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What happens when USA goes too far in debt?

Posted by hamiltongardener CAN 6a (My Page) on
Thu, Aug 9, 12 at 11:51

The USA is creeping up to $16 trillion in federal debt. For most people, it's hard to imagine that the USA would ever go "belly up" so to speak. Other countries like Greece or Argentina? Sure, but the USA is too big to fail. We can't seem to accept that the world's economic and military superpower could ever fail.

But it's happened before. Empires fall all the time. When was the last time you heard of the Pound being the world's reserve currency?

But in the past, when a superpower fell from grace, another, or several others, just took it's place. Could that happen today? Or would the financial fallout of the world's biggest economy be so devastating in this age of globalization that we will see the financial destruction of most of the world?

I know Canada would be hit very hard, at least initially. Around 80% of our exports go to the USA, so imagine 80% of your foreign economy disappearing overnight. Since a lot of our exports are raw materials and energy, I am fairly certain we could eventually restructure our economy , find new export countries, but the initial "nuclear blast" so to speak would cripple us.

How do you think the rest of the world would fare?


Follow-Up Postings:

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RE: What happens when USA goes too far in debt?

Yet isn't it interesting that with all the economic turmoil in the world, the interest rates on treasury bonds are near historic low, and by some calculations, negative. - IOW, the markets still believe that US Gvt debt is the safest place these days to put your money.

Which is why I don't understand that the gvt isn't taking advantage of these really low rates and investing in better infrastructure. Not the opposite, 'austerity' ploy which seems to serve no purpose other than to theoretically protect the assets of the uber-wealthy. And thats theoretical.

Here is a link that might be useful: link to current bond rates


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RE: What happens when USA goes too far in debt?

Just a snippet. I spent 40 years purchasing my own birth control pills. Now I'm supposed to spend the rest of my life paying for someone elses. Why? Why did we go from 45 million people on food stamps last year to 100 million this year? Yes, we are heading for a cliff and I don't think the powers that be, either can or want to save us.


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RE: What happens when USA goes too far in debt?

Gee. How many health insurance plans already cover birth control and have done for decades? Most of them, I believe.

And how that makes any difference to the national debt, I dunno.. Repealing the Bush tax cuts, all of them, and cutting back on our military, corporate subsidies, adjustments to social security and medicare to compensate for a longer life span, etc. have far more to do with it.


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RE: What happens when USA goes too far in debt?

'I like to pay taxes. With them I buy civilization.'Oliver Wendell Holmes
The nation was born in debt has never paid it off & occasionally someone thinks up a new way of skirting paying for it. The latest is the tax cut!
Military spending has skyrocketed & corporate welfare is a disgrace!
There yah have it K says potato I say as long as it's not big agrabusiness being subsidized.
Some see a difficult way of paying their taxes other see another opportunity to rig another tax shelter!


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RE: What happens when USA goes too far in debt?

Interesting, did you start BC at 15 and quit at 55 or was it a different time frame of age parameters? Just curious.


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RE: What happens when USA goes too far in debt?

Since you are so interested it was actually 37 years. Better?


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RE: What happens when USA goes too far in debt?

I guess the White House Operators start dodging toll free and private labeled calls, "Barack Obama? I'm sorry, but he's working right now and isn't allowed to take personal calls," when that fails, I guess the Pres himself has to get on the line and say, "Hey guys, you know, you really aren't allowed to call me at work, I could lose my job over this and then how would you get paid ..."

Honestly, though ... The US economy is so historically resilient ... I think working to prevent its total failure is a good aim, but not anticipating it, if that makes any sense.

After all, I've already got December 21 to stress about. Give me a break.


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RE: What happens when USA goes too far in debt?

Well, vote for the tea party guys, who insist they won't extend the spending limits, and we can watch what happens if the biggest financial enterprise in the world - the US Gvt - slashes spending by 40% overnight.

Because right now, we borrow 40 cents on every dollar spent.

The solution, of course, is more tax cuts for 'job creators".


