Cutting the deficit, post 2017 tax reform

[bilby]

Such extreme debt-to-GDP over so many years is unlike anything before in history.

It's partly just the recent years, from the 60s or 80s, but it's also the overall trend from about 1930 to the present. You cannot compare this to one short spike in 1943-48 and say that short spike is worse than the overall trend of high debt-to-GDP over such a long period.

I wasn't thinking of historical, but in comparison to other countries.

http://www.nationmaster.com/country-info/stats/Economy/Public-debt

We are 37th.

(in 2012) Today we're higher on the list -- #12 according to this source: https://www.statista.com/statistics/268177/countries-with-the-highest-public-debt/ But it's irrelevant. Every source seems to have its own version of the numbers.

So 36 other countries were in debt worse than the U.S. in 2012 -- And that reduces the danger? You think if another dozen countries should suddenly take on such debt and put the U.S. down to 49th, then the danger would be reduced?

So your solution to the problem is to have all other countries run up extreme debt, to 120% debt-to-GDP or higher, and that would reduce the danger, because the U.S. would move farther down that list.

You think it's a contest between competing countries, with each country trying to get the other countries to run up higher debt than their own, and the ones farther down the list are made more secure by the indebtedness of the countries higher on the list.

??

What danger?

Exactly what ill do you expect to befall the US economy or her people as a result of these deficits?

And how does your theory that the deficits are dangerous explain the massive boost in prosperity, peace and well-being of all of the world's sovereign currency issuing nations since they stopped trying to peg their currency to commodities in the early 1970s?

If there is some danger here, why has it not been realized in more than 40 years? How much longer need we wait for the doom you are prophesying?

 

[Lumpenproletariat]

(in 2012) Today we're higher on the list -- #12 according to this source: https://www.statista.com/statistics/268177/countries-with-the-highest-public-debt/ But it's irrelevant. Every source seems to have its own version of the numbers.

So 36 other countries were in debt worse than the U.S. in 2012 -- And that reduces the danger? You think if another dozen countries should suddenly take on such debt and put the U.S. down to 49th, then the danger would be reduced?

So your solution to the problem is to have all other countries run up extreme debt, to 120% debt-to-GDP or higher, and that would reduce the danger, because the U.S. would move farther down that list.

You think it's a contest between competing countries, with each country trying to get the other countries to run up higher debt than their own, and the ones farther down the list are made more secure by the indebtedness of the countries higher on the list.

??

What danger?

Exactly what ill do you expect to befall the US economy or her people as a result of these deficits?

And how does your theory that the deficits are dangerous explain the massive boost in prosperity, peace and well-being of all of the world's sovereign currency issuing nations since they stopped trying to peg their currency to commodities in the early 1970s?

Increases in prosperity have been the norm long before that. Increase in science and technology and increase in global trade explain it much better than increasing gov't debt.

If there is some danger here, why has it not been realized in more than 40 years? How much longer need we wait for the doom you are prophesying?

If you're right, then we should increase the deficit high enough to pay the federal budget. 4 trillion $$$$ annually and up each year. We could then solve ALL our health-care problems, our infrastructure, eliminate poverty, pay everything with debt. If you're right. You don't want to eliminate all the suffering and fix the nation's problems? feed the hungry in Africa etc.? Why not? Are you an ascetic who thinks the suffering is good for us?

We could fund social security and still eliminate the oppressive SS tax. Why are you against that?

Free college education for everyone. Why are you against that?

The danger is that it only takes a beginning wave of defaults, or mistrust of lenders to continue doing it, and all of it comes crashing down. Half the federal programs would have to be eliminated. There have been many defaults in the past, on smaller debts. But if default is impossible with govt debt, as you think, then you're ready to eliminate all taxes and pay everything with trillions in new debt every year, not just the 1/2 trillion we're doing now. Nothing prevents us from increasing the deficit to 4 trillion annually and paying the whole budget with debt.

Are you saying we should experiment? run it up higher and higher gradually to see what happens?

We had 1.5 trillion deficit back in 2008-2010. So you think that was fine -- we're still here. Raise it to 2 trillion? 3 trillion? Why not?

In theory, a pyramid scheme can go on forever. If it's done right. No one has proved that it has to collapse.

 

[Horatio Parker]

The danger is that it only takes a beginning wave of defaults, or mistrust of lenders to continue doing it, and all of it comes crashing down. Half the federal programs would have to be eliminated. There have been many defaults in the past, on smaller debts. But if default is impossible with govt debt, as you think, then you're ready to eliminate all taxes and pay everything with trillions in new debt every year, not just the 1/2 trillion we're doing now. Nothing prevents us from increasing the deficit to 4 trillion annually and paying the whole budget with debt.

Who's going to default?

 

[bilby]

Increases in prosperity have been the norm long before that. Increase in science and technology and increase in global trade explain it much better than increasing gov't debt.

