The Fiscal Cliff

[Jib in lad]

The entire world is screwed until we stop relying on a monetary system where everything people own is created out of debt.

Nailed it, even the money we print is then lent to the govenment by the bank of England with interest attached to it , its our money not the ****ing banks .

 

[Mrk]

Paying your debt means paying what you owe, and that includes servicing the debt. It can also mean paying the principle. If you remember, we were doing that under Clinton. A huge tax cut, two wars and Medicare Prescription bill that were put on the credit card is what has caused this problem. Taxes need to go up (they are a bit), the military budget needs to be scaled back tremendously, and then allow the economy to keep recovering, which will provide more revenue.

These are not insurmountable problems.

Not necessarily, a tax rise is probably the best way of killing any growth (especially when it's as weak as it is), because any tax rise, however small, will disincentivise a certain demographic. If you want sustainable growth and rising revenue, you cut taxes, if you want a short term fix, you raise taxes, but then you'll only face the same problem a few years down the line.

 

[Elong]

Must spread rep.

 

[WA Toffee]

Why does the world need the US, if all they do is overconsume at the expense of everyone else?
The US gets the world's stuff; what does the world get in return? Paper Dollars, which will never been redeemable.

An analogy would be a group of people shipwrecked on an island. Under our current model the Chinaman does the fishing, the Japanese guy collects the firewood, the Taiwan guy builds the shelter.. and the American gets to eat the dinner. Based on our current system, we would take a look at this and say "look! This economic system depends on the American! without him none of these other poor islanders would have any jobs!"

That's how screwed up the current system is, and it is a relic of a monetary system that was put together when the US was the world's richest country because they produced far more than they consumed and exchanged the rest for gold. Today it is the exact opposite; the US has gone from the world's largest creditor to the world's largest debtor nation.

I agree that demographics are also an increasing problem - why do you think it will only last 30 years? The ongoing costs of healthcare and pensions will only grow.

The issue with that analogy is that you forget to mention that the American man PAYS to eat the dinner. So yes, without him paying, none of those people would have jobs. No point a chinaman catching all those fish if no-one is buying them. No point the Japanese guy collecting firewood of no-one is buying it etc.
That is why the World depends on the US economy (unforunately)

 

[Nordecke]

This thread sucks.

We can trace all this stuff back to Dec, 23 1913. when 'Ol Woodrow gave the green light to the Federal Reserve.