Perpetual Innovation

Category: USA Federal Debt

  • The ugly truth about our trade deficit with China.:-(

    The China Question premiers on CNBC on Friday night, June 3rd at 8pm.

    This looks like it is going to be the story that I’ve been looking for years. The symbiotic relationship that we have with trade-deficit to China. 

    They subsidize our spending habits (US & EU) with their artificially cheap currency. Then with the $ dollars and Euros from their trade surpluses,  they buy stuff. They buy our Treasuries to keep our Federal Debt a float. They have a high savings rate, where we have a fractional private savings rate (deficit for government, of course). They keep their currency artificially low so they can continue to export. Literally they are paying us to buy their products of toys and such. But that relationship cannot, and will not, last forever. The relationship is NOT sustainable.
    Both a trade deficit and a federal deficit are automatically “fixed” over time by the devaluation of the currency.

    Let’s see what the show has to offer.

  • US’s looming Federal Debt crisis as described by Dave Cote of Honeywell.

    US’s looming Federal Debt crisis has to be addressed, and soon. Maybe not before the end of this week when the Federal government might shut down without a 2011 budget allocation. But soon.

    Check out this video for the Committee for Economic Development: http://www.youtube.com/watch?v=-1DKIg2CcLk  (5min)

    Or we can delay and let the debt market and the IMF help use with austerity decision.

    My favorite, always is the national debt clock: http://www.usdebtclock.org/

    Any comments on its accuracy are welcome. Seem pretty accurate though. When the Federal government has already spent all the money it gathered for Social Security and Medicare and the Baby Boomers all start to retire and start to require that money… It’s gonna get ugly. Very ugly:-(

    The question is how soon and how quickly we can start to dig ourselves out the hole we’re in. Cote suggests both tax increases and spending cuts. For sure we have to get the 10% growth rate per year in SS & Medical expenses under central. But ever since “W” Bush we have cut taxes and increased spending. That was before we got into a recession and decided to stimulus-spend our way out of it… Only at the Federal government can that make any sense.