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      07-23-2011, 08:50 AM   #221
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Originally Posted by pman10 View Post
You're welcome for the Econ 101 lesson
Iff economists understood economics 101 a bit better, then perhaps they wouldn't be embarrassing themselves (and their profession) so consistently. The profession has become SO bad that there's an award given to economists that actually get things right:

http://rwer.wordpress.com/2010/05/13...r-economics-2/

The money quote:
"The general failure to warn of the approaching Global Financial Collapse demonstrated that within the economics profession today the general level of competence at real-world economics is grievously less than what society requires. Worse, the economics establishment has attempted to evade all responsibility for the Global Financial Collapse by calling it an unpredictable, “Black Swan” event..."
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      07-23-2011, 11:06 AM   #222
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Thanks for the good laugh......yes I understand how fractional banking works......most of the money in circulation today is created from loans made by banks using fractional banking...they loan out 10:1 more money than they have in deposits...they now bypass the 10:1 rule by sweeping your money deposited into money mkts from checking accts, hence they can now lend out all your money and grow that 100% via loans...guess where this new money(via loans) came from?...nowhere, it is created out of thin air but you know this huh? haha.

You say when the Fed Reserve and the Treasury Dept create money its not out of thin air huh?...you obviously have no idea how they create money then...the govt creates money by printing treasuries and selling them and this money is created out of thin air as a loan is debt and debt is money, its backed by nothing but an empty promise....when the Fed Reserve buys treasuries from the govt or MBS's from banks, where do you think the money came from??...it came out of thin air, hence the term "printing out of thin air"...its not literally printed but rather expressed as a bunch of 0's on a computer and wired...this money isnt backed by anything...it is created via a computer hence we get inflation...the US dollar has decreased in value by 98% since the Fed inception and this is a true reflection of "printing" money and decreasing the value of it.


Youre right about one thing, creating debt and using debt needs to be used responsibly...but has this ever happened?...humans are predictable, they rape and pillage the financial system to fatten themselves and leave everything else behind, now that I can count on...so we must protect ourselves in sensible ways.

Btw, you are welcome for the 401 econ lesson...I am enrolling more students for online courses now..




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This makes very little sense.

You don't seem to understand the concept of debt financing. The idea is that one takes out a loan, and then puts that money to work to gain returns in EXCESS of the interest owed. From a government perspective, this means stimulating the economy in such ways that tax revenues exceed expenditures (interest payments, among other things).

You are somewhat correct in stating how U.S. monetary policy has operated in recent years, however. The goal until now has been to borrow enough in order to pay off interest on previous loans. This to date has been feasible, as U.S. bonds carry extremely low interest rates. The real issue comes when financing has 'super-economic' motives, such as national defense or other areas whose economic value cannot be easily illustrated. Until the government breaks free of this pattern, however, we will forever be in a pattern of spiraling deficits and total debt.

P.S. - the Federal Reserve/ Treasury Dept. are NOT 'creating money out of nowhere'. That's called printing money. Go look and see what happened when they did that in Zimbabwe, or in Germany in the 1930's. You'll get inflation rates in the thousands of %, if not higher. That is NOT what is going on at the moment.

Debt financing (what the US government engages in) is a very different concept. You are relying on the multiplier effect of money: people deposit money in a bank, that money is loaned out to others (eg. the government), who then spend that money (such as on new roads), and the earners of that cash turn around and deposit or invest that money in another bank. In effect, you are MULTIPLYING the utility of existing money. It's a very powerful concept, and allows far greater access to capital (and hence increased economic activity). But it has to be used responsibly. There is nothing sinister or terrible about this - it is one of the fundamental pillars of capitalism.

You're welcome for the Econ 101 lesson
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      07-23-2011, 11:40 AM   #223
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Originally Posted by mact3333 View Post
Thanks for the good laugh......yes I understand how fractional banking works......most of the money in circulation today is created from loans made by banks using fractional banking...they loan out 10:1 more money than they have in deposits...they now bypass the 10:1 rule by sweeping your money deposited into money mkts from checking accts, hence they can now lend out all your money and grow that 100% via loans...guess where this new money(via loans) came from?...nowhere, it is created out of thin air but you know this huh? haha.

