Author Topic: United States National Debt concern  (Read 57178 times)

arebelspy

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Re: United States National Debt concern
« Reply #200 on: June 30, 2014, 12:06:41 PM »
Our current ratio of national debt to GDP is on the low side given our current economic conditions.  Not enough debt is just as bad as too much. Google Krugman's explanation of a liquidity trap if you don't know what that is.

In our economic system, having a sizeable amount of debt is important and actually good for the nation's development.  Debt gives the U.S. government more buying power, which means they can do things like finance social security, defense, education, building roads, science grants, etc.  If our level of debt is too low, this type of stuff goes away, which is actually a really bad thing.  If our nation paid off its debts instead of financing more defense/education/welfare/science/roads/etc, we'd actually see an economic collapse and a deflationary spiral.  Both bad things.  A TON of debt is bad too, obviously due to inflation and the increased risk of defaulting on bonds (providing Congress became incompetent enough to not print more dollars).

Food for thought.

Wow

True story. 

I'm assuming the "wow" was because it was something you hadn't thought of before?
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socraticmethod

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Re: United States National Debt concern
« Reply #201 on: June 30, 2014, 12:30:37 PM »
Our current ratio of national debt to GDP is on the low side given our current economic conditions.  Not enough debt is just as bad as too much. Google Krugman's explanation of a liquidity trap if you don't know what that is.

In our economic system, having a sizeable amount of debt is important and actually good for the nation's development.  Debt gives the U.S. government more buying power, which means they can do things like finance social security, defense, education, building roads, science grants, etc.  If our level of debt is too low, this type of stuff goes away, which is actually a really bad thing.  If our nation paid off its debts instead of financing more defense/education/welfare/science/roads/etc, we'd actually see an economic collapse and a deflationary spiral.  Both bad things.  A TON of debt is bad too, obviously due to inflation and the increased risk of defaulting on bonds (providing Congress became incompetent enough to not print more dollars).

Food for thought.

Wow

True story. 

I'm assuming the "wow" was because it was something you hadn't thought of before?

Yeah true story man. Gospel of Krugman right there. Economists like Bastiat and Hazlitt and Hayek are no doubt spinning in their graves after that gem.

matchewed

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Re: United States National Debt concern
« Reply #202 on: June 30, 2014, 12:50:35 PM »
Our current ratio of national debt to GDP is on the low side given our current economic conditions.  Not enough debt is just as bad as too much. Google Krugman's explanation of a liquidity trap if you don't know what that is.

In our economic system, having a sizeable amount of debt is important and actually good for the nation's development.  Debt gives the U.S. government more buying power, which means they can do things like finance social security, defense, education, building roads, science grants, etc.  If our level of debt is too low, this type of stuff goes away, which is actually a really bad thing.  If our nation paid off its debts instead of financing more defense/education/welfare/science/roads/etc, we'd actually see an economic collapse and a deflationary spiral.  Both bad things.  A TON of debt is bad too, obviously due to inflation and the increased risk of defaulting on bonds (providing Congress became incompetent enough to not print more dollars).

Food for thought.

Wow

True story. 

I'm assuming the "wow" was because it was something you hadn't thought of before?

Yeah true story man. Gospel of Krugman right there. Economists like Bastiat and Hazlitt and Hayek are no doubt spinning in their graves after that gem.

So instead of constructive or contributing to the points you go with not addressing the issue and being dismissive? I'm curious were you expecting people to start drawing economist cards for their deck?

socraticmethod

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Re: United States National Debt concern
« Reply #203 on: June 30, 2014, 12:59:00 PM »
Our current ratio of national debt to GDP is on the low side given our current economic conditions.  Not enough debt is just as bad as too much. Google Krugman's explanation of a liquidity trap if you don't know what that is.

In our economic system, having a sizeable amount of debt is important and actually good for the nation's development.  Debt gives the U.S. government more buying power, which means they can do things like finance social security, defense, education, building roads, science grants, etc.  If our level of debt is too low, this type of stuff goes away, which is actually a really bad thing.  If our nation paid off its debts instead of financing more defense/education/welfare/science/roads/etc, we'd actually see an economic collapse and a deflationary spiral.  Both bad things.  A TON of debt is bad too, obviously due to inflation and the increased risk of defaulting on bonds (providing Congress became incompetent enough to not print more dollars).

Food for thought.

Wow

True story. 

I'm assuming the "wow" was because it was something you hadn't thought of before?

