So explain to me the national deficit and what's the consequences because of it?

Question

I've read we're 8 trillion dollars in debt...that's a lot of money, yet it seems our economy is oblivious to it...like student loans over 23,000 dollars. I was curious what's to become of this, and with such debt, would we have to ....oh start over from scratch as if the debt never existed? Or we can't and the next generation will have to answer for it? I don't know much about the situation, so i'm interested in knowing what's up.

ALSO on my search i found this page....so i'm curious if that's a legit solution for the deficit: http://www.federalbudget.com/amendment.h...

Answer 1

we pay money(interest) on the money the FEDERAL RESERVE prints.It isnt federal at all but a consortium of private banking interests.Kennedy tried to reverse this and give the money back to the govt and the American people.Funny.......looked what happenned to him
time to revisit this history to explain there is nothing really new today compared with those events preceding 1929.
Credit is way too free and easy.
Money seems to have less value each day.
Inflation while not of the hyper-variety is trending in that direction.
There is too much big cash liquidity sloshing around on the cheap for hedge funds and New York take-over artists to promulgate their trade.
There is a very wide disparity between a handful of very rich people and the poor with a vanishing middle class. This is common before major market corrections.
Trade wars and tariffs are on the table. These threats are uttered almost daily.
This is the usual “Me first” nationalistic mentality. Putin scared Europe with his gas shut-off and Ms. Pelosi our new Demo leader is threatening China with 27% tarrifs. The Middle Eastern gang threatens oil shut-offs and currency transfers out of the U.S. Dollar.

Business ethics have collapsed in the past few crazy years destroying entire companies and wrecking others with misplaced trading ideas. Enron and a few early hedge fund failures are evidence. Those boys managing that $6 Billion natural gas fund debacle were just all re-hired by Goldman Sachs to have another go. Others are Fannie Mae, Freddie Mac and the still hidden Farm Home Loan operations. The list goes on and on.
9. Then, we have the forever war in Iraq which appears to have degenerated into a worsened civil war threatening to destabilize the entire Middle East with Iranian and terrorist aggression. Crude oil will be used as a major weapon. Do not believe otherwise.

The stock market low from 1921 to the 1929 high was more than 500%. Interestingly, the percentage of increase is comparable to our modern day pre-crash rally of the Nasdaq.

We do technical analysis and are always looking for historical comparisons. In checking the 1928-1929 top, we discovered the preceding eight year rally run was so powerful it took nearly 18 months to form the technical top before it all dumped over. Usually these tops can form and sell in much less time. Today in 2006, our fellow colleagues and analysts have kept predicting the tip-over top and it keeps extending! This was the big story before the 1930’s major league event.

Another interesting situation was the large amount of foreign loans made by the USA (both public and private) for war restoration in Europe but also throughout several other nations as well. This was the first time big money in large amounts was loaned outside of the USA. From 1919 to 1930 the total exceeded $15 Billion which was massive bucks in those days. Please note that over ½ of this money went into portfolio investments where there was zero American management of those funds. Sound like China?

Domestically, America by 1929 had discovered most of the newer investment frontiers and there were not enough new trading or investment ideas to swallow all the available capital that was being tossed around. Does this sound familiar? Today we have the same problem but it’s probably 1,000% worse since Japan’s carry trade and our dollar printing have escalated credit to legendary new heights.

Exactly 80 years ago in 1927, as in our forth-coming 2007, real estate and construction were and are in the soup followed by major inflation. At this cycle juncture people are getting tense with bad credits, lack of cash, higher prices, and failing installment sales of several kinds with questionable erratic stock markets.

Here comes the big one: In 1927 when it was obvious business and commerce was slowing dramatically, THE FEDERAL RESERVE BANKS BEGAN TO BUY GOVERNMENT SECURITIES. It seems there is nothing new in this world at all.

Also, in 1927, it was reported and generally believed by the American public that the Federal Reserve purchases were taken to PREVENT LARGE EXPORTS OF GOLD FROM THE BANK OF ENGLAND TO THE UNITED STATES. INTEREST RATES IN ENGLAND WERE HIGHER AT THE TIME. THIS RATE DIFFERENCE AND THOSE POTENTIAL GOLD SALES WERE CONSIDERED A THREAT TO UPSET THE TEA CART ON BOTH SIDES OF THE POND. Is this de-ja vu all over again or what?

In 1928 the Federal Reserve was openly trying to discourage speculation. In spite of their efforts stocks went on a wild buying spree in spring of 1927 which spilled over into 1928-1929. The markets kept advancing and as the “easy money” became common street talk, the explosive pinnacle appeared over the horizon. This open craziness by the public at large surfaced in 1928 but in May of that year the market had a severe correction (Like May 2006 or will it be May, 2007?)

A common phrase in later 1928 was that the country was experiencing a “profitless prosperity.” Today Wall Street observers and players deem it a profit recession or a “Goldilocks Economy” somehow masking Goldilocks’ terminal illness. The Federal Reserve tried to reassure the public in later 1928 that despite gold exports following a discount rate reduction in fall 1927, our nation still held gold worth over U.S$1 Billion. Period analysts checked for gold exports and found few if any and decided this announcement was public relations talk to reassure the Sheeple. We certainly know all about this today don’t we?

In November of 1928 the stock exchange reported its first of five, six million share trading days. Watch for this kind of similar volume to precede the next blow-off top. From August of 1929 through the fall, this was the beginning of the end as speculation and gambling fever in the markets was virtually uncontrolled. The initial crash lasted two months and was followed by a rally of six more months into the spring of 1930. After that the markets sank into oblivion.

One largely unnoticed fact was the idea these markets had mostly recovered by 1936. This was not the case however, and those that had re-entered with fresh buying in 1934-1935 were smashed for a second time in 1937. That one had to be the mother of all “Dead cat bounces.” Is 1937 to be replicated in 2007? The timing sure looks identical to us. During the past year or so, we have read several remarks from our colleagues that 1934-1936 closely resembles 2004-2006. Can this be true? We have seen some overlay charts for both cycles and they are very close in appearance.

There is a strong uneasiness and undercurrent in the markets; especially among the older experienced traders and New York market guys. We could name some well known guys but are not allowed to do this. For the most part they choose not to be negative as they don’t want to scare the Sheeple or their investors. In watching their body language accompanied by extraordinary semantic dancing we can tell these boys smell a rat and they are getting very, very nervous.

Traders should shorten their time horizons in our view as volumes and volatility increase. Use trading stops and do not over trade. Buy physical gold and silver and make yourself, your friends and family as secure and protected as possible by being independent of the system. As we used to say in the Boy Scouts; Be Prepared!

Answer 2

When you owe money, you may need to borrow to pay it off. The government is competiting with us to borrow money to pay it's bills. That kind of competition drives up the interest rates we all have to pay. It also drives up the interest that banks pay to us. High interest rates drive down the ability of business to expand and create jobs as well. You may not be able to buy a new car because the interest rates are too high. Thank our politicians.

Do not confuse deficit with debt. The deficit is the difference between what the government takes in this year and what they spend. A negative deficit adds to the debt.

Good question. Here is one for you: Isn't it time for term limits and the fairtax?

Answer 3

Actually, you are fine as long as other countries need to buy up your dollars in order to purchase oil. If for some reason OPEC countries would start to sell oil in euros, you could no longer spend more than you earn, and would face economic collapse.

I'm sure someone can explain it better than me. I'm a bit tired, sorry.