Raising the Debt Ceiling

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Ya think?

Yes. You shouldn't be financing a new car, that's one of the dumbest financial mistakes that a majority of Americans seem to make. Nothing depreciates in value faster. Pay cash for a used car.

Let the cap come. Let most of the government shut down.

Here in Minnesota we had the same thing, We had a stalemate and the government shut down all "non-essential services." But a funny thing happened. The word did not end. Life went on. Rest stops closed, so people stopped at restaurants and gas stations and many spent money helping the economy. State parks closed so people went to private campgrounds helping the economy. The state lottery shut down, so people spent disposable money at private businesses helping the economy. Every day more and more people realized that we didn't really need all those things that shut down.

People realizing a large government isn't needed scares the hell out of politicians, so the Dem governor quickly folded.


The fear mongering is just straight out lying. Federal taxes will still be collected, we just can't up our credit limit. Social security taxes will still be collected making social security barely funded. Taxes collected are enough to pay for existing debt interest, social security, military, and more.

I'm OK with the government shutting down everything except a basic military in the US for national defense. Let the rest end. Life will go on.

mcg - I am so happy you are in a financial position to pay cash for your cars. The fact that many people, myself included, are not similarly positioned does not make us "dumb". I am going to buy a used car, and I am going to finance it because I need to, not because I have piles of cash setting around but inexplicably desire a loan.

I'm in Minnesota too, and my wife almost lost her job as a preschool teacher due to her employer being overly dependent upon state subsidization. We're still living off of Ramen noodles as not much else is affordable for the next week or so.

What did the Minnesota shutdown solve?

From: http://www.time.com/time/nation/article ... 89,00.html

"Analysts who have been following the budget fight say the plan, which relies on borrowing about $1.4 billion, merely kicks the state's political and economic problems down the road."

The state's credit rating has been downgraded, which results in higher interest payments. 22,000 workers were temporarily laid off. I doubt those workers saw it as no big deal. The deal allowed the state to borrow $700 million from the schools to pay for a tobacco settlement - interest free for the state, but the interest due from the schools continues to accrue. I fail to see where the win was here.

Most Americans could easily save for a used car, but don't. That is dumb. They could cut out a little discretionary spending in order to have positive cash flows, but they don't. It baffles me as to why so many people seem to want to pay interest rather than earn it. Compound interest is your friend. It can vastly increase the total amount of goods you can consume over your lifetime, but you have to defer the gratification.

I don't know the particulars of your situation, but it is possible that it makes sense for you to finance. Most people should still be able to save up money, though, even working part time at Subway.

Perhaps you hadn't noticed, but the debt of the State of Minnesota doesn't underwrite your currency.

How will the United States pay for its imports when exporters begin demanding payment in Euros, Canadian dollars, Yen and Sterling? How will the United States acquire hard currency with a dollar plunged into freefall because US debt gets downgraded below investment quality?

How many consumers will no longer have money to spend when their jobs disappear, either because the government no longer employs them, because their employer can no longer sell goods or services to the government because it is no longer buying or because they no longer receive direct transfers.

The United States government pumps over 20% of the United States GDP into the economy through three principal vehicles: salaries and benefits for public servants and military personnel, purchasing and direct transfers to individuals. If you were to limit expenditure to the tax revenue collected today, that would represent a 10% collapse in GDP immediately, which would have a spill on effect in reduced revenue (because there would be less economic activity to tax).

Think very carefully about where the money comes from that goes into your wallet each week. How many steps does it take to get from your wallet back to government:

If you receive income assistance or other benefits, it's one step.
If you are a federal public servant or a member of the armed forces, it's one step.
If you work for a business that sells goods or services to the federal government, it's two steps. (feds buy good directly from your employer's business who in turn pays you)
If you work for a retail business, it's three steps. (feds pay people in the first two categories, who buy goods from your employer's business who in turn pays you)

Now, I grant you wal-mart won't close tomorrow if all the public servants and military families stop shopping there. But Walmart will be selling less, which means less revenue, which leads to job cuts. Which takes even more people out of the consumer market.

So when you want the government shut down, be careful what you wish for. It may come to bite you directly sooner than you expect.

When I first married my wife I worked at Toys-R-Us, and she worked at McDonald's. We spent many years sleeping on a bare floor of a tiny apartment where we ate ramen noodles & cheap mac-n-cheese for years. So I feel for ya, but we do what we gotta do to get by. And the point is we got by.

If all government aid for schooling ended, most people would not stop sending their children to school. It would be painful as the system is in transition, but afterwards the pay for good teachers may be even better. In the mean time McDonald's is still hiring. Transitions suck, but life goes on.

Certainly the government workers who were laid off were also effected. But the majority of people were not effected. And the key is that the industries & services that actually create wealth were largely not effected. So the economy and life went on.




No doubt they solved nothing here in MN and just pushed everything further out so it will be a bigger problem later. (kinda like repeatedly increasing the debt ceiling instead of balancing the budget.)

Another issue with the debt ceiling debate is that it's falsely tied to the debate about spending / budget. Two distinct separate issues. I've concluded that Obama for all his uplifting campaign speeches is at best a center-right republican president. The tea-baggers and the rest of the republicans are now far-right, the rest of the democrats are mostly center-left. All are beholden to corporate money / wall-street. The media falsely calls this a debate between the "extreme-right republicans" and the "extreme-left democrats" when in truth, the a democratic president has been offering "republican" supply-side economic solutions. Solutions that have been thoroughly disproved. I think there will be default for the end goal to make Obama a one-term president. That said, I think the 2012 presidential election will be a contest of a "really scary republican" vs "less scary, quasi-republican democrat Obama" -- either way the poor and the middle class is screwed. American is well on its way to becoming a fascist country (ownership of government by an individual, by a group, or by any other controlling private power, defined by FDR )

Perhaps we Aspies are better suited to deal with this - as we see the world though the lenses of logic and rational thought.

The 10% loss to GDP would sting from a balanced budget, but what is that 10% really doing? Coincidentally if you look at real inflation rates using the the old formulas we happen to be at just over 10%. Government giving out more money than it takes in creates inflation.

Feeding and clothing little children and keeping millions of people away from unemployment, homelessness and starvation...

Why is this so hard for people to grasp?

Really? As soon as a "we're hiring" sign is placed anywhere, there's over a hundred applicants in the first day alone to compete against allowing the managers to pick and choose from as they like. You have a nearly 10% unemployment rate prior to the state shutdown and then pile 20,000 extra competitors atop of that and you have a labor surplus. The supply of potential workers increase leads to a decrease in demand for any individual potential or current worker.

I beg our pardon, then.
By the way, I seriously hope for the best for you and your wife. My wife, daughter, and I have had to eat a whole lot of Top Ramon, too.

-Bill, otherwise known as Kraichgauer

Thanks. By the way, with Ramen and it's competitors being high in sodium it's good to drink plenty of water.

This is $0.13/oz and a lot more nutritious that noodles.
CLICK!

A few bags should tide you over until the Democrats regain power and we can all spend money on meat instead of tax breaks for the rich...