Does the defecit matter? - Page 2

Originally Posted by marcUK

Who cares if they collapse? Its always been a confidence trick. You start again with something equally as valueless, and repeat the whole game for another 200 years.

Originally Posted by MJ1970

Not really, but whatever.

Originally Posted by marcUK

you mean you actually buy into this notion that scraps of paper have value?

Originally Posted by marcUK

Scared you'll be a loser MJ. Perhaps you should stop the currency neurosis and start really believing in Jesus.He will deliver you wont he?

Originally Posted by MJ1970

Absolutely not.



I should have detected this earlier, but now I see it more clearly. Later.

Originally Posted by MJ1970

Absolutely not.



I should have detected this earlier, but now I see it more clearly. Later.

Originally Posted by e1618978

Chinese treasury holdings have jumped a lot in the last year.

http://www.treasury.gov/resource-cen...uments/mfh.txt

Originally Posted by e1618978

doesn't that kind of refute your point about the Chinese diversifying away from the dollar, and trying to make the Yuan the world's new reserve currency?

If you think cutting the government's budget is as easy as taking the ax to some unpopular federal programs, a new national poll suggests that you should think again.

According to a CNN/Opinion Research Corporation survey released Friday, most Americans think that the government spends a lot more money than it actually does on such unpopular programs as foreign aid and public broadcasting.

"The public has a better idea of how much the government spends on programs like Social Security and Medicare, but there is a related problem - cutting them has little public support," says CNN Polling Director Keating Holland. "The result: cutting unpopular programs would probably not cut the deficit very much, and cutting the deficit would probably require cuts in programs that Americans like."

Let's start with international assistance. Sixty percent of people we questioned say they'd like to put foreign aid on the chopping block. So would that make a dent in the deficit?

No - but try telling that to the American public. According to the poll, on average, Americans estimate that foreign aid takes up 10 percent of the federal budget, and one in five think it represents about 30 percent of the money the government spends. But the actual figure is closer to one percent, according to data from the Office of Management and Budget from the 2010 fiscal year's $3.5 trillion budget.

OK. Let's try more low-hanging fruit - funding for the Corporation for Public Broadcasting. Our survey indicates nearly half of all Americans would like to see major cuts.

According to our poll the public estimates that the government spent five percent of its budget last year on public television and radio.

Not even close. The real answer is about one-tenth of one percent.

Want more examples?

Cutting pensions and benefits for government workers is popular, but once again most Americans overestimate how much that costs the government. On average, Americans think the federal government spent 10 percent of its 2010 budget on pensions and retiree benefits; the OMB figures indicate the real number is about 3.5 percent.

A sizeable minority would like to see food and housing assistance for the poor on the chopping block, but Americans' estimates of how much the government spends on those programs are three to four times higher than the actual price tag.

Cuts in military spending also have some support - more than a third of all Americans favor cuts in that area. But the public, once again, overestimates the amount of military spending. They told us 30 percent in our poll. In reality only 19 percent of the 2010 budget went towards military spending, according to 2010 OMB figures.

"Budget experts agree that cutting a target that big would be a good start toward getting the deficit under control. Problem is, 87 percent of people we surveyed don't want to decrease the amount of money spent on Social Security - and four in ten would like to see that figure grow. The same is generally true for Medicare and Medicaid, which combined made up 19 percent of last year's budget," adds Holland.

Originally Posted by e1618978

I don't think it is quite that simple. China is our primary lender - and they have a US dollar surplus because they keep their currency artificially low.

They end up selling yuan and buying dollars to suppress the yuan, then investing the surplus dollars in treasuries. It is a predatory practice on their part, designed to keep them at full employment and to discourage imports of goods - we are stealing from each other in other words.

The current situation is unsustainable - and I don't think that the defect would go down much no matter how much we tried to cut budgets due to the resulting lower tax revenue.

Originally Posted by SDW2001

China is not our primary lender per se. They are the largest foreign holder of debt. I believe WE are the largest holder of debt.

Originally Posted by SDW2001

As for the deficit: I think that deficits of under $400 billion probably don't matter that much. I don't know that they are sustainable forever, but they won't cause disaster if our economy keeps growing. But deficits that are 50% of the budget and $1.5 trillion in actual dollars are likely going to lead to disaster.

Originally Posted by SDW2001

The answer to unfunded obligations is one no one wants to hear: We should phase-out Social Security completely.

Originally Posted by MJ1970

(I know. I know)

Who is "we" here? Do you mean individual US citizens and US companies?

Well, the relatvie size (to GDP, to the budget, etc.) matters more than the nominal amount. But I think we cannot run deficits in perpetuity without negative consequences. It just might take a longer time for those consequences to manifest themselves if the deficit is smaller.

Yes, and Medicare also.

First step with SS is to adjust eligibility age to align with what it was when it was started...about 1-2 years before average lifespan (this would be close to 80 now...it was 60-65 then). It was intended as last ditch safety net old age insurance. Second is means testing. Third is break the bad news to the youngest generation. There will be none when you get to that age so start saving for yourself.

These are hard, they might both seem and actually be unfair. But short of just a hard crash for the system, this is the smoothest approach.

Originally Posted by SDW2001

The debt is held by US corporations, citizens, banks, investment firms, etc.