You say when the Fed Reserve and the Treasury Dept create money its not out of thin air huh?...you obviously have no idea how they create money then...the govt creates money by printing treasuries and selling them and this money is created out of thin air as a loan is debt and debt is money, its backed by nothing but an empty promise....when the Fed Reserve buys treasuries from the govt or MBS's from banks, where do you think the money came from??...it came out of thin air, hence the term "printing out of thin air"...its not literally printed but rather expressed as a bunch of 0's on a computer and wired...this money isnt backed by anything...it is created via a computer hence we get inflation...the US dollar has decreased in value by 98% since the Fed inception and this is a true reflection of "printing" money and decreasing the value of it.


Youre right about one thing, creating debt and using debt needs to be used responsibly...but has this ever happened?...humans are predictable, they rape and pillage the financial system to fatten themselves and leave everything else behind, now that I can count on...so we must protect ourselves in sensible ways.

Btw, you are welcome for the 401 econ lesson...I am enrolling more students for online courses now..
Issuing treasury bills is NOT creating money. The government is not printing money (well, not directly, anyway) to issue these treasury bills. This is simple debt financing, and no different than a large corporation issuing debt paper. If you read my previous post, you will note that I explain the difference - which deals with buyer expectations that government debt is a relatively safe asset to hold, thus making the cost of borrowing cheaper for the government. But the government is NOT expanding money supply by issuing debt - it is simply the transferral of money from one hand to another.

I think the issue here is that we have different definitions of what constitutes 'printing' money. I tend to agree with the Fed, that only Quantitative easing is printing money. You seem to believe that Open Market Operations (conducted by the Fed over the course of its entire history), is printing money - which I believe is expansion of the monetary BASE, not the money supply (which relies on the multiplier effect). That is the reason why the Money Supply held stagnant after the recent financial crisis, in spite of quantitative easing. So agree to disagree

Getting back on topic and to more civil discourse - your thoughts on the current debt limit debate?
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      07-23-2011, 11:45 AM   #224
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Originally Posted by pt View Post
Iff economists understood economics 101 a bit better, then perhaps they wouldn't be embarrassing themselves (and their profession) so consistently. The profession has become SO bad that there's an award given to economists that actually get things right:

http://rwer.wordpress.com/2010/05/13...r-economics-2/

The money quote:
"The general failure to warn of the approaching Global Financial Collapse demonstrated that within the economics profession today the general level of competence at real-world economics is grievously less than what society requires. Worse, the economics establishment has attempted to evade all responsibility for the Global Financial Collapse by calling it an unpredictable, “Black Swan” event..."
That's not entirely true. Economists had some ability to forecast the financial collapse - but no one believed them.

Read about the inverted Treasury yield curve that was seen in 2006. Or the predictions that the housing collapse would bear a significant effect on the greater economy.

And seriously man, your source is a blog?
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      07-23-2011, 02:13 PM   #225
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Congratulations Tea Party loons. Your efforts to close down America would be applauded if not for the fact that as America falls next month so does the rest of the world.
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      07-23-2011, 02:18 PM   #226
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On the literal debate: The other day a plan very similar to Bidens and Obamas passed the house 230-194 but failed in Reid's senate 51-46 because there were no tax increases. Now Obama's saying, "can the republicans not say no to everything" or something which is hypocritical as Obama didn't want a plan that was full of compromises to pass. Now the deadlines getting really close and nothings getting done.
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      07-23-2011, 03:08 PM   #227
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Originally Posted by pman10 View Post
That's not entirely true. Economists had some ability to forecast the financial collapse - but no one believed them.

Read about the inverted Treasury yield curve that was seen in 2006. Or the predictions that the housing collapse would bear a significant effect on the greater economy.

And seriously man, your source is a blog?
Here's another source - I'm always happy to keep the bar high.

Why Economists Failed to Predict the Financial Crisis

http://knowledge.wharton.upenn.edu/a...articleid=2234

Back on topic, I just don't see anyone taking leadership of the debt ceiling talks. I'm not there to see things happen or anything and I could be wrong about this, but this just looks like mass incompetence spiraling out of control.

When the 2-Aug deadline passes, when is the next deadline?
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      07-23-2011, 04:41 PM   #228
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Once again you fail at understanding where money comes from...approx 35-50% of treasury auctions are purchased by the Fed right now otherwise bond treasury prices would collapse...ya see, the Chinese have pulled back significantly and Japan isnt buying anymore...even the middle east has curtailed its purchases...so when the fed's start buying govt debt, where does the money to buy the treasuries come from?...thats right out of thin air...they print(electronically) it up, in most circles this is called counterfeiting...even when the US govt prints up IOU notes called treasuries, which have value, its backed by nothing so they too are printing money(not literally) since someone is willing to pay for them with money....so you still think this is no different than a corporation issuing debt???......dont see the Fed's buying Microsoft debt with funny money....