Yeah true story man. Gospel of Krugman right there. Economists like Bastiat and Hazlitt and Hayek are no doubt spinning in their graves after that gem.

So instead of constructive or contributing to the points you go with not addressing the issue and being dismissive? I'm curious were you expecting people to start drawing economist cards for their deck?

Some points are better left to just speak for themselves and that one truly left me in awe. I'm content to leave it at that.

Roland of Gilead

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Re: United States National Debt concern
« Reply #204 on: June 30, 2014, 02:20:22 PM »
Some points are better left to just speak for themselves and that one truly left me in awe. I'm content to leave it at that.

Translation:  socraticmethod lost the debate and is looking for a quiet exit.

arebelspy

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Re: United States National Debt concern
« Reply #205 on: June 30, 2014, 02:50:14 PM »
On the plus side I'm only a Friedman away from a Bingo!
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warfreak2

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Re: United States National Debt concern
« Reply #206 on: June 30, 2014, 02:53:37 PM »

thepokercab

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Re: United States National Debt concern
« Reply #207 on: June 30, 2014, 02:56:12 PM »
Some points are better left to just speak for themselves and that one truly left me in awe. I'm content to leave it at that.

Translation:  socraticmethod lost the debate and is looking for a quiet exit.

Or he's simply flabbergasted that a forum full of people who are looking to retire early, and are generally optimistic about the future, aren't freakin' out about the upcoming collapse. 

On a side note, this thread has prompted me to look up some websites that claim that the U.S. Dollar is about to collapse.  Thankfully they all have some sort of DVD/book set that will help me steer through it.  Amazingly though, they all want U.S. dollars in exchange for these products.  Don't they know its about to collapse!!   

arebelspy

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Re: United States National Debt concern
« Reply #208 on: June 30, 2014, 02:57:52 PM »
Some points are better left to just speak for themselves and that one truly left me in awe. I'm content to leave it at that.

Translation:  socraticmethod lost the debate and is looking for a quiet exit.

Or he's simply flabbergasted that a forum full of people who are looking to retire early, and are generally optimistic about the future, aren't freakin' out about the upcoming collapse. 

On a side note, this thread has prompted me to look up some websites that claim that the U.S. Dollar is about to collapse.  Thankfully they all have some sort of DVD/book set that will help me steer through it.  Amazingly though, they all want U.S. dollars in exchange for these products.  Don't they know its about to collapse!!

Hah!  I lol'd.

We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
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warfreak2

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Re: United States National Debt concern
« Reply #209 on: June 30, 2014, 03:01:06 PM »
On a side note, this thread has prompted me to look up some websites that claim that the U.S. Dollar is about to collapse.  Thankfully they all have some sort of DVD/book set that will help me steer through it.  Amazingly though, they all want U.S. dollars in exchange for these products.  Don't they know its about to collapse!!
:D

Roland of Gilead

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Re: United States National Debt concern
« Reply #210 on: June 30, 2014, 03:08:55 PM »
The SHTF crowd are a hilarious bunch.

They scoff at the US dollar and call it worthless, yet they constantly tout how many US dollars their gold is worth.

socraticmethod

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Re: United States National Debt concern
« Reply #211 on: June 30, 2014, 03:25:39 PM »
Some points are better left to just speak for themselves and that one truly left me in awe. I'm content to leave it at that.

Translation:  socraticmethod lost the debate and is looking for a quiet exit.

No it just isn't worth continuing to deconstruct all the Keynesian nonsense while my own points continue to go unaddressed. Nobody was able to explain how a WWII deficit that was slashed after the war is comparable to the current situation in which deficits are projected to increase to a trillion per year by 2024 assuming the best case scenario. Nobody addressed what happens to these projections if there is a recession within that time frame which odds are there will be. Nobody addressed the matter of rising interest rates. Nobody addressed the tens of millions of boomers leaving the work force and drawing social security and medicare in the coming years. This is just denial by silence. Not to mention the absurdity of suggesting it's actually beneficial that future generations of Americans are being saddled with massive debt obligations that they have no part in creating. The continued lack of a response to these points after ample opportunity has been given for it tells me who really won the debate. I brought facts to the table and answered the questions asked of me numerous times. In return the other side brought ad hominem personal attacks, a discredited editorialist at the New York Times and constant dodging of my questions. Not much of a debate.

