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[ShelladyOptions]

Hang on to that farmland.

The powers that be have spoken. They will continue to keep interest rates low for a significant period of time.

Real, hard assets will inflate if what the government wants to happen actually happens. Right now the thorn in their side is Europe which is making it hard to weaken the dollar. Flooding the market with dollars should make your currency weaker but the baloney that is happening in Europe is keeping that from happening. If Europe turns around, your land and hard assets should be the beneficiaries of a weaker, inflated US dollar.

What is very clear is that the Fed has absolutely no idea how long we will continue on this path of slow to no growth and high unemployment and they have absolutely no idea what will actually get us out of this situation. If they did, they would tell us. Their actions are time stalling at best in the hopes of some growth down the road. Austerity is a double edged sword and is an economic hindrance. Quite simply our world debt is bigger than our world GDP and cutting costs is not enough.

Any big ideas out there?

[nwobcw]

  I saw you on CNBC a couple mornings ago, nice jacket!

  Back in about "06 or 7 when the economy was humming along nicely I read somewhere the average family was spending 107% of it's income.  I knew then problems were looming.  If it takes that kind of consumer spending to keep things rolling I just don't have any idea how it can be sustainable.

[ShelladyOptions]

This is the heart of the problem..

The Budget explained in simple English.

United States Tax Reveue                                                         $ 2,170,000,000,000

Fed Budget                                                                                   $ 3,820,000,000,000

New Debt                                                                                       $1,650,000,000,000

National Debt                                                                              $14,271,000,000,000

Recnet Budget Cuts                                                                          $38,500,000,000

Now, remove 8 zeros and pretend it's a household budget.

Annual family income                                                                                       $21,700

Money the family spent                                                                                     $38,200

New debt on the credit card                                                                             $16,500

Outstanding balance on the credit card                                                      $142,710

Total budget cuts that our politicians are PROUD about                                 $385

This is the core of the problem.

[unlgrad]

I don't think it has been presented that simply so people can grasp the problem.  My heavens, we are bankrupting our future. Oh, for a balanced budget that seems to never come.  So when will the foreclosure be?  If we didn't spent a dime for 8 years, we could pay it off.

[4wd]

Something is wrong with your accounting.

~~If a family has a $21, 700 income and adds new debt of $16,500 on the credit card, shouldn't that new debt be a seperate column of numbers which would reflect how lthat debt adds to the income, rather than a line item to be subtracted from income?  A line item subtraction should be yearly cost to service debt, and as long as the debt payment on the credit card is covered by the family income, then what is the problem?

[sw363535]

4wd

Something is wrong with your accounting.

~~If a family has a $21, 700 income and adds new debt of $16,500 on the credit card, shouldn't that new debt be a seperate column of numbers which would reflect how lthat debt adds to the income, rather than a line item to be subtracted from income? 

debt is not income----Cash flow is the term that fits.  It is an addition to cash flow for spending purposes, but it is never income.

IMO---it is not subtracted from income either, until the principle is paid.  Then it is part of the Fed  Budget figure.  But so far we have never come close to committing to paying anything on the actual debt.

Politicians choose their words carefully on this issue.  The best we have done is try to stop the rate of increase of the debt.  Empty promises so far. The debt has been an accelerating climb for for every congress that gets elected for at least 40 years.

A line item subtraction should be yearly cost to service debt, and as long as the debt payment on the credit card is covered by the family income, then what is the problem?

I think the cost of servicing the debt(interest) is in the Fed Budget figure.--------(assumption)   Scott may answer that.

[Hobbyfarmer]

4x4:

1). Just how high up in Gov't are you? Also seems you are on the liberal side of the isle.

2). If not # 1 you must be an economics professor at a Jr college

[chipster22]

Imagine what will happen to that household's budget when the interest rate on the $142,710 debt goes from somewhere around 3% to 9% or higher.

I wonder if our country's huge debt is the real reason we have had low interest rates this long.  The budget would explode on the debt service line item alone.

[4wd]

Well sir, you may label me as you are comfortable with. I am nothing more than a farmer that spends more than he makes, and have been doing it since 1977.

[4wd]

1.  Well, household debt is issued along with multi pages, printed on both sides, of "terms" which the borrower agrees to and signs. If one of the "terms" is an interest rate adjustment after so many months or years of payments, then, yes, households could be facing the grim reaper if significant debt principals remain when the new "adjusted" interest rate goes into effect.

2.  YES.