Comments | snousle: The federal budget: how will it end?

snousle

The federal budget: how will it end?

Jan 11, 2013 09:17

The series of dramas with budgets and appropriations has got me thinking about how to prepare for however its going to end. It's clear by this point that it isn't going to be pretty ( Read more... )

Comments 12

p0lecat January 11 2013, 22:33:32 UTC

I am honestly and really hoping for a level 10, ultimate crash and burn!

bluebear2 January 12 2013, 02:18:01 UTC

There was speculation whether Bush was starting wars intentionally to make the U.S. go into debt as some sort of plot by the illuminati or whoever. Interesting that it as yet hasn't been able to do it. The U.S. is stronger than we all thought. Debt from waging wars and empire building has taken down many empires in history. Some assumed that would happen here.
I'm impressed.

equinas January 12 2013, 08:37:48 UTC

Bush, but not Obama?

Considering which of the two has racked up the greatest debt, that's a pretty funny exclusion.

The budget cannot be balanced... equinas January 12 2013, 08:40:29 UTC

Five minute video from a simple accountant using the government's own budget numbers (as you did above) proves it.

www.youtube.com/watch?v=EW5IdwltaAc

The thing about those "old white Republicans" on social security is, they paid into that system. They paid what they were required to pay with the promise that they would be taken care of in their dotage. I don't hold with condemning them because they want to shrink government spending but not lose what is, in effect, their cash investment in their future.

But in the end, there is no solution. The dollar will go to zero, we will have a year or so of anarchy, and then emerge with a currency that is - hopefully literally - worth more than the paper it's written on. And I'm doing everything I can to get ready for this.

Re: The budget cannot be balanced... snousle January 12 2013, 10:34:29 UTC

I didn't condemn them, I merely called the situation "peculiar". Which it is ( ... )

Re: The budget cannot be balanced... equinas January 12 2013, 11:04:57 UTC

I agree that if we were just faced with balancing the budget, it could be done, if government spending went into austerity mode and the private sector stopped hoarding and started investing again. But the government - even the right - are not willing to make the necessary cuts, and the people would never accept the necessary tax increases. Imminent failure.

With regard to the above chart, however, you're talking deficit. I'm talking debt. The huge increase during Obama's first term (more than both Bush terms) shows no sign of slowing with continuing entitlements, bailouts and the CBO's continual upward adjustments of the financial impact of the ACA. The fact is, we really have nothing that is not borrowed. It's unsustainable.

Re: The budget cannot be balanced... come_to_think January 12 2013, 23:12:21 UTC

ACA?

Thread 6

goldibehr January 13 2013, 16:32:24 UTC

I have been assuming for years that inflation is going to be used to "handle" this federal debt. It's the path of least resistance for our politicians.

snousle January 13 2013, 18:09:30 UTC

It's harder than it looks because T bonds come due on an ongoing basis, and even if borrowing stopped their regular sale must continue to pay due bonds and hold the debt at a steady level. But if you start to deliberately inflate the money supply by more than the usual few percent, you get less for the bonds, so the cost of servicing the debt goes up even as you're trying to hold it steady in nominal terms. Or something like that. There is a positive feedback involved that could be troublesome.

equinas January 14 2013, 07:47:39 UTC

Yeah, Belarus tried that, and here's what happened: http://www.zerohedge.com/news/2013-01-12/hyperinflation-action-beer-bag-cash