Roland of Gilead

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Re: United States National Debt concern
« Reply #212 on: June 30, 2014, 03:37:07 PM »
North Dakota alone has 30 billion barrels of recoverable oil with current technology and up to 500 billion barrels of potential oil with developing technology.

The USA is entering a new age of oil and gas.  We will become a net exporter of energy.   This is not a country you want to bet against.

70% of new drug discoveries are made in the USA.  Yes our healthcare system needs work, but 70% of worldwide drug discoveries from one country?

socraticmethod

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Re: United States National Debt concern
« Reply #213 on: June 30, 2014, 03:41:30 PM »
Nobody here has addressed the issue of why we NEED a national debt rather than just printing fiat.  What purpose does the debt serve?

Another question that went unanswered.

waltworks

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Re: United States National Debt concern
« Reply #214 on: June 30, 2014, 03:42:44 PM »
I'm just reading now to see if we have a last-worder, or a flouncer here. There's evidence for both possibilities. That last post was pretty pre-flouncey, but 60+ posts into the void also shows last-word dedication...

-W

Thedudeabides

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Re: United States National Debt concern
« Reply #215 on: June 30, 2014, 03:53:32 PM »
a discredited editorialist at the New York Times

I had not heard that Nobel Memorial Prize winning economist, Dr. Paul Krugman had since been discredited by the Austrian School.

If this is the case, then you should make the updates to the Austrian School Wikipedia page:

http://en.wikipedia.org/wiki/Austrian_School

Economist Paul Krugman has criticized Austrians' views on inflation and the failure to test their views against empirical evidence. In late 2011 he pointed out that the monetary base had tripled in the previous three years, but the average annual inflation rate was only 1.5 percent. There was no "devastating inflation" as predicted by Austrians.[36] In late 2012 he chided those who failed to "let the evidence speak" when it disproved the Austrian theory of inflation. Krugman wrote: "If you believe that... expanding credit will simply result in too much money chasing too few goods, and hence a lot of inflation... [Then] the failure of high inflation to materialize amounts to a decisive rejection of [the Austrian] model."[37]

socraticmethod

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Re: United States National Debt concern
« Reply #216 on: June 30, 2014, 04:09:16 PM »
a discredited editorialist at the New York Times

I had not heard that Nobel Memorial Prize winning economist, Dr. Paul Krugman had since been discredited by the Austrian School.

If this is the case, then you should make the updates to the Austrian School Wikipedia page:

http://en.wikipedia.org/wiki/Austrian_School

Economist Paul Krugman has criticized Austrians' views on inflation and the failure to test their views against empirical evidence. In late 2011 he pointed out that the monetary base had tripled in the previous three years, but the average annual inflation rate was only 1.5 percent. There was no "devastating inflation" as predicted by Austrians.[36] In late 2012 he chided those who failed to "let the evidence speak" when it disproved the Austrian theory of inflation. Krugman wrote: "If you believe that... expanding credit will simply result in too much money chasing too few goods, and hence a lot of inflation... [Then] the failure of high inflation to materialize amounts to a decisive rejection of [the Austrian] model."[37]

Krugman discredited himself when he inaccurately predicted a double dip recession while calling for a debt funded spending boom that led to the 2008 financial crisis and subsequent recession. He also espouses an economic theory that was discredited in the post WWII boom and in the stagflation of the 70's. He's been dodging a debate challenge by Bob Murphy for years now even though more than $100,000 has been raised for charity if he accepts.

Thedudeabides

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Re: United States National Debt concern
« Reply #217 on: June 30, 2014, 04:35:33 PM »

a discredited editorialist at the New York Times

I had not heard that Nobel Memorial Prize winning economist, Dr. Paul Krugman had since been discredited by the Austrian School.

If this is the case, then you should make the updates to the Austrian School Wikipedia page:

http://en.wikipedia.org/wiki/Austrian_School

Economist Paul Krugman has criticized Austrians' views on inflation and the failure to test their views against empirical evidence. In late 2011 he pointed out that the monetary base had tripled in the previous three years, but the average annual inflation rate was only 1.5 percent. There was no "devastating inflation" as predicted by Austrians.[36] In late 2012 he chided those who failed to "let the evidence speak" when it disproved the Austrian theory of inflation. Krugman wrote: "If you believe that... expanding credit will simply result in too much money chasing too few goods, and hence a lot of inflation... [Then] the failure of high inflation to materialize amounts to a decisive rejection of [the Austrian] model."[37]

Krugman discredited himself when he inaccurately predicted a double dip recession while calling for a debt funded spending boom that led to the 2008 financial crisis and subsequent recession. He also espouses an economic theory that was discredited in the post WWII boom and in the stagflation of the 70's. He's been dodging a debate challenge by Bob Murphy for years now even though more than $100,000 has been raised for charity if he accepts.

