Your opinions of the massive debt of the U.S. and WHEN that is going to affect the market?

Discussion in 'General Trading Discussion' started by User911, Feb 11, 2015.

  1. Profit5500

    Profit5500 Senior Investor

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    I have not invested in the industry myself so I do not know how it works. If I could invest I would then be able to understand how the market works.
     
  2. petesede

    petesede Guest

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    that chart you linked to is absolutely misleading because it only goes back to 2006... if you go back to the 1980s you will see that it was frequently up to 120% and I believe the highest was 130% From 2000 to 2005 were the ´best´ years we had in the last 50 years. The chart ´started´ at the lowest possible years in order to make this year and last year look horrible (which makes me believe this is a politically motivated graph), when in fact 100% isn´t that abnormal over the past 30 years and in fact is lower than most of the Reagan years. You also have to point out that most of the 100ish years have been years when we are coming out of a recession and furthermore were having to deal with the huge expenses involved with the Gulf War.

    This is what I hate about discussion, too many people are politically motivated and twist facts to their suiting. The amount of spending on food stamps, Obamacare and any other social program you want to throw at the liberals is a drop in the bucket compared to what we wasted in Iraq. The entire food stamp program costs in a year about the same as one plane that got shot down.... we drop thousands of smart missiles that cost $5 million dollars each on $2000 pick-up trucks, but yet God forbid we give free lunches to school kids that cost $30 million per year.
     
  3. petesede

    petesede Guest

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    And hey, they also did a nice job at putting the Y-axis at 60. Next thing you know they will quote something Bill O´Reiley said last night on his ´news´ show as fact and proof that we are indeed about to implode because of our huge national debt which is all Obama´s fault and had noooothing to do with the war in Iraq.
     
  4. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I get it Pete. You're not an Obama fanboy, you're the smartest guy in the room, we can borrow and print infinite amounts of money and keep rates down forever with no consequence (unlike every other country who has tried it), bull markets last forever or should be made to last forever by the fed, nobody but the Repubs wanted to go into Iraq, debt to GDP HASN'T been going up under Obama...

    ...and even if none of that is true, it IS no doubt true that you'll always have the last word. Feel free.
     
    Last edited: Feb 14, 2015
  5. Onionman

    Onionman Senior Investor

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    Goodness knows when it will impact the market, but as long as the market relies on the sugar fix of QE it's not really a big issue I don't think. It's certainly a long-term story that needs to be addressed at some stage, and I figure it's a big issue for future generations. But in the near term, other issues will be the main focus.
     
  6. petesede

    petesede Guest

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    It is a fact. The % debt we have now is lower now than it was under Reagan and even the early Clinton years. The chart you link purposefully cut off in 2006 and moved the Y-axis to 60% to make the graph appear more dire than it is.

    And yes, we are not like every other country. The big difference is the huge amount of float there is in US dollars. They are everywhere and held by every country. it absolutely (and unfairly) makes ´printing money´ a lot less dangerous for us than any other country. It is a huge advantage for us, which is why you constantly see Russia and China bitching about it. Most other countries hold a large % of their own currency, so if they print more, it hurts them more than anyone else. The USA holds only a fraction of US dollars that are floating, so when we print money, the burden is shared by every other country that is holding our currency, which is everyone. And I never said we can print infinite amounts of money, what I am saying it the amount we are printing is tiny compared to the amount of float there is in the world. spitting in the ocean.

    Yes, debt to GDP has gone up under Obama, the chart clearly shows that. My point is that 100% is historically, over the last 30 years, not anything outrageous and in fact is 30% lower than it was under Reagan. Do this chart.. put 1988 at 130% and then put 2014 at 100%... set the Y-Axes to 80 and take a gander at that graph.. You will think Obama is God for doing such an amazing job. And to be fair, I never blamed Reagan for the high debt ratio from the 1980s because the main reason it was that high was because he won the cold war using it. Which is really the same reason it moved up the last 3 years, because of the war in Iraq. I personally am non-political, I think for the financial state of the economy, the dems and reps are basically the same.

