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1 China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 2:07 am

rosco 357


Veteran
The mystery of the half-filled stands at many events at the 2008 Olympic Games has been solved, according to Chinese internet users, who say it is the result of a policy to prevent the gathering of large and possibly uncontrollable crowds.

For all its export might, China is still a poor, largely agrarian country with perhaps 700m farmers and 150m migrant workers. The size of its economy is huge but, measured by wealth per head, it ranks 109th in the world, comparable with Swaziland or Morocco.

It faces an acute crisis as its people live longer but fewer are born; the old lack pensions and healthcare must be paid for. Half the population does not have clean drinking water and 16 cities are among the most polluted on earth.

So why, asked the mainland Chinese writers in a Hong Kong magazine named Kaifeng (Open), did China blow more than £20 billion on the Games?

They calculate that the total costs may exceed £30 billion, more than the Chinese government will spend this year on education or public health or relief for the Sichuan earthquake. These are questions that would make any ruler nervous.

Chinese leaders prided themselves on the splendid reception for dignitaries and 10,500 athletes. They rejected criticism of their policies on Darfur, Burma and Zimbabwe, brushing aside foreign demonstrators complaining about Tibet.

However, they remain worried about political undercurrents among their people. These can be unexpected. Despite pervasive internet control, censors could not stop nationalist criticism about the diplomatic price China has paid for mounting the Games.

a long artical so here is the url for all of it
http://www.timesonline.co.uk/tol/news/world/asia/china/article4547323.ece

gypsy


Moderator
Rosco did u notice the smog, or haze in china when showed scenes of the area at the olympics?

rosco 357


Veteran
yes but on the news mainly,, i have not followed it close, i did watch tonight , the amrerican win his 8th gold metal in the swimming,, i know the chinese have been working hard to hold down the smog even closing factories i think, this is one reason the usa did not sign the treaty, and i cant spell it right now, but that was years ago, it was not going to make china and some others maybe india follow the rules we had to follow, and there emerging strong economy, well we just did not need any burdens on our economy, when in competion with those countrys, so im glad we did not sign it, but that is just me, ,,,some of the opening ceremonies were not real but computer generated fireworks,

gypsy


Moderator
koko something lol

it is sad that we are boosting chinas economy AND OURS FALTERS.. also it irks me to know we are in debt to them..

rosco 357


Veteran
well ours is not faultering that bad, some things are getting better, there is a post about it, take care,i think marc explained the debt thing, but im to sleepy now to go read it,

6 Americas debt on Sun Aug 17, 2008 3:00 am

gypsy


Moderator
United States public debt
From Wikipedia, the free encyclopedia

Deficit and Debt Increases 2001-2007
Deficit and Debt Increases 2001-2007

The United States total public debt, commonly called the national debt, or U.S. government debt, is the amount of money owed by the United States federal government to creditors (bankers) who hold U.S. debt instruments. Debt held by the public is all federal debt held by states, corporations, individuals, and foreign governments, but does not include intragovernmental debt obligations or debt held for Social Security. Types of securities held by the public include, but are not limited to, Treasury Bills, Notes, Bonds, TIPS, United States Savings Bonds, and State and Local Government Series securities.[1]

As of April 2008, the total U.S. federal debt was approximately $9.5 trillion[2], about $31,600 per capita (that is, per U.S. resident). Of this amount, debt held by the public was roughly $5.3 trillion.[3] If, in addition, unfunded Medicaid, Social Security, Medicare, etc. promises are added, this figure rises to a total of $59.1 trillion.[4] In 2007, the public debt was 36.9 percent of GDP [5], with a total debt of 65.5 percent of GDP.[6] The CIA ranked the total percentage as 26th in the world.[7]

It is important to differentiate between public debt and external debt. The former is the amount owed by the government to its creditors, whether they are nationals or foreigners. The latter is the debt of all sectors of the economy (public and private), owed to foreigners. In the U.S., foreign ownership of the public debt is a significant part of the nation's external debt (see also below). The Bureau of the Public Debt, a division of the United States Department of the Treasury, calculates the amount of money owed by the national government on a daily basis.[8][9][10][11]

The total debt has increased over $500 billion each year since FY 2003, considering both budgeted and non-budgeted spending.[12] The annual US budget deficit declined from $318 billion in 2005 to $162 billion in 2007, but is estimated to increase to $410 billion in 2008.[13] Annual deficits add to the debt. The Congressional Budget Office projects an annual budget surplus by 2012. However, this estimate is based on current law, which assumes sizable tax reductions will expire in 2010.[14] When the U.S. Government has a surplus, it may pay down its outstanding debt by paying back the principal of the outstanding bonds redeemed for payment while not issuing new bonds. The U.S. Government could also purchase its own outstanding securities on the open market if it was searching for a way to use a surplus to reduce outstanding debt that was not due for redemption in a given year.[15][16]
Contents
[hide]

* 1 , in particular the central banks of Japan and China. In total, lenders from Japan and China held 47% of the foreign-owned debt.[29] This exposure to potential financial or political risk should foreign banks stop buying Treasury securities or start selling them heavily was addressed in a recent report issued by the Bank of International Settlements which stated, "'Foreign investors in U.S. dollar assets have seen big losses measured in dollars, and still bigger ones measured in their own currency. While unlikely, indeed highly improbable for public sector investors, a sudden rush for the exits cannot be ruled out completely." [30]

