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Hypocrisy_Central's avatar

Uncle Sam prints the money, so how can the US be going broke?

Asked by Hypocrisy_Central (26783points) July 28th, 2011

I can’t see how the US can be going broke unable to pay its debts? How can it even have debts? It taxes the people near death, it was able to crap money out the wazoo for a decade to pay for an illegal war and an ill-thought out one. Who does the US owe money to? The US sure doesn’t act as if it owes me a dime. Oops, that dime devalued down to seven cents while I was posting.

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20 Answers

jerv's avatar

1) We don’t tax people to near death… unless they are in the middle class. I pay around 10%, Warren Buffet pays around 20%, and my folks (who are in the middle) pay just over 30%. And compared to many nations on Earth (many of which are doing better than us), even 30% is low.

2) More dollars mean nothing without the wealth to back that currency. Just ask Zimbabwe who had to chop twelve zeroes off when they revalued their currency after their dollar went into hyperinflation. (Going from ~$1Z=$1.47US to $12,336,416,667Z=$1US tells you all you need to know) What wealth are we backing our dollars with?

3) We owe anybody who bought bonds. That includes China, but also many Americans.

4) Nope. Reagan taught us that deficits are just a number, and since nobody dares refute his wisdom….

Jaxk's avatar

Maybe a picture will help. Notice the massive separation of the spending and revenue lines over the past couple of years.

Here’s another way to look at it. If you add up all the earning of all the individual taxpayers it totals about $7.5 trillion. But if you look at our spending (federal, state and local) the government spends over $6 trillion annually. That doesn’t leave us much to much to live on. So the government borrows enough to keep us alive. Unfortunately the bills are due. The governments answer of course is to take more from us to pay those bills.

They’ve been printing money as fast as they can but the presses are beginning to overheat. We’ll need to borrow more money to buy new ones.

mij's avatar

I think it has to be backed up with gold reserves or some such?

Tropical_Willie's avatar

@mij No gold or silver standard, for US dollars. Dollars use to have gold or silver backing it, I have a couple of silver certificates from the 1930’s. Also seen gold certificates from same era.

Just print and spend it.

john65pennington's avatar

You have to have gold to back any and all checks issued by The Federal Government.

It’s like the little girl told her mother, “mom, we can’t be broke. You still have checks in your checkbook”.

jaytkay's avatar

It taxes the people near death.

US taxes are at their lowest point in decades. Especially for the wealthy. Which is why the deficit is so huge.


missingbite's avatar

@jerv When people say they are taxed near to death they are speaking of their overall tax burden. Your stats look a lot like just federal tax percentage. I pay 10% sales tax just where I live. Some places are lower some are higher.

Look at Detroit or New Orleans if you want to see welfare states. Many people in those cities don’t know what to do if the Government doesn’t tell them. And the Government screws that up too. (Katrina for instance) Insert the blame Bush for that in three…two…

tedd's avatar

You know one thing that boggles my mind about our current economy (and not just the US, all worldwide governments)....

Their currencies are no longer based on any firm backing. Pretty much no one uses a gold standard or any other standard anymore. We believe in the value of money based pretty much entirely on what we think of those nations and their economies, which ironically should have no real connection to how valuable the money is anyways.

If all the money in the world is backed up by nothing but hopes, dreams, and magic already…..... why the hell can’t all the nations of the world just have an endless pocketbook?

I Understand the inflation aspect, but why does it even need to be like that…. why simply because there are more dollars in the world should they really be worth less….... they were never worth anything to begin with.

jerv's avatar

@missingbite I pay 9.5% sales tax here, but my total taxes are not so high that I can’t live on what is left. Many places pay more than we do.

@tedd Speculation is all that matters; who cares what something is worth now when you can sell it for what it might be worth next year?

tedd's avatar

@cletrans2col There is truth in what @jaytkay is saying. By a % of income US taxes are at their lowest in 50 years (a combination of the Bush Tax cuts and all the tax cuts that were in the stimulus bill).

What is really hurting us, is that back in the 80’s when Reagan got into office he cut the highest tax bracket from ~70% to ~35% (whether or not that is a bad or good thing or ethical is another debate entirely). Those tax cuts are all fine and dandy, but he never cut the spending to match our new income levels without all that tax money. No president or congress since Reagan has had the balls to say to the American people “Ok either your taxes are going back up, or we’re going to cut the sh*t out of spending.” .... and as a result, voila… runaway deficit.

tedd's avatar

@jerv Yah true I suppose. They should just end speculation on currency in that case. lol

jaytkay's avatar

@cletrans2col Wrong.

Your carefully detailed argument is so convincing!

cletrans2col's avatar

@jaytkay Yes, because yours was full of insightful information… whatever
@tedd True. And that will not happen until we reach Greek levels of insolvency (although we’re pretty damn close).

wundayatta's avatar

Because, duh, we aren’t printing enough money. There is lots of excess capacity in this country, but no one is using it because no one is spending money and there’s no need to build more stuff. If we printed more money, we might be able to get that capacity into production.

In any case, the US isn’t broke and it isn’t going broke. This hysteria is laughable. So is the idea of the gold standard. If there would be any way to fuel deflation and an end to the economy as we know it, it would be to employ a gold standard. An economy needs to be as flexible as possible. The gold standard would freeze available capital, and actually would cause the country to go broke. Needlessly. Except people who know nothing about economics hear some catch phrase and start repeating it ad nauseum as if they know what they’re talking about.

But it’s the same people asking these questions over and over, so one has to wonder what their agendas really are. Because all these policies benefit the superrich, while screwing the rest of us. Of course, these are the same people complaining about the conspiracies of the trilateral group and at the same time they try to implement policies that advantage such conspiracies, which don’t exist in the first place.

I think what is really going on here is merely expressions of frustration. You strike out in all directions, even though it is meaningless, because you want to feel like you are doing something. You aren’t, but so what. When your fist lands in someone’s face, it still makes a satisfactory crunch.

Ron_C's avatar

The United States is not going broke but congress has decided it isn’t going to pay its bills. The problem is that the Tea Party doesn’t understand the difference between the debt ceiling and budget negotiations. I notice that some of the loudest Tea Party people can’t handle their own budgets, one guy is a dead-beat dad who owes $100K in child support. It would be comic that he is lecturing the president about how to handle the budget if he wasn’t so mis-informed.

Another thing the tea party people don’t seem to understand is that congress makes the budget and authorizes spending. All the president can do is make recommendations and aprove or disaprove the budget.

cletrans2col's avatar

@Ron_C Yeah and Charlie Rangel lectures people about paying their taxes, yet never paid his own.

Yes, I’m pretty sure the TP Congressmembers know their role, and they are doing it well which is why Obama, MSNBC, and the Senate Dems hate them.

Granted, if I was in the Senate, I would have supported the $4B plan that put subsidies, but I respect them standing for principle. Do people forget that the Dems could have addressed all this many months ago?

Ron_C's avatar

@cletrans2col they are standing on principle and the future grave of the U.S. The tea party really needs to stop listening to the Kock brothers and start listening to people like Paul Krugman.

cletrans2col's avatar

@Ron_C Paul Krugman? No thanks.

tedd's avatar

@Ron_C @cletrans2col Listening to their brains without any indoctrination on what they should be angry about and think would be a good start.

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