<rant> Speaking of a billion here and a billion there, how long do you think it will be before the U.S. starts defaulting on its debts? It's either that, or keep on keeping on until we end up in a situation similar to Greece. If the government was a business, it would have been forced to declare bankruptcy well before now. It does not have cash on hand to meet its short term obligations, which are instead paid for by converting a lot of them to long term debt.
The country is borrowing more money than it will ever be able to pay back. A large portion of tax revenue goes to pay the interest on the approx. 9 trillion in public debt. Nine trillion divided among the population equals about $29k per person or $133k per taxpayer. Republicans and Democrats can argue all they want about taxing the rich, or taxing corporations and blaming each other for, well, everything, but it really doesn't matter in the long run. Say a company ends up paying 1 billion in taxes. That clears the public debt burden for 7,500 people. Whoopie. Say that trickle down economics works and lower taxes on businesses means that a lot of jobs are created. More money goes into circulation and the GDP will probably increase, but again, big deal. None of it will come close to having any positive impact on the deficit. All of that is if we don't borrow any more starting this second. That's not going to happen. Amtrack needs another handout. Fannie Mae is shopping around for one too. FDIC? Right. Insured with what? Made up money that the government pays for the privilege of using with money it gets directly from its citizens. The list goes on. I don't really know how this can be fixed. I don't think the government does either, which is why those in charge of spending are, heh, spending all of their time arguing over trifles in order to keep the status quo, where they know they have it good. Our economy is no longer based on the exchange of goods and services in a fair market. It is now based on robbing Peter to pay Paul. It's a shell game and the creditors are the only ones who win. It is a beautiful scheme. The Fed makes something that is essentially worthless. They give it to us. We assign a value to it at a markup of, say, 9900%. Then we give some back to them to the tune of several hundred billion $ per year. (I wonder how one would go about setting up a competing business. There is more than one private bank, so why not more than one "federal" bank? I want in on that kind of action.) The U.S. better start considering defaulting on a lot of that debt while we still have the clout to get away with it easily, relatively speaking (A). If we wait until other countries lose interest in investing or the Fed starts refusing to lend more, we will be in the same position Greece is (C). Another option is to let the interest rates raise to true market levels, let the market adjust itself and then try to deal with the sudden spike in inflation and the resulting further devaluation of the dollar (B). One way, our credit rating is probably damaged and it will be harder to get loans. The other way, we won't be able to get loans because we won't be able to even make the interest payments. Ideal > A > B > C. It is interesting to see the U.S. and its creditors assuming the same roles as home loan borrowers and lending institutions before that whole mess blew up. I don't see the U.S. debt situation ending any differently unless something proactive is done. </rant> Finance is fascinating and mind boggling at the same time. PT ----- Giving an unprofessional opinion based on the understanding of a Professional Business minor, for a better tomorrow. (Please do not respond nitpicking the numbers. They don't really matter except to provide a very general context for the scale of the problem.) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Order the Adobe Coldfusion Anthology now! http://www.amazon.com/Adobe-Coldfusion-Anthology/dp/1430272155/?tag=houseoffusion Archive: http://www.houseoffusion.com/groups/cf-community/message.cfm/messageid:351800 Subscription: http://www.houseoffusion.com/groups/cf-community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/groups/cf-community/unsubscribe.cfm