I hereby volunteer to take 110K out of my 401K and pay for my share and my wifes share. In exchange, I want ONLY those people who pay their share to be able to vote in any election.

That would INHO fix the problem for all time, as the deficit problem would go away pretty quick. Right after the next election I suspect.

Has to be a constitutional amendment, wonder how many people would give up their freedom to keep their stuff?

Randy: Today, as a result, no ocean fish are without mercury, and we are advised to not eat more than one or two pieces of fish per week because we will ingest too much mercury

Not true. Fish always had mercury. See here:

Concentrations of mercury in museum fish were not significantly different from mercury concentrations in unpreserved fish we collected from the rivers. Our study indicates that preserved museum fish specimens can be used to evaluate historical changes and predict current levels of mercury contamination in fish.

If you don’t like the above reference then read this from Mercuryfacts.org

10. There’s solid scientific evidence that the amount of mercury in fish has remained the same (or even decreased) during the past century. Researchers from Princeton University, Duke University, and the Los Angeles County Natural History Museum have all compared specimens of ocean fish preserved between 25 and 120 years ago with current samples of the same species. In these studies, mercury levels in the fish stayed the same or declined.

Don’t worry about eating fish because,

3. There are no scientifically documented cases of Americans developing mercury poisoning from eating commercially available fish. The only documented cases in the medical literature are from Japan in the 1950s and 1960s, following a massive industrial spill of mercury into fishing waters. Mercury levels today (in both fish and people) are nowhere near the levels measured during this tragic episode.

You really should check yourself out once in a while before making this blanket and easily refuted statements.

Tim – IIRC, the German WWI debt was in their own currency, which is why they could inflate their way out of it (and into a world of other pain…)

Tim McDonald: Has there ever been an equivalent situation, where a country’s debt was in it’s own currency, and thus the value of the debt was controlled by said country?

Imperial Rome, for starters. When the Emperor got broke, he’d just cut the silver content of the Denarius.

No, it didn’t work out very well, but there is a lot of ruin in an Empire, as we are finding out.

Has there ever been an equivalent situation, where a country’s debt was in it’s own currency, and thus the value of the debt was controlled by said country? The British pound was once the worlds powerhouse, but the Brits were always a lender nation, at least until WWII?

Maybe when I was laughing at G. Gordon’s gold advertisements I should have been LISTENING! It was 600 at the time, and I was thinking it was a bad time to buy. Oh well, too late now.

The US population is now 5x that – around 300 million, and the debt is certainly going to be well up above the equivalent 2 trillion. It’s hard to see this turning out well, but then again, I’m not an economist (or lawyer).

Simply put, there is actually very little that the Federal Gov’t does that could not be done better by State/Local governments or by private enterprise. Certainly we need a Federal entity for external threats. We need a Federal judiciary for true constitutional issues but certainly not for the plethora of Federal statutes that strangle us all. We…uh, well…. I suppose we need the Legislative and Executive branches, too, as long as they don’t actually pass any laws or issue any executive orders.

Seriously, if the trillions of dollars in tax revenues that now flow to the Federal Hegemon stayed, instead, with the States where the citizens reside, there would be far less corruption, far less waste and far less tyranny. Local government is simply more accountable to citizens and is far more restricted from oppressing its people. And it is far easier for the oppressed to move from a nanny state like Maryland or California to a ‘free’ state like Texas or Alaska, than to leave the U.S. and move to…?

Of course this could hardly be accomplished in one stroke– the sudden layoff of hundreds of thousands of federal workers would be catastrophic. But the steady “winding down” of the Federal Hegemon would go a long way to curbing spending.

And as to the doom and gloom of the so-called inevitable Apocalypse, there is some hope. Americans are, indeed, a marvelous people and there are any number of transformative innovations on the horizon that could completely change the equation we now face. To take just one (though by no means the only one): nuclear fusion. There are at least three, different technologies now in advanced stages of research that hold out the possibility of cheap and plentiful energy. U.S. economics would be revolutionized with the elimination of oil imports.

Demographics is an unsolvable problem you say? One transformative technology that shows promise is biogenetics that would radically extend the productive life of average adults by 20 to 30 years. Although this might not be such good news when considering that the retirement age is upped to 95, it suddenly infuses our economy with millions of high-skilled, intelligent and already-assimilated workers.

I am not saying that either of these technologies will, in fact, come to fruition. I am just pointing out that history is replete with transformative technologies that up-ended conventional thinking and the prophets of doom.

steve s says:
geokstr-So you are saying no conservatives voted for or stumped for Bush? Isn’t this a bit convenient, being able to disown him when things did not work well?

