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Comment: Re:Borrowing without planning to repay = THEFT (Score 1) 932

I hear you.

Sadly, I think the politicians like to think they can pay it off somehow. There will be unicorns or something. Or, some other bag holder after they get out of office, and it won't matter because they'll have their airports named after them and a nice golden parachute. They have to lie to themselves to be able to live with the system they are a part of.

Taxes are essentially money taken at gunpoint, and money borrowed by the government is essentially money taken from your children at gunpoint. We don't get to refuse to pay. I don't even get to vote. :-) However, unlike a lot of Americans, I did choose to live here, because I know how bad it can be elsewhere.

I treat it as the cost of living. There are worse places to live than the USA (I've lived in some of them), and I can work hard and save hard, and spread my money around in many forms, and hope that I get to keep a small part of it eventually. I'd love for things to be better than that, but I can't see a way to make it happen. I know I'll land on my feet, but I am now saving for a future family, and that's going to make things much more difficult.

Comment: Re:That which cannot be paid, will not be paid. (Score 1) 932

I have no axe to grind here. One problem with the US two party system is that if you disagree with someone, they think you are in the other party, and assume all kinds of stuff about you. Don't, it's sloppy thinking. I'm not even American.

Defense spending is not part of a circle of bad debt that has a chance of generating a cascading failure across multiple markets.

Also, it's not a financial obligation already promised. Some might argue that staying in certain countries is a moral obligation, but the USA could slash defense spending without generating cries of default, or making pensioners eat dog food.

Also, defense spending may be a lot, but it is still chicken feed compared to the stuff I have already mentioned. Unfunded pension liabilities are close to 130 trillion (not a typo) dollars, and many of those pensions were invested in the housing market. Last I checked, the Fed is in hock for around 12 trillion dollars when you include things like guarantees on debt that is certain to go bad. Fannie and Freddie are basically a 100% loss in a 6 trillion dollar market. Defense spending is typically 0.5 to 1 trillion a year. It's significant, but like I said, not part of the interlocking bad debt that is truly going to screw the US.

If you take your blinkers off and read what I said again, you will noticed I did not specify what had to be cut, just that things have to change, and that bureaucracies are not capable of doing that.

So, why did you assume I had some axe to grind about the military? Hmm? Perhaps you should think about that.

Comment: Re:That which cannot be paid, will not be paid. (Score 1) 932

You can inflate away old debt, but you lose the ability to sell new debt if so. Even if the government essentially defaults on all its existing obligations through inflation, I can't see politicians figuring out how to survive without being able to borrow money like crazy. :-) It'll be fun to watch though!

Comment: Re:That which cannot be paid, will not be paid. (Score 2) 932

You can borrow until people decide you have no chance of paying back, then they refuse to lend you any more and demand their money back. This is not about partisan politics, so give it a rest. Reagan and Bush sure helped the USA down this path, but it is true that the Obama administration has been spending at about double the rate of the previous administration, and people who buy government debt (and thus are loaning the USA money) are noticing, and they are worried. If you really want someone to blame, blame FDR and Hoover for starting the USA down this path. Really though, it's just the way things are now regardless of who is nominally in charge. The bus has no driver.

I agree we should jump start our economy. Forcing those who are holding bad debt into bankruptcy, and cutting government spending to meet _existing_ tax revenues would be a good start. It would hurt like hell for a short while, but the economy would dramatically improve. I am not aware of any historical examples where government spending did anything beside drive the government into more debt, making things worse down the road (Japan is the perfect example). I am aware of examples where cutting spending and forcing bad banks into bankruptcy solved a country's financial problems in less than three years. Most recently, Iceland, and further back, the USA in 1920.

Comment: Re:That which cannot be paid, will not be paid. (Score 1) 932

They can certainly do that with old debt, as long as they don't expect to sell any more treasuries in the meantime.

So, sure. They can default on all the existing debt, as long as they are willing to run the government on actual income after that. I don't have a big problem with that. Lending money is a form of gambling. Sometimes gamblers lose.

I just can't see the current crop of politicians dealing so well with having their purse strings cut. :-)

Comment: That which cannot be paid, will not be paid. (Score 4, Informative) 932

The solution to debt is not more debt. At some point someone is going to have to be grown up about this. It would be nice if they were grown up sooner, so that it hurts less. I'm not holding my breath.

Also, the US makes enough tax income to pay interest on it's current debt. In other words, "default" is not a consequence of refusing to raise the debt limit. Something will have to go unpaid, but it doesn't have to be the USA's debt interest. People are running fast and loose with the meaning of the word "default". Don't let them take you in.

Social security is an unfunded liability, currently funded through a Ponzi scheme, which is just now entering the "not enough new suckers" phase. (No, really, it is. There is no SS "trust fund". I can write checks to myself all day; it doesn't mean I have more money.)

Medicare is a disaster in terms of cost.

The US spends each day double what it takes in in taxes.

The US decided to take what was entirely a private problem (big banks would go bankrupt because they made bad bets on housing) and turn it into a government problem by bailing private entities out that should have gone bankrupt, and then guaranteeing lots of other debt. This actually prolongs the problem and makes it worse.

The Federal housing entities are some of the worst culprits, helping blow the housing bubble, and now pretending they are not bankrupt. They will have to implode and be shut down at some point. Bye bye Fannie and Freddie.

The inmates are running the asylum. It seems the solution to being seriously in debt is to spend more. There is also apparently a magical money multiplier that makes government spending somehow blessed and better than private spending. We have economists making arguments based on very dubious differential equations in which they carefully never specify their boundary conditions. The well known "economists" are more about justifying their political leanings than any actual scholarship.

Public union pensions for federal and state workers are unfunded to the tune of tens of trillions of dollars. These will never be paid out.

All of these chickens will have to come home to roost. Arguing about Democrats or Republicans or Left or Right completely ignores the fact that reality will eventually force a solution.

The current administration will do all of the worst possible things they could do. Not because they are evil, or Democrats, or whatever, but because bureaucracy is about protecting the way things are now. Their universe does not include actions which could fix this problem, because they would change the power balance and the money flows upon which they depend. The Republicans are being forced to pay lip service to the concept of being fiscally responsible by entities such as the Tea Party, but I can't see them doing anything real. They too are bureaucrats, and they too have rice bowls to fill.

If any entity did force some kind of resolution, it will be vilified by all and sundry, because resolution involves the death of a million sacred cows at all levels of this society. There's no upside for a politician in being vilified for doing something that will hurt this much, even if it's the right thing to do.

It would be nice to say that we get to pick whether we try to deal with it now, and maybe have a little control, or later, when it will be completely out of our control. In reality, I can't see that choice having any chance of being presented.

The Financial Crisis never ended. It was just temporarily papered over by insane government spending. Now we just have a bigger can to kick down the road.

A massive failure is coming, whether it be a cascade failure, or death by a thousand cuts. I have no idea when or how. I wish it would happen sooner so I can start concentrating on rebuilding, instead of trying to dodge falling pianos while the world at large tries to pretend we're in a light summer rainstorm.

The Force is what holds everything together. It has its dark side, and it has its light side. It's sort of like cosmic duct tape.

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