Heh, you mean Bob Murphy the economist who was predicting double digit (20+%) inflation in 2009 that could facilitate the abandonment of the US dollar by the end of the Obama administration?

dragoncar

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Re: United States National Debt concern
« Reply #218 on: June 30, 2014, 05:25:18 PM »
Nobody here has addressed the issue of why we NEED a national debt rather than just printing fiat.  What purpose does the debt serve?

Another question that went unanswered.

It was answered, twice here, and probably 100 times during the debt ceiling "crisis" on all the news channels.  They are equivalent, but one is vastly easier due to our pesky legal system.

fixer-upper

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Re: United States National Debt concern
« Reply #219 on: July 01, 2014, 12:44:02 AM »
Nobody here has addressed the issue of why we NEED a national debt rather than just printing fiat.  What purpose does the debt serve?

Ahem:

Because the constitution. 


Naturally, you then accused me of being happy to slaughter civilians.  edit: Seriously, weren't you paying attention during the debt ceiling storytime?

Your answer was incorrect, as I pointed out earlier.  Now I'll accuse you of being ignorant of the constitution, as well as sentence structure, because the manners.

All you said was that the Constitution does not define the dollar as debt, which is completely irrelevant to WHY our system is set up so that the Fed prints the money.  The reason is that debt issuance is an enumerated power, so it's the most viable way create non-coin money.  As I said, we COULD just print the money, but it would be a pain in the ass, and not particularly helpful.  What does sentence structure have to do with manners?  Apparently poor sentence structure is rude, but accusing someone of condoning slaughter is not?  Airtight logic there.

If I would have completed the sentence, you would have known the relationship between sentence structure and manners, just as readers of your post would have gotten some meaning from finishing the phrase "because the constitution".  I was mocking you.

So what you're really saying through your BS is that fiat money has to be debt because its easier?  What happened to "because the constitution"?  Yes, it's an enumerated power which could go straight to the treasury rather than the Fed, but nowhere in the constitution does it say fiat dollars need to be debt.

Your support of the Fed, the national debt, and the taxes which support Mideast meddling (arming "moderate" terrorists), is supporting slaughter.  Rude or not, it's a simple fact that people are dying because our economy depends on maintaining a high ratio of domestic product to debt.  Without the debt, the GDP loses its denominator, and there is no need to support the military industrial complex who sells the weapons, nor the drug companies who will happily let poor people die if they can't afford $10k a dose for chemo.  If the government didn't NEED the GDP boost from the drug companies, do you really think they'd get away with half the stuff they do?

fixer-upper

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Re: United States National Debt concern
« Reply #220 on: July 01, 2014, 12:51:47 AM »
North Dakota alone has 30 billion barrels of recoverable oil with current technology and up to 500 billion barrels of potential oil with developing technology.

The USA is entering a new age of oil and gas.  We will become a net exporter of energy.   This is not a country you want to bet against.

70% of new drug discoveries are made in the USA.  Yes our healthcare system needs work, but 70% of worldwide drug discoveries from one country?

You mean we can be on par with Venezuela, Mexico, and Iraq?  I'm not understanding how that's a good thing.

The drug discoveries will go wherever those companies are able to pillage most effectively.  You're their current target, while the rest of the world gets stuff at a reasonable price.  I'm also having trouble understanding how that's a good thing.
« Last Edit: July 01, 2014, 12:56:48 AM by fixer-upper »

matchewed

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Re: United States National Debt concern
« Reply #221 on: July 01, 2014, 05:48:26 AM »
North Dakota alone has 30 billion barrels of recoverable oil with current technology and up to 500 billion barrels of potential oil with developing technology.

The USA is entering a new age of oil and gas.  We will become a net exporter of energy.   This is not a country you want to bet against.

70% of new drug discoveries are made in the USA.  Yes our healthcare system needs work, but 70% of worldwide drug discoveries from one country?

You mean we can be on par with Venezuela, Mexico, and Iraq?  I'm not understanding how that's a good thing.

The drug discoveries will go wherever those companies are able to pillage most effectively.  You're their current target, while the rest of the world gets stuff at a reasonable price.  I'm also having trouble understanding how that's a good thing.