In 2006, the central banks of Italy, Russia, Sweden, and the United Arab Emirates announced they would reduce their dollar holdings slightly, with Sweden moving from a 90% dollar-based foreign reserve to 85%. [31] On May 20, 2007, Kuwait discontinued pegging its currency exclusively to the dollar, preferring to use the dollar in a basket of currencies.[32] Syria made a similar announcement on June 4, 2007.[33]

eficit in goods and services was $725.8 billion in 2005.[41]
* The global market capitalization for all stock markets was $43.6 trillion in March 2006.[citation needed]

[edit] The mechanics of U.S. Government debt

When the expenses of the U.S. Government exceed the revenue collected, it issues new debt to cover the deficit. This debt typically takes the form of new issues of government bonds which are sold on the open market. However, the debt can also be monetized by which the Federal Reserve creates an entry on its books to credit the US Government for an amount equal to the dollar amount of the bonds the Federal Reserve is acquiring. The money created in this process not only includes the new dollars that came into existence just to purchase the bonds, but much more because this new money is now sitting in the form of checkbook money at the Federal Reserve. Under the scheme of Fractional Reserve Banking this new checkbook money is treated as an asset to lend against. Economists estimate the expansion of the money supply as being many times the amount of the initial money created with the exact amount being a function of what percentage of deposits banks must set aside as "reserves".[15][16]

The ultimate consequence of monetizing U.S. debt is that it expands the money supply which will tend to dilute the value of dollars already in circulation. Thus, expanding the pool of money puts downward pressure on the dollar, downward pressure on short-term interest rates (the banks have more to lend) and upward pressure on inflation. Typically this causes an inflationary boom that ends in a deflationary bust to complete the business cycle. Note that money supply expansion is not the only force at work in inflation or interest rates. United States Dollars are essentially a commodity on the world market and the value of the dollar at any given time is subject to the law of supply and demand. In recent years, the debt has soared and inflation has stayed relatively low in part because China has been willing to accumulate reserves denominated in U.S. Dollars. Currently, China holds over $1 trillion in dollar denominated assets (of which $330 billion are U.S. Treasury notes). In comparison, $1.4 trillion represents M1 or the "tight money supply" of U.S. Dollars which suggests that the value of the U.S. Dollar could change dramatically should China ever choose to divest itself of a large portion of those reserves.

[edit] Arguments against paying down the national debt

Since the money supply is reduced when the U.S. Government pays down its debt, the unintended result of a government surplus could be a deflationary recession as the money supply contracts in the reverse of the process of monetization described below. The government can avoid this consequence by instead focusing on expanding its GDP and thereby "reducing" the percentage of GDP that debt represents. The hope is that the deficit spending that increases the debt will increase GDP by a greater amount, and thus — in relative terms, at least — the debt would decrease. This worked to great effect in the U.S. between the end of World War II and 1980, even though the debt showed a net increase in absolute value over the same period.[20] Kenneth L. Fisher's May 1, 2007, article "Learning to Love Debt" is a good representation of the argument that "more debt is [a] good thing" because of after effects the resulting money creation will have on the economy.[42]

[edit] Arguments for paying down the national debt

Economists from the Austrian School point out that the United States experienced depreciation of 43% of CPI (from CPI of 51 to 29) from 1800-1912: a period of strong economic growth in U.S. history.[43] [44][45]

Furthermore, it is not always true that an increase in the money supply leads to an expansion of the economy. For example, consider the failure of Japan's Central Bank to do just that. In an attempt to follow Keynesian economics and spend itself out of a recession, Japan's central bank engaged in ten stimulus programs over the 1990s that totaled over 100 trillion yen.[46] Even enacting this policy Japan has been left with a national debt that is 194% of GDP [4].

In the absence of debt monetization, when the Government borrows money from the savings of others, it consumes the amount of savings there are to lend. If the government were to borrow less, that money would be freed to work in the private sector and would lower interest rates overall.

Lastly, raising interest rates is one of the traditional ways that the U.S. Federal Reserve uses to combat inflation (which can be brought on by government debt), but a large national debt figure makes it difficult to do so because it raises the interest paid in servicing that debt.

Net interest on the U.S. national debt was approximately $240 billion in fiscal years 2007 and 2008. This represented approximately 9.5% of government receipts. Interest was the fourth largest single disbursement category, after defense, Social Security, and Medicare.[47]Paying off the debt would theoretically free up these funds for other purposes.



By definition, international trade is the exchange of goods and services across national borders. Historically the currencies of nations involved were backed by precious metals (typically using some form of Gold Standard), which would cause a nation operating under a trade imbalance to send precious metals (economic goods in and of themselves) to correct any trade imbalances. In the current scheme of fiat money, the U.S. government is free to print all the money it wants. Consequentially, the government cannot technically go bankrupt as any debtor nation can just issue more money through a practice known as seigniorage.[48]

If there is a gross imbalance between the amount of new money being brought into circulation and the amount of economic goods that are represented by an economy, then there is an unstable situation that can lead to hyperinflation.[49] This has been observed in smaller nations such as Argentina in 1989; the International Monetary Fund and World Bank try to end such crises by working with the problem country to institute sound economic policies and restore faith in the international community that the country can again service its debt with a stable currency.[50]

The interest rate offered on new bond issues is the one that clears the market. On December 13, 2006, the U.S. 30-year treasury note had a rate of 5.375%. Were investors to become concerned about the future value of the US Dollar, they would demand a higher interest rate on US bonds to compensate them for the risk they are assuming.[51]


i
Several government agencies provide budget and debt data and analysis. These include the Government Ac a projected deficit of $850 billion, a swing of $2.138 trillion.[66] The latter document states that 49 percent of this swing was due to "economic and technical re-estimates", 29 percent was due to "tax relief", (mainly the 2001 and 2003 Bush tax cuts), and the remaining 22 percent was due to "war, homeland, and other enacted legislation" (mainly expenditures for the War on Terror, Iraq War, and homeland security).

