National Debt

[analog]

dai, our Ben Fanklin had an interesting writeup on money and its value.
well, at least it was simple enough for me.

http://etext.virginia.edu/users/brock/webdoc6.html

For many Ages, those Parts of the World which are engaged in Commerce, have fixed upon Gold and Silver as the chief and most proper Materials for this Medium[of exchange]; they being in themselves valuable Metals for their Fineness, Beauty, and Scarcity. By these, particularly by Silver, it has been usual to value all Things else: But as Silver it self is no certain permanent Value, being worth more or less according to its Scarcity or Plenty, therefore it seems requisite to fix upon Something else, more proper to be made a Measure of Values, and this I take to be Labour.

By Labour may the Value of Silver be measured as well as other Things. As, Suppose one Man employed to raise Corn, while another is digging and refining Silver; at the Year's End, or any other Period of Time, the compleat Produce of Corn, and that of Silver, are the natural Price of each other; and if one be twenty Bushels, and the other twenty Ounces, then an Ounce of that Silver is worth the Labour of raising a Bushel of that Corn. Now if by the Discovery of some nearer, more easy or plentiful Mines, a Man may get Forty Ounces of Silver as easily as formerly he did Twenty, and the same Labour is still required to raise Twenty Bushels of Corn, then Two Ounces of Silver will be worth no more than the same Labour of raising One Bushel of Corn, and that Bushel of Corn will be as cheap at two Ounces, as it was before at one; ceteris paribus.

Thus the Riches of a Country are to be valued by the Quantity of Labour its Inhabitants are able to purchase, and not by the Quantity of Silver and Gold they possess;

i'm a little hesitant to get back in market yet.

1929 'crash' took nearly three years to bottom, with a couple rallies along the downhill slide.
here's a somewhat expanded chart.
sorry, image is too many pixels to post.

http://stockcharts.com/charts/historical/djia19201940.html


seems to me that a lot of alleged money has recently disappeared back into the thin air from which it sprang. Logic would suggest a plain old savings account might see an increase in purchasing value as a result. 1929 showed it takes a while to drain the money from the stock market, so i thought we might see some of that deflation as Franklin predicted.

But Geithner is throwing money out treasury's window so fast i have no idea what'll happen. Control systems tend to "ring" or maybe burst into oscillation when given a sudden jolt.

the tv ads are saying 'buy gold' , just like they were saying 'borrow money' last year which makes me think that ship is oversold already and they're scalping tickets.

so i have no idea what to do. i'm thinking twenty acres and a tractor...

Money has lost so much value in my lifetime the graphs all have it down near zero.
To see the current trend we really need to see it on a semi-log graph, ie log(value) vs time.

I remember my Dad, an aviation forecaster, saying in astonishment "Some of those airline pilots have twenty-thousand dollar houses!"

a.

[jamiebk]

http://etext.virginia.edu/users/brock/webdoc6.html

For many Ages, those Parts of the World which are engaged in Commerce, have fixed upon Gold and Silver as the chief and most proper Materials for this Medium[of exchange]; they being in themselves valuable Metals for their Fineness, Beauty, and Scarcity. By these, particularly by Silver, it has been usual to value all Things else: But as Silver it self is no certain permanent Value, being worth more or less according to its Scarcity or Plenty, therefore it seems requisite to fix upon Something else, more proper to be made a Measure of Values, and this I take to be Labour.

By Labour may the Value of Silver be measured as well as other Things. As, Suppose one Man employed to raise Corn, while another is digging and refining Silver; at the Year's End, or any other Period of Time, the compleat Produce of Corn, and that of Silver, are the natural Price of each other; and if one be twenty Bushels, and the other twenty Ounces, then an Ounce of that Silver is worth the Labour of raising a Bushel of that Corn. Now if by the Discovery of some nearer, more easy or plentiful Mines, a Man may get Forty Ounces of Silver as easily as formerly he did Twenty, and the same Labour is still required to raise Twenty Bushels of Corn, then Two Ounces of Silver will be worth no more than the same Labour of raising One Bushel of Corn, and that Bushel of Corn will be as cheap at two Ounces, as it was before at one; ceteris paribus.

Thus the Riches of a Country are to be valued by the Quantity of Labour its Inhabitants are able to purchase, and not by the Quantity of Silver and Gold they possess;

Hummm...A VERY wise man. Is he talking about Gross National Product Here? Our ability to produce is at the core of our economy. Thanks for sharing that.

[Shapley]

A dollar in 1871 and 1931 were equal, although the value started to declined after the turn of the last century.

