Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

United States loses AAA credit rating from S&P

reuters.com

Post reply on HN
Print view View original

431–440 of 518 posts

Re: United States loses AAA credit rating from S&P

#431

Post by muzz »

dvogel wrote: post #267
ubernostrum wrote: post #200

Earlier quoted context omitted.

Except for the gaping hole in the fence, which dictates that the trust funds have to invest in Treasury bonds. Which means the money goes in and straight back out again, and that threats of default carry an implicit threat of "Social Security won't be able to pay out".

Thus far the risk of investing the SS surpluses into any investments other than US treasuries far out-weighed the risk of the US choosing to make SS forgive the debt incurred by said treasuries. I've often argued that SSA should be allowed to invest some portion of the surplus (perhaps 10-20%) in AAA-rated municipal bonds. Perhaps the downgrade today will prompt more people to consider this.

Isn't reducing the conflict of interest a small price to pay for slightly higher risk? Currently, Congress can "save" money by cutting benefits to Social Security receipients and use that money to pay off the bonds owed to Social Security.

Re: United States loses AAA credit rating from S&P

#432

Post by jpdoctor »

noagenda wrote: post #214
pyoung wrote: post #78

Earlier quoted context omitted.

It's a little more complicated than that. Treasury bonds are actively traded on secondary markets. The 'price goes down, yield goes up' generally refers to secondary markets. The concern for the U.S. govt isn't the secondary market. It is the primary market where they auction off bonds to raise money to fund operations. In the primary market, the U.S. treasury issues a certain number of bonds in order to raise a spec…

US government doesnt sell bonds to fund operations, it is never revenue constrained (because the US dollar is a non-commodity backed, floating exchange rate, fiat currency). It sells bonds to remove dollars from the system.

> US government doesnt sell bonds to fund operations

Yes it does.

> It sells bonds to remove dollars from the system.

No. The Fed is in charge of the money supply, and when they sell bonds, dollars are removed from the system.

The US Govt selling bonds actually increases various measures of the money supply.

Re: United States loses AAA credit rating from S&P

#433

Post by tsotha »

bgentry wrote: post #421
tsotha wrote: post #279

Earlier quoted context omitted.

The program is popular and self-sustaining. Social Security was never self-sustaining. It's doomed by demographics and has been since the day it was enacted.

You an accomplish italics/quotes using asterisks, like so

Yeah, I know. I get mixed up sometimes going from one blog to another. Is this system really easier that just going straight HTML?

Re: United States loses AAA credit rating from S&P

#434

Post by notatoad »

CamperBob wrote: post #247
geuis wrote: post #52

(Reference: http://www.federalbudget.com/ ) Steps to recovery: 1) End all offensive military actions overseas. Finish winding down Iraq and abandon Afghanistan wholesale. These actions have cost several trillion dollars over the last 10 years. We can't get that money back, but we can stop spending more. 2) Defense spending is in the top 3 highest budget expenditures. Cut it by 1 third across the board. Maintain impor…

End all offensive military actions overseas. Finish winding down Iraq and abandon Afghanistan wholesale. These actions have cost several trillion dollars over the last 10 years. We can't get that money back, but we can stop spending more. Once you realize that the military is not a collection of armed forces so much as it is the US's largest social welfare program, these policies and figures start to make more sense.…

i see this point made every time the discussion about military spending comes up, and i hate it so so much.

what this argument boils down to, for me, is "we need to keep killing foreigners so that our economy doesn't suffer", and this is a morally reprehensible position.

Re: United States loses AAA credit rating from S&P

#435

Post by zzzeek »

geuis wrote: post #52

(Reference: http://www.federalbudget.com/ ) Steps to recovery: 1) End all offensive military actions overseas. Finish winding down Iraq and abandon Afghanistan wholesale. These actions have cost several trillion dollars over the last 10 years. We can't get that money back, but we can stop spending more. 2) Defense spending is in the top 3 highest budget expenditures. Cut it by 1 third across the board. Maintain impor…

more liberal than conservative yet no suggestion to raise taxes which are at their lowest levels in 50 years (http://www.chamberofcommerce.com/business-advice/tax-prepara...) ? not even on billionaires sucking the government dry via the bush tax cuts (http://voices.washingtonpost.com/ezra-klein/2010/11/the_bush...) ?

Re: United States loses AAA credit rating from S&P

#436

Post by redthrowaway »

stcredzero wrote: post #414
redthrowaway wrote: post #315

Earlier quoted context omitted.

That's been important, but it's not the only factor. Yes, intactness of American industry after WWI&II was key. It certainly gave the US a big leg up in post-war industry and rebuilding. Imigration was a huge driver of the economy when it came primarily from Europe, and professionals were over-represented. Demographics can't be ignored, but neither can they tell the whole picture. I'm not trying to insinuate that the…

As such, the commonly-held libertarian view that an end to military adventurism will be a boon for the US economy strikes me as naive. Driving economic activity by having the military act as a major consumer is really just running on a treadmill. We need to find an outlet which will lead to increases in economic activity. There is a huge investment hurdle involved, but space exploration and colonization could fit the…

>Driving economic activity by having the military act as a major consumer is really just running on a treadmill.

I think you're missing my point. It's not that military spending drives manufacturing, service, and R&D industries (although it does), it's that direct military action has often been, and is often used to promote US economic interests. See the military's actions in Latin America in support of United Fruit, military support of right-wing (pro-US and pro-business) dictators everywhere, or the military-political interventions in the Middle East in support of energy interests.

