Can the ponzi last through the next election cycle?
Fitch downgraded the United States’ long-term credit rating as expected. This is basically the reason:
Thank you Barak, Donald, Joe, Janet, Jerome, Ben, US Congress et al.
My question is, can the ponzi last through the upcoming election cycle? Instability rears its ugly head from time to time like an alcoholic realizing he is slipping into the abyss. SVB bank, commercial real estate, Fitch credit ratings....
How easy or difficult will it be for the party in power to pin it on the other party?
Oh well, I guess we'll just let the good times roll... for now.
When you spend fifty years trying to create a business economy where those same businesses evolve into huge corporations making ever more demands of it's workforce without paying them their economic due to re-enforce the profit margin without paying their share of the tax burden when recession and depression and finally COVID strikes and you DEMAND the government of the day continually BAIL YOU OUT to the point where you suck the country dry and workers would rather sell up and move in with their folks without the stupidity of folk at the top constantly rearranging the lifeboats as 'the unsinkable ship' starts to take on water (enough with the analogies you get where this is going) There was only one way this was going to end.
@irishmolly72 Look at the number of corporations that made huge profits (and continue to do so today) during the pandemic. A simple web search will reveal tha corporations and individuals who paid zero income tax. The country is in dire need of maintenance/repair/replace/upgrade of our electrical grid, our water system, and highways/roads/bridges. They have been allowed to deteriorate because no $ was spent to maintain them. Revenue is desperately needed and that $ comes via higher taxes on those that can easily afford it.
This conversation is too difficult for me... also, I think it's too difficult for most of the people that commented here and I also think it goes above the head of the original poster.
The only thing I want to say about this:
1. Japan has a 263% debt to GDP, and yet they still have triple A ratings. The idea that your rating is linked to the debt, doesn't seem to be working in Japans' case. But Japan has a way more stable political system. Political parties, for as far as I know, don't use a tool like the "debt ceiling" to keep their political opponents hostage and create uncertainty if debts are going to be payed. For as far as I understand this material, I think the instability hurts the rating a lot more then the debt itself.
2. It's not a ponzi scheme. With a ponzi scheme, all people that put money in are not promised a quick and fixed returns. This is not the case with taxes to keep your state working. The word "ponzi" is just a pejorative term that politicians and activists use to poison the well and make people fall for what ever political narrative that the user of the term is selling at the time.
@irishmolly72 Are we moving the goalpost now? ... your entire post is:
This is the reason why we have a bad credit rating = "debt to GDP" => Get angry at establishment
You even put Obama on there... I wonder what you expect from Obama who inherrited a crisis. Maybe he should have started harsh measures of austerity in the middle of a crisis too crack down on the debt? Impoverish the general poppulation some more when they are already struggling. Hoping that the rich will invest in an economy in a point of time that they are actively holding back on investments.
I give one counter example, showing that this correlation doesn't nescessarily work. In other words... this idea that you have the right answer, seems unlikely. I'm not going to deal with a what-about-ism and someone that starts asking questions. This is your claim, if you think that this really is the reason then it's your job to figure out why this correlation doesn't always work and you need an argument why this is working for the US. But again... you, me, we haven't worked ourselves into this toppic at all. And unlike you, I'm not going to throw stuff against the wall and see what sticks. Or start talking about a subject where I use absolute claims: "this is it!", on a toppic that I know very little about. The only thing I know, is that the people that I listen too that discuss this issue, always tell me that it's not as simple as your claim.
@Kwek00 How am I claiming that it's simple? Barack, Donald, Joe, Janet, Jerome, Ben, US Congress et al. each contributed in their own unique and admittedly complex ways.
Yes, it can. But I'm glad people are finally waking up that this is a ponzi scheme.. America will make it last as long as they can. But China will pressure the rest of BRICS and the Saudis to pull out of the Petrodollar, which will send the US into freefall. The time they pick will be when the other currencies are relatively recovered, to buy up as much US real value (property , business and other assets) as they can with their own currencies..(Because the $US wont be the global trade currency any more..) And that will be the final battle of WW3, which is the economic war being won by the Chinese..😷
I'm not sure that's why it was downgraded. They mentioned it themselves. An erosion of governance. And it's not hard to pinpoint where that's coming from. That is, if you keep a foot in reality. Global investors would still rather carry U.S. bonds more than any other country in the world. And I have zero idea how ponzi scheme is relevant. Maybe you're not familiar with what a ponzi scheme is. Side note. The man's name is spelled BARACK. Good try though. America-haters will always find a way. But when they come from the U.S. I'll just never understand why they don't grow a pair and leave. Always strikes me as pure weakness. Gotta' be it.
Global investors would still rather carry U.S. bonds more than any other country in the world.
As with people and companies, governments that borrow have debt service payments and eventually have to pay back principal, which is painful. The only differences in their finances are that governments can confiscate wealth through taxes and indirectly through inflation, so that’s what we should expect to happen. Will this be a big problem? The answer is probably not much over the near term but probably a lot later.
