“No Way Out” of Debt Trap, Gross Says: U.S. Living Standards Doomed to Fall

[DMX7]

The standard of living has been slowly declining over the last several decades. No new news here....

Not for the richest Americans thanks to dumbass republicans.

[coyotes_geek]

The political and financial elites created this crisis and have been consolidating and growing their wealth and power to absurd gilded age levels- but, but it's the fault of the middle class!

Actually it is. At least a good chunk of it. Who doesn't want to see en lement programs cut? The elites, or the middle class?

[coyotes_geek]

Do you guys realize how little of our debt China owns?

Today they own about $1.2 trillion. Five years ago they were under $300B.

So basically over those 5 years China has funded roughly 20% of our new debt.

[Jacob1983]

America is ed yet it's still a country.

[RandomGuy]

Do you guys realize how little of our debt China owns?

Of bigger concern than actual government debt is the balance of trade.

That is something I worry about far more than government debt, since it can be something that exacerbates a lot of other problems.

[RandomGuy]

Today they own about $1.2 trillion. Five years ago they were under $300B.

So basically over those 5 years China has funded roughly 20% of our new debt.

They kind of have to, given the trade imbalance, and their currency peg. The recent semi-"floating basket" is B.S. since that basket is likely dominated by dollars.

[ManuBalboa]

Politicians aren't elected for telling, and then acting on, the truth. They are elected for telling us what we want to hear and then giving us what we want. Of course we want low taxes and high spending, and the Fed to print enough currency to make it happen with minimal short term pain.

People paying taxes want lower taxes. People collecting benefits want higher spending.

Hence the entire game of making people dependent on the government. It's all a joke. They are never going to fix this. Every man for himself. Can't wait till the house of cards crumbles.

[Winehole23]

Money where his mouth is:

http://www.bloomberg.com/news/2011-0...e-reports.html

[The Reckoning]

actually, according to my macro prof last year, economists have already established our debt economy as just another market (like a stock market) that circulates treasuries through the globe by way of alternative markets driven by China. apparently China is profitting from our debt much like it profits from our consumption, so its very content with the situation.

so option 1

(note that the US has never defaulted on a loan)

[coyotes_geek]

actually, according to my macro prof last year, economists have already established our debt economy as just another market (like a stock market) that circulates treasuries through the globe by way of alternative markets driven by China. apparently China is profitting from our debt much like it profits from our consumption, so its very content with the situation.

so option 1

(note that the US has never defaulted on a loan)

That's all well and good from a macroeconomic standpoint. I agree that we don't need to worry about the U.S. defaulting. But the problem is that the debt markets don't give a about our standard of living. When it becomes necessary to lower the standard of living by raising taxes, cutting services and adopting an inflationary monetary policy so that we can continue to take on new debt, we can all rest assured that Uncle Sam will be up to the task. Uncle Sam knows full well that banks are more important than people.

If as an American taxpayer/citizen that scenario is acceptable to you, then by all means support the status quo.

[Marcus Bryant]

That's all well and good from a macroeconomic standpoint. I agree that we don't need to worry about the U.S. defaulting. But the problem is that the debt markets don't give a about our standard of living. When it becomes necessary to lower the standard of living by raising taxes, cutting services and adopting an inflationary monetary policy so that we can continue to take on new debt, we can all rest assured that Uncle Sam will be up to the task. Uncle Sam knows full well that banks are more important than people.

If as an American taxpayer/citizen that scenario is acceptable to you, then by all means support the status quo.

Remember that the low federal tax rates and open-ended federal en lements enjoyed by the middle class are the result of a conspiracy propagated by the neo-Robber Baron reactionaries.

[CosmicCowboy]

My generation will be the last to enjoy all the benefits...reasonably low taxes, positive business environment, social security, medicare....all the while voting for new and kicking our debt down the road for you young idealistic "progressive" guys to pay...

Thanks suckers!

[Marcus Bryant]

My generation will be the last to enjoy all the benefits...reasonably low taxes, positive business environment, social security, medicare....all the while voting for new and kicking our debt down the road for you young idealistic "progressive" guys to pay...

Thanks suckers!

Essentially. Of course, when they have to pay for it, the culprit will be the right-wing bogeyman of the moment.

[coyotes_geek]

Remember that the low federal tax rates and open-ended federal en lements enjoyed by the middle class are the result of a conspiracy propagated by the neo-Robber Baron reactionaries.

So true. The VRWC is forcing low taxes and en lements on us against our will.

[coyotes_geek]

My generation will be the last to enjoy all the benefits...reasonably low taxes, positive business environment, social security, medicare....all the while voting for new and kicking our debt down the road for you young idealistic "progressive" guys to pay...

Thanks suckers!

