Kent Spencer

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Why is the U.S. and Europe in so much debt? What can be the outcome if the debt continues to rise?

Please also list your solutions to solving these problems. Thanks!

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    Dec 14 2011: I am not too sure about Europe, but I feel that the U.S. has become a nation of consumers rather than producers. We make nothing and buy everything to support what I feel is a rather gaudy lifestyle.

    As far as a solution goes, the things we make as a nation make our nation. If we make nothing, then we shall become nothing.
  • Jan 2 2012: Ok the opossible out come may or may not be like this or in this oder. the U.S. will have riots all over and people would leave the country market would stop and desiese and such wouls spread because of water cut oifs and mdeical and such. The country would be in ruins and so would other countries as Some depends on the us ittself
  • Dec 17 2011: Everyone wishes that there project or program is funded even if it does not produce revenue or produce a profit. That is the function of Government. What has happened in the United States is that we have now far too many programs and not enough tax dollars to support them. Ergo we collect 2.3t in taxes and spend 3.5t through borrowing . That is why our government sells treasuries to China and Saudia Arabia and they hold those IOU's so we can take the money they spent and use them on these programs.
    Once you have that vicious cycle started no one wants their program cut or cancelled they just want another program funded and supported. That is why our debt is skyrocketing

    In Europe their governments like Greece have borrowed heavily (selling their bonds to Germany and other countries) to support their social programs including their pensioners. Their workers were able to retire at full pension in their 50's (living 40 plus years off the government without producing a revenue or little tax) the government went into deficit spending just like the us and then couldn't repay the interest on the borrowed money back to the countries that borrowed (bought their treasuries) So in essence their reckless governments not only threatened their countries stability but also that of their neighbor. (Just think if you borrowed your neighbor $100,000 and he gave you an IOU, you really needed the money to run your household and you thought he would pay you back the $100,000 with interest, He says sorry I not only can't pay you back your interest but I am unable to pay you your $100,000 as well, How about we let it go and I pay you nothing?) This is what is happening right now in the European Union. So to prevent them from paying nothing the countries are instead saying how about we borrow you more money but this time you agree to our terms as to how you spend our money.This is why the protests are so violent who wants to be told by someone else on how to spend money?
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    Dec 14 2011: Faith... Horrible answer, for someone who in general doesn't believe in it... but the entire EU, and American economy, is based on faith. Faith that American, and EU workers, will have stable jobs and pay their debts. If EU, and American corporations, are continued to be allowed to outsource manufacturing overseas, they will not provide those stable jobs, the faith will be unjustified, and the banks will collapse.

    Debt is given on faith, faith that you will work hard, and pay it back... If we aren't worth that faith, and we don't want to build our own stuff, and pay our own regular people a decent wage... No one will loan us money anymore. We could end the FED and create an infrastructure bank at that point... but if the people continuously take on more debt than they can pay back, it won't matter, we'll keep printing money, and our dollars will keep declining in value, because our debt notes no longer mean anything.

    We could also create an international stimulus, that prints money for all countries to create infrastructure products and jobs, because then relative printing would be equal, and all the countries could maintain their exchange rate. If the dollar goes down enough, the working poor in America and Europe, will no longer be able to afford all the products they've outsourced, and our quality of life will collapse, because we can't afford food, and transportation. EU would do better transportation wise, we'd do better food wise, and we'd trade...

    Preferably we create middle class jobs and pay back our debts through investment in infrastructure jobs before the collapse. Whoever does it first, the EU, or America, will look stupid, until it pays off and they have a better infrastructure than the other... at which time we'll all be forced jump on the bandwagon.

    Every time standard of living rises, a country should take on more debt, it has faith in itself. We may have stretched to far, but saving us will be cheaper than giving up a monetary system
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      Dec 14 2011: Do you believe a lack of values can be linked to the debt of these two countries? Or is it just bad management?
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        Dec 15 2011: A lack of values certainly leads to bad management. We all know that it is possible to steal with pen and paper and do it legally.
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    Dec 14 2011: I think this was simply because the governments borrowed money to spend on current needs and WANTS (extravagant use, perhaps) and the global feeling for recession hit, resulting in depressionary pressures. It's all about behaviors/reactions to general economic trends..
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    Dec 14 2011: if the government can grow without increasing taxes, it will. the people support it, because increasing debt or moderate level of inflation seems to be a minor issue compared to the services the state provides in return. little they know about the real dangers. it is a very unfortunate dynamic.

    and why in europe and US? actually, all governments do that. but these are the strong economies that can support huge governments for extended periods of time. but all states are heading in the same direction.