In other words, about the time the Federal Reserve System was created...

[analog]

by jamiebk » 10 May 2009 11:22 am
Our ability to produce is at the core of our economy..

that's why i so enjoy Parkinson, he made such fun of the slide to total bureaucracy.
If you read "Peristroika" it sounds like Gorbachev read him too.



a.

[Shapley]

Is America About To Go Broke?

Government obligations for Social Security and Medicare may soon exceed the combined net worth of every household and nonprofit organization in the country.

For the past several years, many have derided President Bush for the 'hidden costs of the war', that is the costs of the war that were factored into other parts of the budget than direct military expenditures for the war. They were not 'off budget' as many suggested.

What they have ignored during all of this are the truly "off budget" costs of Medicare, Medicaid, and Social Security. These are the obligations the Congress tells us they 'can't touch'. This is a lie, of course, they can touch them, but it requires a true 'profile in courage', since the political cost of doing so may be low poll numbers or even a loss of office. As it is, we all pay for their lack of courage. It is these 'off budget' costs that allowed the debt to rise despite 'record surpluses' at the end of President Clinton's term of office. The surpluses, of course, came about as a result of moving more costs 'off budget'. President Bush, and the Republican Congress, were content to leave those expenses 'off budget', and thus the annual increase in debt was greater than the size of the budget deficit. This is why I've always referred to the 'record surplus' as a lie. It is, and now that lie is catching up with them (and us).

Deficits were not a problem if the GDP was growing at the same rate or better. Now, however, we find ourselves massively increasing our debt even as GDP recedes. We borrow in good times and bad. Congress is the problem, and has been the problem. They hold the purse strings. The Republican Congresses of the and Democrat Congresses the preceeded and suceeded them have both shown a common lack of backbone in dealing with the problem, each hoping that the economy wouldn't implode until their term was ended. It doesn't look promising for the current bunch.

[Haggis@wk]

I'd like to see that same chart for other countries...England, Australia, China, Japan. I doubt it would be much different.

What has been constant is the loss of purchasing power of the dollar to the currencies of the countries you mentioned. When I was a kid in Germany a dollar bought 4 Marks. when the Mark was abandoned for the Euro the exchange rate was 1.5 Marks to the dollar. We started the Euro Dollar at 1-1, but today it's at $1.40.

[Haggis@wk]

White House: Budget deficit to top $1.8 trillion, 4 times 2008’s record.

“With the economy performing worse than hoped, revised White House figures point to deepening budget deficits, with the government borrowing almost 50 cents for every dollar it spends this year.”

I wonder where all those Lefty critics who bemoaned the Bush's Administration deficit spending now?

[jamiebk]

I'd like to see that same chart for other countries...England, Australia, China, Japan. I doubt it would be much different.

What has been constant is the loss of purchasing power of the dollar to the currencies of the countries you mentioned. When I was a kid in Germany a dollar bought 4 Marks. when the Mark was abandoned for the Euro the exchange rate was 1.5 Marks to the dollar. We started the Euro Dollar at 1-1, but today it's at $1.40.

yeah...and when I was a kid I could buy a coke for 5 cents. The value of the USD changes...Today it may be $1.40...tomorrow who knows? There are some things to be said for a cheap dollar...it makes our exports more attractive for one. Hopefully that, and the curtailment of imports would help matters. But, that's just one aspect and of course there are varying views on that premise.

[Shapley]

yeah...and when I was a kid I could buy a coke for 5 cents. The value of the USD changes...Today it may be $1.40...tomorrow who knows? There are some things to be said for a cheap dollar...it makes our exports more attractive for one. Hopefully that, and the curtailment of imports would help matters. But, that's just one aspect and of course there are varying views on that premise.

True. A lot of it is based on perspective. People feel better about the fact they are making 100 times as much as their grandparents did fifty years ago, even though that money is only worth 1% of what it was then so that, in reality, we make about the same...

[Haggis@wk]

Jake Tapper notes that the Congressional Budget Office has some revised numbers on the budget deficit, Apparently by revised we mean completely different than first reported. The deficit projection has increased 50% since January, and CBO director Douglas Elmendorf blames “enactment of recent legislation.” Do you think he means Porkulus and the omnibus spending bill?

The director of the Congressional Budget Office today updated his projections for the budget and economic outlook and is now anticipating a $1.8 trillion deficit this year, and $1.4 trillion in 2010.

