"Nazi Germany is not a valid example because....do I really have to explain this? No. "

Germany's rise to prosperity from WWI destruction is a *very* valid example. I've mentioned no one by name.

default, hyper-inflation, either of which would reshape the economic landscape of the world.... not the end of the world.

http://www.informationisbeautiful.net/visualizations/the-billion-dollar-o-gram-2009/

Medicare, Social Security, and Medicaid.

It's as easy as 1-2-3 to see why America is in so much debt.

We of course can thank Big Government Statists Democrats for creating this mess.
Social Security-Created by Franklin Roosevelt.
Medicare-Created by Lyndon Johnson.
Medicaid-Created by Lyndon Johnson.

Big Government Democratic policies have put America into this debt crisis.

I think fiedler is right. This is not America's downfall. It's not a big enough problem. It IS a huge problem, but it is not a superpower killer. We've been in a lot deeper shit before. Debt is a relatively simple problem with a relatively simple solution. On April 20th, 1775, we were in very deep shit. We won against the world's biggest superpower. On December 8th, 1941, we were in very deep shit. We beat three very tough superpowers. On September 12th, 2001, we were in fairly deep shit. We are on the verge of victory once again.

No one is shooting at us in this crisis. That makes it a very simple problem.

Another reason the US debt is so large: the United States Dollar is the reserve currency of the world, and has been for the past few decades. Everyone wants to buy our debt because they want dollars, and we go along with it because -- why not? We control the value of the dollar. And along the way, we've usually held inflation fairly low, to the point where it's now the lowest it's been in forty years.

The point of the Federal Reserve is, and always has been, to reduce inflation. As history shows time and time again, inflation is an economy killer. Debt is too, but its much more of a slow, painful death than the quick plunge of inflation and hyperinflation.

Now, as was said before, the reason we're in so much debt is that we spend more than we make, simple as debt. Because of the interest on our debt it will be harder to get out, but by no means will it be impossible. I mean, if 9/11 had never happened and we hadn't gone into Iraq, we'd be out of government debt by now, simple as that (oh, and if the Bush tax cuts didn't happen too). We hold the debt of other countries, just as other countries hold our debt. And most of our debt isn't owed to other countries or private entities, but to ourselves. The #1 holder of Treasury Bonds is the Social Security fund.

Thus, its politics and entitlement programs that we have to blame. The programs need reform, and politics forbids it because any politician who touches social security or entitlements suffers political death. Therefore nobody wants to be the one who changes it, everyone wants to be the one who votes against it, waits for it to fail, and be the one who says "I told you so"

So how to solve the debt crisis? You could find new lawmakers, or do it Germany 1930s style with a dictator.

Without 9/11 and Iraq we'd still be in nearly as bad shape. Keep in mind the cost of Iraq War total since 2003 is about as much as the Stimulus, and Afghanistan even less (relatively speaking, of course). These are huge sums which the nation can't really afford, but they pale in comparison with the money we spend and owe on entitlements.

There would be a deficit if we only spent money on Social Security and Medicare. With Baby Boomers retiring and entitlements unreformed there's no way the budget could have stayed balanced even in a period of total world peace. Granted, the deficit may be somewhat smaller if taxes were higher, but once every Baby Boomer is in their seventies and collecting money from the federal government there is no way we could still be having 1999-style debates on a post national debt economy.

http://costofwar.com/en/

Those are the numbers on the wars. According to the site we've spent only about a trillion dollars on war over the last 10 years. That's an unimaginable amount of money, but with a $1.5 trillion deficit this year alone it's got to be put in perspective. Entitlements are the real ulcer here.

Invictus + 1 for several excellent points.

Invictus ++
"Entitlements are the real ulcer here."
"With Baby Boomers retiring and entitlements unreformed there's no way the budget could have stayed balanced even in a period of total world peace."

"Medicare, Social Security, and Medicaid."

I know you can't hear me, TC, but I DO love how overly-simplified you make things to suit your own ends.

You've left out, for one...the MILITARY?

I suppose hundreds of billions is fine spending THERE, but for Democratic policies that help millions of Americans at home, now, that's just out of line!

@Spyman:

There are two questions at work here:

1. Why do we have a debt?
2. Why do we have so MUCH debt?

To answer one, the United States actually began its political life in debt; the Flounders, Hamilton chief among them, felt that a reasonable debt was a good idea to start, as it would 1. Allow the nation to spend from the start to grow and build the new nation 2. A federal debt allows for federal porjects and works, which might unite the nation, and 3. A debt insures a certain amount of attention from abroad--ie, our creditors--and would open the door for relations.