Projections between different groups will sometimes differ because they make different assumptions. For example, in August 2003, a Congressional Budget Office report projected a $1.4 trillion deficit from 2004 through 2013.[67]

However, a mid-term and long-term joint analysis a month later by the Center on Budget and Policy Priorities, the Committee for Economic Development, and the Concord Coalition stated that "In projecting deficits, CBO follows mechanical 'baseline' rules that do not allow it to account for the costs of any prospective tax or entitlement legislation, no matter how likely the enactment of such legislation may be." The analysis added in a proposed tax cut extension and Alternative Minimum Tax reform (enacted by a 2005 act), prescription drug plan (Medicare Part D, enacted in a 2003 act), and further increases in defense, homeland security, international, and domestic spending. According to the report, this "adjusts CBO's official ten-year projections for more realistic assumptions about the costs of budget policies", raising the projected deficit from $1.4 trillion to $5 trillion.[68]





http://en.wikipedia.org/wiki/United_States_public_debt

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SSC


Admin
Gypsy that is pollution, the china govt has elected to shut down 1/2 of the cars and a large majority of the factories during the olympics, their air quality is horrible, have you not seen the people with the face masks on the streets, including the US athletics when they arrived, although there was an appology for that.

gypsy


Moderator
Yes SSC that is why i commented on it, it is awful..another reason to find and oil/gas Alternative, new drilling will solve a problem for awhile, more oil,only!!

what about our breathing?

9 Foreign Holders of US Debt on Sun Aug 17, 2008 3:29 am

SSC


Admin
MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES
(in billions of dollars)
HOLDINGS 1/ AT END OF PERIOD


Jun May Apr Mar Feb Jan Dec Nov Oct Sep Aug Jul Jun
Country 2008 2008 2008 2008 2008 2008 2007 2007 2007 2007 2007 2007 2007
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------

Japan 583.8 578.7 592.2 600.7 586.6 586.9 581.2 590.9 601.7 591.9 595.8 620.6 622.9
China, Mainland 503.8 506.8 502.0 490.6 486.9 492.6 477.6 458.9 459.1 467.7 471.2 480.0 477.3
United Kingdom 2/ 280.4 272.5 247.8 201.1 181.1 161.9 158.1 174.3 155.0 120.3 99.8 67.3 50.0
Oil Exporters 3/ 170.4 164.3 153.9 150.8 146.1 140.9 137.9 138.7 141.6 137.1 134.7 134.7 133.2
Brazil 151.6 151.4 149.5 149.1 146.6 141.7 129.9 121.7 113.9 110.5 107.7 105.8 94.8
Carib Bnkng Ctrs 4/ 122.4 104.7 115.4 107.1 103.0 108.1 116.4 107.4 105.6 99.1 103.8 70.7 78.2
Luxembourg 88.6 80.4 84.8 92.7 83.1 68.4 69.7 68.3 63.3 58.4 57.1 57.6 55.9
Russia 65.3 63.7 60.2 42.4 38.4 35.2 32.7 33.5 33.6 31.8 31.9 35.9 33.5
Hong Kong 61.2 61.4 63.2 60.6 57.5 54.4 51.2 51.7 51.3 52.6 53.2 55.9 57.3
Switzerland 44.4 42.1 42.5 41.2 39.4 39.3 38.9 38.1 37.8 37.0 37.4 37.2 38.3
Norway 43.3 47.1 45.3 44.5 34.0 33.6 26.2 27.6 25.5 22.9 6.4 -- 3.1
Mexico 42.5 40.4 38.0 38.8 36.5 35.6 34.4 32.0 30.5 30.0 30.2 34.9 33.9
Germany 40.9 45.0 43.7 42.2 42.2 42.7 41.7 39.1 41.8 41.8 42.3 41.7 45.9
Taiwan 40.9 40.1 42.6 41.2 38.8 38.9 38.2 37.1 40.7 39.9 39.5 44.6 44.7
Korea 36.5 38.5 40.5 40.7 41.4 42.1 39.2 37.8 37.0 39.4 42.6 44.4 43.7
Thailand 32.4 32.8 27.9 25.7 30.5 28.9 27.4 27.5 22.8 24.7 22.9 22.5 20.6
Singapore 30.4 30.6 33.5 33.3 33.5 38.6 39.8 40.2 38.8 36.6 37.8 36.3 36.0
Turkey 30.3 28.9 31.1 28.7 28.5 28.2 25.6 25.6 28.1 28.3 29.2 28.5 28.7
Canada 28.4 30.3 25.9 22.0 22.7 24.4 18.7 24.1 15.9 17.3 18.8 23.3 24.6
Netherlands 15.1 15.7 15.5 15.1 14.1 15.9 15.2 14.2 14.8 15.1 16.6 15.7 16.5
Ireland 14.2 15.8 18.5 17.8 15.6 15.6 18.7 17.5 17.0 16.3 16.8 15.6 15.8
Poland 13.3 12.4 12.5 11.6 10.2 10.3 12.9 11.1 9.8 10.6 10.5 11.1 10.4
Sweden 12.4 13.2 13.1 13.2 13.6 13.4 13.7 14.1 14.5 14.8 15.7 15.5 15.1
Belgium 12.4 12.4 12.5 12.8 13.2 13.1 13.2 14.2 14.6 14.6 14.6 15.4 15.2
Egypt 12.3 12.8 12.7 12.7 12.0 11.6 10.4 10.6 9.9 9.9 10.1 10.2 10.0
Chile 11.7 11.1 10.1 9.7 8.6 9.0 8.7 8.5 7.5 6.8 7.6 7.4 7.3
India 11.7 10.3 10.5 11.8 14.4 14.6 14.9 14.8 14.9 10.8 12.1 14.1 14.0
Italy 10.6 11.7 10.6 11.3 11.3 12.7 14.6 15.5 14.1 13.4 13.2 13.9 14.0
All Other 135.3 136.0 138.0 144.1 144.3 145.1 145.9 142.2 138.0 136.0 137.9 140.4 151.0
Grand Total 2646.5 2611.2 2594.1 2513.8 2434.1 2403.8 2353.2 2337.1 2299.2 2235.3 2217.5 2201.0 2192.0