Well, you might say the national debt will be paid back one day...dream on...there is no way the US will ever pay back this debt unless hyperinflation gets so bad that it will take a wheel barrow to buy a loaf of bread Weimer style...then 13T could be 10 million using current exchange rates.

Wanna know what the US govt's obligations are over the next 30 yrs or so???...100T!!!!...with Medicare, SS and Medicaid(medicare being the majority of it), there isnt enough money in the world to pay this back or pay for it(unless we get severe inflation in which gas will be 20.00 a gallon)...the planets entire liquid net worth is 100T...ya see, its a ponzi scheme that will end badly one day...you can prepare for this or continue to "kick the can down the road" as we are currently doing.

And of course we will raise the debt ceiling...if you understood what I have said many times on this thread you would know that I believe this will happen and I pretty know it will happen as our economy is premised on expanding debt(money) perpetually in order to survive...look up the definition of a ponzi scheme and tell me our economy is.

You really should youtube or wiki or something and learn about the Federal Reserve, fractional banking, and treasury auctions...cause you still dont seem to grasp where money is created...money IS debt!!!!!!!!!!!!...when you create debt you are creating money.


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Issuing treasury bills is NOT creating money. The government is not printing money (well, not directly, anyway) to issue these treasury bills. This is simple debt financing, and no different than a large corporation issuing debt paper. If you read my previous post, you will note that I explain the difference - which deals with buyer expectations that government debt is a relatively safe asset to hold, thus making the cost of borrowing cheaper for the government. But the government is NOT expanding money supply by issuing debt - it is simply the transferral of money from one hand to another.

I think the issue here is that we have different definitions of what constitutes 'printing' money. I tend to agree with the Fed, that only Quantitative easing is printing money. You seem to believe that Open Market Operations (conducted by the Fed over the course of its entire history), is printing money - which I believe is expansion of the monetary BASE, not the money supply (which relies on the multiplier effect). That is the reason why the Money Supply held stagnant after the recent financial crisis, in spite of quantitative easing. So agree to disagree

Getting back on topic and to more civil discourse - your thoughts on the current debt limit debate?
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      07-23-2011, 04:49 PM   #229
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Congratulations Tea Party loons. Your efforts to close down America would be applauded if not for the fact that as America falls next month so does the rest of the world.
Do you even have a clue what the Tea Party stands for?...doubt it...ignorance is bliss my friend...Tea Party is trying desperately to save America.

1. smaller govt
2. back the currency with something tangible(ie-gold) to curb inflation
3. no foreign wars unless directly provoked
4. limit welfare/social handouts
5. limit govt red tape and agencies that tie the hands of corp's
6. limit income taxes and allow small business to grow
7. limit the Fed Reserve

Do I agree with everything they stand for?..no...but they are essentially what the conservatives were many decades ago before they morphed into being semi-fascists...people should look up what fascism means and tell me we arent headed there.
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      07-23-2011, 05:07 PM   #230
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again in this thread.....mact knows everything.
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      07-23-2011, 05:39 PM   #231
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again in this thread.....mact knows everything.
Not everything, but abit more than you......osgal nasho..hehe.
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      07-23-2011, 06:05 PM   #232
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Yes, the way to save America is to make it effectively bankrupt, show the world once again how the leader of the free world can't afford to educate its kids or look after its elderly, and win friends by crippling the global economy by setting off the 2nd great economic crash of the last few years.

You in America like we in the UK print the currency your debts are issued in. Our debts are not particularly high set against history, and unlike most of the big European economies we remain in control of our economies. Crashing America and the Dollar with it - and the rest of us following - is not the way to "save" America. Unless of course you think America is evil and actually you need to abolish government and go back to some dreamed of utopia that never happened.

I think the wrong side won your civil war. You could have a CSA for the loons, give them Fox News and see how much they enjoy living an Amish lifestyle whilst those Americans with brains get on with civilisation. This has gone beyond left and right (mind you, even your "liberal" politicians sit on the right of the political spectrum), its fundamentalist frootloops trying to save the country by destroying it. Suicidal anarchy doesn't sit on left or right, it has its own separate padded cell.
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      07-23-2011, 06:08 PM   #233
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Not everything, but abit more than you......osgal nasho..hehe.
you do know osgal is a highly disrespectful word right?
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      07-24-2011, 07:37 PM   #234
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Do you even have a clue what the Tea Party stands for?...doubt it...ignorance is bliss my friend...Tea Party is trying desperately to save America.

