[Jotapay]

Who here (especially in America) understands that in the short term budget account deficits which are multiples above GDP are more of a danger to their way of life than peak oil?

Edit: not sure why this is in energy technology. It should go in Economics.

[shortonsense]

Who here (especially in America) understands that in the short term budget account deficits which are multiples above GDP are more of a danger to their way of life than peak oil?

Edit: not sure why this is in energy technology. It should go in Economics.

That would depend on which scenario you believed PO would cause. For those who thought it would start nuke wars, obviously that is more of a danger, since disproved of course. If your scenario for post PO was mild recession followed by buildout of renewables and the electrification of transport, the budget issues might carry more weight.

I've been irritated about the budget deficit since Ronny ran them up, I suppose today is worse, but its not like a new event.

[Tyler_JC]

Who here (especially in America) understands that in the short term budget account deficits which are multiples above GDP are more of a danger to their way of life than peak oil?

You've thrown together a couple of concepts that should really be kept separate.

There's a federal budget deficit which is the yearly gap between federal revenue and federal spending.

There's a national debt which represents the total value of these deficits.

There's also a current account deficit which is the trade deficit plus the capital deficit/surplus.

In the case of the United States, the current account deficit is dominated by a huge trade deficit. The capital balance is actually in surplus because Americans are excellent international investors. Americans buy relatively high returning assets while foreigners buy low return US treasury bonds. In effect, the world is trading its real estate, bonds, and stocks in exchange for American government debt.

At the end of 2008, foreigners owned $3,470 billion more of the United States than we owned of the rest of the world. However, America actually made a net profit on its foreign investments.

It's like taking out a loan from the bank to buy dividend-paying stocks, using the dividends to pay back the bank loan, and having money left over!

The concern, IMHO, is the budget deficit. We can't expect to spend billions more than we raise in taxes forever. At some point, taxes will have to go up and spending will have to go down. This will be unpopular and painful. The budget deficit has gotten so large that doubling income tax revenue would not bring the budget into balance. Think about that. We could double everyone's income tax bill and STILL have a large deficit.

If we don't solve that problem relatively soon, everything else kind of falls apart.

[Daniel_Plainview]

Who here (especially in America) understands that in the short term budget account deficits which are multiples above GDP are more of a danger to their way of life than peak oil?

Edit: not sure why this is in energy technology. It should go in Economics.

Peak oil will wreak havoc upon the national budget (by stifling the economy, thereby depleting the tax base and increasing the costs of government programs). To that extent, the concepts of PO and "deficits" are interwoven (i.e., PO will cause the deficits to worsen) and, therefore, it is not entirely meaningful to suggest that "deficits" will be more of a problem than PO.

[Gerben]

The financial problems are easy to fix: reset the system. That will cause great problems, but it doesn't change the American way of life much. In the end what the US needs is less consumption, higher taxes and more people working in manufacturing jobs.
The US should start protecting some of its domestic producers that have to compete with foreign manufacturing. The automotive industry is a successfull example: most cars sold in the US are produced in the NAFTA area, even if the companies are foreign (Honda, Toyota). There is no reason why Americans cannot produce toys, shoes, clothes, electronics or other crap that is now being produced in Asia. Many jobs might leak to Mexico, but a 'golden decade' for Mexico will help the US a lot more than the current growth in China.
The EU doesn't work much differently. Many manufactoring jobs move to the new EU members in East- and Middle Europe. A few decades ago the new EU members were Ireland, Portugal, Spain and Greece. Those countries had high economic growth and were catching up. Wages went up quickly. Same for East-Germany and now the same is happening in Slovenia, Poland and Czechia. China has too many people to make wages go up fast.

Peak oil can have a much greater impact on the American way of life. The key is preparation. The US should focus on alternative sources of energy if it wants to maintain its way of life. The current scarcity of oil does not allow a quick economic recovery even if the financial problems were fixed. It could turn out to have a dramatic impact if the doomers are right and oil production starts to decline significantly before alternatives are available.