So this is where it comes from, and for a new nation starting up in the 18th Century, at the height of the Industrial and coming into the Imperial Ages, this wasn't a bad idea at all.

So why do we have so much?

Like any good idea, the extreme of that idea can turn out to be a rather poor idea indeed. As the nation grows, so does the debt, because more NEEDS arise...

A small infastructure and little federal intervention is fine for a small, 18th Century state, but not for a 21st Century superpower, THAT requires an enormous amount of spending.

We can't charge the states, directly, as 1. A shared debt is, again, a lareg unifying factor (for example, if we forced California to pay entirely for itself, it has far less of an incentive to state with the rest of the nation, and the same holds true of Texas and Alaska and the test of the States, a shared debt means a shared responsibility.) and 2. To do so would be unfair and tricky, considering the state of the debt currently, deciding who owes what.

Why else do we have so much?

Again, we must have a large military, a large infastructure, update and repair that infastructure, constantly be innovating scientifically and medically to try and stay in line with the rest of the world, as history teaches us that if you fall behind the Scientific Arms Race, you're in trouble, and then you have all manner of public works and services, everything from roads to police to the FBI and CIA and educational services and mandates, social security to provide a safety net for seniors...

And the list just goes on and on.

What do we cut, then?

It'd be easy if the parties could agree, but as America is essentially a nation built on two political ideals, we see the conflict in cost cutting we do today:

Locke/the Left vs. Hobbes/the Right.

Locke believed Liberty preceded Security, as without Liberty, to him, there is little point in being secure, and "comfort" falls inbetween the two.,

So Locke--and the Left--promote ideals such as Education and Caring for the Sick (ie, Health Care) over Defense.

Hobbes lived during the tumult of the English Civil War, so he thought--and the Right agrees--that Liberty is useless if you're constantly udner fear of death or living at the point of someone else's gun, so it's best ot have Security and Defense precede Liberty and all the programs (Education, Health Care, Social Reform) that entails.

The Left points the finger at Military Spending.
The Right points the finger at Health Care.

And neither are totally wrong.

I'm Left-of-Center, so I lean towards cutting Defense first, but I see the validity of both viewpoints.



And THAT is why we have a debt.

No easy, whole-cloth, "it's the Democrats'/Republicans' fault" nonsense.

We were a nation born in debt.
We've lived most our history in debt.
The only way to grow a nation and defend it is by spending.
And so we spend.
And so we grow the deficit.
And so we have one group calling for Defense to be cut over Domestic Services.
And so we have one group calling for Domestic Services to be cut over Defense.

And so we stay in debt, gridlocked in a tough battle of ideals.

"blah, blah, blah...And THAT is why we have a debt."

No...that is not why. We have debt because the Federal Reserve issues money at interest. As I said...it is that simple.

You are *all* rearranging the deck chairs on the Titanic right now. What a waste.

And YOU are over-simplifying, sir.

Really, with a name so close to Darwin's, you'd think more sense and logic would permeate your words...

This is a debt of trillions.

Saying there is one cause to it ALL is tantamount to saying that there is a single explanation for why the Roman Empire fell when, really, there are several, all contributing to a massive fall.

"This is a debt of trillions."

And it all started with a loan. A loan that can never be paid back.

Yes, it is that simple.

You know your both right.

Like Darywn says it's a flawed system. But even if we replaced this system with another one America is still spending too much compared to what it is being payed.

In the 1980's, for some reason we changed politics. See, up until that point, there was a fight between two sides...Democrats wanted government spending and were happy with taxes enough to cover them...Republicans wanted lower taxes and wanted to cut government spending.

In the 1980's, Republicans changed their position, and the Democrats have never really figured out how to respond. They began to espouse the position that lower taxes will increase government revenue. This gave them a good argument to lower taxes, and there was hope to decrease the size of government as well. Something went wrong though, and instead, Republicans also still increased spending, and at arguably a faster rate than the Democrats, while cutting taxes and arguing that revenue will increase. This allows them to give voters everything they want. More pork, less taxes, and no guilt about it. At this point, no taxes is a religion for Republicans, and we have been decreasing taxes pretty steadily since the 1980's. At the same time, spending has been increasing pretty steadily.