Of which:
For. Official 1750.8 1742.7 1742.7 1706.6 1681.6 1688.0 1641.1 1619.1 1613.8 1607.7 1595.1 1621.0 1612.6
Treasury Bills 225.8 218.8 215.1 201.3 204.3 207.1 196.3 185.3 180.4 178.3 180.0 176.2 160.9
T-Bonds & Notes 1525.0 1523.9 1527.6 1505.3 1477.3 1480.9 1444.8 1433.8 1433.4 1429.4 1415.1 1444.7 1451.7

Department of the Treasury/Federal Reserve Board
August 15, 2008

1/ Estimated foreign holdings of U.S. Treasury marketable and non-marketable bills, bonds, and notes
reported under the Treasury International Capital (TIC) reporting system are based on annual
Surveys of Foreign Holdings of U.S. Securities and on monthly data.
2/ United Kingdom includes Channel Islands and Isle of Man.
3/ Oil exporters include Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar,
Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.
4/ Caribbean Banking Centers include Bahamas, Bermuda, Cayman Islands, Netherlands Antilles and Panama.
Beginning with new series for June 2006, also includes British Virgin Islands.

10 Re: China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 3:30 am

SSC


Admin
gypsy wrote:Yes SSC that is why i commented on it, it is awful..another reason to find and oil/gas Alternative, new drilling will solve a problem for awhile, more oil,only!!

what about our breathing?

The reference was to China, could it not be caused by over population ?

11 Re: China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 3:39 am

gypsy


Moderator
of course,and what about us? (America) how long before we are in the same boat?with all the illegals coming in? we need a stronger gov't ,and laws our laws our slack,and faltering, this from the kkk what was that kentucky kuruppt What? lol
It is sad we have all not kept the nature of the American Indian~ love the land/nuture..preserve it!

12 Re: China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 3:56 am

SSC


Admin
There is a very long detailed explanation about US debt , the pros and cons on Wiki. If you read this it might shed light on the reason behind debt.

Indians ?? We shipped them off to reservations took away their land and treated them like a herd of cattle, but they managed to rebound and are making a fortune on mineral rights and bingo, of course the substance abuse among them seems to be at an increasingly alarming rate.
Illegals...I vote to shoot everyone of those border jumping wetbacks, send them back to hell the way they came here.

13 Re: China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 4:13 am

gypsy


Moderator
Good for the first Americans, i am part of that heritage..Ii just gave the awesome debt we owe,i i still am trying to figure out ur numbers,countries yes,, still find it astronomical what eight years has done to this country,, but we are fighters,we will come back.. we just have to get congress, and America off their asses ,take off the rose colored glasses,quit nodding, and get busy~

ps: u know what goes around, comes around ~I mean with america, lots of mistakes we need to correct..

good night

14 Debt of the Netherlands on Sun Aug 17, 2008 4:20 am

SSC


Admin
Debt - external: $2.277 trillion (30 June 2007)



Year Debt - external Rank Percent Change Date of Information
2006 $1,645,000,000,000 5 30 June 2005
2007 $1,899,000,000,000 6 15.44 % 30 June 2006
2008 $2,277,000,000,000 6 19.91 % 30 June 2007


Definition: This entry gives the total public and private debt owed to nonresidents repayable in foreign currency, goods, or services.

This is an example of a very small countries debt, is it any wonder with the population of the US that our debt is so extreme.

15 Re: China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 4:23 am

SSC


Admin
gypsy wrote:Good for the first Americans, i am part of that heritage..Ii just gave the awesome debt we owe,i i still am trying to figure out ur numbers,countries yes,, still find it astronomical what eight years has done to this country,, but we are fighters,we will come back.. we just have to get congress, and America off their asses ,take off the rose colored glasses,quit nodding, and get busy~

ps: u know what goes around, comes around ~I mean with america, lots of mistakes we need to correct..

good night

Gypsy the US has been in debt since the 1800 , with population increase and the cost of technology only common sense tells you the numbers will rise. It has certainly taken much longer than 8 years to incur the National debt, each administration inherits the Nat. debt , so to blame the Bush era for the whole debt is ludicrous.



Last edited by SSC on Sun Aug 17, 2008 4:28 am; edited 1 time in total

16 Re: China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 4:27 am

gypsy


Moderator
SSC not like we are now, (debt)also read my wikipedia info again~ how long before our tax dollars individually will pay that off? read it again~

17 Re: China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 4:36 am

SSC


Admin
It is way more complex than our tax dollars, they are a very small drop in the bucket. If you closley study the internal makeup of the debt , then maybe you will go beyound the minute and get the broad spectrum of what the Nat. debt truely consists of. It is far more complex than I think you realize.