I am not claiming that increases in government debt caused those increases inprosperity; I am asking you to explain how they were possible in an economic environment that you are characterizing as 'dangerous'. If the danger is so slight that it has been overwhelmed by other advances, why should we give a shit?

If there is some danger here, why has it not been realized in more than 40 years? How much longer need we wait for the doom you are prophesying?

If you're right, then we should increase the deficit high enough to pay the federal budget.

Don't build a straw man; Answer the damn question. I don't give a SHIT what might happen if we increased the deficit to some arbitrary and much higher level than it currently is; I want YOU to explain WHAT THE DANGER IS at the current level of deficit spending. You made the claim that there was DANGER. Now, what is the nature of that danger? What are we risking here?

If you can't tell me what the dangerous consequences are, then how can you claim that there is danger at all?

What do you think is going to happen, as a result of the current policy? How do you get from the current policy, to an event or events that constitute 'danger', and to whom are these events 'dangerous'?

The government never has to default on a debt denominated in the currency that the government issues. Never.

 

[humbleman]

I am not claiming that increases in government debt caused those increases inprosperity; I am asking you to explain how they were possible in an economic environment that you are characterizing as 'dangerous'. If the danger is so slight that it has been overwhelmed by other advances, why should we give a shit?

If you're right, then we should increase the deficit high enough to pay the federal budget.

Don't build a straw man; Answer the damn question. I don't give a SHIT what might happen if we increased the deficit to some arbitrary and much higher level than it currently is; I want YOU to explain WHAT THE DANGER IS at the current level of deficit spending. You made the claim that there was DANGER. Now, what is the nature of that danger? What are we risking here?

If you can't tell me what the dangerous consequences are, then how can you claim that there is danger at all?

What do you think is going to happen, as a result of the current policy? How do you get from the current policy, to an event or events that constitute 'danger', and to whom are these events 'dangerous'?

The government never has to default on a debt denominated in the currency that the government issues. Never.

http://www.pravdareport.com/business/finance/14-09-2010/114921-us_dollar-0/

Who owns the US dollar?


At first glance, this would seem like a rather silly, stupid and pointless question. Why, the average person would answer, the American people own it. Or rather, if one had to get more technical, the American government, which is in turn, being a Republic, owned by the people, one in the same...

...For the truth of it, neither the people of America nor the government of America owns the US dollar. How's that, you say? Well, if one was to really dive just a bit deeper, before hitting the rocks just under the US greenback pond, one would quickly discover that the actual US dollar has not existed since 1913, where it was effectively killed. What is now called the US dollar is actually a Federal Reserve Note, says it right at the top of each bill. Why does that matter? Read on.

First of all, a US dollar, as something before 1913, was an instrument of wealth. That piece of paper, or just as common a gold or silver coin, had actual worth, anywhere in the world. It was worth its weight in gold, be it actual gold or paper. A Reserve Note, on the other hand, is a debt instrument, which not only is not wealth but is the opposite of wealth. Its very existence is a sucking sound on wealth, wealth being transferred, in this case not to the poor masses (as defined by defunct and unworking Marxism) but to the top 1% (equally defunct and unworking, but its only now starting to go that way)...

...The Federal Reserve, unbeknownst to many outside the US and almost everyone in the US, is NOT a Federal, that is, government entity. It is about as governmental as Federal Express. In truth, it is a wholly private, untraded, and thus unsupervised, banking corporation, with a secret cabal of owners. One can assess some of those probable owners by those corporations/banks who were bailed out, while others were allowed to die...

And here comes the best part.

So, when the US government wants money, the Treasury Department prints bonds (promissory notes aka debt obligations) and "sells" these to the Federal Reserve (private banking concern), which than "gives" the US government Federal Reserve Notes (tender). Thus the money the US government and thus in turn, the US people and all peoples and nations in the world who hold dollars (and why do you think they push these on the world so much?) are debt instruments owed to the Federal Reserve, by the holders. Thus, sooner or later you must return them, plus a percentage. Of course, to the Federal Reserve, the percentage is better...

From here you know why the US politicians have messed up everything and now with the different administrations they can solely put the country in more debt. Politicians are not working "for you", politicians are working for the Federal Reserve and to keep their "jobs" or "subjected power".

Didn't you notice that the name "Federal Reserve" is just a way to make you believe the bank belongs to "the government"?

The same members who own the Federal Bank are the ones who own the big corporations which suck tax payers money with huge contracts.

In many countries, mine owners pay ten times the minimum salary to workers. The miners stay an entire week underground. Then, when they come out and receive their pay, they go straight to the bars and go-go dancer locations and spend most of their money over there. Those bars and go go dancer locations belong to the same owner of the mine.

This is exactly the same game corporations play producing the money, giving it as loan to the US government and receiving it back thru contracts with the US government. Ha ha ha ha

And you think that this will stop?

Ha.

Too late.

