Debt ceiling?

@Romeo Fabulini,

Romeo Fabulini wrote:

As I've said before, if I ruled an island of a million people, their taxes would generate millions of dollars a week to pay for my armed services and welfare programs, roads, railways, hospitals etc, I wouldn't need to borrow extra money from anywhere at all.
Maybe I should run for US President, ha ha..

You make several false assumptions. You assume that your revenue will be predictable. You assume that your expenses will be predictable. That is not a real world situation. Many things happen in the real world to make predictions turn out wrong.

Let's say you predict income from taxes for a year. Suddenly, a drought occurs that year. The taxes you predicted from agricultural products doesn't happen. The price of food goes up and the populace demands you do something to bring it down. The farmers demand you help them or they will go out of business and there won't be anyone to grow food next year.

You could say, "No" and then restrict your spending to respond to the lost revenue. The problem is when you do that you further hurt your economy reducing your revenues even more. That is why a balanced budget amendment is a horrible idea. You lose the ability to respond to problems by increasing spending in the short term to promote long term health.

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@Romeo Fabulini,

Romeo Fabulini wrote:

Returning to my self-contained island model where I'm ruler of its one million population who generate millions of tax dollars a week which I use to fund hospitals, roads, railways, armed services and welfare programs etc, how on earth would it be possible for me to go into national debt?
What did Bush/Obama do wrong?

In 2000, the US was predicting it would see surpluses every year and it would use those surpluses to pay down the debt. When Bush came into office, they decided that surpluses amounted to taking too much money from the taxpayers while providing nothing in return.

The problem was expecting the predictions were so accurate you didn't have to allow for any other problems.

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Parados wrote:

Quote:

Let's say you predict income from taxes for a year. Suddenly, a drought occurs that year. The taxes you predicted from agricultural products doesn't happen. The price of food goes up and the populace demands you do something to bring it down. The farmers demand you help them or they will go out of business and there won't be anyone to grow food next year....

Ah, but in my efficient little kingdom there'll be no famine because the population level won't be allowed to exceed the land's capability to feed everybody, it's not rocket science.. Wink

I mean, just look at the primitive backward states in Africa where they're all f*cking like rabbits and bringing famine on themselves!

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@Romeo Fabulini,

Quote:

Ah, but in my efficient little kingdom there'll be no famine because the population level won't be allowed to exceed the land's capability to feed everybody, it's not rocket science..Wink

But you can't control the weather. It's silly to argue that you can.
There a lot of things that can happen. Your main city will be on a river because of the ability to transport goods. A 500 year rainfall can flood it and destroy the businesses and homes.

Things happen that you won't be able to predict. They always do. Someone could try to corner the market on silver and drive it up which when it crashes hurts investors and drastically changes your tax revenues. The number of things that happen are far to numerous to control.

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@Romeo Fabulini,

How do you propose to keep people from *******? (The obvious answer is to invest in an education system which has a proven track record of lowering birth rates, but you obviously won't borrow the money needed to do this).

But then again...

...since you wont borrow money to invest in public health, maybe this won't be such as problem. As long as the infant mortality rate is as high as the birth rate, the system will balance itself out.

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parados wrote:

Quote:

There a lot of things that can happen. Your main city will be on a river because of the ability to transport goods. A 500 year rainfall can flood it and destroy the businesses and homes.
Things happen that you won't be able to predict. They always do. Someone could try to corner the market on silver and drive it up which when it crashes hurts investors and drastically changes your tax revenues. The number of things that happen are far to numerous to control.

Maxdonca wrote:

Quote:

How do you propose to keep people from *******? (The obvious answer is to invest in an education system which has a proven track record of lowering birth rates, but you obviously won't borrow the money needed to do this)

Do I detect a touch of defeatism in you guys?.. Wink

Firstly, my island nation will be rolling in money from taxes, and even after paying for infrastructure there'll be ample left in my Treasury to cover any emergency that might come along.
Remember, my one million population will generate literally millions of dollars in taxes each week, and if I mishandle that, I deserve being put up against a wall and shot!
As for shady speculators who try to corner the market in silver or whatever, i'll bust their asses!

Secondly, as ruler, I'll issue a decree limiting couples to a maximum of 2 kids each (I think China also did something like that) to ensure the population never exceeds the lands ability to produce enough food to feed it, (and i'll possibly even limit it to 1 kid later)

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@Romeo Fabulini,

Quote:

Firstly, my island nation will be rolling in money from taxes, and even after paying for infrastructure there'll be ample left in my Treasury to cover any emergency that might come along.

So you are going to overtax your people. That will hurt the economy of your island.

Quote:

As for shady speculators who try to corner the market in silver or whatever, i'll bust their asses!

How do you propose to tell the difference? You will have to increase taxes in order to increase the regulation. Increased regulation will affect profits that will reduce taxes.

Clearly you are proposing you will have a dictatorship. You get to decide all issues. You overtax the people. I wonder how much of the taxation will disappear into your private accounts.

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@Romeo Fabulini,

How do you propose to be "rolling in money from taxes" before you have made the investment in infrastructure, health and education?

The investment has to come before the revenue. People who are uneducated, hungry and don't have access to medical services don't have the ability to pay much in taxes.

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@parados,

In an ideal world, a country would run deficits when there were problems of some kind; war, economic downturn, natural disasters. The debt created by those deficits would then be paid off during good times. In the US is we have decided that we don't have to pay off the debt during good times. We can just continue to run deficits during the good times because they don't destroy us in the bad times. The problem is it means we have to run even bigger deficits during the hard times.

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The bottom line is that many "rich and civilised" countries are up to their necks in national debt, so obviously they've botched up somewhere and failed, so my ideas and suggestions as to how countries should be run can't be any worse.. Smile

We could even say that individuals who are in debt have botched up their own personal finances too, yet I've never been in debt in my life and am rolling in cash.. Smile

http://i53.photobucket.com/albums/g64/PoorOldSpike/man_grin.gif~original

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