18 Re: China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 4:41 am

gypsy


Moderator
umm really, show me !remember we are both from missouri... how many trillions of dollars this war has cost? and what results? will continue, got to sleep~ G'night again



Last edited by gypsy on Sun Aug 17, 2008 4:45 am; edited 1 time in total

19 National Debt on Sun Aug 17, 2008 4:44 am

SSC


Admin
Your Proof of existing debt for roughly 98 years.

The United States total public debt, commonly called the national debt, or U.S. government debt, is the amount of money owed by the United States federal government to creditors (bankers) who hold U.S. debt instruments. Debt held by the public is all federal debt held by states, corporations, individuals, and foreign governments, but does not include intragovernmental debt obligations or debt held for Social Security. Types of securities held by the public include, but are not limited to, Treasury Bills, Notes, Bonds, TIPS, United States Savings Bonds, and State and Local Government Series securities. [1]


Debt to Nominal GDP
As of April 2008, the total U.S. federal debt was approximately $9.5 trillion [2] , about $31,600 per capita (that is, per U.S. resident). Of this amount, debt held by the public was roughly $5.3 trillion. [3] If, in addition, unfunded Medicaid, Social Security, Medicare, etc. promises are added, this figure rises to a total of $59.1 trillion. [4] In 2007, the public debt was 36.9 percent of GDP [5] , with a total debt of 65.5 percent of GDP. [6] The CIA ranked the total percentage as 26th in the world. [7]


Deficit and Debt Increases 2001-2007
It is important to differentiate between public debt and external debt. The former is the amount owed by the government to its creditors, whether they are nationals or foreigners. The latter is the debt of all sectors of the economy (public and private), owed to foreigners. In the U.S., foreign ownership of the public debt is a significant part of the nation's external debt (see also below). The Bureau of the Public Debt, a division of the United States Department of the Treasury, calculates the amount of money owed by the national government on a daily basis. [8] [9] [10] [11]

The total debt has increased over $500 billion each year since FY 2003, considering both budgeted and non-budgeted spending. [12] The annual US budget deficit declined from $318 billion in 2005 to $162 billion in 2007, but is estimated to increase to $410 billion in 2008. [13] Annual deficits add to the debt. The Congressional Budget Office projects an annual budget surplus by 2012. However, this estimate is based on current law, which assumes sizable tax reductions will expire in 2010. [14] When the U.S. Government has a surplus, it may pay down its outstanding debt by paying back the principal of the outstanding bonds redeemed for payment while not issuing new bonds. The U.S. Government could also purchase its own outstanding securities on the open market if it was searching for a way to use a surplus to reduce outstanding debt that was not due for redemption in a given year. [15] [16

1. HistorySee also: National debt by U.S. presidential terms
The United States has had public debt since its inception. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly reported value of $75,463,476.52 on January 1, 1791. Over the following 45 years, the debt grew, briefly contracted to zero on January 8, 1835 under President Andrew Jackson but then quickly grew into the millions again. [17] [18]

The first dramatic growth spurt of the debt occurred because of the Civil War. The debt was just $65 million in 1860, but passed $1 billion in 1863 and had reached $2.7 billion following the war. The debt slowly fluctuated for the rest of the century, finally growing steadily in the 1910s and early 1920s to roughly $22 billion as the country paid for involvement in World War I. [19]

The buildup and involvement in World War II brought the debt up another order of magnitude from $51 billion in 1940 to $260 billion following the war. After this period, the debt's growth closely matched the rate of inflation until the 1980s, when it again began to increase rapidly. Between 1980 and 1990, the debt more than tripled. The debt shrank briefly after the end of the Cold War, but by the end of 2005, the gross debt had reached $7.9 trillion, about 8.7 times its 1980 level. [20]


Public and Total Debt % to GDP
End of
Fiscal Year US Public Debt
USD billions [19] % of GDP [21]
1910 2.6
1920 25.9
1930 16.2
1940 43.0 44.2
1950 257.4 80.2
1960 290.2 45.7
1970 389.2 28.0
1980 930.2 26.1
1990 3233 42.0
2000 5674 35.1
2005 7933 37.4
2007 9008 36.8
2008 37.9(est)

At any given time (at least in recent decades), there is a debt ceiling in effect. Whereas Congress once approved legislation for every debt issuance, the growth of government fiscal operations in the 20th century made this impractical. (For example, the Treasury now conducts more than 200 sales of debt by auction every year to fund $4 trillion in debt operations.) The Treasury was granted authority by the Congress to issue such debt as was needed to fund government operations as long as the total debt (excepting some small special classes) did not exceed a stated ceiling. However, the ceiling is routinely raised by passage of new laws by the United States Congress every year or so. The most recent example of this occurred in September 2007, when the Congress raised the debt limit to $9.815 trillion. [22] As of July 28th 2008, the recently passed "landmark housing bill" raises the current debt ceiling by 800 billion to 10.6 trillion to account for the bailout of the two mortgage giants Fannie Mae and Freddie Mac. [23]

2. Components2. 1. Public and government accountsThe national debt is broken down into 2 main categories: [24]

Securities held by the public
Marketable securites
Non-marketable securities
Securities held by government accounts
The values for fiscal years 2003-2007 are: [24]

United States Public Debt
End of fiscal year Securities held by (in millions of dollars)
Government accounts The public
2003 2,859,291 3,949,981
2004 3,075,687 4,327,550
2005 3,331,333 4,625,013
2006 3,663,773 4,866,593
2007 3,958,417 5,072,195

