Crap Throwing Monkey Posted February 12, 2006 Share Posted February 12, 2006 1) Give me a technical reason why the federal deficit, at its current level, is bad. I cant make the case that it is good either, so dont ask me to, but show me its bad, or dont inject it into the conversation. 601082[/snapback] $400 billion in interest. 20% of the budget. Again, that's just the interest. If you shelled out 20% of your income on debt interest without making a dent in the principal, that would be bad. First technical reason. And the way the principal - and a good chunk of the interest besides - is usually serviced is to issue more debt. If you paid off your credit cards every month with other credit cards - which were raking up interest to the tune of 20% of your income, that would be bad too. Second technical reason. Link to comment Share on other sites More sharing options...
JimBob2232 Posted February 12, 2006 Author Share Posted February 12, 2006 $400 billion in interest. 20% of the budget. Again, that's just the interest. If you shelled out 20% of your income on debt interest without making a dent in the principal, that would be bad. First technical reason. And the way the principal - and a good chunk of the interest besides - is usually serviced is to issue more debt. If you paid off your credit cards every month with other credit cards - which were raking up interest to the tune of 20% of your income, that would be bad too. Second technical reason. 1) "that would be bad" is not a technical reason. I shell out 30% of my salary to make a mortgage payment. This isnt including my car loan or my student loans. Does this mean I have too much debt, and am having deep financial dificulties? Furthermore, should I not own a house, car or have an education? 2) Interest rates are (or were) at historic lows. This means we are replacing high interest debt with lower interest debt (in most cases) This is like refinancing your 12% home loan for 6%. Hardly seems like a bad situation. Link to comment Share on other sites More sharing options...
Scraps Posted February 12, 2006 Share Posted February 12, 2006 I think alot of what i have posted here has been misinterperrete, so I'll take it in stride. I am not trying to make the point that bush is wonderful. He is not. I am trying to make the point that democrats have no clue what they are talking about, and trip over their own feet to make bush look worse than he actually is, especially when it comes to the economy. 601125[/snapback] Hmmm, what are we to think about someone who claims Bush is doing a good job in the war on terrorism in one post, then claims he is doing a half assed job in the next? I only injected it into the conversation in relation to what I have heard some democrats say. My retort to you was not directed (necessarily) at you, but to anyone who says the deficit is too big. Give me proof, or else I cant take you seriously. You haven't explained what was wrong with the following issues that you take exception with "1) The federal deficit is too large" "2) The large deficit is due to cutting taxes" "4) The large deficit is due to increased federal spending" How am I supposed to take you seriously when you can't give me a good reason why defecits are good? This is an interesting question you are asking. I would think someone with as strong views and opinions on the economy and monetary policy would at least have an understanding of overall stock market valuation. I do, I just want to see if you have a clue as to what you are talking about. That said, stock market valuation analysis is done by many investors. Each one takes the same data and comes to a conclusion. Conclusions vary by investor. One common indication is S&P500 PE Ratios, which averaged around 16 between 1950 and 2000. During the bubble it got up near 40, which indicates a drastically overvalued stock market, and should have been a warning sign to all. At present it is back in the 15-16 range. Of course, this is just one indication of a fairly valued stock market, but it is an important one. My personal opinion and analysis says the market is fairly valued right now, but as I said earlier, there are probably 1000 economists who disagree with me. Actually, what you said was "It is now, by most accounts, fairly valued again and can resume its normal growth, dependant on the economy. " I asked you to back that up and you did a 180. "2) The large deficit is due to cutting taxes" "4) The large deficit is due to increased federal spending" How am I supposed to take you seriously when you can't give me a good reason why defecits are good? Reserve board policy plays a role, no doubt. But stimulating economic growth is just one aspect of the reserve board. They have to carefully weigh what each move will do to inflationary pressures and unemployment. To rely on the reserve board to stimulate the economy is a poor decision, though they do have that effect. So we should instead trust a bunch of politicians who are beholden to a voter base that is pretty ignorant of economics? Thanks, but I'll put more faith in the economists on the Fed who have to carefully weigh what each move will do and have done a damn good job for the past 1/4 century. Case in point, rates are going up pretty fast right now. They are going up in an attempt to protect against inflationary pressures. While the economy is improving on its own, its not in a position where we need to stifle its growth. By what measure are you claiming that growth is being stifled? Isn't unemployment at 5 year lows? Isn't it a good idea to have some room to cut rates should the economy need a boost? Oh, and as far as cutting rates further goes..the federal funds rate was sitting pretty at 1.0 pecent. Cant really go much lower! The Japanese have, so could we. This is an interesting question you are asking. I would think someone with as strong views and opinions on the economy and monetary policy would at least have an understanding of overall stock market valuation. I do, I just want to see if you have a clue as to what you are talking about. That said, stock market valuation analysis is done by many investors. Each one takes the same data and comes to a conclusion. Conclusions vary by investor. One common indication is S&P500 PE Ratios, which averaged around 16 between 1950 and 2000. During the bubble it got up near 40, which indicates a drastically overvalued stock market, and should have been a warning sign to all. At present it is back in the 15-16 range. Of course, this is just one indication of a fairly valued stock market, but it is an important one. My personal opinion and analysis says the market is fairly valued right now, but as I said earlier, there are probably 1000 economists who disagree with me. Actually, what you said was "It is now, by most accounts, fairly valued again and can resume its normal growth, dependant on the economy. " I asked you to back that up and you did a 180. Link to comment Share on other sites More sharing options...