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RE: What happens when USA goes too far in debt?

It's all a red herring. There is plenty of wealth still in the U.S. Back in the good old days, people paid high taxes when the country was in trouble and very few complained about it. If tax rates were adjusted up, income that is taxed lightly or not at all taxed at standard rates, and loopholes closed, the US could easily get back into fiscal health in a relative short order. It's just the mass insanity of the far right that prevents us from dealing with these issues. All I see are rich, greedy people paying the lowest effective tax rates in close to a century, complaining about how mistreated and overtaxed they are, and then they start blathering about their vacation homes in Florida and their luxury cars and their week long trips to Vegas to gamble.


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RE: What happens when USA goes too far in debt?

I am very concerned about what will happen to the economy if the American Government doesn't get their act together and deal with the looming "fiscal" cliff they are about to go over.

The massive cuts to Defense, Medicare and Medicaid, coupled with taxes increases on EVERY American, will devastate both the economy and the social fabric of the US and with that goes us and the Euro Zone at least for a while.

With all this facing them some have only to worry about birth control pills and food stamps when there are really serious issues looming that actually impact the National Debt. Well if Congress doesn't get it's act together and DO THEIR JOB then there will be a lot more people on food stamps!


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RE: What happens when USA goes too far in debt?

Not sure what Mrskjun's BC pills have to do with the national debt, but she isn't paying for other's pills. The insurance companies are paying for them. Through the years insurance companies have been mandated to provide certain treatments & medications. Does she also resent paying for other women's mammograms? Geesh!


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RE: What happens when USA goes too far in debt?

I spent 40 years purchasing my own birth control pills. Now I'm supposed to spend the rest of my life paying for someone elses.

If you're going to be a martyr (by disregarding how medical insurance actually works), please do it correctly:

Now I'm supposed to spend the rest of my life paying for everyone else's.


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RE: What happens when USA goes too far in debt?

The vast debt various countries owe other countries will not be paid. An immense and very painful re-structuring in accordance with the future of an ever-shrinking economy will follow.


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RE: What happens when USA goes too far in debt?

Some one needs to tell MrsK that no one is asking her to pay for someone else's birth control-oh wait-I think they have several times. She just isnt ready for that bit of information. They are however asking her to pay for someone else's war profiteering but some how that doesn't resonate with her. Odd.

first Empires dont generally fall-like Aztecs or Incans they crumble slowly and gently-like the British Empire or Rome. The Egyptians have been up and down several times.

In this case money owed could be power-money not being an actual thing but an idea of what is owed to someone. When you 'own' a substantial part of someone's economy you have an interest in that economy and no interest in seeing it tank. Or maybe you do?

I am trying to remember when the debt went to 1 trillion-some how a magic number-with inflation since then I would suppose our debt today isnt actually that much more but then again I gather most people think it is more important to see the debt as a part of the GDP. I wonder if that is true. It is interesting to me that being in serious debt has become a part of our culture-individuals expect to be in debt and to never pay that off and as a nation we expect to be in debt-it actually is a part of the creation of money in our economy.


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RE: What happens when USA goes too far in debt?

Back in the good old days, people paid high taxes when the country was in trouble and very few complained about it.

And back in the old days when the country went to war people paid higher taxes to pay for it - there was shared sacrifice, not just sacrifice of military families.

Politicians today are about as reponisble as the kids who ran for student government in middle school, promising longer recess and better lunches, which of course they could not deliver. Of course middle school is when Grover Norquist hatched his plans. Nothing's changed.


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RE: What happens when USA goes too far in debt?

"Some one needs to tell MrsK that no one is asking her to pay for someone else's birth control..."

Where will the money come from?


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RE: What happens when USA goes too far in debt?

So I'm to understand that birth control has not been covered by health insurance before now? I find that highly unlikely. So how many additional women do you think will now be covered that weren't before? I would have thought you would be pleased to limit births especially amongst the irresponsible set.


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RE: What happens when USA goes too far in debt?

