind all spending. Therefore it becomes almost impossible to justify making cuts. But what happens when you have enough logic to justify unsustainable spending levels? You either have to suffer without something or go broke. Yes, right now we are at a point where raising taxes can pay for it. But interest rates are a percentage that gets bigger and bigger. Even if we raise taxes as high as we can, and never raise spending, and completely remove the debt cieling, at what point will we default? Is it even mathematically possible for us to pay the debt down?
But we've been over this 1000 times before. In principle, a budget is simple: you either raise taxes or cut spending to meet a gap. In this case, we're trying to meet a big gap, so we need to do both.
I'll be out at Pennsic, pretending to be a Viking, if/when the default happens. So if everything goes to shit overnight, at least I'll have a city of 13,000 people for support.
EDIT: NASA's budget is so small that it just won't make much of a difference.
EDIT 2: OK, it's actually like 1% of the federal budget, so cutting it could make a difference.