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

Okay, please go easy on me. I'm just starting to get into economics as a hobby, to learn more about what's going wrong with our once so proud nation, America. Where did we take a wrong turn? I've heard that it started back in 1973 when the production of Federal Reserve Notes increased... If the private Federal Reserve System is "unconstitutional" - in question, why don't we do something to get rid of it? What other system of currency should we be using instead? We owe so much money, how will we ever come out of it? I've heard that if every single working American were taxed 100% of their income, that wouldn't even pay the interest in our debt alone. Is this true? What are our chances of actually coming out of this? Are we going to repeat the roman empire falling? I'm sorry for so many questions, I just want to know. I love my country very much and I wish there was something we can do to stop our much predicted and spoken about "falling".

This is my first post on this forum.

-Travis

Well, thats a bunch of loaded questions. Our national debt isn't something that happened overnight or in the past 3 years. It's been going north for decades with every administration kicking the can to the next. While at the same time, looting the treasury to put money in the pockets of their friends or other power brokers. You can only spend more than you take in for so long. Even you, would have to claim bankruptcy at some point if you did that. Problem is, you need to spend some to keep the wheels of the economy turning, but you also need to trim spending in other areas which nobody in Washington has the balls to do if they ever want to get re-elected anyway. So it's a catch 22 but sooner or later it's going to be a very bitter pill to swallow.

You also have to recognize that many in this country, even in positions of power, want nothing more than to see the end of America as you have come to know it. You don't need to fire a shot, you collapse the monetary system by over burdening it and that will do it. Listen to those who speak of printing more money, borrowing more money, spending trillions, and the nice song and dance that accompanies it. There you will find your enemies. Words like equal outcomes, fairness, forward, are just code speak for wanting the end to hurry up and arive. We need men of character again who can right the ship. Trouble is finding them willing to do public service. A huge task no doubt but since when as Americans have we backed away from something deemed too difficult ?

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

Why would anybody want and be waiting for the end of America?

Originally Posted by constructionguy

Well, thats a bunch of loaded questions. Our national debt isn't something that happened overnight or in the past 3 years. It's been going north for decades with every administration kicking the can to the next. While at the same time, looting the treasury to put money in the pockets of their friends or other power brokers. You can only spend more than you take in for so long. Even you, would have to claim bankruptcy at some point if you did that. Problem is, you need to spend some to keep the wheels of the economy turning, but you also need to trim spending in other areas which nobody in Washington has the balls to do if they ever want to get re-elected anyway. So it's a catch 22 but sooner or later it's going to be a very bitter pill to swallow.

You also have to recognize that many in this country, even in positions of power, want nothing more than to see the end of America as you have come to know it. You don't need to fire a shot, you collapse the monetary system by over burdening it and that will do it. Listen to those who speak of printing more money, borrowing more money, spending trillions, and the nice song and dance that accompanies it. There you will find your enemies. Words like equal outcomes, fairness, forward, are just code speak for wanting the end to hurry up and arive. We need men of character again who can right the ship. Trouble is finding them willing to do public service. A huge task no doubt but since when as Americans have we backed away from something deemed too difficult ?

Originally Posted by tbudwiser

We owe so much money, how will we ever come out of it? I've heard that if every single working American were taxed 100% of their income, that wouldn't even pay the interest in our debt alone.

There are 2 ways of getting out of that, default or inflation + default. Defaulting would be bad for bankers and bad for people in the short run. Inflation means bankers can amass riches gradually and maximize this until it becomes unbearable, then a default will happen and they'll want to start the whole thing again.

If you worry about widespread misery, well, it will be bad either way, but much of those crazy catastrofic forecasts some libertarians defend seems unrealistic to me, food will still be cheap to produce, so despite the currency problems, people will find a way around the trouble to get by.

Is this true? What are our chances of actually coming out of this?

Yes, the system was made to work that way, it does not matter to them if they don't ever get paid in full in the end, they are printing (at very little costs) all the money they lend anyway. Bankers will already have amassed a huge amount of dollars, and with it, a huge amount of property.

Are we going to repeat the roman empire falling? I'm sorry for so many questions, I just want to know. I love my country very much and I wish there was something we can do to stop our much predicted and spoken about "falling".

No, unless there is a third world war, the US will not "fall" quickly, even as bad as it is, the rest of the rest world is just as bad or worse. Brics = even more statism, they try to impress people with big numbers, but that is just as far as they can go, trully fast improvements in lifestyle there is not viable under statism (especially with a strong federal government/ weak state government, that makes government even more innefficient).

By the way, blind nationalism is pretty stupid, it leads many of the people of my country to worship dumb presidents.

This is my first post on this forum.

-Travis

Welcome.

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?

I think if you want a decent picture of what a treasury problem would look like at street level, there are a few places to look. First, the Weimar republic -- Germany between the wars. There are others of course, the Soviet Union, Brazil had a currency crisis. Actually, if you look at a Peso coin, the money says $NP, because the old peso had to be replaced because it wasn't worth much. So those places would be the places to start.

Long story short, the bills you have won't buy what you need -- in Germany, people would take wheelbarrows full of DM to buy bread. People wanted to be paid by noon so that they could spend their pay before the DM lost even more value. Brazil wasn't quite as bad, but it was a bit similar.

I like what I'm hearing, it gives me much more hope. I suppose I've been falsely led into believing the US is over. Now correct me if I'm wrong, because I am by no means a professional at this type of stuff, but it seems like we're currently just borrowing more and more money and not paying it off as some comments above have suggested. At the rate we are borrowing and at the rate the dollar is inflating, our debt will be over $200 trillion by 2018 -- Is this true? I heard it somewhere, but I don't know if it's true. I listen to political speeches and they all sound great, but it seems like nothing they say ever actually happens. Like Obama for an instance, does anything he says he's going to do ever actually happen?

We have some problems, actually I think we're a bit closer to the Roman Empire.

See how much we have in common.

http://www.roman-empire.net/articles/article-003.html
http://wanderingmind.hubpages.com/hu...ed-Perspective

The long story short is that we're getting diminishing returns on a lot of things.

Originally Posted by septimine

The long story short is that we're getting diminishing returns on a lot of things.

Sounds like you don't understand what diminishing returns means!