This is up from CBO director Douglas W. Elmendorf’s January 2009 projection of a $1.2 trillion deficit this year. In short, the US government is borrowing 50 cents for every dollar it spends.
The new projected deficit is four times the 2008 deficit, which was a record high for its time

.

The financial news seems to get more and more like something Clancy would write; or Lewis Carroll.

[Shapley]

The deficit projection has increased 50% since January, and CBO director Douglas Elmendorf blames “enactment of recent legislation.”

.

We'll probably be seeing a new CBO director soon. I believe Congress mandates that all references to this years deficit have to include the phrase "inherited from the previous administration".

[Haggis@wk]

The deficit projection has increased 50% since January, and CBO director Douglas Elmendorf blames “enactment of recent legislation.”

.

We'll probably be seeing a new CBO director soon. I believe Congress mandates that all references to this years deficit have to include the phrase "inherited from the previous administration".

That's not as funny as you think. The current administration has already block any of the IGs from investigating theft ftom the "Stimulous" bill, and the CBO remains the only independent governmental agency that can criticize the president. It'll go soon.

[Shapley]

I didn't mean it as a joke. The CBO seems to be the only entity associated with Congress that has been offering any type of honest evaluation of President Obama;s and the Congress' fiscal irresponsibility. I don't think Ms. Pelosi will let that stand for too long.

[Haggis@wk]

Social Security, Medicare may run dry sooner.

[Haggis@wk]

Les Jones

The blue lines are Obama’s projected unemployment numbers with and without his $775 billion stimulus. The red triangles are actual employment numbers.

The actual numbers aren’t just worse than the rosy picture Obama painted for a world after his magical stimulus took effect. They’re worse even than the doomsday scenario he outlined if Congress didn’t pass his stimulus plan.

emphasis mine

Words that need repeating.

[jamiebk]

All we really know from this is the actual unemployment rate. You are assuming that the projections were correct (with and without stimulus). In fact, the unemployment rate could have been substantially higher had the stimulus not been enacted. In other words, the problem may well have been much more severe than expected. Your premise that the stimulus had no effect on the unemployment numbers is not supported merely by these data. That is something we will never know, because, of course, the stimulus was put into place. We can't know what would have happened had it not been. Projections are just projections. e don't know when they were made, nor what factors went into them.

[Shapley]

I believe that all the author is saying is that there is no indication the stimulus bill has had any effect. President Obama has been quoted several times reporting that his stimulus has already "saved or added" several thousands of jobs, but the actual numbers compared with his 'no action' scenario does not support this claim.

Based on actual data vs. his 'no action' scenario, no action would have been the better course of action. It is entirely possible that his 'no action' assumptions were as wrong as his 'post action' assumptions. The only thing we can accurately gather from this, however, is that is 'post action' assumptions are clearly wrong, and his claims of positive results from the stimulus are without factual basis.

If President Bush had said it, it would have been called a 'lie'.

[Shapley]

Retail Sales Fall Unexpectedly In April

Just another indication that the stimulus has failed to stimulate...

[Haggis@wk]

Social Security, Medicare may run dry sooner.

Social Security, Medicare may run dry sooner.

The report is wrong. It claims that outlays will exceed receipts for the first time in 2016. Unfortunately, that’s already the case. In February, as the Treasury’s website makes clear, we took in $54.5 billion and paid out $55.7 billion, for a deficit of $1.25 billion. In March that recovered to gain a $2.7 billion profit, but the first red ink has already been spilled, and it’s not going to stay black again for very long.

George Bush tried to warn us in 2005 about the looming crisis in entitlements. What kind of response did that get? Democrats like Harry Reid accused Bush of fear mongering and panic, and assured Americans that “the so-called Social Security crisis exists in only one place — the minds of Republicans. In reality, the program is on solid ground for decades to come.”

Obviously not. We lost money in February for the first time ever — and that will only get worse as the economy slows, unemployment rises, and more people start drawing Social Security. We are in a situation wholly unique in American history.

Jamie,
I can't really disagree with your reasoning, just that those were the "scare” charts prepared by the administration in order to convince Congress to pass the stimulus. If the best fear mongerers in the White House can't exaggerate better than reality, then they need to hire better fear mongers.

[Shapley]

panem et circenses.

The "stimulus" provides the bread, the media provides the circuses in the form of 'Reality TV" and the stuff that masquerades as news.

… Already long ago, from when we sold our vote to no man, the People have abdicated our duties; for the People who once upon a time handed out military command, high civil office, legions — everything, now restrains itself and anxiously hopes for just two things: bread and circuses.
- Juvenal -