Falsely equating the US to Venezuela, Mexico, and Iraq because we have oil is silly. You're ignoring a whole bunch of stuff to make stupid point. We have a more developed infrastructure, stable government, and (one of the things that has been brought up before) our money is the benchmark for other countries. The US is not falling apart, the sky is not currently falling no matter what chicken littles are saying.

What you just did is a true example of a straw man argument, or a red herring. You've brought something into the argument to show a negative just to knock it down and it has nothing to do with what is actually being discussed.

fixer-upper

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Re: United States National Debt concern
« Reply #222 on: July 01, 2014, 09:16:46 AM »
North Dakota alone has 30 billion barrels of recoverable oil with current technology and up to 500 billion barrels of potential oil with developing technology.

The USA is entering a new age of oil and gas.  We will become a net exporter of energy.   This is not a country you want to bet against.

70% of new drug discoveries are made in the USA.  Yes our healthcare system needs work, but 70% of worldwide drug discoveries from one country?

You mean we can be on par with Venezuela, Mexico, and Iraq?  I'm not understanding how that's a good thing.

The drug discoveries will go wherever those companies are able to pillage most effectively.  You're their current target, while the rest of the world gets stuff at a reasonable price.  I'm also having trouble understanding how that's a good thing.

Falsely equating the US to Venezuela, Mexico, and Iraq because we have oil is silly. You're ignoring a whole bunch of stuff to make stupid point. We have a more developed infrastructure, stable government, and (one of the things that has been brought up before) our money is the benchmark for other countries. The US is not falling apart, the sky is not currently falling no matter what chicken littles are saying.

What you just did is a true example of a straw man argument, or a red herring. You've brought something into the argument to show a negative just to knock it down and it has nothing to do with what is actually being discussed.

There's plenty of straw men in this thread.  What's one more?

My point is that being a resource exporter isn't necessarily good for the people.  Resource exploitation typically leads to vast wealth inequalities, where being a manufacturing country tends to lessen that divide.  Shipping away our natural wealth may prop up the dollar for a while, but those oil fields aren't expected to last through a fifty year retirement.  What happens then?

As for the US having the reserve currency, the fiat dollar is getting pretty old by historical standards, and will eventually be replaced just like the pound and franc were.  It may not happen this week, or even this decade, but it will almost certainly happen within our lifetimes.  Failing to plan for this is an economic risk which is easily avoided if you're willing to learn a bit of history rather than bury your head in the sand.

With change comes opportunity for the observant, or it can leave you buried like a resident of Vesuvius if one fails to heed the rumblings of the mountain. 
« Last Edit: July 01, 2014, 09:21:52 AM by fixer-upper »

brewer12345

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Re: United States National Debt concern
« Reply #223 on: July 01, 2014, 09:49:40 AM »
FU, what is your prescription to hedge against all of this?

dragoncar

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Re: United States National Debt concern
« Reply #224 on: July 01, 2014, 09:58:55 AM »

All you said was that the Constitution does not define the dollar as debt, which is completely irrelevant to WHY our system is set up so that the Fed prints the money.  The reason is that debt issuance is an enumerated power, so it's the most viable way create non-coin money.  As I said, we COULD just print the money, but it would be a pain in the ass, and not particularly helpful.  What does sentence structure have to do with manners?  Apparently poor sentence structure is rude, but accusing someone of condoning slaughter is not?  Airtight logic there.

If I would have completed the sentence, you would have known the relationship between sentence structure and manners, just as readers of your post would have gotten some meaning from finishing the phrase "because the constitution".  I was mocking you.

So what you're really saying through your BS is that fiat money has to be debt because its easier?  What happened to "because the constitution"?  Yes, it's an enumerated power which could go straight to the treasury rather than the Fed, but nowhere in the constitution does it say fiat dollars need to be debt.

Your support of the Fed, the national debt, and the taxes which support Mideast meddling (arming "moderate" terrorists), is supporting slaughter.  Rude or not, it's a simple fact that people are dying because our economy depends on maintaining a high ratio of domestic product to debt.  Without the debt, the GDP loses its denominator, and there is no need to support the military industrial complex who sells the weapons, nor the drug companies who will happily let poor people die if they can't afford $10k a dose for chemo.  If the government didn't NEED the GDP boost from the drug companies, do you really think they'd get away with half the stuff they do?

Yeah you keep trying to attribute positions to me that I don't espouse.  Constitutional mandate that dollars be equal to debt?  Slaughter of civilians?  None of that follows, but you keep repeating it.   So I'm done here, and I suspect I'm not alone.

