what is more important: reducing debt or stimulating the economy

:/ if that were true our debt as%of GDP didn't drastically increase.

 

Thank you for verifying exactly what I've been saying in countless posts.

Governments go bankrupt if they do not control their own currency. Greece went bankrupt because it became part of the European Union. Spain went bankrupt because it became part of the European Union. That is the difference between Greece / Spain and the United Kingdom or the United States.

States do not issue their own currency. Greece in the EU essentially functions as a state. Illinois and California can go bankrupt. You can go bankrupt. The United States cannot go bankrupt. Educate yourself and stop calling me ignorant.

 

A simple look at government debt on wikipedia is all it takes my friend.

 

A Republican - "blah blah blah I'm not listening" *plugs ears*

 

Erik that only works as long as people trust your currency and foreign governments have no reason to do so. the minute others start demanding payment in something other than your inflated currency you are screwed.

Oh and when Spain went bankrupt there was no EU.

 

They've gone bankrupt multiple times, and most of the bankruptcies of the above nations were when they had their own currency. I still won't fault you for your historical ignorance.

And don't be childish. There is a major difference between noting someone's *historical* ignorance, or any other specified ignorance - which simply means that there is something about x you don't know, and calling a person ignorant. They are two entirely different meanings, and youdw only get some over the earlier if - get this - you were ignorant of its meaning.

 

That is the point, they can't demand payment in something other than our debt because it is all in U.S. denominated assets. Hence, the U.S. can never go bankrupt. This is not an opinion, it is fact.

 

Yes, most of it was pre-1971 when currency was pegged to precious metals or some other commodity. Since then, fiat money was allowed to float internationally. The bankruptcy potential for sovereign governments was reduced to zero. Greece's bankruptcy is soley because it is a member of the EU. If Greece controlled its own fiat currency, it would not have went bankrupt. It would simply roll over its debt like the rest of us do.

 

Lol, thanks for including the full. Read after the bold, dude. Also, read between the lines. Yeah, the government technically may be never be *forced* into bankruptcy because it can print... did you forget the fiscal crises I mentioned already? Again, look at Germany in the 20th century.

 

Hyperinflation is no where on the horizon in this country. We are fighting deflation. Lowest 5 year inflation rates and interest rates in history. Enough with the fear mongering.

The U.S. government debt is all U.S. denominated assets. It can and will continue to be rolled over indefinitely. There is no problem here. We have an economic growth problem, not a debt or spending problem.

 

And it would have suffered the devestating effects of devaluing currency. Your point is a technicality, not truly valid. The effects of devaluing currency in order to avoid bankruptcy are similar to the effects of actual bankruptcy.

Don't beat a point into the dirt because you have to be right. Half the people on this forum seem to follow that, sadly. As a piece of personal advice, argue for the value in exchange of ideas. I've found myself to be wrong before, there's no shame in learning.

 

Huh? If you are implying I'm republican you're incorrect. And the rest of what you said doesn't make any sense unless you quoted the wrong person.

 

What's interesting to note is that the demand for goods has dropped significantly and should lead to a deflationary scenario but we're not seeing that play out on the consumer side quite like that. The overall price of goods may have dropped in the aggregate, but at the point of consumption we're seeing inflationary price changes. What I mean is the things consumers must buy are climbing in prices and evidence of this is seen in the price of milk, bread, toilet paper (when did toilet paper quadruple in price?!), plastic bags, canned foods, meat, deli products, restaurant services (which may be due to declining demand), eggs, cheese and so many other goods. Price increases are hitting right in the middle of our spending money, which just hurts demand for other goods of less critical needs (cars, computers, building materials, etc).

I was listening to some economist talking last night about the economy on one of the DC area channels and he was saying that the amount of readily available productive output from our industrial capability is estimated to be somewhere around 20%. That's insane! We have so much growth potential in our economy but it feels like we're just stuck in a treading water scenario.

 

"In 1836 we were not on a fiat money system based upon debt."

Taxcutter says:
That makes the feat all the more remarkable.

 

I believe full employment of resources in the market for labor could solve our political-economic dilemma.

 

What??? The CPI showed less than 2% inflation last year....

 

Learning what? You are trying to argue that our currency is being devalued, which is not exactly true. Our currency's status as the reserve is no where near in jeopardy (it is actually rebounding since the 2008 recession to pre-recession levels), inflation is the tamest it has hever been, interest rates at historical lows, and the stock market is purring like a kitten. I'm sorry if I won't join the U.S. dollar decline fear bandwagon. There is no evidence to support it.

 

I know but any trip to the grocery store or Wal-Mart says otherwise. I have no idea why it's so, but milk at $4.69/gallon, toilet paper at $1 per roll and cheese at very high prices are just a few examples. Car tires, windshield wipers, bread, fruit, vegetables, etc. have all continued to climb.

I'm not disputing the stats, just saying that what I see when I shop is very different than the picture painted by the stats. Could just be that the necessities are high demand because we must buy them while prices for non necessities are dragging down. No idea, just stated what I am seeing.

 

Bill, the CPI doesn't include groceries as those prices are considered too volatile. It also doesnt inlcude fuel and housing...

 

I fear the stock market is where the biggest bubble is right now, aside from derivatives. With productive capacity down, it's difficult to understand the jumps in stock values, particularly because we are facing a demand problem in our economy.

 

What goods and services does the CPI cover?
The CPI represents all goods and services purchased for consumption by the reference population (U or W) BLS has classified all expenditure items into more than 200 categories, arranged into eight major groups. Major groups and examples of categories in each are as follows:

FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)
HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)
APPAREL (men's shirts and sweaters, women's dresses, jewelry)
TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)
MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)
RECREATION (televisions, toys, pets and pet products, sports equipment, admissions);
EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);
OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses).

http://stats.bls.gov/cpi/cpifaq.htm#Question_7

 

Fuel is down (based 100% on global oil demand), real estate is a completely independent market, and groceries are too regional. A tornado through a corn crop will skyrocket groceries until it is repaired. All are logical omissions from the CPI.

 

Which drives my point home. I believe demand for necessities is driving up those prices while other prices are falling due to declining demand. Overall net change of 2%, but where it hurts is we are suffering from high prices on the goods we need the most.

 

Fuel prices have an inflationary tendency on any fuel dependencies as well. Transportation must be more expensive due to higher fuel prices.

 

Where did you hear that information?

I believe this must be a meme regularly promulgated by the RW media.

It cannot possibly be a coincidence that so many people assert this totally erroneous fact. I see it asserted numerous times and it is completely untrue.

The BLS does produce a variety of different indexes, one of which excludes food and energy (the so-called "core" index), but the CPI absolutely includes food and fuel prices.