Below is a chart (using data published by the U.S. Treasury) showing the total of government and public portions of the debt as well as the components of each as of March, 2008:



Because there is a large variety of people who own the notes, bills, and bonds in the "public" portion of the debt, the U.S. Treasury also publishes data which groups the types of holders by a few, general categories to get a good picture of who owns United States debt. In this data set, some of the public portion is moved and combined with the total government portion because this amount is owned by the Federal Reserve as part of United States monetary policy. (See Federal Reserve System) As is apparent from the chart, a little more than half of the total national debt is owed to the "Federal Reserve and interagovernmental holdings". The foreign and international holders of the debt are also put togather from the notes, bills, and bonds sections. Below is a chart for the data as of December, 2007:

2. 2. Foreign ownershipA traditional defense of the national debt is that Americans "owe the debt to ourselves", but that is increasingly not true. The US debt in the hands of foreign governments is 25% of the total [25] , virtually double the 1988 figure of 13%. [26] Despite the declining willingness of foreign investors to continue investing in US-dollar-denominated instruments as the US Dollar has fallen in 2007, [27] the U.S. Treasury statistics indicate that, at the end of 2006, foreigners held 44% of federal debt held by the public. [28] About 66% of that 44% was held by the central banks of other countries, in particular the central banks of Japan and China. In total, lenders from Japan and China held 47% of the foreign-owned debt. [29] This exposure to potential financial or political risk should foreign banks stop buying Treasury securities or start selling them heavily was addressed in a recent report issued by the Bank of International Settlements which stated, "'Foreign investors in U.S. dollar assets have seen big losses measured in dollars, and still bigger ones measured in their own currency. While unlikely, indeed highly improbable for public sector investors, a sudden rush for the exits cannot be ruled out completely." [30]

In 2006, the central banks of Italy, Russia, Sweden, and the United Arab Emirates announced they would reduce their dollar holdings slightly, with Sweden moving from a 90% dollar-based foreign reserve to 85%. [31] On May 20, 2007, Kuwait discontinued pegging its currency exclusively to the dollar, preferring to use the dollar in a basket of currencies. [32] Syria made a similar announcement on June 4, 2007. [33]

A list of the foreign owners of U.S. Treasury securities is listed by the U.S. Treasury: [29]



Foreign owners of US Treasury Securities (April 2008)
Nation billions of dollars
Japan 592.2
China, Mainland 502
United Kingdom 251.4
Oil Exporters 153.9
Brazil 149.5
Carib Bnkng Cntrs 115.4
Luxembourg 84.8
Hong Kong 63.1
Russia 60.2
Norway 45.3
Germany 44
Taiwan 42.6
Switzerland 42.5
Korea 40.5
Mexico 38
Singapore 33.3
Turkey 31.1
Thailand 27.9
Canada 24
Ireland 18.5
Netherlands 15.5
Sweden 13.1
Egypt 12.7
Belgium 12.5
Poland 12.5
Italy 10.6
India 10.5
All Other 154.2
Grand Total 2601.8
2. 3. Recent additions to the public debt of the United StatesRecent additions to U.S. public debt Fiscal year
(begins 10/01) Value % of GDP
2001 $144.6 billion 1.4%
2002 $409.3 billion 3.9%
2003 $589.0 billion 5.5%
2004 $605.0 billion 5.3%
2005 $523.2 billion 4.3%
2006 $536.5 billion 4.1%
2007 $527.9 billion 3.9%

The cumulative debt of the United States in the past 5 completed fiscal years was approximately $2.78 trillion, or about 29.5% of the total national debt of ~$9.5 trillion. [34] [35]

2. 4. Statistics and comparablesU.S. official gold reserves are worth $261.5 billion[citation needed] (as of March 2008), foreign exchange reserves $63 billion[citation needed] and the Strategic Petroleum Reserve $77 billion[citation needed] (at a Market Price of $110/barrel).
The national debt equates to $30,400 per person U.S. population, or $60,100 per head of the U.S. working population, [36] as of February 2008.
In 2003 $318 billion was spent on interest payments servicing the debt, out of a total tax revenue of $1.95 trillion. [37]
Total U.S. household debt, including mortgage loan and consumer debt, was $11.4 trillion in 2005. By comparison, total U.S. household assets, including real estate, equipment, and financial instruments such as mutual funds, was $62.5 trillion in 2005. [38]
Total U.S Consumer Credit Card revolving credit debt was $937.5 billion in November 2007. [39]
Total third world debt was estimated to be $1.3 trillion in 1990. [40]
The U.S. balance of trade deficit in goods and services was $725.8 billion in 2005. [41]
The global market capitalization for all stock markets was $43.6 trillion in March 2006.

20 Re: China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 4:58 am

gypsy


Moderator
yes but the biggist deficit is now

21 Re: China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 3:39 pm

SSC


Admin
Well of course it is Gypsy, do you not see a pattern of growing debt for 90 years, as economy booms so does debt. The last 8 years are just following a pattern, you cannot blame Bush to do so then back up and blame Clinton, Carter, Sr. Bush and every other president we have had, the numbers so big in numerical terms , but take 1950, wouldn't the debt figure of that era had sounded astronomical...when gas was just a few pennies. You cannot time warp back to when things were cheap or sounded cheap in todays figures. At that time wages were much less cost of living was less, that all sounds great now , but that is not reality, that is just past history.

