Should the US start over ?

[nec209]

Should the US start over ? Say we have a big debt and re-call all money and declare bacrupcy and start a new courancy. And say we had good time and now we face reality and lower wages to other countries?

 

After all Canada and US had it too good when you look at South America , Central America ,Asia and Europe with wages and greedy lifestyle..

[Pangloss]

I'm not sure I understand the question. Many Asians and Europeans enjoy the same or better standard of living as the average American. And I think if you ask most people in developing nations they'd much rather focus on increasing their wages to our level, and in fact this is one of the most important guiding motivations behind the international effort to manage global trade in a fair manner.

 

Perhaps you could define what you mean by "start over"?

[CaptainPanic]

He means that America should say to all other countries that the debts will not be paid. After all, that's what happens if you go bankrupt. Then you can start over again, and you don't have to pay anything!

 

The second part of the OP seems to suggest that the debt can be paid back by reducing the wages. I am certain that I do not understand much of the economy, but I think that this might work, eventually.

The enormous debt of the USA should be compensated by working harder and consuming less foreign products. That way you can turn the import-export balance to provide an additional income to the country... Alternatively, you can also start producing goods that other people actually want to have (example: do Europeans want a small Japanese car, or a 20 meter long pickup truck from Detroit? Answer: small Japanese car).

[jackson33]

In general terms, the US (or any State/Government) National Debt is an accumulative figure of expenses over incomes (revenue) and effects that entity no different than your personal debt.

The one exception being that by law, on the debt of a personal debt, that debt is cleared by the estate (if one), assumed by others (as in a business) or that the values of all others are diminished to cover that single debt. That is if a person dies today, owing 1,000$, cost 1,000$ to clear his/her debt, the value of all other assets in the country are then worth 2,000$ less.

 

Note; The current worry about the Auto Makers, the Financial Institutions are based on the debt these firms have or are obligated to for YEARS to come, the amounts undeterminable for not knowing how long length of lives (retired worker/family obligations), unknown future obligations (health) or the values (equity) of items into the future (originally based on an INCREASE or 2-5% annual increase).

 

The US Federal Deficit, today is around 11.3T$, about 70% of the GDP and about 10% of all total value of all US assets. Of course sentiment (value to another), determines the value of an asset in the first place, or the values would decrease ahead of the failure of the debt payment, to say nothing of the virtually of the economy (GDP).

 

Today about 600B$ (over 1/5th the 2008 total budget) is required to pay the interest only on the US debt, which is held by three major components. Projections are this figure will increase over the next ten years to where each person born will be required to pay 100k+$ (on average/capita), over their life time, just to cover the interest (maintaining loan total).

 

Going back to an effect on a total, the US currently leads the world with 15T of the worlds 55T$ GDP, is by far the the highest per capita consumer (both government and individual) and is valued in the currencies of every Nation or the value every other economy.

 

The debt itself is based on two major factors; 1- Actual cost of government and it's obligations over what revenue is budgeted or collected. This includes every major 'emergency spending bill, which have occurred in nearly every recent Congress. 2- From what's exported to what's imported. The US for 60 years has increased imports while decreasing exports and oil/gasoline imports have created the major increases, which leads into who the US owes the debt to...

 

Sorry, this is a 2007 pie chart but gives the general idea...

 

http://j-walkblog.com/index.php?/weblog/comments/more_on_pie_charts/

 

Most US Debt is held by The US Federal Government (interest due, budgeted to that dept.), the US Citizen through Savings Bonds or purchase of bonds (various, including Treasury Notes) or the Federal Reserve. Foreign investors do make up about 25-30% (then primarily China/Japan) but in all cases the debt is from shipping products intro the US over whats imported, trade deficit. Meaning, to quit financing American Debt, would shut down exports to the US, which is to degrees are their Industrial Structure customer. Even the major oil importers to the US (Canada/Mexico/Venezuela) either do business in the US or import products intentionally to maintain a sense of equalization, especially Canada.

 

 

nec209; Having given you a little background, if the US paid off all obligations to every foreign entity (not logical), the value of an American dollar, WOULD decrease about 5-8% at worst (my estimate) or the cost of every item would increase accordingly. We would probably NOT go into a deflationary period (where pay would be less) or actually suffer from anything.

 

Attention today and for the past 20/30 years has been for seen debt compared to the GDP can get to where payment of interest alone can influence the economy (over 60% GDP) or that where one Country, out of necessity to equalize will hurt their own economy (would hurt US) or in either case create hyper inflation over a long period.

[bascule]

Should the US start over ?

 

Short answer: no

[ParanoiA]

Should the US start over ?