Of course they did, but “compassionate conservatism” turned out to be pretty much anything but conservative. And as a matter of fact, conservatives strongly criticized Bush policies on a host of major issues (as I mentioned in my earlier comment) for the entire 8 years he was in office. It wasn’t the moderates who derailed “shamnesty”.

In addition, when you have only two choices, and the other team is nominating people with voting records to the left of Bernie Sanders, even RINOs like McCain and Bush are infinitely more appealing.

Seriously, a process seems underway:

Reagan’s Farewell Address: I’ve been asked if I have any regrets. Well, I do. The deficit is one. I’ve been talking a great deal about that lately, but tonight isn’t for arguments. And I’m going to hold my tongue.

Attributed to Cheney: Reagan proved deficits don’t matter.

Obama/Pelosi: Wheeeee!!

Ex: In previous generations, they let industrial pollution ruin ocean waters. Today, as a result, no ocean fish are without mercury, and we are advised to not eat more than one or two pieces of fish per week because we will ingest too much mercury.

Our fisheries are collapsing, and so our children might not have the pleasure of eating seafood as we do. They will pay for our greed of over-fishing.

My son, age 22 understands it. But he is an econ/math major who doesn’t want to go to law school:-)

Buying us is only part of the answer.
The other reason China keeps us around is to steal from us.
All the new technologies, all the innovations that no one could have ever figured out, comes from the US. China is great at incremental improvements and efficientizing and manpowering; but they come up with very little that is ‘new’.

If we go down, there’s no more golden goose to get new things from.

More like:

Clinton Surplus: didn’t exist
Bush Deficit: barely manageable
Obama post-Bush Deficit: 10x Bush, over the edge, unsustainable

Here in California they were reading a list of departments in the California government as an example of things that could be cut before they cut police and fire departments and construction (although politically they will always threaten to cut those first.) The one that stuck in my mind was the “Commission on Professional and Semi-Professional Kickboxing.” Really. The California government pays people to monitor professional and semi-professional kickboxing.

You know, I’m sure there’s money in it, and danger too, and someone should be watching to make sure all the safety issues are monitored, but I’ll also bet that it’s pretty overstaffed and it could just as easily be handled by one person monitoring for law enforcement and requiring the professional and semi-professional people to self-report to him.

justaguy: After this, we never have to default, we just pay back in de-valued money that we magically create. China wants its $1 trillion, no problem, a few key strokes of the Federal Reserves computer.

That only works for a while. The “big bang moment” is a currency collapse. It happened to Iceland. Their currency fell to zero almost overnight. In the 1990s Argentina was forced to issue dollar-denominated debt because no one would buy their their peso bonds. After a while Argentina had to curtail imports to service their debt as they ran out of hard currency. Then the women came out banging their pots and pans and the government defaulted on the bonds sending Argentina in the toilet in 2000. The US can last longer because the dollar is the world’s reserve currency, and many other countries are just as bad off. But we can’t keep it up forever. The big mistake is thinking we will have smooth transitions. But any one familiar with the behavior of large scale non-linear systems like a national economy knows that’s not true.

John Blake: Given this looming demographic cataclysm, comparable only to population crashes due to medieval plagues, collectivist Statists’ “generational theft” that shifts debt burdens to unborn posterity is in fact unworkable.

You have it exactly right. We don’t really have a financial problem, we have a demographic problem. Even if all the retirees had lots of money, who is going to service them? No kind of legislation is going to fix this problem. Bringing in immigrants won’t work because they retire too, and demand all sorts of services too. Low-skilled, low IQ immigrants brought in from the Third World is not going to fix the US demographic problem unless they have some kind of slave status, but that won’t work either because what do we do for skilled labor?

orca: Who knows, maybe one of those deficit reducing Republicans I keep hearing about but have never seen will win the Presidency and refuse to roll over the bonds.

How is he or they going to do that? I don’t know the average maturity of Treasury bonds, but you be sure it’s a lot less than 20 years. Short term bonds means lower interest rates, but that also means more rollover. This year Treasury has to find something sell something like $2 trillion in new bonds. It’s not clear they can unless we have a another panic and the “flight to quality.” Only US debt is looking less and less like “quality” these days.

Treasury is stuck with short term bonds, because interest rates are near zero. It does not have the money to service the interest on long term bonds which are about at 4%. If the Fed can’t keep short term rates really low, Treasury runs out of money and the government stops functioning.

Given this looming demographic cataclysm, comparable only to population crashes due to medieval plagues, collectivist Statists’ “generational theft” that shifts debt burdens to unborn posterity is in fact unworkable. Even should depleted cohorts agree to enslave themselves to long-past socialist death-eaters, their numbers will make nonsense of projecting late 20th Century wealth available for selfish Know Nothing ripoffs.

