Discussion in 'Off-Topic' started by BurnPyro, Jul 12, 2015.
as long as there are wives then debt ceiling = debt
Mostly it doesn't bother me, but if I spill some I just clean it up with 409 and a paper towel. Not sure why this needs a thread.
Because it's good to discuss some things. Some people might get some perspective on the world.
The debt limit is weird because it isn't about budgeting at all; it is an entirely separate matter. It's more like you decide that you will spend $30 this month (Congress said so with the budget), but you are only going to make $20 (again, the budget). So now you are paying people for their work/services/whatever (which the budget authorized), and you do not have enough money. The debt limit is basically Congress giving you permission to use a credit card, instead of cash. Either way, you still owe that $10; the debt is incurred regardless of whether you owe the service provider or the credit card company.
Which is why when Congress gets in a huff about having to raise the debt limit because of "the President's spending," they are basically being disingenuous; they knew full well they'd have to do this with each and every budget they pass; which was CGP Grey's point in the linked video.
But yea, debt ceiling is not debt. They are related concepts, certainly, but they are not the same thing at all.
PS: I love CGP Grey's videos and podcasts, etc.
I will answer the default question when I have more time, it is a more involved answer.
I think one of the main complicating components of this is the fact that Budgets are generally based on assumed tax income, in addition to other political problems (leverage and such as mentioned in the video IMAGIRL posted).
Budgets are often crafted based on how current trends are supposedly going to go in the next few years. For example, many new taxes are measured in how much money they expect to get over X number of years. But expected taxes and actual tax revenue is not always the same thing. This is why it's important to be able to borrow money in some cases (or at least the most legitimate reason why it's important).
If you're expecting to get 20 Billion from Y% over the next 5 years, but only get 15 Billion, you've got to borrow to make up for the remaining 5 Billion. This is not likely to be Congresses fault, short of them being wrong in their economic projections (or other issues as previously described), and it's also not likely the President's (or the IRS') fault short of the President failing to properly collect taxes (unable to deal with fraud, evasion, whatever).
Ideally, you'd have a few years of surplus revenue, with which you could tap into during shortfalls. In reality however, it's much easier for politicians to barrel out pork for the sake of votes/campaign funding and/or insider trading or whatever, and thus they'll play it close to or sometimes even over the projected income, which makes having shortfalls surpass surplus much more likely/inevitable.
The Ceiling historically seems like the vestiges of Congressional control over the issuance of currency (which they gave up to the FED when it was established).
Since I'm not an economist, my question is this: what does it mean that nearly 600 trillion of USD is "created" by currency and credit derivatives? And it being 150 times larger than the Money Base? Or 5 times that of total national assets?
My thought on Greece's situation. Europe decided to date a high-maintenance, fraudulent, spendaholic girlfriend. This was always the only outcome.
Never fear though, the situation cannot possibly get worse.
This is interesting reading from the finance minister who was forced to resign. It's difficult to know how much of this is a fair acount, but it paints a pretty bleak picture of the way the Euro-group is run.
In discussing debt, no one has considered the moral aspect. Is it right to demand your grandchildren to pay for your grandfather's 57 chevy? That's essentially what we're doing. We're demanding generations yet to be born to pay for our and previous generations's bills. That cannot be good whether you're talking about Greece or America. If Greece were to collapse as a result of its finances that would certainly be bad for Greece and Europe. Now if America's debt problems really come home to roost, that's a reality I don't want to think about. That's why it's imperative we get our fiscal house in order.
The next president and Congress are going to inherit a debt about 20 trillion with 60-100 trillion in unfunded liability depending on how far out you go.
It still might be a good idea to try and let future generations pay for it. The idea is that through a combination of inflation and real GDP growth the initial amount loaned becomes trivial over time. Meanwhile the money that got paid for the car entered the economy and helped reduce unemployment and created growth.
I think there's only 2 possible outcomes left for the greece situation
1. Greece leaves the EZ (not EU) (for a bit), reintroduces it's own currency and then devaluates it to increase greek competivity, and uses inflation to melt the debts away.
2. Greece stays in the EZ and gets forced, with a knife on the throat, to actually do the reforms that have been agreed on since the start of the crisis with an eventual debt restructuring.
Either way, thesituation for common greeks is going to get worse before it can get better.
option 3- greece takes over half the mediterranean and all of turkey and the caucasus
Unsure if any of you have the foundation or gumption to watch, but here goes nuttin:
I've decided to try and put together a rough (text-based) time-line of events leading to the current Greek situation. It'll probably take quite a bit of time, so don't wait up for me; if anyone wants to beat me to the punch that would also be awesome.
Mostly, I feel like it would be good if we had all the important information centralized for easy and quick reference, and it would help me and others perhaps understand the specifics of it better, and thus be able to have more firm, accurate, and overall insightful thoughts and commentary. And I do like having at least accurate commentary.
In the mean time, have fun discussing things.
So. From a background of International Politics maintaining a preference in Security Policy I've always seen Economic Policy as a weak point for myself, so props to @Sokolov and @Ohmin for breaking that down for me.
Onto the subject at hand, Greece serves as an issue for notions of both security and prosperity across several facets:
I) The action of a Greek exit from the EU would, arguably, call into the question the ability of the EU to function as an effective Economic and Political entity which is why throughout Ohmins forthcoming timeline you will note a multitude of so-called deadlines, where-upon the EU's political apparatus having failed to reach accord with the Greek state apparatus has issued numerous pushbacks to grant further time for the Greek state to reach a position that is somewhat tenable in allowing itself to continue to function within the EU.
II) While some would argue that the defaulted loans are the immediate concern of the EU states I wound instead argue that these serve as a symptom of the greater issue the EU's seeks to combat. Firstly the loss of political prestige and power would damage the standing of the EU both politically and economically with the far-reaching consequences possibly seeing a gradual break-down of the EU's current structure in an effort to rectify the state of affairs that has lead to the first nation in history to leave the EU since it's inceptions post-WW2. Secondly, as Sokolov has noted, simply belonging to the EU served to create an atmosphere of "Security" in regards to the Greek economy, in turn if the Greek state departs from the EU not only would this increase the risk of any future investment into the Greek state it would also serve to dispel the aura of economic security among current and future EU states. This would both harm the current interests of EU states while also reducing the possibility of increased membership in later years. At least those states which seek purely economic benefits to membership.
Also, guys, let's keep in mind that microeconomics do NOT work the same way as macroeconomics. As convenient as it may be to think of these issues in terms of "your mom/uncle/whatever bought/loaned you this" hypotheticals, a nation's financial situation isn't a monolithic entity and can't really be understood in the same terms as an individual without setting up strawman arguments.
I am interested to see if you are stating this to set up tons and TONS of wiggle room for future declarations, or if are just reminding us that 1 to 1 conversions are inaccurate.
Do tell. Inquiring minds.
Greece should bite the bullet and get rid of the euro currency before it gets sucked any deeper. Short term pain for long term gain.
I think more like the second. I didn't have follow-up declarations in mind.
Many defenders of the status quo exist. Glad to see you are not one of them.
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