Scraps Posted February 12, 2006 Share Posted February 12, 2006 1) "that would be bad" is not a technical reason. I shell out 30% of my salary to make a mortgage payment. This isnt including my car loan or my student loans. Does this mean I have too much debt, and am having deep financial dificulties? Furthermore, should I not own a house, car or have an education? 601137[/snapback] I presume you will pay off your mortgage, student loan and car loan. Will the government ever pay off its debt? Or will it simply pile up more debt so that we can spend more money sevicing the debt? Link to comment Share on other sites More sharing options...
Crap Throwing Monkey Posted February 12, 2006 Share Posted February 12, 2006 1) "that would be bad" is not a technical reason. I shell out 30% of my salary to make a mortgage payment. This isnt including my car loan or my student loans. Does this mean I have too much debt, and am having deep financial dificulties? Furthermore, should I not own a house, car or have an education? No, 20% of the budget (and 100% of the debt payment) going to interest is a technical reason. "That would be bad" is an interpretation of the technical reason. And I assume the 30% of your income that goes into your mortgage includes some sort of principal payment? Because if you're only paying the interest and not paying down the principal, as the government does, then YES, you'd be having deep financial difficulties. 2) Interest rates are (or were) at historic lows. This means we are replacing high interest debt with lower interest debt (in most cases) This is like refinancing your 12% home loan for 6%. Hardly seems like a bad situation. 601137[/snapback] Key differences being, again, that you pay down the mortgage, and that you're not running up more debt on top of it. It's not like refinancing a 12% mortgage to 6%, it's more like refinancing a 12% mortgage you've paid no principal on to a 6% mortgage you'll pay no principal on, and taking on an additional mortgage besides. The technical definition of that is: "A bad thing". And that's aside from the fact that your mortgage is backed by a tangible asset - your house. Government debt is backed by the "full faith and credit" of the government...which basically means it's backed by their ability to collect and raise taxes. Link to comment Share on other sites More sharing options...
ExiledInIllinois Posted February 12, 2006 Share Posted February 12, 2006 1) "that would be bad" is not a technical reason. I shell out 30% of my salary to make a mortgage payment. This isnt including my car loan or my student loans. Does this mean I have too much debt, and am having deep financial dificulties? Furthermore, should I not own a house, car or have an education? 601137[/snapback] No. Just a cheaper house and car... I will give you education. I always thought going over 1/4 month's salary (take home) for a mortage was a dangerous thing. 15-20% makes me feel confortable. Where does savings fit into the picture... I hope 15 to 20%??? Link to comment Share on other sites More sharing options...
ExiledInIllinois Posted February 12, 2006 Share Posted February 12, 2006 And I assume the 30% of your income that goes into your mortgage includes some sort of principal payment? Because if you're only paying the interest and not paying down the principal, as the government does, then YES, you'd be having deep financial difficulties. And that's aside from the fact that your mortgage is backed by a tangible asset - your house. Government debt is backed by the "full faith and credit" of the government...which basically means it's backed by their ability to collect and raise taxes. 601150[/snapback] BINGO! Link to comment Share on other sites More sharing options...
Kelly the Dog Posted February 12, 2006 Share Posted February 12, 2006 Jimbob done got hosed if he owes ANY money for that there edumacation he done got. Link to comment Share on other sites More sharing options...
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