America’s multi-trillion debt so cavalierly entered on by boundlessly corrupt, incompetent administrations, acting in bad faith under false pretenses over decades, will simply not be paid– not in inflated dollars, not in anything. About AD 2020 – ’30, the highest-and-best policy will be to default on sovereign debt, just “walk away”. Why not– Russia, Brazil, etc. did just that in 1998. Anyone who thinks citizens born c. 1990 – 2000 will spend their entire working lives paying 60 – 80% of real income to validate dead coteries of smirking interest-groups had best recuse themselves.

Something-for-nothing always works, but never for more than (say) 72 years [see Sovietism from 1917 - 1989]. Having exhausted societal surpluses, official gangsters create a desert: Nothing-for-something is their stock-in-trade. The governmental overburden crashes, as occurred in AD 450 when Roman parasites finally drained residually productive ponds. Now as Earth enters on a 70-year Maunder Minimum presaging the overdue end of our current Holocene Interglacial Epoch, global elites are purposefully, willfully sabotaging energy economies while precluding any long-term fiscal or demographic remedies. Amid worldwide mega-deaths, such policies will sink free-market prosperity forever to Churchill’s “abyss of a new Dark Age.”

Well… they would, but… there really aren’t any. If you look at the other Western economies, they’re mostly in the same boat we are – large debt loads, deficit spending, economic recession, budget capture by entrenched special interests. Invest in Japan, you say? But their debt load is well over 200% of GDP. Europe? The individual national economies just aren’t big enough to shoulder the load, and the Euro’s still largely untested for that purpose – if Germany and England are bastions of stability, they’re in harness with the likes of Italy and Spain.

What about the Chinese economy? Sure, if you like your money to be subject to the whims of a government that’s nominally Communist. At best you can hope for benign neglect; at worst, outright confiscation, with a whole range of kleptocracy in the middle. Moreover, the country is essentially dependent on ever-growing foreign exports to fuel its economy; the kind of Western meltdown that would make investment in China attractive would also put tremendous stress on their domestic politics…

orca:
It certainly doesn’t have to.Who knows, maybe one of those deficit reducing Republicans I keep hearing about but have never seen will win the Presidency and refuse to roll over the bonds.

And will promptly be denounced for shutting down the government, interfering with entitlement payouts, and drowning kittens in the blood of the innocent.

It can’t be done. Our choices are default and monetization. Default is politically unacceptable. The Federal Reserve has demonstrated that it, the only entity which even theoretically could resist monetization (although if it actually did so the FRA would be repealed or amended in about a day) has no interest in doing so. Somebody order a few new servers for the FRB network, they’re going to have some extra zeroes to store.

You remember all that business about a “soft landing,” economics-wise? A soft landing in debt-mageddon is about all we can hope for. A soft landing in this regard constitutes the industrialized world not being destroyed by war and economic devastation. Anything better than that (say, the whole world being turned into Cuba) is a net win, sickening as that is to say.

Ted F: Bill Clinton put a stop to the U.S. government selling 30 year bonds, the only debt instrument that could rightly be described as “borrowing from our children.”

This is nonsense.If the government sells a 1-year treasury that it’s going to have to roll over 29+ times without ever extinguishing, the only difference between that and a 30-year bond is the increased interest-rate exposure.

It certainly doesn’t have to.

Who knows, maybe one of those deficit reducing Republicans I keep hearing about but have never seen will win the Presidency and refuse to roll over the bonds.

RowerinVA: Even worse, to most Americans, “borrowing” implies not only a promise to pay back, but also a promise to pay interest. This makes it sound like the children are getting an investment of some type. They aren’t. The children are responsible for repaying the principal and the interest.

The U.S. will never be able to repay the principal on the national debt. The last time we had zero national debt was during the administration of Andrew Jackson. We roll over the debt like the homeowner with an option ARM mortgage. According to Hyman Minsky there are 3 kinds of borrowers.

1. The hedge borrower who pays back both principal and interest from current cash flows and investments.

2. The speculative borrower who can only service the loan and must roll over the principal.

3. The Ponzi borrower who can’t pay back principal or interest from current cash flows and depends of the future appreciation of some asset to service the loan.