    If we had a debt problem, we would have problems borrowing money and bond rates would be high... I think you should check out bond rates.. and then compare them to every other country in the world. China, Russia (big time), UK, France, Germany, Japan... all have to pay higher interest rates to borrow money. how can you say we have a debt ´problem´ when we get the best deals when borrowing money? Countries that have a debt problem ( Argentina, Greece etc) have to pay huge interest rates when they borrow money.

    Onionman, it will be fixed just by making sure GDP is growing as fast as debt. We are recovering from a recession and had a lot of war expenses at the same time. In a year or two those things will be behind us and we will go back to the late Clinton years where we actually had a budget surplus and were able to pay down the debt. Remember, the only reason that ended was the Bush tax cuts in 2002 that once again put is into a deficit, followed by the huge expenses in Iraq. If we had not done the tax cuts in 2002, and had limited the war to Afghanistan, we would have had a budget surplus than last 16 years straight, with the possible exception of 2008 and 2009. To be fair, the tax cuts in 2002 could have helped grow the economy and offset the losses, but because of Iraq, we never were able to see if the tax cuts could have worked.
     
  7. BudFox

    BudFox Well-Known Member

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    The dollar will remain safe as long as it stays a petro-currency. This does mean spending a lot of money on war/covert intervention within nations that try and trade oil using euros but it seems to be working so far.
     
  8. Rosyrain

    Rosyrain Senior Investor

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    I am shocked that the debt is less now than it was during the Regan years. I was too young to really understand how the economy was then, other than what I have read, but it seems like most people were strolling along with money in their pockets and smiles on their faces. What is different now? It could be that we as consumers just have much more personal debt?
     
  9. JR Ewing

    JR Ewing Super Moderator Staff Member

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    It isn't. Notice he's only giving a personal opinion and not citing any sources. As a general rule, it's better to trust data from reputable sources than contradictory un-sourced "opinions" from people in internet forums.

    Debt to GDP was much lower before Obama took over. Obamacare alone will cost trillions and trillions. You can adjust the chart on the link I posted and see this going back decades.

    The debt now is far higher than it has been under all other presidents combined, despite the fact that we've been in a zero interest environment for the last 6 years, and that the "Bush Wars" that everyone wanted only account for a small fraction of that 18+ trillion. Rates were sky high when Reagan came into office, and the recovery that happened on his watch was far better than our current anemic recovery, despite the fact that the Carter years did far more damage than the Bush years.

    As for that goddamn Iraq war that all liberals love to say was totally partisan...

    "One way or the other, we are determined to deny Iraq the capacity to develop weapons of mass destruction and the missiles to deliver them. That is our bottom line."
    --President Bill Clinton, Feb. 4, 1998

    "If Saddam rejects peace and we have to use force, our purpose is clear. We want to seriously diminish the threat posed by Iraq's weapons of mass destruction program."
    --President Bill Clinton, Feb. 17, 1998

    "Iraq is a long way from [here], but what happens there matters a great deal here. For the risks that the leaders of a rogue state will use nuclear, chemical or biological weapons against us or our allies is the greatest security threat we face."
    --Madeline Albright, Feb 18, 1998

    "He will use those weapons of mass destruction again, as he has ten times since 1983."
    --Sandy Berger, Clinton National Security Adviser, Feb, 18, 1998

    "[W]e urge you, after consulting with Congress, and consistent with the U.S. Constitution and laws, to take necessary actions (including, if appropriate, air and missile strikes on suspect Iraqi sites) to respond effectively to the threat posed by Iraq's refusal to end its weapons of mass destruction programs."
    Letter to President Clinton, signed by:
    -- Democratic Senators Carl Levin, Tom Daschle, John Kerry, and others, Oct. 9, 1998

    "Saddam Hussein has been engaged in the development of weapons of mass destruction technology which is a threat to countries in the region and he has made a mockery of the weapons inspection process."
    -Rep. Nancy Pelosi (D, CA), Dec. 16, 1998

    "Hussein has ... chosen to spend his money on building weapons of mass destruction and palaces for his cronies."
    -- Madeline Albright, Clinton Secretary of State, Nov. 10, 1999

