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The crisis when our debt goes 'pop'

Larrry

Well-known member
Thomas Sowell
Without naming names or making political charges, the Congressional Budget Office last week issued a report titled "Federal Debt and the Risk of a Fiscal Crisis." The report's dry, measured words paint a painfully bleak picture of the long-run dangers from the current runaway government deficits.

The CBO report points out that the national debt, which was 36 percent of the gross domestic product three years ago, is now projected to be 62 percent of GDP at the end of fiscal year 2010 -- and rising in future years.

Tracing the history of the national debt back to the beginning of the country, the CBO finds that the national debt did not exceed 50 percent of GDP, even when the country was fighting the Civil War, the First World War or any other war except World War II. Moreover, a graph in the CBO report shows the national debt going down sharply after World War II, as the nation began paying off its wartime debt when the war was over.

By contrast, our current national debt is still going up and may end up in "unfamiliar territory," according to the CBO, reaching "unsustainable levels." They spell out the economic consequences -- and it is not a pretty picture.

Although Barack Obama and members of his administration constantly talk about the so-called "stimulus" spending as creating a demand for goods that is in turn "creating jobs," every dime they spend comes from somewhere else, which means that there is less money to create jobs somewhere else.

White House press secretary Robert Gibbs' recent rant against Rush Limbaugh for criticizing the bailout of General Motors went on and on about how this bailout had saved "a million jobs." But where does Gibbs think the bailout money came from? The Tooth Fairy?

When you take money from the taxpayers and spend it to rescue the jobs of one set of workers -- your union political supporters, in this case -- what does that do to the demand for the jobs of other workers, whose products taxpayers would have bought with the money you took away from them? There is no net economic gain to the country from this, though there may well be political gains for the administration from having rescued their UAW supporters.

As the Congressional Budget Office puts it, if the national debt continues to grow out of control, a "growing portion of people's savings would go to purchase government debt rather than toward investments in productive capital goods such as factories and computers; that 'crowding out' of investment would lead to lower output and incomes than would otherwise occur."



Read more: http://www.nypost.com/p/news/opinion/opedcolumnists/the_crisis_when_our_debt_goes_pop_63ej5l5mZL8yOXwi92mwPM#ixzz0vjfprid3
 

Clarencen

Well-known member
WELL, There are many theories of how the economy works. It is just like a lawsuit, Who ever can come up with the best story wins, no matter who is right or wrong.

I have just read Fareed Zakaria's artical in Newsweek. I disagree, so do many others I am sure.

I am no ecconomist, still I have, at least to some extent watched our economy since I was about five years old. I believe, even though Says Law is old, that production produces demand. I think today we have to many people who produce nothing. We are not producing enough.

Hoover's programs did not work, because he loaned to big business hoping their expansion would create jobs, but there was no balance, money was needed before people could buy.

Roosevelt put some money in people's hands. It did stimulate the economy, it did start money to flow. Roosevelt tried to balance the budget by taxing the processors, it didn't work for long. The result was a return of un-employment. The war is all that pulled him out of the fire.

Since the end of the Korean War we have just been juggling one economic system after another, mostly it has worked, but each side looks for the faults of the other.
 

hypocritexposer

Well-known member
Clarencen said:
WELL, There are many theories of how the economy works. It is just like a lawsuit, Who ever can come up with the best story wins, no matter who is right or wrong.

Good post Clarence, but I think I disagree with the statement quoted. the Law of Economics is a Science and absolute (taking into account micro and macro), but what is lacking, is honesty in the stories that are told.

Partisan politics determine the "story", and in most cases what is best for the party, that is telling the story. Voting for persons that are willing to do whatever is best for the Country, and not themselves, is the trick.
 
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