 

Yes, but not by screwing the world. We should quit pretending this republic is a good idea since we quit paying attention a long damn time ago. You can't afford a willfully ignorant citizenry in a republic. The duty is upon them and only about 10% of the population is living up to the responsibility. People died and sacrificed in ways we never ever would dream of nowadays and handed us a nicely built constitutional republic and we've made it as much of a joke as they did. We rationalize around every principle established in it, just like our forefathers did and just like the framers did.

 

The republic is not respected by any stretch of the imagination. Your politicians could roll tanks down your block tomorrow and no one's gonna do squat about it. The people lost this government decades ago. Congress ignores us and we do nothing. We are gutless and cling to antiquated BS that the people give the government its power.

 

So, let's stop pretending and just write a new constitution that compliments a society that can't be bothered with paying attention to governing and the principles rolled up in it. Install a dictator or something since efficiency and performance is all anybody gives a crap about anymore. Freedom was sold out for security, just like Franklin warned. And we deserve neither, just as he judged.

 

In fact, you might just toss out the constitutional thing altogether, it doesn't carry much weight anyway and just serves as a record of your previous rhetoric and makes it inconvenient when your post rhetoric doesn't live up to it.

 

Sorry. This is my Monday.

[SH3RL0CK]

ParanoiA:

If we are going to resort to a dictatorship for efficiency and performance then our fearless leaders might as well screw the world over as well as us. Why not?

 

I am however, more optimisitic. I don't forsee a dictatorship in the near future; just increased apathy and complacency from the American citizens and our politicians. I do think the USA is heading very quickly down the road to full socialism which is bad enough... but until the media dies (I give the mainstream print media about 5-10 more years but cable, TV networks and internet bloggers quite a while longer) a dictator such as Hitler is, I think, not in the cards.

[Mr Skeptic]

We can't really go bankrupt as a country (debt forgiven), and even if we could it would be a terrible idea at this point.

[nec209]

He means that America should say to all other countries that the debts will not be paid. After all, that's what happens if you go bankrupt. Then you can start over again, and you don't have to pay anything!

 

The second part of the OP seems to suggest that the debt can be paid back by reducing the wages. I am certain that I do not understand much of the economy, but I think that this might work, eventually.

The enormous debt of the USA should be compensated by working harder and consuming less foreign products. That way you can turn the import-export balance to provide an additional income to the country... Alternatively, you can also start producing goods that other people actually want to have (example: do Europeans want a small Japanese car, or a 20 meter long pickup truck from Detroit? Answer: small Japanese car).

 

 

You talking about trade debt that is because the US imports more than they export.The fed debt is the goverment spends money like the world coming to the end.

 

 

The US is changing from manufacturering industry to a service based economy the problem is commodity ,resources or service an other country wants is what makes wealth and makes that country rich.

 

Remove commodity ,resources or a service an other country wants = no wealth gain.

 

I person living beyon means is bad very bad :eek:taking 40 years to pay your house or car loans off is bad.The American people live by debt they want a house ,car and every thing in the store and go to the bank and use the debt-card and take out big loans and mortgages!!.

[Pangloss]

For what it's worth, if memory serves we actually crossed the threshold with "service" overtaking "manufacturing" in 1955. I don't recall where that stat came from offhand but I posted it here before and I can look it up if there's any interest.

 

On a related note, the other day I ran across this cool Wikipedia chart showing GDP by sector and labor force by occupation, with the three sectors being agriculture, manufacturing and service. Note how some countries differ between the two measurements. The stark contrast in China's coloring between the two charts is particularly revealing. (Sorry for the size of the chart -- probably a bit annoying for smaller monitors.)

 

[nec209]

Why is the US darker than Canada ? IS the US more a service based economy than Canada?

 

Also anyone got better legen?

[SH3RL0CK]

Should the USA start over? As bascule stated, no.

 

Yes, the USA has some problems. Every nation has problems however. I would certainly not be willing to trade the problems the USA has with most other nations. A relatively large debt is a very minor problem compared to a civil war which is common in parts of Africa and Asia...

[jackson33]

Why is the US darker than Canada ? IS the US more a service based economy than Canada?

 

Also anyone got better legen?

 

Canada maintains about a 10% advantage for an Industrial Economy over the US (30 vs. 20%) but a good deal is the US industry producing products in Canada. Many Auto's, most Big Rig Trucks and a host of large manufactured items. Until last year, their dollar (labor cost to manufacturing) compared to the US$ was around .65 cents (now about equal). Canada is also the producer of MOST Oil, gas and other commodities that the US imports. Although not industrial, Canada has become a heavy food producer (agriculture) and a producer of wood/paper products.

 

A very good site for 2008 Industrial/Service based economies...

 

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition