I thought I would write this as much as putting my own words to paper as much as anything and to get some further discussion to possibly complete my thoughts to it's end conclusion. I wrote the below in the platinum trillion dollar coin thread. Although I and any sane person would not believe for a second that there is even close to enough support outside of the tea party to get this done. I also wrote: I want to try to address this in conjunction with others comments from different threads to get it into once place. I am not sure that even if there was the political will to get this budget under control and the debt ceiling was not raised that this would actually mean that rates would have to be raised to 4% or bonds to 5%. IMO only the dumping of USD/Bonds onto the market would cause the Tsunami of inflation to force the fed to do so. If the Fed and the Treasury were happy to keep the inflation at the current (probably say 10%) then I think all is not lost. Remember this is just a hypothetical because IMO SHTF will come to america because they wont do this, but. If Obama was to cut spending and run a balanced budget where interest and even a small portion of of debt was paid down as first priority like I mentioned above....IMO right there is the very first reason that interest rates and bond rates would remain low for a significant period of time. With no extra debt being thrown at the market, there would be no upward pressure on bonds. Even then, in a decade or so if Japan starts to slowly offload it's USD assets to pay for it's own maturing bonds to it's own people, the Fed could easily step in and buy them as to keep the market at a neutral setting like they have been doing as the deficits mount. This would also deter the Chinese from being forced to dump their USD assets as the US would not be devaluing those assets. This would give the US even longer to sort it's back yard out to restructure and become productive again. Similarly, with government spending becoming balanced, there would be a big receding in GDP and most certainly push the US into recession. That is a negative on interest rates. With the US government such a big portion of GDP, cutting 1.3trillion or what ever has to be negative on the economy. This would also be negative on revenue so the 2.47t revenue would also contract. How far it contracts will be up to a serious number cruncher to find out and adjust accordingly to ensure a balanced budget. This right here is the first reason democracies need to ensure that governments remain small. As soon as government spending is a large portion of GDP, Austerity is always going to be a very painful path. Lets for arguments sake say that revenue drops to 2.2t in the first 4 years was bloated industries reliant on the government reform and become more efficient. Once the interest is paid that leaves Obama 1.9343trillion to spend. Assuming 1% of that automatically goes to debt repayments that means Obama has 1.914t to run government for the year. Now, you're the president for the next 3 years. You have 1.914t to spend each year. How do you divide it up? Edit: Mandatory spending in FY2012 was 2.252trillion with Social security at $773b and Medicare/Medicade at $733b so cuts HAVE to be made there.
Let's start with military spending. FY2012 military spending was budgeted at $868b up from a 2000 level of <$300b. If they went back to 2000 levels and ended the wars, brought home all unnecessary troops back and closed all the bases, used the military for border security..... Surely the US could cut the military budget in a time of fiscal crisis to $250b and still be able to respond in a timely manner to anything that arises. Thats a saving of $518 billion right there. That leaves 1.664T to spend.
Peter Schiff speaks the truth regarding the USA - CPI, Inflation and more. http://www.europac.net/media/video_blog
Some will not be able to see how I can hold what they see as mutually exclusive views, but I am a proto-libertarian as well as a hawk. Without the US and allied navies plying the seas the costs of providing shipping for world trade would be astonishing. Fleets need auxillary supply ships, those supply ships need supply ports, the fleet and auxillaries need bases for maintenance and shore leave. Should the US Navy close its' Dubai base and force ships to sail all the way to Florida for basic maintenance? No. Somali pirates franchising into Sumatran pirates, anyone think thats a good idea? Middle East madness and Minor Cold War conflicts aside, we have lived with the Pax Americana for 60 years, due in part to Army/Air Force bases all over especially those in Germany, Japan, Korea and Diego Garcia. Have you considered what the unintended consequences of closing all those bases at once will do? Remove the Americana, I argue you also remove the Pax. However there is pork to stop barreling. It's not hard to find videos on Youtube about military spending by actual military analysts rather than people outside the system. For example, for US domestic political reasons, production of Abrams MBTs continues at full speed ahead despite the US Army saying they don't want them. Why? Well the factories are in Democrat electorates for whom it is politically expedient for the production to continue. Stop producing, the factories downsize, needing less workers, creating unhappy unions and we need them on side don't we! On the other hand most of the F-series airframes with familiar names to us like F-15,F-16 etc are unreplaced at twice their expected life span. Were they to be produced again they would not be in politically expedient electorates. How many other US Defence projects are there kept alive for political reasons of Leviathan that have nothing to do with US or international defence? Like the overproduction of main battle tanks and the civilian beaurocrats who sign off on them...
By Pax Americana I assume you mean the type of Pax we saw them promote in Nicaragua, or Guatamala, or maybe Chile, no, I think you mean in Haiti, or is it Afghanistan, or Iraq, or Suharto's Indonesia, no it must be Panama, or Romania, no it was Florida in the early 1800's, or was it Cuba? Maybe it was the lead-up to the war with Japan? Nah I give up, what benefits has Pax Americana brought us?
