[some_guy282]

Uh, that was a joke. You were supposed to laugh.

[Colorado-Valley]

The current estimate is a minus $330 billion. But the government has chosen not to count the Iraq war, which will probably add another $130 billion.

Hey, it's only money!

[Daculling]

Ya lets not discount the oil we sit on now...

[Kingcoal]

It's all fiat money anyway. Unfortunately oil, which is real money, keeps going up and up!

[frankthetank]

Yup...and those poor bastards that own all that debt are seeing their dollars buying less and less of that black stuff.

[hull3551]

Yup...and those poor bastards that own all that debt are seeing their dollars buying less and less of that black stuff.

An interesting article in the Asia Times regarding how the value of debt held by foereign investors dropped in value due to the depreciation of the US dollar:

Link

[Falconoffury]

Will the USA ever balance its budget again? Will the USA spiral into ultimate destruction based on a forever unbalanced budget?

[the_sword]

Yes the budget will be balanced, directly after an Argentina style currency meltdown of the US dollar, a forced IMF policy, and sale of 1/2 of the US Infrastructure( read: city water companies, interstate hwys, national forest mineral rights, etc etc etc).

[mmasters]

May be balanced under a new economic system to replace the current one 10-30 years out (after this one goes to hell).

Wasn't on the list so I chose the "what are you smoking" option

[paoniapbud]

Why am I in this basket and where are we going?

[gego]

There are two ways government can take purchasing power from you. One is tax, and the other is by inflating the money supply with new loans to government, which makes money worth less than it was and gives the government purchasing power.

Government taxes to the extent that they can do so and still remain in power, but this does not give them enough purchasing power. Their needs are greater than taxes would allow because they need the funds to not only provide the minor ligitimate functions of government, but the also need the funds to keep the voting populus voting for them, i.e., they need to buy votes with largesse.

The accumulated debt and the expected level of government spending cannot be paid, so eventually they will default on both debts and the other promises they make like social security. This probably will put an end to those in power, but the general public is so conditioned to government running life that they will just accept the bankruptcy of the present government and institute an new government that will begin the scam afresh, sort of like the USSR failing and breaking up followed by new governments like Russia.

Overlay this all with the chaos of economic activity disintegrating and life becomming unsustainable by many and the failure of the government may not be perceived as so significant after all.

[paoniapbud]

There are two ways government can take purchasing power from you. One is tax, and the other is by inflating the money supply with new loans to government, which makes money worth less than it was and gives the government purchasing power.

You are right that issuing bonds does increase the government's purchasing power. However, inflation is a consequence of the macroeconomy. Inflation does decrease purchasing power but only to the extent that real wages and interest rates do not keep up. Through the years our wages have, more or less, kept up with the rate of inflation. Otherwise we would still be making a dollar a day and paying the prices we currently do. The government doesn't "control" the real value of money. In fact, the Federal Reserve has increased interest rates to stave off inflation.

Sorry to be nit-picky but we gotta get this stuff straight!

[NordicHero]

Yes the budget will be balanced, directly after an Argentina style currency meltdown of the US dollar, a forced IMF policy, and sale of 1/2 of the US Infrastructure( read: city water companies, interstate hwys, national forest mineral rights, etc etc etc).

That sounds about right. But you forgot to mention that the purchasers of those assets would more than likely be Jewish.

[rwwff]

Yes the budget will be balanced, directly after an Argentina style currency meltdown of the US dollar, a forced IMF policy, and sale of 1/2 of the US Infrastructure( read: city water companies, interstate hwys, national forest mineral rights, etc etc etc).

That sounds about right. But you forgot to mention that the purchasers of those assets would more than likely be Jewish.

The IMF comes into play when the loans a country has taken out are not denominated in that country's currency. This is the magic of dollar hegemony. There will be no IMF intrusion, as all of our loans are in fact payable in stuff we can print. We don't need Euros or Yen.

Now, I'm not saying we won't sell off all kinds of stuff, like perhaps all the lumber in the national parks and forests for instance, or drill for oil for export off the coast of Florida, California, Oregon, and Washington, or perhaps strip mine all of Gila Wilderness looking for the last drivels of silver to be found.

Highways I doubt would make the cut, after a crash like that, our motoring days will be over, so tolls would be pretty thin, but the assets would remain valued very highly and subject to enormous property tax bills.

