We can do this the nice way … or the nasty way — So much for Republicanism and responsible economics.
The International Monetary Fund made it clear last week that it saw the world’s largest economy as an accident waiting to happen. The US could not continue to live beyond its means indefinitely, and there were only two ways to deal with the unsustainable imbalances in the global economy: the nice way or the nasty way.
The nice way, according to simulations by IMF staff, would involve a gradual slowdown in the pace of consumption in the US, accompanied by slightly higher real interest rates and a modest 15% devaluation in the dollar over a few years.
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When the bank holds the mortgage, they have a right to protect the collateral. The spending in Washington is shear madness. The only way to cut the pork is to impose Congressional term limits. There shouldn’t be such a thing as a professional politician. All you have to do is study the Roman Empire to see how this is heading.
I’m not really sure how imposing term limits will cut pork. Unless the term limit is zero.
The IMF’s recommendations have been a disaster for every country that follows them: Mexico, Thailand, Russia, etc. That said, there has already been a 20% dollar devaluation, but the IMF is too stupid to know that, and they are talking about something else.
I believe what they are talking about isn’t our government’s spending, but our trade deficit. They want us to jack up our interests rates so that we consumers will stop borrowing money to buy foreign goods. But they haven’t a clue as to how this can happen without causing a global recession.
Perhaps our Senate could ratify the Kyoto Treaty? That would kill our economy — and buying spree — for at least ten years. Then the IMF could dog the new world economic leader: China.
No more cheap clothes from Asia being sold at WalMart. No more Japanese hybrids or European luxury cars. No more Chinese computers. No more Saudi oil.
I think a good place to start is no more outsourcing to India.
Wow – I find myself agreeing with everything posted on this subject so far, except maybe for the term limits issue. I can’t help but wonder if a stretch of protectionism for, say 5 years, would fix some of this. Inflation would ramp up possibly, but not forever, and bringing some manufacturing back here would help some ailing local economies. If consumption is viewed as a problem, buying smaller amounts of quality goods (made primarily here) would help that and the debt issue. Bringing down health care costs wouldn’t hurt either. Take away major corporations complaints about doing business in the states.
AB CD is right – the IMF and its polices are responsible for a lot suffering.
WE ARE living beyond our means however and devaluing the $ isn’t the way to go. We need to put the neocons on a leash and start making hard decisions as to tax policy and the like.
I personally would like to see a roll back of all the duhbya tax breaks, a rise in the top tax bracket, say to 38%, lowering of capital gains, reinstatement of the “death” tax, a reduction OR elimination in the mortgage interest rate write off, and a stiff 50% tax on earnings over $20,000,000. I mean if you can’t live on what’s left, WTF?
Any other ideas? I’d like to hear them.
We already have a solution to this: it’s called the United States Constitution and the principle of Congress having a small list of enumerated powers. All we need to do now is get a majority of the people to actually give a shit about this fundamental principle behind the design of our government. Since I don’t see this happening any time soon (no thanks to our government indoctination camps some people like to call public schools), I guess I’ll be stashing away all the money I can between now and when the federal government is forced into bankrupcy and defaults on our debt.
Well, Sounds the Alarm, perhaps we should just abolish private property ,like good little Marxists, and take away all incentives for people to actually be productive and over-achieve.
I think I’ll stick to my belief that confiscation of one person’s wealth to be given to another is immoral and contrary to the ideals of a free society.
why don’t we put higher tarriffs on incoming goods? Why not make it more expensive to do business overseas? Why are we being pushovers in the world market?
I’d guess that MOST EVERYONE IN AMERICA is living beyond their means. Given the average credit card debt — per person –is $8,000., and 43% of Americans spend more than they earn each year (2004 figures)…
What does this say? American consumers owed a total of $1.9773 trillion in October 2003, (Federal Reserve statistics on consumer credit). Or, about $18,654 per household, which does NOT include mortgage debt. 63%, is “non-revolving” debt (cars, RV;s, boats). Revolving credit (credit cards) totals $735.3 billion. (A number that is 30% higher in the last five years, and more than doubled in the last ten.)