I wouldn't mind paying for some lithium for a few of you old bitties if it would calm your lying right wing "me I am the best and hardest working and do it all, everyone else is a loser sponging off my hard work getting all the freebies" typing fingers off the enter button.
Oh yeah you pay taxes for all the duds and scum of the earth. Where do you tight old nasty hags get off with this attitude is something bred in the air down around the central Gulf from cotton plantation life??? You're all sell pompous Gods gift to mankind what we would do without all your hard work paying taxes for all the lazy no good crack heads sucking off the federal teet to power up their new Lexus and buy a case of whiskey with their food stamps????

It doesn't it bother you about the huge freebies big petro chemical gets that makes your state the butt hole of the America almost worst then Elizabeth NJ or Detroit. You don't mind all ths entitlements big agriculture gets such as the paper industry and tax breaks.
But hades, some one gets 49 bucks in food stamps and "I am tired of paying for losers".........


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RE: What happens when USA goes too far in debt?

Hamilton, Forget imports/exports, have you ever Put pencil to paper to figure out just how much corporate ownership Canadian firms have in the US? Canada would be hit for alot longer than "at least initially".


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RE: What happens when USA goes too far in debt?

Someone must have gotten a new memo from Media Matters or the White House just as he ran out of "medication" and discovered he was out of beer. Bad day, hummm? Want a blankie? Maybe a binkie would help sooth those nerves.
Anyone else going to be skipping this poster? A shame really, I would have enjoyed hearing about his plants, but I just can't do a crazy more virulent than xxxxx.


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RE: What happens when USA goes too far in debt?

Hey there Mike, welcome to what has become a tiresome political hash-fest forum. Did you just discover HT after all this time? Too bad, we used to have some rollicking good times here.


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RE: What happens when USA goes too far in debt?

I've seen mph101 here before. Reminds me of BP without the crude humor.

"Bitties" is a compliment, according to Urban Dictionary: "... the word bitty has no negative connotations. Rather, the inverse is true: "Bitty" is a term for an attractive female, but is not used as a direct compliment or pick up line--it is casual.
Singular: That bitty over there is looking at you man.
Plural: Call up some bitties to come over."

Or, mph could be misspelling "biddies", in which case it is a slur against Irish-American immigrants.

Take your pick--or blow it off.


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RE: What happens when USA goes too far in debt?

I really didn't mean for this to get into a discussion about who's fault it is that the debt is so big.

I was kind of wondering if anyone wanted to speculate on the effect an American economic failure would be, perhaps on individual countries or maybe on regions.

Like, what would the effect on South America be? Or Mexico?

How would it affect China, since China holds so much of that debt...AND America is China's biggest consumer of manufactured goods? I think China's economy would be crushed if America ever failed.

Would the Eurozone actually benefit in the long run and why?

Just asking for scenarios and opinions.


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RE: What happens when USA goes too far in debt?

As a percent of GDP, Japan's is twice ours. Most first-world countries have fairly high debt ratios. Many third-world countries have little to none (or just don't keep track of such things).

I figure when we get our debt down to 36.7% of GDP, we'll be living pretty much like Bangladesh anyway.

-Ron-


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RE: What happens when USA goes too far in debt?

"Or, mph could be misspelling "biddies", in which case it is a slur against Irish-American immigrants."

Seriously, where do you get your information from? I am pretty sure most people here knew it meant an old lady. Two dictionaries online confirm it. So, I do not know what dictionary you used to find "biddy". The ones I looked up said:

1. usually disparaging : woman; especially : an elderly woman. Merriam-Webster
2. Informal a woman, esp an old gossipy or interfering one. thefreedictionary.com

So please, do a little more research before you constantly call people out on grammar or definitions of words that people ALREADY KNOW.


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RE: What happens when USA goes too far in debt?

Well Frank, Elvis is kinda right.

