Walmart not Coming to Washington DC

[U2DMfan]

Originally Posted by AEON

Isn't it about 75%? And from what I understand, that isn't exactly optimal.

You must be thinking of the debt?

Federal spending in FY2012 was 22% of GDP. On par with '82-'86. And basically the same as 1991. And if economic growth maintains, the current level will fall down to 21%. The number for the balanced budgets in the late 90's was 18-19%. Although I'd argue with people living longer and having so many baby boomers turn 65, that 20% is a solid number to aspire to.

FY 2012 total spending was 39.5% of GDP and the future is trending down.
Projected to be 36% by 2015. To put some perspective on that number, in 1982 and 1983, the number was 36% of GDP. In 1992 it was 37%.

From the mid-70's to 2008 it was between 32% and 37%.
So we're almost back to basically normal (modern) spending.
FTR, the balanced budget (Clinton) numbers were 32% and 33%.

But yeah, the only way to even remotely give a fair observation of history is to look at spending and revenues relative to GDP. We're absolutely going in the right direction. If economic growth ever really kicks in, growing the total pie (GDP), the % goes down. We should be just fine in terms of spending.

As for the mounting debt, I don't know. That's a ball of confusion to me in terms of how that directly affects the economy. Maybe Digi can explain that.

[AEON]

Originally Posted by U2DMfan

You must be thinking of the debt?

Yeah - I got it from here: U.S. debt now about 73% of GDP, CBO says

WASHINGTON (MarketWatch) - The U.S. national debt is now about 73% of gross domestic product, the Congressional Budget Office said Tuesday. The percentage of debt is higher than any point since around World War II, and twice the percentage it was at the end of 2007, the nonpartisan agency said in its long-term budget outlook. If current laws stay in place, debt will decline "slightly" relative to GDP over the next few years, the agency said. But it warned that growing future deficits will push the debt to 100% of GDP 25 years from now

[AEON]

Originally Posted by U2DMfan

As for the mounting debt, I don't know. That's a ball of confusion to me in terms of how that directly affects the economy. Maybe Digi can explain that.

Here was an article on the front page of CNBC: The Fed's 'hidden agenda' behind money-printing

So here's where it gets scary: U.S. debt held by the public today is about $12 trillion. The budget deficit projections are going down, true, but the United States is still incurring an annual budget deficit by spending more than we take in in taxes and revenue.

The CBO estimates that by 2020 total debt held by the public will be $16.6 trillion as a result of the rising accumulated debt.

Do the math: If we were to pay an average interest rate on our debt of 5.7 percent, rather than the 2.4 percent we pay today, in 2020 our debt service cost will be about $930 billion.

Now compare that to the amount the Internal Revenue Service collects from us in personal income taxes.

In 2012, that amount was $1.1 trillion, meaning that if interest rates went back to a more normal level of, say, 5.7 percent, 85 percent of all personal income taxes collected would go to servicing the debt. No wonder the Fed is worried.

[INDY500]

Originally Posted by AEON

EXACTLY!

arbitrary: based on random choice or personal whim

No, they aren't arbitrary decisions but informed decisions based on want, desirability, affordability, loyalty, enticement, experience, availability, price, etc, etc,etc. And most importantly they are decisions deemed by both parties to be beneficial.
Was your decision on which car to buy or where you ate out last weekend based on the factors I just listed or arbitrary?

[AEON]

Originally Posted by INDY500

No, they aren't arbitrary decisions but informed decisions based on want, desirability, affordability, loyalty, enticement, experience, availability, price, etc, etc,etc. And most importantly they are decisions deemed by both parties to be beneficial.
Was your decision on which car to buy or where you ate out last weekend based on the factors I just listed or arbitrary?

I guess there is some debate on which specific aspect of the "markets" are arbitrary: the individual decisions vs the group-mind. The reason I think "markets" are arbitrary is because they are not predictable (unless they are manipulated) - they simply follow the whims of the group-mind.

So, one year you build 9 plants and employee 5000 people to make a hot selling widget - the next year you close 9 plants and layoff 5000 people because your hot selling widget isn't so hot anymore (of course, the owners and the managing directors sucked out the profits before they closed shop). Who cares about the thousands of families left without a job and decimated communities that supported the plants? Oh well - it's just the "market" doing what it does.

You can't predict the whims of the populace. If you could - then everyone would. Yes, some do get lucky and have the right product at the right time - but these stories are not the norm. For the most part - people have to "follow" the market/whims and hope the group-mind doesn't shift too quickly and destroy their career, family, and savings.

[LJT]

How much is actually purchased on an informed decision? How many brands are bought due to familiarity and size of advertising budget? Plenty of research suggests people are loathe to change energy supplier even if they could get a better deal. something exploited by the energy suppliers. Our purchasing isn't as informed as you think. Buying a brand because it is produced locally rather than the cheaper one from further afield (Adam Smith visualised his 'invisible hand' as favouring local production over global) would not be a rational decision based purely on markets, but would support your local economy and employment more, though many businesses do not see things that way.

[BVS]

Originally Posted by INDY500

No, they aren't arbitrary decisions but informed decisions based on want, desirability, affordability, loyalty, enticement, experience, availability, price, etc, etc,etc. And most importantly they are decisions deemed by both parties to be beneficial.
Was your decision on which car to buy or where you ate out last weekend based on the factors I just listed or arbitrary?

I'm not sure whether to post the definition of naivety, or a picture of economics for dummies.

[U2DMfan]

Originally Posted by INDY500

And most importantly they are decisions deemed by both parties to be beneficial.

You cannot be unaware that some parties screw the other party over under the guise of giving them a 'benefit'.

And then there is no chance for reprisal because we can't regulate it...otherwise it's a hindrance to the free market.

To date, nobody has gone to jail for what happened in the 2008 collapse. Why? Because it's not always illegal to screw people over in the free market. But only certainly illegal when the people with all the money are the ones losing the money.

[anitram]

Originally Posted by INDY500

All the more reason to stop saddling future generations with mountains of debt.

I just wanted to highlight how this makes absolutely no sense and is not tied to any kind of logical, rational or empirical evidence.

The rising national debt has many implications - it means that government is spending proportionally more $ on interest payments, which translates into less $ for infrastructure development, hospitals and so on. It can also lead indirectly to inflation, because historically (or at least until now), governments have relied on inflation to keep rising debts in check. But the problem with inflation is that once it starts, it is very difficult to control. To suggest that the national debt is either a cause or main contributing factor to income inequality is nonsensical.