22 Re: China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 4:23 pm

gypsy


Moderator
Iagree to and extent, but it is not balanced,there is more debt, less jobs, more unemployed , bad economy, I think they should at least try to . control this...more.. we need reform and new blood, i don't understand alot of the workings of the gov't, I also know that there will always be some debt/deficit, but it is out of control, and whoever is president next has a lot of mess to clean up..and the economy is hardly booming~ the article u put was from what i posted on page one, i deleted some of it because it was to long .. I put the url so one could read it all`

23 Re: China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 4:40 pm

SSC


Admin
I agree some type of reform needs to happen, but expenditures have gone off the charts, your legislatures and making big bucks, many leaching programs should be stopped aka..aid to illegals, ship them back home, don't reward them for jumping a border, if a person is 63 and is able to work, deny social security why pay to someone capable of providing for them selves. Stiffen the disability rulings. Tighten up the welfare system, stop paying for every illegitimate child born in a ghetto, manadatory sterilization would cure that little issue.
The space program, everytime one of those screws up it costs billions, what are we gaining in space ? Just making it a floating junk yard. The list of wasted money is endless.

24 Re: China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 4:56 pm

gypsy


Moderator
http://www.brookesnews.com/060602tradedeficit.html
also the article was to long so to read the rest got to the link

does the trade deficit threaten the US economy?

Dr Frank Shostak
BrookesNews.Com
Monday 6 February 2006

Most economists are extremely alarmed about the effect of the expanding deficit on the current account. In 2004 the deficit stood at $668 billion, or 5.7 per cent of the gross domestic product (GDP). For 2005 we have estimated that the deficit was around $788 bill, or 6.3 per cent of GDP. As a result of the ballooning deficit the value of US net external liabilities, expressed at historical cost, jumped to $5.1 trillion in 2005 from $4.3 trillion in 2004. As a percentage of GDP net external liabilities climbed to 41 per cent in 2005 from 37 per cent in the previous year and 4.9 per cent in 1980.

It is held that this increase in foreign debt cannot go on forever. If the Americans do not begin reducing their trade deficit, there will come a time when foreigners will become less willing to hold dollar denominated assets. This in turn will weaken the US$. Consequently, once this happens the U.S. will be forced to increase interest rates (maybe sharply) to continue to attract foreign investments.

Higher interest rates in turn will plunge the economy into recession. In short, given the size of the current account deficit it is held that the US dollar has to plunge in a big way against most currencies and it is not possible to avoid a painful adjustment as a result of this. In short, it would appear that the trade deficit is a major economic problem that must be urgently addressed in order to avoid serious economic disaster.

What information does the trade account provide?

Let us take an American individual who earns his money by exchanging something useful for it — he produces consumer goods. He then decides to exchange the money for some other consumer goods that are manufactured in China. A Chinese producer who has received the American dollars uses them to buy consumer goods from the above American producer i.e he is importing from the US.

So what we have here is a situation in which the American producer has paid for the Chinese consumer goods with his saved consumer goods. Likewise the Chinese producer has paid with his saved consumer goods to secure American consumer goods. The American and Chinese trade balances are in balance.

Now let us assume that instead of using the dollars to buy American consumer goods the Chinese producer decides to invest his dollars in US corporate bonds. The US trade account in this case will move into a deficit whilst China’s trade account will show a surplus. From the trade deficit perspective, as espoused by the popular way of thinking, this will be seen as bad news since American foreign debt has risen by the size of the deficit.

By its design the national balances of payments do not disclose the transactions that occurred within the economy. The balances of payments only deal with transactions that are external to the economy. In other words, a balance of payments describes how much money a particular country spent on goods from other countries and how much money it received for the goods it sold to other countries. Now, the larger the economy is the less information, as far as economic activity is concerned, can be derived from the balance of payments statement.

On this Mises wrote,

While an individual’s balance of payments conveys exhaustive information about his social position, a group’s balance discloses much less. It says nothing about the mutual relations between the members of the group. The greater the group is and the less homogeneous its members are, the more defective is the information vouchsafed by the balance of payments. The balance of payments of Denmark tells more about the conditions of the Danes than the United States balance of payments about the conditions of the Americans. (Mises’ Human Action 3rd revised edition Contemporary Books inc p 451)

In the above example one is tempted to conclude that as a result of the trade deficit America’s economic fundamentals have deteriorated, or at least there are signs that this may be the case. A closer inspection of what has really happened would show that an American importer has paid for Chinese goods with money that he has earned by producing useful consumer goods.

The fact that the Chinese producer has invested the dollars in American corporate bonds doesn’t pose any threat to American economic fundamentals. What we have here is a situation where claims on real savings have been channelled to America Inc. Once these claims are exercised and real savings are employed efficiently it only promotes a further expansion in US real wealth. Is anything wrong with this? All we have here is that instead of buying final American consumer goods the Chinese producer buys future US goods.

According to Rothbard,

More nonsense has been written about balances of payments than about virtually any other aspect of economics. This has been caused by the failure of economists to ground and build their analysis on individual balances of payments. Instead they have employed such cloudy, holistic concepts as the ‘national’ balance of payment without basing them on individual actions and balances. (Man Economy and State, Nash Publishing P 720)

Also, contrary to the popular way of thinking an emerging trade deficit doesn’t mean here that American’s are now saving less. We have seen that an American individual has exchanged unconsumed final goods i.e. saved goods for money — claims on real savings. Now if the Chinese producer transfers the received claims in return for his goods to an American corporation this will lift the pool of real savings at the disposal of Americans. Because real savings were obtained from China — via the import of Chinese consumer goods — in addition to the real savings generated by the American producer.