An Encyclopaedic Dictionary of Gender and Sexual Orientation Bias in the United States. By Philip Herbst, Intercultural Press, Published 2001, ISBN:1877864803.
Among the Celtic Irish, Brigit, meaning "exalted", was a pagan goddess of fertility and healing who was later Christianized and known as St. Brigit.
In the 18th century Bridget became a popular female Christian name, with Biddy or Biddie as the diminutive or affectionate form.
In the 19th Century, it became a generic for an Irish maid.
Also came to be used for a slattern or prostitute
In mid 20th century used among black speakers for an attractive little girl, or a small old woman.
Common meaning in US is an elderly woman, especially one regarded as fussy or mean or a gossipy busybody. (Often as "old biddy")
Online Etymology Dictionary
biddy "old woman," 1785; meaning "Irish maid-servant" (1861) is Amer.Eng.; both from pet form of common Irish proper name Bridget.

That being said...the meanings of words change over time. "Biddie" is no longer in common usage as a slur against Irish people... I say we go with the modern usage of the term.


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RE: What happens when USA goes too far in debt?

I always thought of "biddies" in terms of chickens; more slangy - some women referred to as gaggling clucking old hens.


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RE: What happens when USA goes too far in debt?

I spent 40 years purchasing my own birth control pills. Now I'm supposed to spend the rest of my life paying for someone elses. Why? Why did we go from 45 million people on food stamps last year to 100 million this year? Yes, we are heading for a cliff and I don't think the powers that be, either can or want to save us.

Wahhhh. No, Mrskjun they don't cost you for the reasons we have explained to you dozens of times. Besides, I guess you haven't gotten your insurance REFUND yet. Because of the Affordable Care Act, you will get a refund if your insurance company failed to use a high percent of your premium on your care. They are going out now. They will likely go to lowering your premium rather than a check in the mail.

The law requires insurers to give out annual rebates by Aug. 1, starting this year, if less than 80 percent of the premium dollars they collect go toward medical care. For insurers covering large employers, the threshold is 85 percent.

As a result, insurers will pay out $1.1 billion this year, according to the Department of Health and Human Services, although most of it will not go to individuals. The average rebate will be $151 per household, with the highest in Vermont ($807 per family), Alaska ($622) and Alabama ($518). No rebates will be issued in New Mexico or Rhode Island, because insurers there met the 80/20 requirement.

As for your question HG, the US is far from going bankrupt. It in fact, has historically low tax rates which means that the world of finance views the country as having untapped assets that insure its good faith despite the ravings of Tea Party flatearthers. Right now, the world looks to US Treasurey Bills as one of the safest places to park their money in a world recession. Your question proposes a hypothesis that is very unlikely both in that it suggests the US can't balance its budget - it can - it just refuses to do so. That's a big difference from being broke.

Here is a link that might be useful: Obamacare insurance rebates


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RE: What happens when USA goes too far in debt?

Many third-world countries have little to none [debt to GDP ratio]

Lets not forget the classic routine of banks loaning vast amounts of money to 3rd world countries, then when its clear that the debt can't be repaid, 'foreclose' and have the IMF come in and bail out the loaner banks with IMF funds. Loaner banks now OK.

Then force the country to divest its assets to private, foreign hands -not surprisingly, often the same banks who loaned them the money in the first place.

Then, for the 'help' given the country in bailing out the foreign banks, force the country to cut gvt spending on health, education, roads, etc. to the bone or just do away with it, and impose some theoretical free market economic system dreamed up at IMF HQ in Washington DC.

Current example: Greece.


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RE: What happens when USA goes too far in debt?

  • Posted by vgkg 7-Va Tidewater (My Page) on
    Fri, Aug 10, 12 at 10:31

"What happens when USA goes too far in debt?"

When it goes too far?

It went too far 25 years ago when Reagan/Bush-I topped off $4 trillion and left Clinton with the bill. Bush II repeated the cut taxes and keep spending disaster again and now repubs are concerned? I gave up worrying about the BS.


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RE: What happens when USA goes too far in debt?