[rwwff]

NB... Maybe we could sell Yellowstone and Yosemite as amusement parks ??

[gego]

You are right that issuing bonds does increase the government's purchasing power. However, inflation is a consequence of the macroeconomy. Inflation does decrease purchasing power but only to the extent that real wages and interest rates do not keep up. Through the years our wages have, more or less, kept up with the rate of inflation. Otherwise we would still be making a dollar a day and paying the prices we currently do. The government doesn't "control" the real value of money. In fact, the Federal Reserve has increased interest rates to stave off inflation.

Sorry to be nit-picky but we gotta get this stuff straight!

Let me make sure I am looking into your thoughts correctly. You get a raise at work; on your way home a stick-up artist stops you at gunpoint and you hand over 1/2 of the raise you just got; he takes it and runs; he spends what he has taken from you so you admit that he has an increase in purchasing power. Your logic is that you did not have a decrease in purchasing power, because you just got a raise.

Now you say the government does not control the real value of money, so I suppose you do not hold them accountable at all for the fact that money today only buys a nickel's worth compared to money a century ago.

It looks to me that your logic is a little fuzzy; maybe those university economics courses really do have an effect after all.

[MrBill]

Let me make sure I am looking into your thoughts correctly. You get a raise at work; on your way home a stick-up artist stops you at gunpoint and you hand over 1/2 of the raise you just got; he takes it and runs; he spends what he has taken from you so you admit that he has an increase in purchasing power. Your logic is that you did not have a decrease in purchasing power, because you just got a raise.

Now you say the government does not control the real value of money, so I suppose you do not hold them accountable at all for the fact that money today only buys a nickel's worth compared to money a century ago.

It looks to me that your logic is a little fuzzy; maybe those university economics courses really do have an effect after all.

Actually, Gego, it is your post that is fuzzy, so no use to blame it on university economics courses. Which are in any case dumbed down to the level that the average undergrad can pass without actually having to study. But that is besides the point.

Inflation decreases your purchasing power. Now, I do not know about you, but successive generations have been able to buy more with their salaries than my grandparents could before or after the depression. When you compare likes to likes. Larger, better built and better insulated houses. Better and more reliable cars. Increased standards in healthcare, medicine and dentistry as well. That extra wealth came from increases in productivity not from inflation.

Now, of course, if money supply continues to increase, while productivity does not, then you have inflation that decreases your purchasing power.

If you want to work for a nickel using technology and work methods that are a century old, you're more than welcome to try. Of course, you will not be able to afford any of today's goods and services as they are all priced accordingly using those productivity & efficiency gains of the past century.

If you argue that demographics and government debt will combine to make workers less well off in the future then you'll have no argument from me. At least there we might agree that debts & future unfunded liabilities taken on today will have to either be paid for by inflating away those debts, also depreciating savings; by forced saving, through higher taxation, which is just another form of lower living standards; or by default, and all that implies.

Analysts say the middle-class flight will press on even if coastal home prices sag amid a national housing slowdown. Home prices near the state's coastline would need to collapse to make buying a home there possible for many households.

Barring a collapse, ever more Californians will call the state's Central Valley home because homes there are relatively affordable. July's median home price in San Francisco was $771,000, compared with $438,000 in San Joaquin County roughly 60 miles to the east, according to real estate information service DataQuick Information Systems.

California middle-class packing up, heading east

Run away money supply or relentless demand stemming from immigration, legal and illegal, plus workers migrating to major cities that is putting upward demand on housing and real estate? Maybe a bit of both. But at the turn of the 19th century they would have been headed for the Midwest instead of the SouthWest.

[paoniapbud]

It looks to me that your logic is a little fuzzy; maybe those university economics courses really do have an effect after all.

Right, a few courses do help. But look to the mods post for my reply. I would have said much the same. Perhaps in those Econ 101 courses you will remember purchasing power?

From wiki: If money income stays the same, but the price of most goods go up, the effective purchasing power of that income falls. Falling purchasing power can thus be part of inflation. However, inflation does not always imply falling purchasing power of one's income, since one's money income may rise faster than inflation. In inflation, there are some winners and some losers.
http://en.wikipedia.org/wiki/Purchasing_power