Thread: Just getting into economics... How long does the US economy have before it falls?

Originally Posted by Reiver

How long does the US economy have before it falls?


Its not going to 'fall', instead we will see decoupling (as the relative importance of the US economy falls). The important issue will be "how will the US respond?". One would fear a right wing reaction akin to threatened imperialism where the power shifts encourages even more aggressive foreign policy

I get that the importance of the US economy will continue to fall over time, however, how does printing more money to create growth make this a good reaction? As you've just stated, the relevance of the US economy will decrease, so this could lead to the dollar not being the world reserve currency, which would stop all buying of US treasuries and would lead to massive inflation with all this money we've printed. This is the predicament. The Fed can't continue to be the biggest debt holder of the US.

I will add that I don't believe Mitt Romney will change much, if any of this.

Originally Posted by Drago

I get that the importance of the US economy will continue to fall over time, however, how does printing more money to create growth make this a good reaction?

I'm not interested in the right wing failure to understand the monetary policy mechanisms available to their government. Its sub-monetarism in its naivety. The issue is the rise in economic influence of other countries. The US either has to accept economic reality or slip into an unfortunate 'economic nationalist' result that damages the domestic population whilst also threatening multilateralism

Originally Posted by unrealist42

The US could easily get its debt under control by adopting two simple fiscal policies. Raise taxes. Limit spending growth.

Some perspective on this:
The national debt is about $15Trillion. It can be paid off over the next 30 years. Over the next 30 years the US economy will generate over $500Trillion.

How is that $15Trillion debt unaffordable in a $500Trillion economy?

The debt could be paid off in 1 to 2 years with the right tax policies. A derivatives and securities excise tax accomplish such. A derivatives and securities transaction or a general electronic transactions tax could work, but it would dis-incentivize economic growth much more than a financial products excise tax.

Those peddling "simple tax solutions" are as relevant as the Georgists! The important issue is growth and that's the worry for the US, especially as her military burden is likely to become an increasing 'crowding-out' drag on her innovation performance

Originally Posted by Reiver

Those peddling "simple tax solutions" are as relevant as the Georgists! The important issue is growth and that's the worry for the US, especially as her military burden is likely to become an increasing 'crowding-out' drag on her innovation performance

I agree. The United States must focus on economic growth. If we deal with the deficit and debt at the same time, great.

Originally Posted by thediplomat2.0

I agree. The United States must focus on economic growth. If we deal with the deficit and debt at the same time, great.

You don't agree as the comment "the debt could be paid off in 1 to 2 years with the right tax policies" is quite alien to my comment

The debt we owe could be paid off in 1-2 years?! Explain that, because it makes no sense. What could this country do to pay off the trillions we owe in 1-2 years??

Originally Posted by tbudwiser

The debt we owe could be paid off in 1-2 years?! Explain that, because it makes no sense. What could this country do to pay off the trillions we owe in 1-2 years??

Its an irrelevant snap of utopian comment. The debt doesn't have to be paid off in 1-2 years (obviously). There has been very little valid comment in the thread to be fair

Originally Posted by tbudwiser

The debt we owe could be paid off in 1-2 years?! Explain that, because it makes no sense. What could this country do to pay off the trillions we owe in 1-2 years??

Look up the notional value of all United States banking derivatives contracts. The amount should be approximately $231 trillion dollars. A derivatives and securities excise tax that along with innovative monetary policies can make the notional values of these contracts real by liquidating them with a new reserve currency backed by a market basket of highly inflationary goods. They would then be taxed at a rate anywhere from 1 to 6 percent. This could generate tens of trillions of dollars in annual federal revenue. In doing so, the revenue generated could be redenominated into United States dollars at a 1:1 ratio and then be used to pay down the debt. This is of course a very simple explanation of my policy, and it is not completely proven to work. It will require many more years of intensive research to see if it can become a reality.

This is just repetition of complete bobbins! Tax solutions aren't available. Growth solutions are!