With respect to the government + private debt, the U.S. is a speculative borrower in transition to a Ponzi borrower. The “appreciating asset” is the U.S. economy. Thus you hear that the U.S. will “grow its way” out of debt. The problem here is the U.S. GDP grows at about 3% per year net of inflation. Thus if the total debt (public + private) grows at a rate greater than 3% net of inflation it can never be paid back. At some point we can’t service the debt and can no longer roll it over. Exactly this happened to New York City in 1975. It could no longer issue new debt because no one would buy it. Private debt exceeds public debt by about a factor of three. Our total debt is nearly four time GDP. This has never happened before. We have entered uncharted waters.

Foreign debt is even worse. We owe about $2 trillion to China and Japan. It will never be repaid because we lack the productive capacity to make exportable goods to China and Japan to repay the debt. What can we possibly manufacture that China can’t make even cheaper on a scale large enough to repay the debt? With respect to China we are already a Ponzi borrower. Why does China continue to lend to a Ponzi borrower? I can see only one reason: future purchases of real assets in the U.S. Why invade a country when you can buy it? Remember our interest payments are in dollars which must be recycled into new debt which in turn yields more dollars. Some day China has to buy something with those dollars. In the alternative the U.S. can simply go into default just like Russia in 1998 and Argentina in 2000. Finally there is a third dismal way out: inflation.

So yes we are indeed borrowing from our children– future generations. But think about something. Perhaps we are the children that was borrowed from. The payback time is today.

This is nonsense. If the government sells a 1-year treasury that it’s going to have to roll over 29+ times without ever extinguishing, the only difference between that and a 30-year bond is the increased interest-rate exposure.

Fran A: Bush was a big spender. Obama is so much worse that there is no comparison. Give me Bill Clinton back.

The increase in the deficit under Obama is due to a combination of falling tax revenue due to the recession and large, temporary stimulus programs also due to the recession. You can’t really compare one year under a President who has dealt with the most severe recession since the 1930s to eight years under a President who faced a very minor recession followed by several years of robust economic growth.

Obama’s economic policy team already has a decent overlap with Clinton’s team so you do sort of have the spirit of Bill Clinton determining fiscal policy. What we don’t have is the kind of economic growth that allows us to focus on balancing the budget rather than reducing unemployment. Raising taxes or cutting spending are not very attractive when unemployment is over 9%.

Bush signed into law one of the largest new increases in entitlement spending in many years. Obama is hearing people telling him to keep his government hands off their Medicare whenever cost control is discussed. The prospects for reduced Medicare spending simply are not all that great right now for either party.

…we will borrow today from people who do have money — and who are willing to forego consumption today, presumably in China and the rest of Asia…

Actually, the government of China forces its people to forego consumption by taking their money. The government then buys US treasuries. It also maintains the value in China of US treasuries by manipulating exchange rates.

It might be more accurate to say that we have exercised an option with regards to the future — we are the holders and they the involuntary writers of an option.

Not more accurate, just more pretentious. I have an option to take my kids to the playground and they have involuntarily written that one too. Actually, it’s an American style option since I can exercise it at any time (or maybe Bermudian because I can’t do it at night).

Elliot: 1. GWB did not issue 3o year bonds.

Bush’s Treasury Department did indeed begin to reissue 30-year bonds in 2006 after the issue of such bonds had been suspended since the surplus years.

2. The maturity date of a bond has little to do with the situation. Five year bonds can be sold. When they come due, the government sells more five year bonds and used the proceeds to pay off the first issue. The cycle continues. The huge danger we have today is that all the money being borrowed at low rates will have to be refinanced at much higher rates, resulting in an even greater deficit covered by even more borrowing.

This is partially true. The yield curve generally slopes upward as it does today. This means it is more expensive to issue long-term bonds rather than short-term bonds. So why do so? Typically, because you are afraid of the risk of rates increasing when your debt becomes due. Why would you face this risk? Perhaps people are concerned about the government’s commitment to combat inflation and conduct responsible fiscal policy.

To be fair, it was only natural for Bush’s Treasury Department to reissue the 30-year. At that time, the yield curve really was practically flat — you’d have to be crazy to not take advantage of long-term rates being so low. Of course, this implies you have large deficits at a time when the economic situation really did not justify them.

3. Note that we have already started to monetize the debt. The Federal Reserve is buying bonds from the Treasury because the market rates at auction are coming in too high.

Partially right. The Fed certainly wants lower long-term rates but not for the benefit of the government. The Fed funds rate has been hovering near 0% for a while now. In other words, conventional monetary policy has already been exhausted in fighting the recession. But the Fed funds rate is simply a very short-term borrowing rate and has little relation to the rates private businesses pay when undertaking investments. So the next best thing for the Fed was to attempt to lower longer term borrowing rates in an attempt to stimulate more investment by private businesses. I haven’t been following this lately but I believe the Fed cut back on this aspect of its monetary policy in late 2009.