My contention is not simply that making tanks is an economic activity that many people benefit from, but that those tanks are used to assert and defend economic dominance, which has a massive spillover effect for other industries.

Re: United States loses AAA credit rating from S&P

#437

Post by rmrm »

digikata wrote: post #405
cookiecaper wrote: post #390

Earlier quoted context omitted.

I strongly disagree that retirement accounts should be mandated by the government. If people won't save for retirement, they should understand that the government can't help them. This philosophy that the peon is too stupid and/or undisciplined to manage his own accounts and that the government must protect him from himself is what gets us into huge messes like this in the first place.

So what do we do with people at the end of their working years, who, through bad luck or bad design, ended up with nothing. Do we stand by and let them suffer and die?

You could devise a means tested welfare for elderly people. There are a lot of perfectly wealthy, perfectly capable people who retire at 60 whatever for no apparent reason other than ss and tax advantaged accounts make it seem like its time. I am a big fan of retirement, and I think safety nets for the disadvantaged are a good idea. I don't think we need a retirement safety net, however, or to make a retirement an entitlement.

Re: United States loses AAA credit rating from S&P

#438

Post by dreamdu5t »

bermanoid wrote: post #327
sliverstorm wrote: post #306

Earlier quoted context omitted.

If you really try, you can cut the entire budget into smaller parts Sure. And just because it's a small fraction doesn't mean it shouldn't ever be addressed. But should a 0.5% line item take precedent over three items which combined total to 70%? When you need drastic improvement fast, it's just a waste of time to dally on pet agendas that don't represent a significant chunk. Get to them later when you have the time…

But should a 0.5% line item take precedent over three items which combined total to 70%? Is it any less of a waste of time to talk about those three items, each of which is considered a core concern of one of the two parties in control and will likely never be properly gutted? If you can't afford the shit that you're unwilling to live without, you need to find a way to make more money. To me, America seems to be in t…

You can't just tax to cover whatever you spend. Historically, great revenue comes with greater spending. There must be a limit to taxation in order for the economy to function.

You cannot raise enough taxes to balance the budget. Based on income, you'd have to raise approx. 175%. Based on all taxes you'd have to raise by 50%! Such enormous tax increases would destroy business, investment, and people's paychecks. We want more people paying the same rates through economic growth.

It's not a waste of time if you want to balance the budget to focus on medicare and the military, but addressing the war on drugs is. I already provided numbers proving this. The fact that two parties aren't addressing them is why everyone is pissed off and freaked out. Neither party has introduced a budget that is balanced, or even on a path to being balanced.

Poeople don't want taxes raised, but they don't want medicare cut. So they borrow. And borrow. And borrow... and now borrowing is hurting us because we've done it so much. Eventually we won't be able to borrow anymore. Infinite borrowing is consequentially the same as defaulting.

Fareed Zakaria said in February 2010: "But, in one sense, Washington is delivering to the American people exactly what they seem to want. In poll after poll, we find that the public is generally opposed to any new taxes, but we also discover that the public will immediately punish anyone who proposes spending cuts in any middle class program which are the ones where the money is in the federal budget. Now, there is only one way to square this circle short of magic, and that is to borrow money, and that is what we have done for decades now at the local, state and federal level...So, the next time you accuse Washington of being irresponsible, save some of that blame for yourself and your friends."

Re: United States loses AAA credit rating from S&P

#439

Post by zg »

bubbleRefuge wrote: post #409
cookiecaper wrote: post #390

Earlier quoted context omitted.

I strongly disagree that retirement accounts should be mandated by the government. If people won't save for retirement, they should understand that the government can't help them. This philosophy that the peon is too stupid and/or undisciplined to manage his own accounts and that the government must protect him from himself is what gets us into huge messes like this in the first place.

Actually retirement accounts are demand leakages. For example quantity theory of money gives us MV=PY money * velocity = prices * quantity of goods/services produced. So if money is squirreled away in retirement accounts it is no longer circulating in the economy and in order to maintain the same level of economic activity we have to 'make up' for the lost M. So retirement accounts are a drag on the economy.

Retirement accounts aren't usually held entirely in cash except very near the end. For younger people the bulk would be invested in equity i.e. funding businesses and thus being fed back into the economy.

Re: United States loses AAA credit rating from S&P

#440

Post by russell »

stcredzero wrote: post #414
redthrowaway wrote: post #315

Earlier quoted context omitted.

That's been important, but it's not the only factor. Yes, intactness of American industry after WWI&II was key. It certainly gave the US a big leg up in post-war industry and rebuilding. Imigration was a huge driver of the economy when it came primarily from Europe, and professionals were over-represented. Demographics can't be ignored, but neither can they tell the whole picture. I'm not trying to insinuate that the…

As such, the commonly-held libertarian view that an end to military adventurism will be a boon for the US economy strikes me as naive. Driving economic activity by having the military act as a major consumer is really just running on a treadmill. We need to find an outlet which will lead to increases in economic activity. There is a huge investment hurdle involved, but space exploration and colonization could fit the…

While I'm an avid supporter of space exploration, it is not the cure for our economic stagnation. Much better are infrastructure improvements: replacing aging bridges, high speed rail, high speed communications, electrical transmission lines. Better to support solar, wind and nuclear energy than to wage wars in the middle east.
Post reply on HN