Thedudeabides

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Re: United States National Debt concern
« Reply #225 on: July 01, 2014, 11:11:53 AM »

As for the US having the reserve currency, the fiat dollar is getting pretty old by historical standards, and will eventually be replaced just like the pound and franc were.  It may not happen this week, or even this decade, but it will almost certainly happen within our lifetimes.  Failing to plan for this is an economic risk which is easily avoided if you're willing to learn a bit of history rather than bury your head in the sand.

With change comes opportunity for the observant, or it can leave you buried like a resident of Vesuvius if one fails to heed the rumblings of the mountain.

I'm interested in hearing more about your hypothesis. The dollar is so far ahead of other currencies that it's replacement would take a long time and would be very gradual. If it were to take a long time, then it seems like there would be a likely contender today. I don't current see that. What do you envision replacing it?

Hopefully this does not come off as argumentative or dismissive. I'm legitimately interested in hearing your opinion.

Also, what would you do to hedge?

Thedudeabides

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Re: United States National Debt concern
« Reply #226 on: July 01, 2014, 12:04:10 PM »

As for the US having the reserve currency, the fiat dollar is getting pretty old by historical standards, and will eventually be replaced just like the pound and franc were.  It may not happen this week, or even this decade, but it will almost certainly happen within our lifetimes.  Failing to plan for this is an economic risk which is easily avoided if you're willing to learn a bit of history rather than bury your head in the sand.

With change comes opportunity for the observant, or it can leave you buried like a resident of Vesuvius if one fails to heed the rumblings of the mountain.

I'm interested in hearing more about your hypothesis. The dollar is so far ahead of other currencies that it's replacement would take a long time and would be very gradual. If it were to take a long time, then it seems like there would be a likely contender today. I don't current see that. What do you envision replacing it?

Hopefully this does not come off as argumentative or dismissive. I'm legitimately interested in hearing your opinion.

Also, what would you do to hedge?

fixer-upper

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Re: United States National Debt concern
« Reply #227 on: July 01, 2014, 12:05:35 PM »

As for the US having the reserve currency, the fiat dollar is getting pretty old by historical standards, and will eventually be replaced just like the pound and franc were.  It may not happen this week, or even this decade, but it will almost certainly happen within our lifetimes.  Failing to plan for this is an economic risk which is easily avoided if you're willing to learn a bit of history rather than bury your head in the sand.

With change comes opportunity for the observant, or it can leave you buried like a resident of Vesuvius if one fails to heed the rumblings of the mountain.

I'm interested in hearing more about your hypothesis. The dollar is so far ahead of other currencies that it's replacement would take a long time and would be very gradual. If it were to take a long time, then it seems like there would be a likely contender today. I don't current see that. What do you envision replacing it?

Hopefully this does not come off as argumentative or dismissive. I'm legitimately interested in hearing your opinion.

Also, what would you do to hedge?

The change, IMHO, would most likely come about overnight as the result of an economic meltdown.  Calls have been made for an international currency, special drawing rights, etc., as a replacement.  I wouldn't be surprised to see an international hard currency backed by a basket of goods, which collects fiat debt in real wealth, then morphs into a soft currency to repeat the cycle of inflation/deflation.

I don't know the future more than anyone here, but do find it hard to believe that the US will be able continue things unchanged for the rest of my life.

How to hedge is anyone's guess.  I favor hard assets (real estate, tools, etc.) that can't be electronically devalued in a currency conversion.  Wealth that I can't see or touch just doesn't seem real to me.

arebelspy

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Re: United States National Debt concern
« Reply #228 on: July 01, 2014, 12:09:21 PM »
How to hedge is anyone's guess.  I favor hard assets (real estate, tools, etc.) that can't be electronically devalued in a currency conversion.  Wealth that I can't see or touch just doesn't seem real to me.

I can see that as an argument against holding US dollars (cash).  But there are already a ton of reasons not to hold cash.

How would ownership of companies that make buckets of money in multiple currencies get devalued?

In other words, why are the so-called "hard" assets needed.  How would me owning a bunch of stock in great companies be at risk if your scenario happened?
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dmn

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Re: United States National Debt concern
« Reply #229 on: July 01, 2014, 12:13:23 PM »
The dollar is so far ahead of other currencies that it's replacement would take a long time and would be very gradual. If it were to take a long time, then it seems like there would be a likely contender today. I don't current see that. What do you envision replacing it?

