US Debt Bubble?
Brutus:
What are the opinions of readers here about the enormous levels of public and private debt in the United States? Are the sums of money borrowed from overseas central banks in the forms of treasuries making us vulnerable to the risk of a currency crisis should those overseas bankers decide to set limits on their exposure to the US dollar as a reserve currency? Over-indebted American consumers no longer have the surplus savings levels needed to pick up the slack to finance government spending.
In the face of rising entitlement costs, I see four choices for Uncle Sam:
1. Raise taxes to cover the short-fall
2. Curtail entitlement spending
3. Some combination of 1 & 2
4. Debase the currency through monetary inflation, thus lessening the burden of debt
Option 4 is the one that would be most politically palatable, but would likely create an environment of inflation, further flight from the dollar, and rising interest rates. Thoughts from fellow forum members?
John Dibble:
Curtailing spending is what's most palateable to me.
nlm:
What do think the value of a dollar is based on Brutus? What gives a dollar value? If you want to start to understand what kind of debt is good and what kind of debt is bad - you need to understand the value of thing that is creating the debt first.
MODU:
Our debt is not that bad, and the last thing we would want to do is pay it off completely. What we do need to do, like Dibble said, is to cut back on our spending. We are wasting too much money on pork and entitlement programs which are being abused. Reduce/eliminate those programs, and not only do we cut down our annual spending and running debt, but we also reduce the tax burden on our citizens, allowing them to retain more money to pay their bills, save for the future, and/or invest back into the economy. We have no reason to increase taxes.
Brutus:
I agree that curtailing spending is the way to go. I'm afraid, however, that as the boomers start collecting those entitlements, you'll have to have to pry them out of their cold, dead hands.
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