    "There is no doubt that ... Saddam Hussein has reinvigorated his weapons programs. Reports indicate that biological, chemical and nuclear programs continue apace and may be back to pre-Gulf War status. In addition, Saddam continues to redefine delivery systems and is doubtless using the cover of a licit missile program to develop longer-range missiles that will threaten the United States and our allies."
    Letter to President Bush, Signed by:
    -- Sen. Bob Graham (D, FL), and others, Dec 5, 2001

    "We begin with the common belief that Saddam Hussein is a tyrant and a threat to the peace and stability of the region. He has ignored the mandate of the United Nations and is building weapons of mass destruction and th! e means of delivering them."
    -- Sen. Carl Levin (D, MI), Sept. 19, 2002

    "We know that he has stored secret supplies of biological and chemical weapons throughout his country."
    -- Al Gore, Sept. 23, 2002

    "Iraq's search for weapons of mass destruction has proven impossible to deter and we should assume that it will continue for as long as Saddam is in power."
    -- Al Gore, Sept. 23, 2002

    "We have known for many years that Saddam Hussein is seeking and developing weapons of mass destruction."
    -- Sen. Ted Kennedy (D, MA), Sept. 27, 2002

    "The last UN weapons inspectors left Iraq in October of 1998. We are confident that Saddam Hussein retains some stockpiles of chemical and biological weapons, and that he has since embarked on a crash course to build up his chemical and biological warfare capabilities. Intelligence reports indicate that he is seeking nuclear weapons..."
    -- Sen. Robert Byrd (D, WV), Oct. 3, 2002

    "I will be voting to give the President of the United States the authority to use force -- if necessary -- to disarm Saddam Hussein because I believe that a deadly arsenal of weapons of mass destruction in his hands is a real and grave threat to our security."
    -- Sen. John F. Kerry (D, MA), Oct. 9, 2002

    "There is unmistakable evidence that Saddam Hussein is working aggressively to develop nuclear weapons and will likely have nuclear weapons within the next five years ... We also should remember we have always underestimated the progress Saddam has made in development of weapons of mass destruction."
    -- Sen. Jay Rockefeller (D, WV), Oct 10, 2002

    "He has systematically violated, over the course of the past 11 years, every significant UN resolution that has demanded that he disarm and destroy his chemical and biological weapons, and any nuclear capacity. This he has refused to do"
    -- Rep. Henry Waxman (D, CA), Oct. 10, 2002

    "In the four years since the inspectors left, intelligence reports show that Saddam Hussein has worked to rebuild his chemical and biological weapons stock, his missile delivery capability, and his nuclear program. He has also given aid, comfort, and sanctuary to terrorists, including al Qaeda members ... It is clear, however, that if left unchecked, Saddam Hussein will continue to increase his capacity to wage biological and chemical warfare, and will keep trying to develop nuclear weapons."
    -- Sen. Hillary Clinton (D, NY), Oct 10, 2002

    "We are in possession of what I think to be compelling evidence that Saddam Hussein has, and has had for a number of years, a developing capacity for the production and storage of weapons of mass destruction."
    -- Sen. Bob Graham (D, FL), Dec. 8, 2002

    "Without question, we need to disarm Saddam Hussein. He is a brutal, murderous dictator, leading an oppressive regime ... He presents a particularly grievous threat because he is so consistently prone to miscalculation ... And now he is miscalculating America's response to his continued deceit and his consistent grasp for weapons of mass destruction ... So the threat of Saddam Hussein with weapons of mass destruction is real..."
    -- Sen. John F. Kerry (D, MA), Jan. 23. 2003
     
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  10. JR Ewing

    JR Ewing Super Moderator Staff Member

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    You can always sit and try to cherry pick this and that and try to spin things and blame the last guy or the guy from 30 years ago, but none of it means shit if it's just speculation or outright distortion or manufacturing of "facts" with nothing to back it up. Some people on internet forums do this to amuse themselves, or for ideological reasons, or are even paid to do so.

    You cannot argue with straight facts and numbers. And it's also hard to argue with sound economic theory - suppressing rates and borrowing and printing infinite amounts will catch up to you eventually, as it always has with other nations.

    A good thing to do is simply use google and check multiple reputable sources to see if something checks out or not. Always be wary of those who state things as fact but do not ever cite reputable sources. Always question opinion and conjecture masquerading as fact.
     
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