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Swipe the Card - National Debt
creepycoug
Member Posts: 22,749
https://www.forbes.com/sites/ginaheeb/2021/02/11/national-debt-set-to-become-larger-than-the-entire-us-economy-cbo-says/?sh=697f814a1e8e
Over the next decade, the national debt is expected to reach a record high of 107% of GDP. This is before Biden's new round of stimulus.
On Wednesday, Federal Reserve Chairman Jay Powell, a Republican himself, expressed alarm about the high unemployment rate and said that now was not the right time to focus on the national debt. Ok! Jay!
Some hope for GDP to return to pre-pandemic levels because Vaccines! Sounds like wishful thinking, but I sure hope so.
Over the next decade, the national debt is expected to reach a record high of 107% of GDP. This is before Biden's new round of stimulus.
On Wednesday, Federal Reserve Chairman Jay Powell, a Republican himself, expressed alarm about the high unemployment rate and said that now was not the right time to focus on the national debt. Ok! Jay!
Some hope for GDP to return to pre-pandemic levels because Vaccines! Sounds like wishful thinking, but I sure hope so.
Comments
Don't have an hour right now, but will watch this later today and report back. Looks like a good one. Thanks for posting it.
The entire business cycle is based on expansions and contractions (where all the poor business decisions come back to haunt folks)...the idea of the "Great Moderation" cheered on by the Central Bankers where the cycles aren't as severely because of the increased size/diversity of the economy has somehow mutated to the idea that the government and indirectly the Fed should print money to paper over/prevent any possible downturn.
Its comically stupid from a bunch of supposedly smart people.
Of course, they wouldn't be, because that would pre-suppose the economy needed cooling down. The real economy doesn't. What you really don't want to be is the guy who says, "Let's stop this charade and let the shit hit the fan because that would be keeping it real."
And frankly, I wouldn't want to be that guy either. But the chickens will come home to roost eventually. They always do.
Pretty sure both parties now fix the numbers with accounting tricks and they aren't going to volunteer to be the one out front
Headline today - new unemployment claims down in California!!!111!!!. Well most of us are on old claims. And before the pandemic when UI had an expiration date they stopped counting you as unemployed when your bennies ran out
At this point we better hope they can keep it going
Unfortunately these morons just thought they were smart enough to do it "right" so it would make things better. And if you look at their history its a pretty similar path to most drug addicts. Start with just a little when you needed when you were down...just a little larger hit...a little more often...evolved the last 10 years into becoming a constant user...tried to get off the smack in 2018 and couldn't when everyone screamed about the stock market...and now they have spent the last year curled up on a Seattle street corner shaking violently high as a kite telling everyone they just need a few more hits but they will stop using next year maybe.
Leads to another interesting conversation had with a coworker yesterday. If the Fed hadn't printed money to basically transfer wealth to the upper classes and keep assets and specifically the stock market riding high does anyone really think the govt behavior would have been the same? Would the same people lecturing everybody to stay home and not do anything be saying that if their retirement savings shrank 50%. The Covid discussion belongs in the Tug, but don't think anybody can argue the Fed and the Fed alone ended up setting all the policy the last year.
This is all to say, fiscal discipline. It's never fun, but you're usually glad you did it later on. On this point it's almost apoltical, because we all know Trump was a spender too, and he was all over the Fed when they were talking about (and did as I recall) tweak rates ever so slightly. He was afraid of what it would do to his beautiful economy. In the end, I'm afraid, politicians, all of them (and Trump became one once he got there) have all learned the lesson: it's the economy stupid. Nobody will ever succeed in the oval office making decisions that in the short term pour water on the economis.
I agree with this. This also brings up an interesting predicament that 401Ks have put our country in... can any politician really afford to let the market "correct" that way markets, in theory, should? I think a huge reason that we're in the place we are now is because letting the market collapse would mean that 401Ks would be worth half as much and we'd have a crisis of retirement-age folks going on food stamps.
The old pension system didn't make sense because it assumed that companies would grow forever(which they don't). I feel like we've now created an environment where the markets are now forced to "grow forever" because it's politically unfeasible to let the markets correct. Could you imagine what would happen to our society if we had a Japan-style, multi-decade recession happen?
And the problem isn't retirement-age folks going on food stamps...its the upper class retirement-age folks not having a boat and buying a new iPad every year. Average 401k holding for folks 50+ is something like $170k, but the median is only something like $60k.
https://www.personalcapital.com/blog/retirement-planning/average-401k-balance-age/
And that's for the people who have 401ks, which is only something like 1/3 of the population (may be a bit higher for those over 50...hadn't seen that data):
https://www.fool.com/retirement/2017/06/19/does-the-average-american-have-a-401k.aspx
Average retirement-age folks aren't depending on the stock market for retirement...they are depending on a few assets if they are lucky and a SS check. And working until they are really old. Its the upper class folks that are. And magically enough a subset of those folks are the ones making policy for the masses.
Agree with your pension system using unfunded assets and a "constantly growing company" assumption. Japan is an interesting and good comparison...as somebody else also mentioned the largest stock shareholder for most companies there is their Central Bank. I expect that process to kick in here whenever there is a stock downturn because of the the reasons you pointed out.
My wife's grand parents told similar stories. My wife's family were pioneer settlers in the Grays Harbor area and raised cattle on a ranch (they still own the land). My MIL's uncles would tell her when she was little, "don't be jealous of those kids who live up on the hill in town. you get to eat meat with all of your meals; they get to once or twice a week maybe," and they weren't kidding. It was a collective of siblings who built their own houses on this property and they invested in timber, ranched, etc. They felt lucky because when they got old the younger generation would take over and run things and take care of them. My family in Cuba did the same thing, but w/o the timber and ranching. You got old, you sat in a rocking chair and lived with or near someone who was bringing in money and looked after you on your way out.
Now everyone expects this great ending, which is fine, but perhaps we're finding it's unrealistic for everybody to have it???? Goes back to my earlier question: is it a good thing that everybody has retirement savings in the market? If pensions didn't work, then it's good old fashioned "save what you can" and then hope that's enough or that your kids will take care of you.
Totally agree with everything you and @HoustonHusky have said. Everybody in the club should read this thread.
Have we printed so much money that we are past the point of no return?
I've wondered for the last decade if we had a national VAT tax of 1-2% with the understanding that the ONLY place it can go is to help paydown the debt would help walk us back, but am also aware that w/ politicians the tax only would keep going up and eventually it would just fall in the general budget.