Some international trade is already being done in Euros, and China is taking measures to establish its RMB as an international currency. In fact, I do not think the world needs a single dominating currency - one could just any reasonably large and stable international currencies, e.g. a basket of EUR, RMB, and/or some USD. As long as the forex market for the chosen currency is sufficiently liquid, any of these will work.

Thedudeabides

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Re: United States National Debt concern
« Reply #230 on: July 01, 2014, 12:15:53 PM »

As for the US having the reserve currency, the fiat dollar is getting pretty old by historical standards, and will eventually be replaced just like the pound and franc were.  It may not happen this week, or even this decade, but it will almost certainly happen within our lifetimes.  Failing to plan for this is an economic risk which is easily avoided if you're willing to learn a bit of history rather than bury your head in the sand.

With change comes opportunity for the observant, or it can leave you buried like a resident of Vesuvius if one fails to heed the rumblings of the mountain.

I'm interested in hearing more about your hypothesis. The dollar is so far ahead of other currencies that it's replacement would take a long time and would be very gradual. If it were to take a long time, then it seems like there would be a likely contender today. I don't current see that. What do you envision replacing it?

Hopefully this does not come off as argumentative or dismissive. I'm legitimately interested in hearing your opinion.

Also, what would you do to hedge?

gimp

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Re: United States National Debt concern
« Reply #231 on: July 01, 2014, 12:25:06 PM »
This thread gave me cancer. Not surprising, mixing politics and money and discussion forums always leads to this. Seriously, does anyone see the state of this discussion as a discussion worth having, or is it people just yelling about their opinions?

fixer-upper

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Re: United States National Debt concern
« Reply #232 on: July 01, 2014, 12:37:23 PM »
How to hedge is anyone's guess.  I favor hard assets (real estate, tools, etc.) that can't be electronically devalued in a currency conversion.  Wealth that I can't see or touch just doesn't seem real to me.

I can see that as an argument against holding US dollars (cash).  But there are already a ton of reasons not to hold cash.

How would ownership of companies that make buckets of money in multiple currencies get devalued?

In other words, why are the so-called "hard" assets needed.  How would me owning a bunch of stock in great companies be at risk if your scenario happened?

If they're privately held, no problem.  If they're publicly held, they're subject to the same sorts of manipulation as bank accounts.

arebelspy

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Re: United States National Debt concern
« Reply #233 on: July 01, 2014, 12:42:11 PM »
How to hedge is anyone's guess.  I favor hard assets (real estate, tools, etc.) that can't be electronically devalued in a currency conversion.  Wealth that I can't see or touch just doesn't seem real to me.

I can see that as an argument against holding US dollars (cash).  But there are already a ton of reasons not to hold cash.

How would ownership of companies that make buckets of money in multiple currencies get devalued?

In other words, why are the so-called "hard" assets needed.  How would me owning a bunch of stock in great companies be at risk if your scenario happened?

If they're privately held, no problem.  If they're publicly held, they're subject to the same sorts of manipulation as bank accounts.

Please explain.

How would ownership of companies that make buckets of money in multiple currencies get devalued?

In other words, why are the so-called "hard" assets needed.  How would me owning a bunch of stock in great companies be at risk if your scenario happened?
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

fixer-upper

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Re: United States National Debt concern
« Reply #234 on: July 01, 2014, 01:25:43 PM »
How to hedge is anyone's guess.  I favor hard assets (real estate, tools, etc.) that can't be electronically devalued in a currency conversion.  Wealth that I can't see or touch just doesn't seem real to me.

I can see that as an argument against holding US dollars (cash).  But there are already a ton of reasons not to hold cash.

How would ownership of companies that make buckets of money in multiple currencies get devalued?

In other words, why are the so-called "hard" assets needed.  How would me owning a bunch of stock in great companies be at risk if your scenario happened?

If they're privately held, no problem.  If they're publicly held, they're subject to the same sorts of manipulation as bank accounts.

Please explain.

How would ownership of companies that make buckets of money in multiple currencies get devalued?

In other words, why are the so-called "hard" assets needed.  How would me owning a bunch of stock in great companies be at risk if your scenario happened?

That's really up to you to decide.  I'm comfortable with minimal or no debt, things that can't be changed with a keystroke, bailed in, or withheld while the government declares a banking holiday.  You may prefer the opposite.

arebelspy

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Re: United States National Debt concern
« Reply #235 on: July 01, 2014, 01:42:53 PM »
Wait, what?