And in the immortal words of Dick Cheney -

"Deficits don't matter"


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RE: What happens when USA goes too far in debt?

I was kind of wondering if anyone wanted to speculate on the effect an American economic failure would be, perhaps on individual countries or maybe on regions.
Other countries like Greece or Argentina?

I have seen that comparison made on Fox news when I dare watch it for more than 5 minutes.
The U.S. economy is massive and diverse compared to that of Greece or Argentina. We produce agricultural commodities on an enormous scale...enough to feed much of the world. We have a large industrial; base and technology sector. We maintain the largest public education system including many of the best colleges, medical and professional schools in the world. We are leading innovators in almost every technological field. There is no reason to spread panic or doom and gloom.

The economic rut we were driven in is one that will be difficult to steer out of but we are on our way to doing that. I am not as concerned with the deficit or the debt as others who seem to be using bad economic news for political purposes during a campaign season.

I am confident that we will conserve, innovate, grow, and inflate our way out of the deficit and debt in due course as we have in the past.
Ross Perot was talking economic doom from national debt when he ran against Clinton. We then grew out of the deficit and debt problems during the Clinton years.
Similarly, Peak Oil has not happened despite dire predictions. We have discovered new sources of fossil fuel that were not even figured into that equation and have made leaps in energy efficiency and conservation.

Meanwhile, we have an enormous problem with a growing disparity in wealth
that is threatening the very fabric of the middle class in our country, our social services and the safety net for the poor and the elderly.

A vulture capitalist is the last thing we need to bankrupt even more people and create untold human suffering. "You people" , you middle class people, deserve better.


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RE: What happens when USA goes too far in debt?

  • Posted by ohiomom 3rdrockfromthesun (My Page) on
    Fri, Aug 10, 12 at 11:53

KT and Heri .. thank you. As I have said I read all news sites and the "doom and gloom" ones seem to come from just one side, the left side seems more to deal with "how" we can fix the problem we face.

On Rockwell's site, for instance, it is all about "hoarding food, stocking weapons and preparing the mass chaos" coming. The same is true for the right sites.

1/2 penny


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I lived in England in the 60's when they 'devalued' the pound. It must have been a big financial shocker to the people with money. England is still a world power. Money as I keep saying and am always ignored is not anything but what you think it is. It represents in value what everyone can agree it represents. Debt is also a way of creating money-out of thin air. If people buy our debt they must want our money. Their money has an equally fantastic basis. I would be more concerned about what climate change is going to do.

Biddies is indeed a term for hens-it is also interestingly a term for baby chicks in parts of the south but I assume it was used to refer to women as hens since women's gatherings are still called 'Hen Parties' in some areas.

As to where the money for birth control is going to come-A person pays into the insurance company, the insurance company is supposed to use that money to pay for necessary medical care for that person. In the past the insurance company instead paid enormous salaries and bonuses to its executives or invested that money in venture capital situations and made gazillions. Under the new law the executives will have to make do with less and the company has to pay for the necessary medical care aka birth control. It is a sad fact that you were being rooked by your insurance company but so it goes. I dont think it is in the best interest of We the People for all of us to continue be rooked just because you were happy with that state of affaairs.


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RE: What happens when USA goes too far in debt?

The US Dollar has been devaluing steadily since the Bush tax cuts and wars.

The best example is to view this in terms of what it now costs for energy - electricity and fuel, which has gone up what, 200% in the past 10 years? Petroleum was $25 a barrel, drifted up to $100 which is now the norm, gasoline prices followed suit. Electricity is up 40-50% as well.

Food is up, everything is up. Its inflation / devaluation. Which will continue to compensate for gvt debt.

We're not the only ones playing the game - everybody does it. It may well be a necessary economic fact with world trade the way it is.


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RE: What happens when USA goes too far in debt?

"The US Dollar has been devaluing steadily since the Bush tax cuts and wars."

Bingo!

This is a big consequence of carrying too much debt. The dollar devalues and everything we buy - primarily commodities and everything else affected by commodities - will cost more.