1. smaller govt
2. back the currency with something tangible(ie-gold) to curb inflation
3. no foreign wars unless directly provoked
4. limit welfare/social handouts
5. limit govt red tape and agencies that tie the hands of corp's
6. limit income taxes and allow small business to grow
7. limit the Fed Reserve

.

That's funny, because the Tea-Party Republican House campaigned on something that isn't even on that list (Jobs). And not only have they failed to pass a single Jobs Bill, they have instead passed bill after bill trying to create State Control over exactly what goes in and comes out of woman's orifices.

Regardless of rhetoric, what the tea party has actually done is to turn the GOP into the Grand Orifice Party, infatuated with draconian orifice control.
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      07-24-2011, 07:49 PM   #235
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Thanks for the good laugh......yes I understand how fractional banking works......most of the money in circulation today is created from loans made by banks using fractional banking...they loan out 10:1 more money than they have in deposits...

:

blah blah <PaulTard talking points> blah blah <increasing the money supply is bad> blah blah blah....


The truth is that population growth excludes a closed dollar. The number of dollars in circulation always has to increase to reflect the increased commerce, trade, consumption, and ownership that increases each decade. If the total number of dollars in circulation now were the same as in 1900, the entire monitary system would have crashed long ago. Increase in product, population, and ownership all require an increase in money circulation. That isn't creating money out of thin air, that is the accumulated added value of decades of labor creating value and infrastructure.

If the total number of dollars in circulation were the same as in 1900, then dollars would be very rare and hard to find. In order to earn a single dollar, you would need to work days and days because with a capped dollar, it takes more and more to get a dollar from someone who already has one. Each year, as wealth and populations grow, you would have to work more and more days just to earn that single dollar bill.

Putting an artificial cap on commerce, trade, consumption, and ownership based upon any non-sequitor like the tons of rocks dug out of the earth adds nothing to the economic system. Digging rocks out of a hole and pretending it has value is just as much creating money out of thin air.

PaulTard small-minded talking points don't actually address anything real in the actual world. Sadly, that's all you've ever offered is more and more PaulTard talking points.

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      07-25-2011, 12:01 AM   #236
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You are clueless I see.......when you understand how money is created and what money actually is, get back to me...I believe you are hopeless...Bill Maher is on HBO on Friday nights but you know this already...

Your remarks make it quite clear you dont understand fractional banking or how the Fed Reserve creates money...please do some dd and get back to me...

BTW, Ron Paul is 10X the man you will ever be...truth.


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blah blah <PaulTard talking points> blah blah <increasing the money supply is bad> blah blah blah....


The truth is that population growth excludes a closed dollar. The number of dollars in circulation always has to increase to reflect the increased commerce, trade, consumption, and ownership that increases each decade. If the total number of dollars in circulation now were the same as in 1900, the entire monitary system would have crashed long ago. Increase in product, population, and ownership all require an increase in money circulation. That isn't creating money out of thin air, that is the accumulated added value of decades of labor creating value and infrastructure.

If the total number of dollars in circulation were the same as in 1900, then dollars would be very rare and hard to find. In order to earn a single dollar, you would need to work days and days because with a capped dollar, it takes more and more to get a dollar from someone who already has one. Each year, as wealth and populations grow, you would have to work more and more days just to earn that single dollar bill.

Putting an artificial cap on commerce, trade, consumption, and ownership based upon any non-sequitor like the tons of rocks dug out of the earth adds nothing to the economic system. Digging rocks out of a hole and pretending it has value is just as much creating money out of thin air.

PaulTard small-minded talking points don't actually address anything real in the actual world. Sadly, that's all you've ever offered is more and more PaulTard talking points.
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      07-25-2011, 10:40 AM   #237
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You are clueless I see.......when you understand how money is created and what money actually is, get back to me...I believe you are hopeless...Bill Maher is on HBO on Friday nights but you know this already...

Your remarks make it quite clear you dont understand fractional banking or how the Fed Reserve creates money...please do some dd and get back to me...

BTW, Ron Paul is 10X the man you will ever be...truth.

Your non-response is very telling. The moment you don't have a Ron Paul talking point being fed to you like a biscuit to a little doggie, you can't actually give an intelligent response.

The cold hard economic facts are that the money supply MUST increase, as I explained in my previous post. The sad thing is that you can't stop humping Ron Paul's leg long enough to think it through and realize I'm right.

