Inflation

[Turf Doc]

I think you make too much sense.

Interest rates are determined by the ratings that is given to the US Government by the ratings agencies. If the Government is late in its payment or heaven forbid, it defaults, all ************************ will break loose. Even the slight increase from 0.5 to 0.1% in the rate in 1971 cost US $12Billion. Imagine what they will be now and if the rate change is 1% rather than 0.05%.

https://www.npr.org/2021/11/23/1058529788/day-of-the-debt

Everyone crows about how USA is the greatest and safest countries but countries rise and fall. US will not remain the greatest forever and when the fall comes the generation at that time will feel the hurt. We cannot print away to forever riches. All this extra money printed will devalue it. The US government does not get a pass on math and basic economics just because it is a country and not a household It is like saying in 1999 that this is the internet age and dotcom companies don't fall under the need to make a profit or have sensible PE. We all know how that ended. The US can avoid pain short term by borrowing and paying it with more money printed than usual but inevitably the crows will come home to roost.

but at a certain point the US needs to actually fall for you to be right, right? And then you have to prove the fall was due to printing too much money. These things have not happened and seem unlikely and or tough to prove. If the crows don't come home to roost during your lifetime will you admit you were wrong? Grandchildren's lifetimes?

Do you know of a household that has been in debt for 100+ years and not had any issues?

Does anyone have any examples of countries that are not in debt that they think the US should emulate?

[Tangler]

Like bitcoins? Loosen up. Taxpayers are the guarantors of government debt. Pretty simple.

This makes sense.

I just don’t know that it is a great idea.

I don’t want to help guarantee a bunch of debt.

[Larry Ragman]

but sir, my president says all this stimulus isn’t going to cost me anything?

and mr zaphod says it’s income?

Actually Mr. Prez says it is free, but that is because someone else is going to pay for it. Unfortunately for us, we are the someone else.

[Tangler]

Does anyone have any examples of countries that are not in debt that they think the US should emulate?

Liechtenstein seems to have their stuff together.

Zero national debt.

Not saying we could be exactly like this tiny country but i think if the wci forum was a country or a person it would look more like this than someone who spends like congress.

“Economically, Liechtenstein has one of the highest gross domestic products per person in the world when adjusted for purchasing power parity.^[13] The country has a strong financial sector centred in Vaduz”

https://en.m.wikipedia.org/wiki/Liechtenstein

[Tim]

but at a certain point the US needs to actually fall for you to be right, right? And then you have to prove the fall was due to printing too much money. These things have not happened and seem unlikely and or tough to prove. If the crows don't come home to roost during your lifetime will you admit you were wrong? Grandchildren's lifetimes?

Do you know of a household that has been in debt for 100+ years and not had any issues?

Does anyone have any examples of countries that are not in debt that they think the US should emulate?

More like an airplane. Pilot, fuel, aircraft and weather all produce a variety of results. Hard landing, soft landing or a crash. Takeoff is a lot easier. No such thing as a perfect landing. Plenty of terrible pilots make things difficult, not necessarily a crash.

[xraygoggles]

This makes sense.

I just don’t know that it is a great idea.

I don’t want to help guarantee a bunch of debt.

Why not?

That's how a society works - you come together to form a govt, which spends for the betterment of all.

The only way that the govt deficit would actually affect us negatively, is if everyone in the US who pays taxes disappears overnight - otherwise, no biggie.

[bovie]

This makes sense.

I just don’t know that it is a great idea.

I don’t want to help guarantee a bunch of debt.

Why not?

That's how a society works - you come together to form a govt, which spends for the betterment of all.

The only way that the govt deficit would actually affect us negatively, is if everyone in the US who pays taxes disappears overnight - otherwise, no biggie.

Spends for the betterment of all. LOL.

I think the key here, to me, is that the "guarantee" is disproportionate, as of course is the "betterment of all"--and they are disproportionate in opposite directions.

There is a relatively small portion of the population acting to guarantee the vast majority of debt (as taxpayers), which is spent on things that skew heavily toward the benefit of a completely different portion of the population, who as it happens also do very little to guarantee the debt to provide the spending from which they benefit.

The extent to and manner in which governments should engage in such spending is debatable and a discussion for another time, but I can certainly sympathize with not being thrilled to play a large part in guaranteeing debt that I will have a small part in benefiting from.

Gone out of your way to co-sign a loan lately?

[Tangler]

This was discussed at length in the below podcast.

Very interesting bogleheads podcast.

Great discussion on inflation and other economic variables by a very smart economist interviewed by Rick Ferri

Dr. Ed Yareni wrote a book called Fed watching for Fun and Profit, and the interview is interesting.

https://bogleheads.podbean.com

Episode 040: Dr. Ed Yardeni, host Rick Ferri
Bogleheads On Investing Podcast

Dr. Ed Yardeni discusses his new book, In Praise of Profits, review economic activity from 2021, and look ahead to 2022.

