US Government Spending Like a Sailor in a Brothel

Generali

http://news.bbc.co.uk/2/hi/business/8148875.stm

The Treasury figures showed that the budget deficit so far in the financial year, which runs to 30 September, was $1.086 trillion - a widening of $94.316bn from the month before......

"Our foreign investors from China and elsewhere are starting to have concerns about not only the value of the dollar but how safe their investments will be in the long run."

Amazing. That's $1,086,000,000,000 that is unavailable to be used by business for productive investment.

At an interest rate of 5% it will cost the US-ian tax payer $4,525,000,000 each month to service the debt that has been run up in the last 9 months. That works out at $183.44 per US Citizen per year.

CLAPTON

indeed so
but if the alterntive was 30s style unemployment what would a sensible person choose

-no debts and no payment of $183.44 per person per year but no job or income

or
-a decent job with a decent income but paying debts off at the rate of $183.44 person per year.

I know which you would choose.

HousingBear

CLAPTON wrote: »

indeed so
but if the alterntive was 30s style unemployment what would a sensible person choose

-no debts and no payment of $183.44 per person per year but no job or income

or
-a decent job with a decent income but paying debts off at the rate of $183.44 person per year.

I know which you would choose.

An interesting point, slightly let down by the fact that the figure of $183.44 is merely servicing the debt, not paying it off. And that's per person, not per adult or even per adult with a job. So if you have four children and a non-working spouse, it's over $1,000 per year even before you start repaying any of the principal. Add in the US unemployment figures, long term sick etc and it becomes a significant burden.

CLAPTON

HousingBear wrote: »

An interesting point, slightly let down by the fact that the figure of $183.44 is merely servicing the debt, not paying it off. And that's per person, not per adult or even per adult with a job. So if you have four children and a non-working spouse, it's over $1,000 per year even before you start repaying any of the principal. Add in the US unemployment figures, long term sick etc and it becomes a significant burden.

yes of course.

The clear point I'm making is that there are real choices to be made. Simply quoting one very large number doesn't significantly illustrate the hard choices that are being made.

The reality is that wall of borrowing is providing a lot of jobs and is stopping 20/30s style unemployment.
Given the choice of your own unemployment but no 1000 of debt repayments and no job for 4/5 years but no debt repayment which would you choose?

Generali

CLAPTON wrote: »

yes of course.

The clear point I'm making is that there are real choices to be made. Simply quoting one very large number doesn't significantly illustrate the hard choices that are being made.

The reality is that wall of borrowing is providing a lot of jobs and is stopping 20/30s style unemployment.
Given the choice of your own unemployment but no 1000 of debt repayments and no job for 4/5 years but no debt repayment which would you choose?

Personally, I don't accept that all this spending is keeping unemployment much lower than would otherwise be the case. There is a small difference but once you take into account the effects of 'crowding out' then it is quite small. The choice you give isn't real, IMO.

The US unemployment rate is 9.5% and rising fast. The drag on the economy caused by the extra taxes that will have to be levied in future to service the debt will cause much higher unemployment in future too.

Another way to look at it is would you rather lose your job now and be able to find another in a year's time or would you rather see your job disappear forever to another country that isn't saddled with a massive national debt?

purch

Is it money well spent ??

The answer won't be fully known for a decade or more, but the problem is, if the answer is NO then by then it'll be way too late !!!! :eek:

CLAPTON

Maybe you're right and maybe not but it moves us away form the rediculous 'oh my gawd' and 'it beggars believe' threads on the size of the debt without looking at the consequences of the alternative course of action.

Normally I take the view that the majority are usually wrong so I'm slightly embarassed by the fact that most of the economistics of all persuasions seem to see the general run of the current policies as being appropriate. Lots of differences about future debt repayment but most seem to see the QE and government spending as essential to stop a deep depression.

StevieJ

purch wrote: »

Is it money well spent ??

The answer won't be fully known for a decade or more, but the problem is, if the answer is NO then by then it'll be way too late !!!! :eek:

Then again the reverse also applies if the funds had not been injected.

The_White_Horse

the problem is, they have a profligate waster in the white house, like we have profligate wasters here.

chuck more money at it and it will all be ok.

vivatifosi

The_White_Horse wrote: »

the problem is, they have a profligate waster in the white house

Following on from a profligate waster from the other side :eek:. How scary is that?

kennyboy66_2

Generali wrote: »

http://news.bbc.co.uk/2/hi/business/8148875.stm



Amazing. That's $1,086,000,000,000 that is unavailable to be used by business for productive investment.

Just think of all that money that could have been available to lend out to homeowners - whether they could afford it or not.


Oh hang on.....


The trouble with the "crowding out" theory, particularly when it comes to Govt borrowing is that it is a little simplistic to say the least.