Your fecalpheliacticstuphoria is shrinking you down to tiny mindless ban-bait again.
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      07-25-2011, 10:52 AM   #238
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Quote:
Originally Posted by mact3333 View Post
You are clueless I see.......when you understand how money is created and what money actually is, get back to me...I believe you are hopeless...Bill Maher is on HBO on Friday nights but you know this already...

Your remarks make it quite clear you dont understand fractional banking or how the Fed Reserve creates money...please do some dd and get back to me...

BTW, Ron Paul is 10X the man you will ever be...truth.

Your non-response is very telling. The moment you don't have a Ron Paul talking point being fed to you like a biscuit to a little doggie, you can't actually give an intelligent response.

The cold hard economic facts are that the money supply MUST increase, as I explained in my previous post. The sad thing is that you can't stop humping Ron Paul's leg long enough to think it through and realize I'm right.

Your fecalpheliacticstuphoria is shrinking you down to tiny mindless ban-bait again.
Oooo. Using big words to seem like a smart boy aren't you? You don't know half of what you're talking about. Yes, obviously there's more money floating around than 100 years but that doesn't mean we should keep printing more as we have gotten to the point where our dollar is nothing and inflation is at record highs. Mr. Encyclopedia, why don't you brush up on your history and see that we're doing what Germany did back in the late 1940's to pay off its debts after it lost the war.
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      07-25-2011, 11:30 AM   #239
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Oooo. Using big words to seem like a smart boy aren't you? You don't know half of what you're talking about. Yes, obviously there's more money floating around than 100 years but that doesn't mean we should keep printing more as we have gotten to the point where our dollar is nothing and inflation is at record highs. Mr. Encyclopedia, why don't you brush up on your history and see that we're doing what Germany did back in the late 1940's to pay off its debts after it lost the war.
You're a retàrd. What is the current rate of inflation?
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      07-25-2011, 12:00 PM   #240
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Yes, obviously there's more money floating around than 100 years but that doesn't mean we should keep printing more as we have gotten to the point where our dollar is nothing and inflation is at record highs. Mr. Encyclopedia, why don't you brush up on your history and see that we're doing what Germany did back in the late 1940's to pay off its debts after it lost the war.
Yes, I am claiming that the fact that there is more money in circulation than 100 years ago, and 50 years ago, and 20 years ago is proof that a correctly functioning monitary system REQUIRES regular increases in the number of dollars in circulation. This is how it has always worked, and how it will always HAVE to work into the future. It is a basic law of macro-economics that is set in stone, no matter what the Ron PaulTard himself tells you. It is true for US dollars, for European currency, for Asian currencies, and all functional currencies. It is true over the last 100 years, 500 years, and 1000 years.

You don't have to go that far back in history to the 1940's. Ronald Reagan ran our debt up to the equivalent of 17-18 TRILLION in debt, adjusted for inflation in current dollars. Much of the COST of that debt under Ronald Reagan has been inflated away instead of being paid off. Are you trying to compare Ronald Reagan to Hitler?

Our current inflation rate is nowhere near record highs, either inside this country or outside this country. You don't have to go back any further than the 1980's under Reagan to see how wrong you are about inflation being at record highs right now. What we do have is a bubble in the commodity market, but that is so fundamentally different than "inflation at record highs" that it isn't even funny.

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      07-25-2011, 01:34 PM   #241
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Personally I don't believe either D's or R's will let the country default. Both sides are currently posturing for political advantage. There will be a resolution before August 2nd. The question is whether it will be a real plan to deal with the deficit which includes entitlement reform (cuts to entitlements) and true tax reform (revenue enhancements) or a temporary "kick the can down the road" deal which will become the central issue in the next election.

Any predicitons on what the resolution will be?
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      07-25-2011, 01:42 PM   #242
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Quote:
Originally Posted by BKsBimmer View Post
Personally I don't believe either D's or R's will let the country default. Both sides are currently posturing for political advantage. There will be a resolution before August 2nd. The question is whether it will be a real plan to deal with the deficit which includes entitlement reform (cuts to entitlements) and true tax reform (revenue enhancements) or a temporary "kick the can down the road" deal which will become the central issue in the next election.

Any predicitons on what the resolution will be?
McConnell's resolution to raise the debt ceiling without any changes, and calling it Obama's (which Obama accepted as an option).

Then come 2012, Boehner and Cantor are both out of congress.
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