It’s not just our governement to blame. It’s ALL OF US. Look at what we are buying? Retailers made $7.5 trillion in revenue and earned $445.6 billion in profit in 2004. $7.5 TRILLION…for what amount’s to tomorrow’s landfill!!! (Walmart alone make $10billion in pure profit each year!)
Hey, we don’t NEED all these resin figures of bears, large inflatable santas for our lawns, and plastic do-hickeys. We also don’t need the endless supply of “new” clothing (especialy that crappy fleece stuff that doesn’t EVER look good, nor does it last). We need to get away from “cheaper cheaper cheaper” and move on to quality and pride of ownership. We need to BUY AMERICAN, if at all possible, and we need to get rid of our personal revolving debt….
The world thinks we are NUTS. I think they’re right!!!
Mike,
I don’t want to give it to anyone – I want the country to pay its bills. The hyper rich benefit much more in proportion than the middle or poor.
According to the CBO in Jan 2005 ~60% of the wealth in the country is owned by ~15% of the people, yet they only pay ~42% of the tax burden. That leaves the other ~85% who own only ~40% of the wealth to pay 58% of the total tax burden? That’s fair? What if that wealth is earned in an immoral way? Like a CEO that runs a company into the ground and then golden parachutes out with $300,000,000, meanwhile 1200 little people lose their jobs, not to mention the money investors loose in the company.
According to our very stupid president, we’re in a war. Guess what the tax rate was in 1942 for the upper bracket? 50% and that was on $30,000 or more. It didn’t go down significantly until the late 1950’s. This is not to mention the taxes on corporations, which I can’t find now, but were much much higher than now. Hey we’re in a war – how about a war tax to pay for it? It was done through all other wars.
You also might notice in my proposal for decreasing or removing the mortgage interest rate, that I don’t propose letting the middle class off either. Also notice I propose to lower capital gains taxes.
Besides, rather than breaking my balls, how about proposing an alternative? I have no respect for some one who only pontificates and doesn’t counter propose.
You got the balls to step up? I’d welcome your proposal.
I would completely abolish all taxes on productivity and I would also never support having to pay taxes on wealth that has already been taxed (i.e. the estate tax). I am an active supporter of the FairTax plan.
Most importantly though, I would systematically roll-back most if not all of the unconstitutional spending and entitlement programs which are sending us on our way to complete economic collapse.
Can someone please explain to me the theory behind cutting taxes and believing that will lead to a stronger economy–one where the goverment isn’t in debt? Maybe I’m naive, but I always thought that more income was good.
It’s the economy, stupid. The government must pay its bills, but it lacks the funds. Telling ordinary citizens that buying crap at Wal-Mart will save us from a recession is BS.
Stacia,
It’s really simple. First, you must remember that the government does not create wealth, it only confiscates and spends it. When people are allowed to keep more of the money THEY have earned, the money will either be saved, spent or invested.
When the money is spent, more money is going into the pockets of merchants and service providers, which means more income which can be further taxed. Also, the more business companies do, the faster they will expand, meaning that more employees will be required, which means more people will have money to buy goods and services and be paying taxes. It is also important to remember that the more money that small business owners have, the more money they will have to put back into their business. Money that is invested also helps businesses expand, which creates more jobs and contributes to an expanded tax base.
There is a point where lowering taxes will not increase government revenues… but in general it is always better to let people choose how they spend their money than to let a politician do it.
Don’t confuse wealth and income. The top income earners pay more, not less.
Revenues have been increasing the last several years, only spending has gone up even faster.
I’m with mike, its much easier to cut spending then it is to earn more money when you are facing debt in everyday life. WHY CAN’T THE GOVERNMENT DO THE SAME!!!!
The US Government and people has made itself a joke for the entire world. We come from China to US and become Americans. Also, the rate at which China is growing, I dont think anybody can stop them. 3 cheers to Chinese government and flow of FDIs. Great job done, China!