Listen on Apple Podcasts: https://podcasts.apple.com/us/podcas...=1000543691018

[Tangler]

Why not?

That's how a society works - you come together to form a govt, which spends for the betterment of all.

The only way that the govt deficit would actually affect us negatively, is if everyone in the US who pays taxes disappears overnight - otherwise, no biggie.

I must stay apolitical. Will stick to facts with references.

I guess i can say some of what you say is interesting.

The “you come together” part is interesting to me for the following:

61% of Americans paid no income taxes last year.
https://www.cnbc.com/amp/2021/08/18/...nter-says.html

The top 50% AGI pay 97.1% of of income taxes.
https://www.ntu.org/foundation/tax-p...s-income-taxes

Rather than “we all come together” it should be: The wealthy (top 50%) pay the whole bill (97.1%) for everyone.

The other part you say:

“For the betterment of all”
This is an opinion you hold. I respectfully disagree.

[xraygoggles]

I must stay apolitical. Will stick to facts with references.

I guess i can say the “you come together” part is interesting to me for the following:

61% of Americans paid no income taxes.
https://www.cnbc.com/amp/2021/08/18/...nter-says.html

The top 50% AGI pay 97.1% of of income taxes.
https://www.ntu.org/foundation/tax-p...s-income-taxes

Rather than “we all come together” it should be: The wealthy (top 50%) pay the whole bill (97.1%) for everyone.

The other part you say:

“For the betterment of all”
This is an opinion you hold. I respectfully disagree.

Yes, that's how a progressive tax structure works, it's not new. Not sure why that's always brought up. Betterment of all - infrastructure, police/firemen, Social Security, Medicare, etc. That's what I was referring to. You know, govt programs that help everyone at some point in their life.

Anyways, back to inflation: I think one reason why people really feel like inflation is skyrocketing, and it is temporarily, is because of gas prices. It's something everyone needs and seeing it rise so quickly gives a visceral reaction. But the gas prices will come back down shortly, and people will find something else to gripe about.

[xraygoggles]

I can certainly sympathize with not being thrilled to play a large part in guaranteeing debt that I will have a small part in benefiting from.

Unless you build your own roads, have your own militia, inspect your vegetables for parasites and water for lead, et al, you use all these services. Constantly, daily.

[Turf Doc]

Liechtenstein seems to have their stuff together.

Zero national debt.

Not saying we could be exactly like this tiny country but i think if the wci forum was a country or a person it would look more like this than someone who spends like congress.

“Economically, Liechtenstein has one of the highest gross domestic products per person in the world when adjusted for purchasing power parity.^[13] The country has a strong financial sector centred in Vaduz”

https://en.m.wikipedia.org/wiki/Liechtenstein

Liechtenstein seems like an awesome place to live, but im not sure that an inconsequential microstate (with apparently only one hospital!!) is really all that comparable.

[jz-]

to flesh out the discussion above wrt. 61% paying no taxes. Even the waitress at Pizza Hut pays state income taxes, SS taxes, and Medicare taxes. She looks at her stub and sees a massive loss to taxes. She will not be convinced otherwise.

[CordMcNally]

Yes, that's how a progressive tax structure works, it's not new. Not sure why that's always brought up. Betterment of all - infrastructure, police/firemen, Social Security, Medicare, etc. That's what I was referring to. You know, govt programs that help everyone at some point in their life.

It seems like progressive tax systems always have quite a bit of pressure to continue to get even more progressive. It can become dangerous when you start taxing the incredibly wealthy more and more. From a fairness standpoint, I don't necessarily think it's fair the majority can vote to take significant money away from a minority.

Anyways, back to inflation: I think one reason why people really feel like inflation is skyrocketing, and it is temporarily, is because of gas prices. It's something everyone needs and seeing it rise so quickly gives a visceral reaction. But the gas prices will come back down shortly, and people will find something else to gripe about.

You'd better cross your fingers because it's shaping up to be an expensive winter with respect to energy prices (gasoline, oil, natural gas, etc.). Many of the components that go into fertilizer have risen sharply which could be setting up for some (what some would call) unexpected increases to food prices in the next year or so. Prices of many common things have a lot of resistance against them for coming down. I think the Fed is starting to acknowledge it which should be a telling sign.

[Tangler]

Yes, that's how a progressive tax structure works, it's not new. Not sure why that's always brought up. Betterment of all - infrastructure, police/firemen, Social Security, Medicare, etc. That's what I was referring to. You know, govt programs that help everyone at some point in their life.

Anyways, back to inflation: I think one reason why people really feel like inflation is skyrocketing, and it is temporarily, is because of gas prices. It's something everyone needs and seeing it rise so quickly gives a visceral reaction. But the gas prices will come back down shortly, and people will find something else to gripe about.

Not going to get in a political discussion with you.

Have a good evening.