Anglosaxon. I am pretty sure that those naval bases existed in 2000. So even if you left only Naval bases and what is required to protect them in their place there would be plenty left over to trim from 2000 levels. Either way, it's a 100% retarded argument to be having in the first place. EIther they trim back to bare basics now in order to balance the budget or in a decade or less they fold completely as they wont be able to afford squat. A lean mean defence force now and for ever or a nice big fat one now and for the next 10 years and then implosion of defence (military) spending. Edit: anyone wish to spend a little time going through the Medicare/Medicade/social security budget to find some massive savings that don't screw those old people that are dependent on it?
Yes, exactly. All the minor skirmishes in South America to prevent commies and tyrants from threatening their neighbours were necessary. Afghanistan/Iraq - I did say Middle East madness did I not? And history did not start with US involvement. Did the US bring the unpopular Hashemites to power in Iraq, whom Saddam Hussein deposed? No. Was the US involved in the assassination of the Afghan king Mohammed Daoud Khan by Soviet backed Afghan communists, leading to 30 years of civil war? No. Soeharto is the correct spelling. As soon as he was deposed the world media seemed to forget the spelling of his name and confused him with previous President Sukarno. Sukarno was the communist purger, Soeharto invaded East Timor - who are you more angry at. Cuba. HA. As bad as Battista was, in the immediate years after Castro's thugs took over more people were killed by extrajudicial execution every year than were killed by Battistas army during his entire reign. And look at them now! Paddlng to Florida on a tyre is better than living in a Socialist Paradise. "what benefits has Pax Americana brought us?" If you value anything to do with keeping the world safe enough for international trade, everything. Anyway, we're off topic and is this sort of discussion allowed on SS?
You can't have a naval base without an army to protect it in within a few days steaming or flying. Everyone learned that with the British WWII Singapore experience. I know that, that's why I used the example of Abrams tanks. Their continued production is not necessary for defence but very necessary for the political vested interest to keep dependant voters dependant on the government. Those same people who are debasing the US currency, engaged in ZIRP, overspending, not facing up to the debt. Everything we are discussing.
Yes this sort of discussion is allowed on SS, especially when conversing with someone who has swallowed the line that the US is only interested in the "democratisation" of the world's barbaric nations. Luckily, we live in a nation that has benefited by the Pax Americana. The majority have suffered.
Good question. How long do I have to see my plans to an end or will I get kicked out at the next election or die with a lump of lead between my ears? Edit to add: Can I break it down into steps? If so, step one. Ensure expenses are less than income.
As much as I dislike the zerohedge guys in general, Tyler Durden put it clearly with this comment: The US budget is broken into "mandatory" and "discretionary" expenditure. Apparently, Congress must approve discretionary expenditure every year but has no choice but to approve mandatory expenditure as it is automatically built into law (presumably it just requires a bigger, harder vote though). If the ENTIRE expenditure on everything except the so-called "mandatory" entitlement expenditure was cut they still wouldn't be able to balance the budget (that includes a 100% cut in departments of defence, education, justice, treasury, transport, energy etc). Consequently, the whole issue hinges on voting to change the so-called mandatory expenditure items (some of which were introduced by Obama in the past few years).
I suggest anyone interested in the real state of the world and how we got there , tune into Oliver Stone's 'The Untold History of the United States'. No conspiracy theories, just the history of the growth of the present US government philosophy and actions. http://en.wikipedia.org/wiki/The_Untold_History_of_the_United_States It is also worthwhile considering Australia as a non-seafaring nation that needs protection for its shipping lanes and what that means for our alliances. I truly reassessed my view of the reasons for the placement of US defenses in Australia and the various governments' obsequious behaviours. [youtube]http://www.youtube.com/watch?v=8DxGzWenm20[/youtube] btw there are ten episodes. Above is episode 1
I never said I believe the US should try or will succeed at 'democratisation'. Politicians may use that to sell to the masses, but soldiers and pragmatists take a look at those people in the conflict zone and come up with an opinion of whether the people will get there on their own, by about a month. 'Democratisation' of the Middle East has had the unintended consequence of bringing to power in the ME completely undemocratic forces. I know that and haven't 'swallowed the line'. There were various reasons to intervene in Afghanistan and invade Iraq, none of them to do with 'oil'. If you say it's about oil, who swallowed the line? It was right we (the West) supported the autocrats and proto-dictators of Taiwan and South Korea and the Phillipines post WWII. They developed into democratic republics on their own terms. And a lot of military hardware stopping them being rolled on by their neighbours or assorted baddie rebels. I disagree. I'm sure many Panamanians, Guatamalans, East Timorese, Indonesians, Malays, Koreans, Indians and many more disagree too. Ask the Vietnamese who march on ANZAC Day with their South Vietnamese medals if they disagree.