I don't even understand your answer at all.

Did you read my questions?
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

thepokercab

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Re: United States National Debt concern
« Reply #236 on: July 01, 2014, 01:59:34 PM »
How to hedge is anyone's guess.  I favor hard assets (real estate, tools, etc.) that can't be electronically devalued in a currency conversion.  Wealth that I can't see or touch just doesn't seem real to me.

I can see that as an argument against holding US dollars (cash).  But there are already a ton of reasons not to hold cash.

How would ownership of companies that make buckets of money in multiple currencies get devalued?

In other words, why are the so-called "hard" assets needed.  How would me owning a bunch of stock in great companies be at risk if your scenario happened?

If they're privately held, no problem.  If they're publicly held, they're subject to the same sorts of manipulation as bank accounts.

Please explain.

How would ownership of companies that make buckets of money in multiple currencies get devalued?

In other words, why are the so-called "hard" assets needed.  How would me owning a bunch of stock in great companies be at risk if your scenario happened?

That's really up to you to decide.  I'm comfortable with minimal or no debt, things that can't be changed with a keystroke, bailed in, or withheld while the government declares a banking holiday.  You may prefer the opposite.

Don't forget guns and ammo.  The wandering hordes who foolishly put their faith in broad based index funds will need to be deterred. 

dragoncar

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Re: United States National Debt concern
« Reply #237 on: July 01, 2014, 02:01:46 PM »
Wait, what?

I don't even understand your answer at all.

Did you read my questions?


milesdividendmd

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Re: United States National Debt concern
« Reply #238 on: July 01, 2014, 10:40:22 PM »

As for the US having the reserve currency, the fiat dollar is getting pretty old by historical standards, and will eventually be replaced just like the pound and franc were.  It may not happen this week, or even this decade, but it will almost certainly happen within our lifetimes.  Failing to plan for this is an economic risk which is easily avoided if you're willing to learn a bit of history rather than bury your head in the sand.

With change comes opportunity for the observant, or it can leave you buried like a resident of Vesuvius if one fails to heed the rumblings of the mountain.

I'm interested in hearing more about your hypothesis. The dollar is so far ahead of other currencies that it's replacement would take a long time and would be very gradual. If it were to take a long time, then it seems like there would be a likely contender today. I don't current see that. What do you envision replacing it?

Hopefully this does not come off as argumentative or dismissive. I'm legitimately interested in hearing your opinion.

Also, what would you do to hedge?

The change, IMHO, would most likely come about overnight as the result of an economic meltdown.  Calls have been made for an international currency, special drawing rights, etc., as a replacement.  I wouldn't be surprised to see an international hard currency backed by a basket of goods, which collects fiat debt in real wealth, then morphs into a soft currency to repeat the cycle of inflation/deflation.

I don't know the future more than anyone here, but do find it hard to believe that the US will be able continue things unchanged for the rest of my life.

How to hedge is anyone's guess.  I favor hard assets (real estate, tools, etc.) that can't be electronically devalued in a currency conversion.  Wealth that I can't see or touch just doesn't seem real to me.

Your philosophy of monetary policy is actually quite intuitive. It does not take much understanding of anything to realize that if there is more money, without more resources, money becomes less valuable.

Unfortunately this simplistic model of monetary policy simply doesn't seem to conform to reality. .

When judging different models, the simplest way to tell which model is most valid is to test the predictive capability of the various models.

The Austrians, conservatives, and freshwater economists have been predicting massive inflation since the Fed liberalized their monetary policy in 2009. 

The neo-Keynesians, like Krugman, have been insisting that there would not be inflationary pressures in such in liquidity crisis.

And the scoreboard says: record low inflation. So who's model is correct?

In other words just because something is intuitive, does not mean that it's useful.

And if your intuition leads you to believe that investing in hard assets like land ,guns, ammo, and gold, is the way to protect your wealth, feel free to ignore all the data up to this point, which suggests that this is not the smartest way to invest your money. You will feel safer, but your fortune, in fact,  will probably be less safe.


arebelspy

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Re: United States National Debt concern
« Reply #239 on: July 01, 2014, 11:07:15 PM »
MOD NOTE: After several requests and reports, we're locking this thread.  It doesn't appear to be going anywhere or being helpful in any way.  Thank you to those of you that tried to positively contribute. Please PM a mod if you have any questions.  Thanks!
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.