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Old 01-17-2013, 05:28 PM #127
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no, but its available to be taxed. which is why we measure debt as a % of GDP.
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Old 01-17-2013, 05:30 PM #128
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thats not what we were talking about though.
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Old 01-17-2013, 06:55 PM #129
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IgnoranceInABag. You are right. I have your back.

When we are discussing the federal debt, we are talking about this 16 trillion owed. When we talk about federal budget, we spent last year something like 3 trillion, when we only had 2 trillion to spend (aka 1 trillion defecit). If we were to scale these numbers down to real life terms, its equivalent to having total personal debt of say, 16 million, while having a yearly income of 2 million, while spending 3 million a year. Or having a mortgage of 16million, while annual income is 2 million, while expenditures of 3 million. So the below analogy is rediculous.

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Just think of America as the largest and most valuable house in the world. As of right now our mortgage on it is slightly larger than a single year of income. So about a $32k house for a person on a $30k salary.
if this were the case, if we took 100% of our salary, and paid it towards debt, then it would be paid off in a little over a year, this isnt the case. our federal debt would take several years to pay off if 100% of the taxes went towards the debt.

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we all understand as GDP goes up, more money is being earned to be taxed. we all understand this. That doesnt take away from the point that the yearly deficit is way too high (1 trillion? i dont know the exact numbers). that is the real issue here. i dont know why we are talking about real GPD vs nominal GDP, presumably we have all taken macro and dont need a terminology lecture
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Old 01-17-2013, 07:51 PM #130
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Deficits are projected to decrease and they have decreased since peak recessionary spending.

Comparing US finances to a house mortgage is ridiculous regardless. A home owner does not borrow at ridiculously low rates (or negative rates...), it does not print its own money, and it doesn't control the money supply, etc. This dumb analogy should never have been brought up to begin with. I thought that would have been apparent when somebody mentioned the possibility of losing your job therefore debt is bad (lol).
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Old 01-17-2013, 08:08 PM #131
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Comparing USA finances to a home owner is not a perfect analogy, but when there is still confusion on how much our national debt is compared to our revenue vs expenditures, there needs to be an explanation in order to get people on the same page. How can we even debate economics when we dont have an understanding of our terms.
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Old 01-17-2013, 08:10 PM #132
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Well, making bad analogies isn't going to help when it teaches wrong ideas.
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Old 01-17-2013, 08:39 PM #133
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How is it teaching wrong ideas? National debt is comparable to having a mortgage. Both are liabilities. Am i wrong on this? Is the national debt not a liability? Is having a mortgage not a liability? We are trying to relate our national debt vs our income/expenditures and what better way to compare then a real life example of debt vs income/expenditures. Certainly our debt is not equal to our income.

We are discussing basic concepts here, not advanced PHD economic theory, where maybe it is not a perfect analogy to compare it to a mortgage. But we are not phd economists, and we dont have a more relatable example. Why dont you provide us with a better analogy since we are teaching the wrong ideas.
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Old 01-17-2013, 08:42 PM #134
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Quote:
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if this were the case, if we took 100% of our salary, and paid it towards debt, then it would be paid off in a little over a year, this isnt the case. our federal debt would take several years to pay off if 100% of the taxes went towards the debt.
Our salary in this analogy is not our tax revenue, tax revenue is simply what we put toward paying certain expenses. Rather, it is the entirety of the output of the united states' economic machine -- the full faith and credit of the united states.

The US economy is a gigantic asset, the most valuable asset in the world. To **** around with the financing of it for political games by portraying it as a shaky asset is not desirable, let alone to be encouraged.
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Old 01-17-2013, 09:03 PM #135
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No. The governments only income (spendable dollars), is tax revenue. The governments debt is 16 trillion. Its spendable dollars is ~2 trillion annualy. Which means the annual income is ~2 trillion. NOT 16 TRILLION!!!!

The 16 trillion dollar GDP is not income. It is not revenue that can be paid towards debt. It is not income.
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Old 01-17-2013, 09:18 PM #136
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Quote:
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No. The governments only income (spendable dollars), is tax revenue. The governments debt is 16 trillion. Its spendable dollars is ~2 trillion annualy. Which means the annual income is ~2 trillion. NOT 16 TRILLION!!!!

The 16 trillion dollar GDP is not income. It is not revenue that can be paid towards debt. It is not income.
GDP is the "household income" in the analogy we are discussing. Try to follow along. You are trying to be too literal here.
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Old 01-17-2013, 09:22 PM #137
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GDP is the "household income" in the analogy we are discussing. Try to follow along. You are trying to be too literal here.
No. The GDP is not "household income" in the analogy. That doesnt work in the analogy. Household income would be tax revenue. NOT GDP!!