And I have zero idea how ponzi scheme is relevant.
1) The scammer (US Government) running the Ponzi scheme attracts initial investors by promising unusually high returns on their investments in a short period. (Initial massive deficit spending. Thank you BARACK and Janet.)
2) Some early investors may indeed receive the promised returns (e.g. Obamacare etc), which helps to build confidence in the scheme and attract more investors. (voters supporting reckless fiscal policy)
3) However, instead of generating profits through legitimate business (GDP growth), the fraudster (US Government) uses the money invested by new participants (e.g. Gen X) to pay returns to earlier investors. (Baby boomers)
4) This creates the illusion of a successful venture. (illusion: US fiscal policy soundness)
5) As long as new investors keep joining (taxpayer compliance, voter acceptance) and some money keeps flowing into the scheme (Fed money printing), it can continue to pay returns to earlier stakeholders, sustaining the deception.
6) Eventually, as the number of new stakeholders diminishes (Gen Z), it becomes difficult to maintain the promised returns. At this point, the scheme collapses, and many investors (citizens who acted in good faith) are left with substantial losses. (Inflation and/or higher taxes and/or an actual default)
@Ynotisay "An erosion of Governance" is one of those catch all phrases. If we had to translate into English. "Things are getting worse and you arent doing anything to fix it" covers it. That doesnt help identify the cause. But it does help you see their thinking..😷
SW-User
The only reason that there is a downgrade is because one political party will raise the debt ceiling, an arbitrary, unconstitutional performance art law, quickly and quietly while their party is in power while using it as a hostage taking device every time the other party is in office. The names you should have on that list are: John Boehner, Mark Meadows, Paul Ryan, Donald Trump, Kevin McCarthy.
@irishmolly72 Unfortunately, you're beyond reason. What you listed was either wrong, irrelevant, and/or ignorant. If you're more intent on expressing hostility then I can't help you. If you want to behave like an adult I'd be happy to enlighten you. You do you.
The only reason given for the downturn was the Hatfield and McCoys political system that has taken over America since trump came on the scene...........and his stooges found out lying and division gets votes......so why stop now.
I don't think anyone can argue with the thinking that has made us a bad investment for foreign investors. If half of our political system don't even see a need to pay our past debts...that THEY largely incurred..............what does that do to foreign investor confidence that the bonds they buy will even have value in a few years............if Congress decides not pay interest on them?
The only thing that is hard to get is why now and not back when Republicans refused to pay our past debts?
@anythingoes477 That's a funny response to someone who has partly blamed Trump and the entire US Congress for this problem. I'm no Trump fan. Anyone who reads my posts know that. For every transgression you cherry picked about conservatives, I could pick many from the liberal side. Sadly, my carpel tunnel prevents me from listing them all. 😋
@irishmolly72 It's not a funny response to the wording in your post. And I hear this a lot on here,,,,,"you should know by reading my posts"..............like I should not respond unless I take time to FIRST drop everything and research every word someone else has ever said on SW first. ;-) I don't know anyone who is worth that kind of research.....on SW. ;-) But it's good people think they are that important to others. ;-)
Take your time. Put together a list of Dems who have even remotely done things like I mentioned above when someone they voted for didn't win. We'll wait. ;-)
@MasterLee Yes, Trump had to deal with the emerging Covid crisis. Biden/Yellen/Pelosi/Schumer used the waning crisis as an excuse to make the government FAR more gigantic and indebted.
Exessive wasteful military spending, $858 Billion just for FY2023, consumer debt and huge tax cuts for the wealthy are all dragging down the U.S. economy.
@LeopoldBloom In your graph, the first set of tall blue bars runs through the Obama presidency. The second set of tall blue bars runs from the Trump (who I oppose) during Covid through the first year of the Biden presidency.
The orange projections are, of course, fluff. Wait until SS and Medicare hits the fan. You haven't seen anything like those deficits yet!
My point was that Obama started the recent bout of insanely wasteful spending. Thank you for your graphical verification that this is true. 😘
@irishmolly72 At least the first year of any president's economic program will be most affected by his predecessor. Obama took office after the disastrous Bush presidency, just as Biden took office after the disastrous Trump presidency. Notice that the first large spike happened under Trump.
In reality, of course, Congress spends money, not the president, and in all of the above cases, complex, worldwide events are the main driver of the American economy, with the President having little or no effect, despite getting all the blame or credit.
Social Security and Medicare aren't discretionary spending, so they may not be shown on this graph. But that highlights another reality, that a significant portion of the federal debt is one part of the government owing money to another part. Any Social Security shortfall could be remedied by lifting the income contribution cap.
The nation is sick, inequality is record high and peace is off the table. The government hates funding the country but loves blowing things up "over there". You sure sound entitled to high ratings no matter what.