[RandomGuy]

Money where his mouth is:

http://www.bloomberg.com/news/2011-0...e-reports.html

Yields on Treasuries may be too low to sustain demand for U.S. government debt as the Federal Reserve approaches the end of its second round of quan ative easing, Gross wrote in a monthly investment outlook posted on Pimco’s website on March 2. Gross mentioned that Pimco may be a buyer of Treasuries if yields rise to attractive levels.

Treasury yields are about 150 basis points too low when viewed on a historical context and when compared with expected nominal gross domestic product growth of 5 percent, he wrote in the commentary. The Fed is scheduled to complete purchases of $600 billion of Treasuries in June.

Gross in his February commentary urged investors to reduce holdings of Treasuries and U.K. gilts and buy higher-returning securities such as debt from emerging-market nations. “Old- fashioned gilts and Treasury bonds may need to be ‘exorcised’ from model portfolios and replaced with more attractive alternatives both from a risk and a reward standpoint,” Gross wrote.

As much as we might be ing about the borrowing, the rates are at almost record lows.

That is going to change going forward.

[MannyIsGod]

That's all well and good from a macroeconomic standpoint. I agree that we don't need to worry about the U.S. defaulting. But the problem is that the debt markets don't give a about our standard of living. When it becomes necessary to lower the standard of living by raising taxes, cutting services and adopting an inflationary monetary policy so that we can continue to take on new debt, we can all rest assured that Uncle Sam will be up to the task. Uncle Sam knows full well that banks are more important than people.

If as an American taxpayer/citizen that scenario is acceptable to you, then by all means support the status quo.

Well, I hate to break it to you but considering the level of consumption from a purely material standpoint our standard of living requires, it coming down was completely inevitable. Such a small fraction of the world's population using such a high energy per capita was very unsustainable.

[Wild Cobra]

So true. The VRWC is forcing low taxes and en lements on us against our will.

I agree, they will be saying that when I'm in my 70's.

[FuzzyLumpkins]

William Gross born 1944 is a baby boomer.

[The Reckoning]

That's all well and good from a macroeconomic standpoint. I agree that we don't need to worry about the U.S. defaulting. But the problem is that the debt markets don't give a about our standard of living. When it becomes necessary to lower the standard of living by raising taxes, cutting services and adopting an inflationary monetary policy so that we can continue to take on new debt, we can all rest assured that Uncle Sam will be up to the task. Uncle Sam knows full well that banks are more important than people.

If as an American taxpayer/citizen that scenario is acceptable to you, then by all means support the status quo.

well, i was pointing out the fact that our debt isnt something that is waiting to be paid back in full or is in complete possession of china.

its a living, breathing market that cycles around the globe with much of the retention being in US markets. although the debt is something to note, i dont believe all the hysteria is warranted. the government, however, doesnt need to "test the waters" of how much debt it can issue out though. the market can only be supplied so much.

that said, for me "standard of living" is all relative. we'll always have a higher standard of living than our parents because of technological and industrial advances.

plus, ill always be content with what i have so long as im not being worked to death (or i hate what im doing), which is definitely a possibility due to the upcoming hiccup in the labor market when the baby boomers retire, and we have to cover social security. its not the debt that concerns me - its social security and military spending.

[FuzzyLumpkins]

that said, for me "standard of living" is all relative. we'll always have a higher standard of living than our parents because of technological and industrial advances.

To me this sentiment is a problem. There is zero justification for it in the face of ever so scarcer resources.

We figure out how to burn hydrogen in the atmosphere without producing nitrates or something?

[z0sa]

Oh no! We'll reap what we've sown! AH

[byrontx]

I'll just toss something out there for consideration but maybe globalization only benefits the hyper-capitalists by forcing those dwelling in lower economic stratas to compete with people of poorer nations. The effect would be to drive down wages and basically slap their ass in line. The U. S. protected its industries for nearly two-thirds of its existence with high tariffs and that seemed to work well for the average American. Maybe we need to toss this globalization mantra. Let China sell us those things we cannot make for ourselves and outside of that- 'em. The reality is that China and other nations do that to us.

I think that and a program of developing and deploying thorium reactors would get us back on our feet.

[Wild Cobra]

I'll just toss something out there for consideration but maybe globalization only benefits the hyper-capitalists by forcing those dwelling in lower economic stratas to compete with people of poorer nations. The effect would be to drive down wages and basically slap their ass in line. The U. S. protected its industries for nearly two-thirds of its existence with high tariffs and that seemed to work well for the average American. Maybe we need to toss this globalization mantra. Let China sell us those things we cannot make for ourselves and outside of that- 'em. The reality is that China and other nations do that to us.

I think that and a program of developing and deploying thorium reactors would get us back on our feet.

Our founding fathers were geniuses who realized that tariffs were necessary. I agree we need to go back to them to keep USA manufacturing compe ive in our own economy.

[Marcus Bryant]

Oh no! We'll reap what we've sown! AH

The American religion demands you seek repentance for your sins against something, apparently now called "sustainability."