What matters as far as real economic growth is concerned is real savings. The balance of payments statements, which deal with monetary flows, cannot tell us much about the flow of real savings. For instance, Americans are importing tools and machinery from Japan and exporting consumer goods to Japan. In terms of the net flow of money it turns out that the value of American imports from Japan exceeds exports to Japan — i.e. a trade deficit emerges.

The conventional wisdom would argue here that Americans are now saving less and are in fact funded by Japanese. In reality the exact opposite takes place. Americans are in fact supplying real savings — final consumer goods — to Japanese producers of tools and machinery. In other words, it is the American real savings that in fact support i.e. fund here the Japanese producers of capital goods.

Observe that Japanese tools and machinery do not as yet produce any real wealth, they are just potential future wealth. Also, note that it is not money that funds economic activity but real savings. Money is just the medium of exchange it is however not the means of payment and it never funds anything.

Let us now consider an American individual that borrows money from a bank and uses the dollars to buy goods from China. The bank has transferred money — claims on real savings to the borrower of money. The bank has obtained the money from some other American producer who instead of exchanging the money for goods has decided to lend them out.

Again, if the Chinese producer uses the dollars to buy US corporate bonds or stocks this will lead to a US trade deficit and to a so-called increase in the US foreign debt, which in turn will be seen as bad news. Again all this is just a misguided story. Every transaction here is fully backed up by real wealth or expectations of real wealth. Also, transactions are not enforced and are done willingly by the individuals involved.

Now, if the national balance of payments is an important indicator of economic health, as various economists are saying, one is then tempted to suggest that it would be a sensible idea to have balances of payments of cities and regions. After all, if we could detect the economic malaise in a particular city or a region, the treatment of the national malaise could be made so much easier.

Imagine that economists in New York City have discovered that their city has a massive trade deficit with Los Angeles. Does this mean that the New York City authorities must step in to enforce the reduction of the deficit? Luckily we do not have balances of payments between cities and it seems that no one is concerned with this issue. Why then be concerned with the so-called international trade account?

According to Rothbard,

It should be clear that the principles applying to the balance of payment of the United States are the same for one region of the country, for one state, for one city, for one block, one house, or one person. Obviously no person or group can suffer only because of an “unfavorable” balance; he or the group can suffer only because of a low level of income or assets. (Rothbard, ibid p 722.)

Trade account deficits and monetary pumping

Consider an American counterfeiter who uses the counterfeit money to buy goods from Japan. The money that he has exchanged is not supported by anything useful. The counterfeiter has produced nothing useful and is not expected to produce anything useful in the future. He is exchanging nothing for money and then he exchanges money for useful Japanese goods.

The Japanese producer who gets the fraudulent dollars — unbacked by real wealth dollars — will have difficulties realising them for real wealth. The reason for this is because no real wealth supports these dollars. The emerging US trade deficit is just an indication that Japanese producers were ripped off.

Obviously, if the Japanese happened to be the earlier recipients of the newly printed dollars then they could secure American goods at the expense of some other American wealth producers. In this case the US trade account will be well balanced — because the Japanese have managed to import goods from America by exercising their dollar claims on real US goods. Consequently, some economists may even conclude that the net flow of savings is also in healthy shape.

However, the story of the trade account here will be false and incomplete because the monetary pumping has been overlooked. American wealth producers are being hurt — prices of inputs are now rising faster than the prices of their products – their ability to produce and to export has weakened. As a result the flow of real savings, all other things being equal, now comes under pressure. Consequently, as time goes by the trade balance moves into deficit.

Note that the trade deficit here is the result of printing dollars out of “thin air”. It mirrors the weakening of the process of real wealth generation. What is then required is not the fixing of the trade deficit but the cessation of the activities of the money counterfeiter. (The economic effect of the central bank’s loose monetary policies is exactly the same as that of the money counterfeiter). It must be stressed here that it is not trade deficits that undermine the process of wealth formation but rather the loose monetary policy of the central bank.

Wgovernment incurs a foreign debt. The government is not a wealth creating entity and as such derives its livelihood from the private sector. Consequently, every foreign debt the government incurs means that the private sector will have to foot the bill some time in the future.

Conclusions

Most economists are of the view that the ever growing US trade deficit and the subsequent expanding foreign debt poses a threat to the well being of Americans. What is then required, so it is held, is to set in motion policies, which will help curtail the widening trade imbalances between the US and the rest of the world. We suggest that what poses the threat to US economic fundamentals is not the trade deficit as such but the reckless policies of the Fed.

Focusing on the trade deficit as the supposedly major problem of the US economy only diverts the attention from the real culprit, which is the US central bank. Also, what matters for the process of wealth formation is the flow of real savings. The balance of payments statement doesn’t provide such information.

Consequently, it is not possible to determine the implications of a given state of the current account on the well being of Americans without information regarding the state of the flow of real savings. Therefore various pessimistic assessments regarding the US economy, which are based on the state of the balance of payments, are likely to be without much foundation.

Editor: AMS is defined as cash plus demand deposits with commercial banks and thrift institutions plus saving deposits plus government deposits with banks and the central bank. The reader should carefully note that credit instruments, for example travellers cheques and CDs, are excluded from this definition.

Dr Shostak is a former professor of economics who now works in the private sector

25 Re: China’s iron Olympic grip starts to slip on Sun Aug 17, 2008 5:20 pm

Guest


Guest
that was quite some reading :-)
I found this one remarkable:
"Every transaction here is fully backed up by real wealth or expectations of real wealth. Also, transactions are not enforced and are done willingly by the individuals involved. "
expectations of real wealth, how do they make it up, lol
we have seen what happens with wrong expectations, when the housing market collapsed.
not really backed up and no real wealth, just thin air

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