We could also suffer another credit rating downgrade, which means that borrowing money will cost us more due to higher interest rates.

While we're not Greece, they can't sell their bonds or borrow money without paying suffocating interest rates. It wouldn't get to that point for us, because our economy and financial institutions are structured differently and we have more financial mechanisms to control our own economy, but it could mean a reluctance by other countries to purchase our treasuries and bonds, along with having to pay more for others to invest.

"It may well be a necessary economic fact with world trade the way it is."

Reuters was reporting today the the German economy has stalled. If it contracts more, it may mean that they too will fall into a recession.


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RE: What happens when USA goes too far in debt?

As I posted above, the current interest rates on treasury bills are the lowest they've been in decades - so I guess that no matter how awful our own debt is, the rest of the world still wants a slice.


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RE: What happens when USA goes too far in debt?

Scare tactics like this won't work.
Romney/Ryan are on the ropes.


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RE: What happens when USA goes too far in debt?

The US Dollar has been devaluing steadily since the Bush tax cuts and wars.

And about to devalue some more.

Looks like QE3 has just begun.


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RE: What happens when USA goes too far in debt?

Yet the stock market went up to near-record highs.


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RE: What happens when USA goes too far in debt?

The US dollar has been devaluing since the mid-1980s, well before either Bush.


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RE: What happens when USA goes too far in debt?

Yet the stock market went up to near-record highs.

Of course it did!

In anticipation of a cash injection like that, I'm sure trader confidence was quite high.


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RE: What happens when USA goes too far in debt?

The US dollar has been devaluing since the mid-1980s, well before either Bush

Since just after NAFTA was put in place, actually. NAFTA came into effect and the US dollar started dropping.

More recently, the devaluation was due to QE1 and QE2.

The good news? American exports should get a boost from the lower dollar.

The bad news? It's not as attractive to investors, meaning either America will have to start paying down some of that debt or potentially face paying higher interest.


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RE: What happens when USA goes too far in debt?

"NAFTA came into effect and the US dollar started dropping."

But of course... that's when our industry, manufacturing and jobs left for other shores... as we predicted they would. That was back in the 80's, around 30 years ago. Now, the Euro is holding strong while the US Dollar continues to slowly devalue.

We absolutely can turn things around, but it will require a revenue boost... not just the cuts we're seeing. The most obvious place to begin collecting revenue would be to go back to previous tax percentages for the very wealthy, let those tax cuts finally expire.


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RE: What happens when USA goes too far in debt?

We absolutely can turn things around, but it will require a revenue boost.

Agreed.

The problem cannot be tackled just through cuts, there HAS to be an increase in taxes as well. That includes closing some of the legal loopholes for money being held offshore.


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RE: What happens when USA goes too far in debt?

NAFTA was passed under Clinton in 1994.
The US $ started declining after the Plaza Accord In 1985. It's been more or less steady to other major currencies for about the last 4 yrs.


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RE: What happens when USA goes too far in debt?

Someone mentioned food stamps so I have to tell you about my trip to WM today. I only had $58 to shop with so when I arrived at the check out I had to let 2 things go back to the shelves.

In front of me checking out was a young nice looking AA woman, in her 20's I'd say. Dressed very nicely, designer bag, etc. She had $290.00 worth of groceries. Included in her groceries were 4 packs of filet steaks, 4 to a pack. Someone she knew walked up in the line next to her and the lady in front of me says to her "I'm shopping for Sunday dinner." Then a few minutes later she goes to pay for all that food, including those steaks and guess who paid for those steaks? Me!! She pulled out her FS card and put $130 on it and then whipped out cash to pay for the balance. It took everything in me not to ask her if I could come to dinner since I helped pay for those steaks!!! This is what is wrong with the system!!! If you don't get it then you must also be having steak on your neighbors tax dollar!!!


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RE: What happens when USA goes too far in debt?

My bad... I got the NAFTA year wrong, but we were talking about the damage it would do way before it came into play.


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