News:

Long overdue maintenance happening. See post in the top forum.

Main Menu

State of The Union

Started by Gaspar, January 25, 2010, 02:34:47 PM

Previous topic - Next topic

Red Arrow

A single payment of $800 Billion invested at (approximately) 10.15%/year for 28 years compounds to $12 Trillion.
($800B x 1.101528= $12T)  This wouldn't include any direct additions to the debt during 24 (include first 4 Clinton years) of the the 28 years.  Direct additions would lower the effective interest rate. I don't want to spend the time to look up each year and include it in the calculations.

I don't know if the Clinton  years were a net (debt addition) zero including interest from the beginning Clinton years or not. I don't feel like spending the time to find out.

Don't read me incorrectly, I don't like the debt and would like it to be paid down for all the obvious reasons.
BUT...Given that we aren't, the interest rates are in line with the rates for a lot of those 28 years.

Good thing we didn't borrow from the credit card companies.
 

heironymouspasparagus

We are talking about additive deficits for the entire time.  T-bills have never paid 10.15%.  And interest is paid during each year, so there IS NO COMPOUNDING!!  Debt would be much worse if there was.

Google is your friend;  Federal Debt History.  There is the history from the beginning of the country.  The "best" years were around 1834 and 1835 when there was only about $35,000 in Federal debt. 

Jimmie Carters biggest deficit was about $65 billion.  Ronald Reagans smallest was about $160 billion.  And except for a few Clinton years, those were the smallest since.

We need a new thread/topic to discuss what "could have been" with an extra $12 trillion invested in our economy - new technologies, new industries, new infrastructure...oh wait, I guess that would be government - instead of paying for our Imperialistic Voyeurism!  (That ought to stir up some stuff...)





"So he brandished a gun, never shot anyone or anything right?"  --TeeDub, 17 Feb 2018.

I don't share my thoughts because I think it will change the minds of people who think differently.  I share my thoughts to show the people who already think like me that they are not alone.

Red Arrow

Quote from: heironymouspasparagus on February 04, 2010, 07:35:24 PM
We are talking about additive deficits for the entire time.  T-bills have never paid 10.15%.  And interest is paid during each year, so there IS NO COMPOUNDING!!  Debt would be much worse if there was.

Google is your friend;  Federal Debt History.  There is the history from the beginning of the country.  The "best" years were around 1834 and 1835 when there was only about $35,000 in Federal debt. 

My example was to show that the additive deficits were not much worse than compounding would have been.  I thought some of those added deficit spending dollars were to pay interest on the debt.  That's usually one of the excuses for the high deficit.  Using debt to pay interest sounds a bit like compounding to me but I'm just an engineer.  I found debits and credits confusing on double entry accounting so I expect there is some way to exclude compounding from the vocabulary of the national debt. Someone supposedly has given that credit.  I am thinking of savings bonds among others.  They want some kind of return on that money.  I agree, there are better ways to spend that money.

I've never had any t-bllls but I did have some CDs and a Money Market account paying above 10% in the early 80s.  The rates later dropped to 7% to 9% in the late 80s.  Rates dropped to less than 3% in the early 90s and later recovered to about 5% in the late 90s.  Then I stopped writing the rates in my record book.

I also had a new car loan at 13% starting in spring 1981.  I believe most mortgages were double digit too.  My dad's mortgage on the house was about 8% (from 1971) and the mortgage company wanted him to pay it off early so they could reinvest it at higher, then current, rates.  They offered no incentive like any kind of discount for him to do it.

I know about Google but don't have infinite amounts of time to spend on this stuff.  I waste too much as it is.
 

nathanm

Quote from: Red Arrow on February 04, 2010, 09:09:52 PM
I believe most mortgages were double digit too.
Yeah, my parent's mortgage on the house they bought in 1980 was in the 12-13% range. They went with a 7 year ARM to get the initial rate a little lower. Fixed rate mortgages were closer to 15%, IIRC.

In the early 90s they refi'd to something around 7% fixed. The rate would have been better if they hadn't been behind on their mortgage payments. The natural gas market was not kind to my dad. :p
"Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration" --Abraham Lincoln