| axt113 said:
And government spending isn't short term much of government spending occurs over the long term, which is why we tend to have deficits for many years in a row, because the spending is at similar levels every year. It'll only collapse at a point where there is no one to buy the debt or their demands for buying the debt become too high, we are no where near that point, right now, our debt is bought up readily. Actually globalization hasn't just been a flow of money out of the US, a lot has come into the US, the problem has been for lower and middle skilled workers in the US, who have suffered due to the competition from workers in other countries who have workers of similar skill willing to work for far less. They have suffered as a result of globalization, but that is expected. I understand where you're coming from, but your fears are overblown, right now, government spending is a necessity, and we still have a good deal of time left to address the debt. Priorities, first recovery, then the debt. |
There are only two reasons the US bond market continues to operate at its current level, investors are concerned about equities and are fleeing to "Safe" investments, and Chinese currency manipulation leaves China with billions of excess American dollars to invest which find their way to the bond market. Any significant shock to the perceived safety of government debt (say the inevitable default of several countries and states) will drive further investment into assets that have real value (precious metals, commodities, real-estate). To make matters worse, any change to the exchange rate in China will also cause a significant shock to the bond market; which means that if America allows China to maintain currency manipulation they will continue to bleed jobs, and if the currency manipulation stops Americans will face higher inflation and/or interest rates.
Or to put it another way, decades of government deficits have created an environment where any action by the federal government will (likely) cause more pain for the American economy. The solution to too much deficit spending and too high of debts is not to increase the size of the deficit and the debt load to buy an additional 6 months of "good times". Effectively that strategy is like paying the mortgage on the house you clearly can’t afford by putting it on your credit card and claiming that your financial problems have been solved.
