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Tue Jan 22, 2013, 10:10 AM

Regarding our "crushing debt"

I saw that phrase again today, this time from David Brooks: "Far from being underinstitutionalized, we are bogged down with a bloated political system, a tangled tax code, a Byzantine legal code, and a crushing debt."

I'm not an economist, so can anyone explain to me how we're being "crushed" by our national debt? We've been running in debt since we had to pay for the Revolutionary War, correct? Has the US suddenly become unable to borrow because of our "crushing debt"? Can anyone point me to where we've been crushed by the national debt? It seems like even in tough times the government has been able to borrow, pay the bills, and stand behind the dollar as the world's reserve currency. So what's being crushed?

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Arrow 7 replies Author Time Post
Reply Regarding our "crushing debt" (Original post)
BayouBengal07 Jan 2013 OP
hobbit709 Jan 2013 #1
sadbear Jan 2013 #2
patrice Jan 2013 #3
Aerows Jan 2013 #4
JaneyVee Jan 2013 #5
el_bryanto Jan 2013 #6
hay rick Jan 2013 #7

Response to BayouBengal07 (Original post)

Tue Jan 22, 2013, 10:12 AM

1. It's only "crushing" when the Democrats are in.

It's perfectly OK to run up the debt when an R is in charge.

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Response to BayouBengal07 (Original post)

Tue Jan 22, 2013, 10:18 AM

2. One reason to look forward to a republican president.

We won't have to hear about that crushing debt anymore.

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Response to BayouBengal07 (Original post)

Tue Jan 22, 2013, 10:26 AM

3. Money is a cruel PRIVATELY OWNED joke by means of which ALL things PUBLIC are measured.

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Response to BayouBengal07 (Original post)

Tue Jan 22, 2013, 11:33 AM

4. "Crushing Debt"

means "There is a Democrat in office, and they want to spend money for things that don't support my agenda of me, me, me."

Had Romney been elected, we wouldn't be hearing any of this - we'd be hearing about how imperative it is to spend money to go to war with Iran.

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Response to BayouBengal07 (Original post)

Tue Jan 22, 2013, 11:40 AM

5. These are the same people who don't want tax revenue to pay it down & are foaming at the mouth for

another trillion dollar war with Iran.

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Response to BayouBengal07 (Original post)

Tue Jan 22, 2013, 11:45 AM

6. Serious response

1. There is an theoretical upper limit to how much free capital is available to loan out. The more the Government Borrows the less there is to loan to the rest of us.

2. A person who carries too much debt is not well respected financially - even if they are paying it all back, you can't help wondering how long they can keep that up. There are those who feel that the United States might end up in the same position - having borrowed too much money, and other nations and institutions unwilling to continue loaning it to us.

In both cases there is a variable we don't know - we don't know what the upper limit of free capital is. We don't know how much borrowing is too much for other nations to continue loaning us money. That's why it is of some concern.

Obviously conservatoids want to inflate this reasonable concern as big as possible to force cuts in social programs they don't like anyway.

Bryant

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Response to el_bryanto (Reply #6)

Tue Jan 22, 2013, 12:37 PM

7. Crowding out.

I think there is little real imminent danger of government borrowing "crowding out" private borrowing for investment. The current reality is that businesses are sitting on record levels of cash ($2.5T) rather than investing in expanded productive capacity. The economic problem we face is under-utilization of capacity and lack of demand. Government can increase borrowing without driving up rates because so much capital is otherwise sitting idle.

Hopefully, at some point, demand will catch up with capacity and we will see some growth. If and when that happens, crowding out of private investment could become an issue. Two points- 1) we're not there yet- and maybe not even close; and 2) when we do get growth, increased tax revenue will at least partially offset the need for borrowing.

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