| U.S. Economics for Dummies
Posted: 4/19/2005 7:47:10 PM | Knowledge of economics is not my strongest asset, so I start this thread in hopes that someone will enlighten me in this.
Here my questions for starters:
1. I know the USA has much capital, but how can they afford its yearly military funding (while no wars are present)
2. How can the USA maintain its economy with the spendings on large wars like Afghan (nearly depleted their missile a***nal <---thanks for the censors - Ha!), and Iraq.
3. How can the USA have one of the largest international debt, yet remain on top economically?
4. Who do they borrow from if they are so in debt; do they hold alliegeance to the lenders?
Well, there you have it, US economics for a Dummy. Enlighten me. | |
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| U.S. Economics for Dummies
Posted: 4/19/2005 8:09:55 PM | The Chinese are pumping revenues from their trade deficit back into US Treasury Bonds.
That's how you can finance two wars, a cut in govt revenues (tax cut for the richest segment of society), and carry over an unfunded budget.
Why would the Chinese want to buy low or negative yield bonds?
Suppose there's a spat in the Taiwan strait and they want the US to take their side.
Or perhaps China wants to insure that they have unimpeded access to the US market so that the remaining US manufacturers can continue to move to China.
If the Chinese issue a sell order on their bonds they could sink the already weak dollar and the US economy. Of course they'd hurt themselves too, but they have the ability to make a very big point. | |
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| U.S. Economics for Dummies
Posted: 4/19/2005 8:51:56 PM | | H'nH: We borrow the money. The national debt is comprised of money borrowed from and owed to: (1) various government trust funds, including Social Security, and (2) the public, including individuals, corporations, state, local and foreign governments, and the Federal Reserve, typically in the form of bonds or other types of securities. | |
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| U.S. Economics for Dummies
Posted: 4/20/2005 9:27:24 AM | there is much power in the darkside
I'm your father and yours and yours and yours and oh shit, I shouldn't have used my light saber so often. | |
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| U.S. Economics for Dummies
Posted: 4/20/2005 9:31:04 AM |
1. I know the USA has much capital, but how can they afford its yearly military funding (while no wars are present)
They're rich.
2. How can the USA maintain its economy with the spendings on large wars like Afghan (nearly depleted their missile a***nal <---thanks for the censors - Ha!), and Iraq.
Borrowed money.
3. How can the USA have one of the largest international debt, yet remain on top economically?
Because people feel confident lending money to the US government. Basically it has the equivilent of a gold card.
4. Who do they borrow from if they are so in debt; do they hold alliegeance to the lenders?
Anyone who wants to lend to them.... including private US citizens, other governments, foreign citizens..... I'm sure the question of who owns the federal US debt is on the web somewhere. | |
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| U.S. Economics for Dummies
Posted: 4/20/2005 9:56:57 AM |
3. How can the USA have one of the largest international debt, yet remain on top economically?
Because the United States has the strongest military in the world,a very stable government(so far at least), and a high GDP.
An economy is only as strong as the perception of that economy, and overall the perception is that the United States is strong. Since money is not backed by anything but comsumer confidence, perception is all it takes to make a country strong economically.
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| U.S. Economics for Dummies
Posted: 5/4/2009 5:00:31 PM |
how can they afford [the] yearly military funding [for the military]?
We *cannot* afford it. Our government is bankrupting the country. The Federal Reserve is complicit.
One way we do this is by "monetizing the debt". This essentially means printing money. When the Federal Reserve prints money, or performs the electronic equivalent with digits in a computer, it transfers wealth away from those who have previously saved money and towards those who get the new money first (the government). The result of the inflation (increase in the money stock) is "price inflation" (rising prices for goods and commodities). It is not so much that prices of goods and services are going up, as much as it is a fact that the value of the US Dollar is being debauched.
The cause is not speculators, nor greedy businessmen, nor Wall Street. Inflation is always and everywhere a monetary phenomenon. Inflation, and hence price inflation, is directly caused by the Central Bankers -- the Federal Reserve in the United States.
How can the USA maintain its economy?
We are not maintaining our economy. We are in the *Greater Depression*. It will be worse than the 1930s. It must be. To learn why, study the Austrian Theory of the Business Cycle.
Right now, it is common to hear that this is "the worst economy since the Great Depression". Soon, perhaps in a couple of years, the words "since the Great Depression" will be replaced by the single word "ever". It will happen. You have heard it here first.
How can the USA have one of the largest international debt, yet remain on top economically?
The American Empire is over. But many people have not gotten the memo yet. Very hard times are ahead for America. We are eventually going to get what we have coming. There is no such thing as a free lunch.
Who do they borrow from if they are so in debt; do they hold allegiance to the lenders?
The government of the USA is the very most corrupt, except for all the others which are even *more corrupt*. People in foreign countries, and in large companies, who have literally $Billions to invest, place that money in short-term US Treasury Bills, because it is more likely that they will get something back from the US government than from the other governments.
However, eventually, everybody is going to wake up to the demographic disaster which is here now, and the reality that the US Government *must* default on its debts -- either by refusing to pay as Argentina did a few years ago, or by debauching the value of the currency. I expect the default to take the form of hyper-inflation, although I am not sure about this. What I am sure about is that a default *will* occur, because the debts are too large to be paid back.
Uncle Sam is a deadbeat debtor.
Larrup
PS To learn more, read the articles at http://www.Mises.org/ and http://www.LewRockwell.com/ on a daily basis. You will soon start to understand economics.
The wicked borrow and do repay, but the righteous are gracious and give generously. (Psalm 37:21) | |
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