The household income's spendable dollars is its income. Those dollars can go to anything (debt/expenses/assets). The GDP is not spendable dollars, therefore the GDP is not the household's income. When a household has a 30k income, they can spend those 30k dollars on debt. The government cannot spend the national GDP on debt.
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Old 01-17-2013, 09:25 PM #138
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No. The GDP is not "household income" in the analogy. That doesnt work in the analogy. Household income would be tax revenue. NOT GDP!!
Not at all. You would never put 100% of household income toward paying your mortgage, so on its face that's wrong.
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Old 01-17-2013, 09:28 PM #139
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Not at all. You would never put 100% of household income toward paying your mortgage, so on its face that's wrong.
Right, you would never. But in theory, you could. In theory, if i make 30k a year, i could spend that 30k on whatever i please. If gdp was our income, then i could spend the whole GDP on debt and we both know we cannot spend the GDP, only the tax revenue. therefore our tax revenue is the income.

In our example, our salary is 30k. We can spend that on hookers if we please (but we would lose our house). If we translate that to the federal government, we could spend our 2 trillion dollars in tax revenue on hookers , but we cant spend 16 trillion on hookers. If our GDP was income, then we could spend those 16 trillion dollars all on theoretical hookers. But we cannot spend 16 trillion on hookers, we could only spend 2 trillion if we wanted, therefore that 2 trillion is our revenue. not 16 trillion
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Old 01-17-2013, 09:36 PM #140
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Right, you would never. But in theory, you could. In theory, if i make 30k a year, i could spend that 30k on whatever i please. If gdp was our income, then i could spend the whole GDP on debt and we both know we cannot spend the GDP, only the tax revenue. therefore our tax revenue is the income.
No it is not the income, it is the portion of the income we use to pay the mortgage/debt. The idea that it is a tax assessment may be hanging you up conceptually, but as we can choose to raise or lower our tax revenue ourselves, tax income is analogous to the amount we choose to pay toward our mortgage/debt.

We are somewhere around 20 percent lower than most high-end developed nations as far as tax revenue vs GDP. We are way undertaxing, which means we are paying way too little toward our mortgage/debt. That's why the principal is rising. We have a negative-amortization pay schedule.

We just need to pay more, the last thing we need to do is pay less. That's just blindingly irresponsible.
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Old 01-17-2013, 09:51 PM #141
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The government has a cash inflow of 2 trillion dollars which comes from taxes. The income is 2 trillion. The income is not 16 trillion. This is equivalent to a person who has a 30k salary. He has 30k dollars of cash inflow and he can spend that however he pleases on bills. JUST LIKE THE GOVERNMENT. The government does not have a 16 trillion dollar cash inflow to spend on expenses. How are you not getting this?
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Old 01-17-2013, 09:52 PM #142
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How is it teaching wrong ideas? National debt is comparable to having a mortgage. Both are liabilities. Am i wrong on this?
They are liabilities and that's where the comparison ends.

To compare the US to a house would mean the mortgage is owned by the people of the house and its neighbors in a currency it prints and controls. Every member of the household buys and sells products to each other and neighbors in that currency (income of house -> GDP of a nation) and a percentage of that is pooled together so the head of the house can pay the bills (budget). The house eventually needs to control the supply of money to control its value, like when it gets more members, so it sells low rate IOUs to people of the house and neighbors to increase its currency supply and uses that money to pay bills or fund new projects to increase income, or GDP. You could go on and on with examples like trading currencies between neighbors but I digress.

You can't just dumb it down and say debt is debt therefore the situations I encounter as a homeowner are grounds for comparison, because they aren't. It's apples and oranges. A house, let alone people, does not have the abilities of a sovereign nation for obvious reasons.
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Old 01-17-2013, 09:59 PM #143
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They are liabilities and that's where the comparison ends.

You can't just dumb it down and say debt is debt therefore the situations I encounter as a homeowner are grounds for comparison, because they aren't. It's apples and oranges. A house, let alone people, does not have the abilities of a sovereign nation for obvious reasons.
really? so things like interest on debt? budgeting? having cash available to pay? cash flow? due dates? financing? none of those concepts are slightly comparable?
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Old 01-17-2013, 10:01 PM #144
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Whoa, you found bonds redeem on dates and mortgages end on dates! My post is irrelevant now! Yaaay
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Overbear: I prefer that I be given a license to shoot anyone who would pick socialism or communism over the basic freedoms inherent to consumerism.
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yesme: i'm not saying you should invest in gold first off, you would be much better off to invest in food,stuff you use and will keep for a couple of years, like razors
Blake360: in highschool, my teacher's father worked for the CIA and she brought my class documents proving the Roswell crash was of extraterrestrial origin.
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Old 01-17-2013, 10:02 PM #145
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I like how none of them will answer my question about i-rates on treasuries.
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Old 01-17-2013, 10:02 PM #146
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having a national debt is comparable to owning a house. You have to plan. You have to use numbers and math in order to make sure it is sustainable. It is comparable enough in order to explain how GDP and tax revenue relates to eachother.
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Old 01-17-2013, 10:04 PM #147
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Whoa, you found bonds redeem on dates and mortgages end on dates! My post is irrelevant now! Yaaay
Way to be a douche. Lets just stop acting like adults and bring sarcasm into this conversation!
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