1) That's right, you can't keep spending and not have money to spend with. I think that the Bush administration, as well as any administration should cut back on expenses. However, I see the Bush administration being the one to do that and not any possible Kerry administration.
2) Lenders don't just collect. That's not how bonds work. Bonds are structured for a certain time span and pay off principal and interest in a fixed or variable pattern for a set amount of time. Notes are short term. Anyway municipal bonds are usually at extremely high credits and pay little interest because they are safe - even California is still at a high credit rating. Federal bonds are rated pretty high and are not emerging market funds - American bonds are not speculative like some third world country. Furthermore, if the bonds are structured unfavorably because of market conditions at the time they can often be refunded or restructured at a new rate. I mean I can go on and on but this is something I never thought people actually thought of so I don't understand any sense of worry here. Investment banks are not like commercial banks - we help build things, we don't come in and collect the farm when you can't pay.
-Rudey
Quote:
Originally posted by DeltAlum
Timing is everything. Well, usually.
Here are two things that puzzle me, being the first to admit that I'm not a financial expert.
How can your cut taxes (income) and start a war (expense) at the same time? I asked a Conservative Republican Congressman that last year and he didn't have an answer -- and admitted it in so many words. I'm not all that smart, but it seems obvious to me that you can't keep on spending at record levels and cut back on the amount of money coming in.
Second, since deficit spending is really borrowing, what happens if the lenders decide to collect? That's a highly simplified question that I've heard argued on talk shows and NPR. Isn't that the way some American cities and even some small countries got into serious financial difficulties -- even went bankrupt?
I don't want to pay any more taxes than necessary, but infrastructure and at least some social programs have to be funded.
I personally think the current administrations fiscal policies are dangerous. But, as usual, that's simply an opinion.
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