If we had kept the old positions, with Republicans against spending and taxes, while Democrats were for spending and taxes to cover it, we would be held to a reasonable budget. Instead, the Republicans seemingly advocate for increased spending under Republican administrations and reduced spending under Democratic administrations, while constantly lowering or attempting to lower taxes. The Democrats have gone insane, and essentially accepted a lot of the Republican positions because of groups like the DLC and Third Way, while still pretending to not have bought into them. So, since we are in a Democratic administration, we are going with austerity and tax cuts.

Someone proposed a rule to force a balanced budget, which I thought was horribly stupid until I thought about the fact that it would stop the cutting taxes while increasing spending crap.

By the way, I am not blaming the Republicans. The logic behind it is pretty sane. It is hard to win an election by arguing for cutting spending (benefits) to people. So, you argue that we can cut taxes which will increase government revenue (no need to cut benefits) while leaving you with more money (yay!). Great for winning an election.

It's not a spending problem and it's not a tax problem.

It's a debt problem.

Money *is* debt.

It is both a spending problem and a tax problem. The debt is the difference between the two.

While technically true Tantris. That is ignoring the underlying flaws with the system. Which Darwyn is pointing out. The system is flawed and needs change.

Because so long as this flawed system exists it won't matter what we do debt cannot be eliminated.

However we do still need to address the problems of rapid spending and no revenue. But these should be addressed after the underlying concern is dealt with.

Darwyn I have a problem with you theory, I stated earlier in the thread. I shall expand:

Even given the premise of fractional reserve banking (flawed as it is):
1.If the government spent less than it collected in revenue (mostly tax) then the government would not be in debt. We know that this can happen because there have been many years when the government had a surplus. Yes it is that simple.
2. In history countries which have not had fractional reserve banking have still managed spend more than they collect in revenue and have been bankrupted.

The two common factor here is spend more than you earn.

Darwyn answer me this: the government could in theory spend less that it earns in revenue - correct?

Obi I was thinking about this problem last night and I came to a similar conclusion (not quite identical).

My conservative friends believe the government should tax less and spend less.
My left wing friends believe the government should spend more, but also tax certain people more (the rich).
Both groups see their solution as fair, simple and necessary.
As politics is a game of compromise we end put with the following solution: spend more and tax less (or at least spend as much/as little as you think you can get away and tax as much/as little as you think you can get away with). The end result - ever increasing debt.

As long as a private central bank issues public currency as an interest-bearing loan, the debt always grows faster than the available money supply. No matter how hard the people work, no matter how much they sacrifice, the debt can never be paid off.

spending and taxing take place inside a rigged system that perpetuates debt. They are not the problem. You are rearranging deck chairs.

The economy runs on debt. The average person owes 3x his/her salary in America, but the country only owes less than half its annual revenue. I'm not sure why people think it's a problem that the government borrows money when that's how things run. And furthermore many other countries currently have much more debt than America as a percentage of GDP.

"the government could in theory spend less that it earns in revenue - correct?"

All money is a product of a loan that can never be repaid. Spend, tax and save all you want...you will always owe more to the private central bank that loaned it into existence.

So the debt is manageable then grenv? I can accept that in theory. How much larger could the US government debt become before it is unmanageable?
Also given the debt must result in higher taxation which in turn suppresses the economy (which is okay to a point) how much debt before the costs out way the benefits?

"And it all started with a loan. A loan that can never be paid back.
Yes, it is that simple. "

Darwyn you are missing the point. It's not supposed to be paid back. The debt exists to control spending and counter inflation. Is that so hard to understand? Jesus.

Tantris, Your statement " in the 1980's for some reason we changed our politics."

Reagan changed the political landscape of the country in the 1980's because America was sick and tired of the stagflation.
The 1980 election that put Reagan in office for the first of two terms was all about ending the Great Society-Keynesian Big Government of the 1970's that saw massive inflation, astronomical interest rates, and unending unemployment.

The reason for the change in the 1980's isn't a mystery.
Your statement that the Republicans increased spending in the 1980's is misleading.
Reagan didn't end the growth of government, but he decreased the growth of non-defense federal spending.
Reagan reformed social security during his second term. A lame duck President reforming social security.
So the more pork less taxes statement is inaccurate.
Reagan also raised taxes when he and Congress simplified the tax code.
As far as "no taxes" being a religion for the Republicans that is simply false on its face since H.W Bush raised taxes and still received the Republican nomination for a second term.