The entire US government is not ruling a free country anymore, the Federal Bank is the owner and the ruler. If you don't believe me, then check how much is the national debt today, and how hard politicians (Republicans and Democrats) are working very hard to please their bosses, increasing the debt level.

If you don't see any "danger" with this situation, then the FOCUS topic in Science applies perfectly for you.

 

[bilby]

http://www.pravdareport.com/business/finance/14-09-2010/114921-us_dollar-0/

Who owns the US dollar?


At first glance, this would seem like a rather silly, stupid and pointless question. Why, the average person would answer, the American people own it. Or rather, if one had to get more technical, the American government, which is in turn, being a Republic, owned by the people, one in the same...

...For the truth of it, neither the people of America nor the government of America owns the US dollar. How's that, you say? Well, if one was to really dive just a bit deeper, before hitting the rocks just under the US greenback pond, one would quickly discover that the actual US dollar has not existed since 1913, where it was effectively killed. What is now called the US dollar is actually a Federal Reserve Note, says it right at the top of each bill. Why does that matter? Read on.

First of all, a US dollar, as something before 1913, was an instrument of wealth. That piece of paper, or just as common a gold or silver coin, had actual worth, anywhere in the world. It was worth its weight in gold, be it actual gold or paper. A Reserve Note, on the other hand, is a debt instrument, which not only is not wealth but is the opposite of wealth. Its very existence is a sucking sound on wealth, wealth being transferred, in this case not to the poor masses (as defined by defunct and unworking Marxism) but to the top 1% (equally defunct and unworking, but its only now starting to go that way)...

...The Federal Reserve, unbeknownst to many outside the US and almost everyone in the US, is NOT a Federal, that is, government entity. It is about as governmental as Federal Express. In truth, it is a wholly private, untraded, and thus unsupervised, banking corporation, with a secret cabal of owners. One can assess some of those probable owners by those corporations/banks who were bailed out, while others were allowed to die...

And here comes the best part.

So, when the US government wants money, the Treasury Department prints bonds (promissory notes aka debt obligations) and "sells" these to the Federal Reserve (private banking concern), which than "gives" the US government Federal Reserve Notes (tender). Thus the money the US government and thus in turn, the US people and all peoples and nations in the world who hold dollars (and why do you think they push these on the world so much?) are debt instruments owed to the Federal Reserve, by the holders. Thus, sooner or later you must return them, plus a percentage. Of course, to the Federal Reserve, the percentage is better...

From here you know why the US politicians have messed up everything and now with the different administrations they can solely put the country in more debt. Politicians are not working "for you", politicians are working for the Federal Reserve and to keep their "jobs" or "subjected power".

Didn't you notice that the name "Federal Reserve" is just a way to make you believe the bank belongs to "the government"?

The same members who own the Federal Bank are the ones who own the big corporations which suck tax payers money with huge contracts.

In many countries, mine owners pay ten times the minimum salary to workers. The miners stay an entire week underground. Then, when they come out and receive their pay, they go straight to the bars and go-go dancer locations and spend most of their money over there. Those bars and go go dancer locations belong to the same owner of the mine.

This is exactly the same game corporations play producing the money, giving it as loan to the US government and receiving it back thru contracts with the US government. Ha ha ha ha

And you think that this will stop?

Ha.

Too late.

The entire US government is not ruling a free country anymore, the Federal Bank is the owner and the ruler. If you don't believe me, then check how much is the national debt today, and how hard politicians (Republicans and Democrats) are working very hard to please their bosses, increasing the debt level.

If you don't see any "danger" with this situation, then the FOCUS topic in Science applies perfectly for you.

The only danger I see in the above is the very real threat due to someone taking Pravda seriously as a source of information. As the old joke goes, there's no information in Pravda, and no truth in Izvestia.

 

[humbleman]

The only danger I see in the above is the very real threat due to someone taking Pravda seriously as a source of information. As the old joke goes, there's no information in Pravda, and no truth in Izvestia.

Oh. yeah?

https://rgdn.info/en/komu_prinadlezhit_amerikanskiy_dollar

The issue I’d like to address is totally different: perhaps, not many inhabitants of the planet know (although nobody makes a secret of this) that USD belongs to the United States of America only on paper notes, while in actual fact it is owned by the Federal Reserve System (also known as the FederalReserve or simply the Fed*)

Same article from Pravda, but by a different source

http://www.marketoracle.co.uk/Article22708.html

For the truth of it, neither the people of America nor the government of America owns the US dollar. How's that, you say? Well, if one was to really dive just a bit deeper, before hitting the rocks just under the US greenback pond, one would quickly discover that the actual US dollar has not existed since 1913, where it was effectively killed. What is now called the US dollar is actually a Federal Reserve Note, says it right at the top of each bill...

...First of all, a US dollar, as something before 1913, was an instrument of wealth. That piece of paper, or just as common a gold or silver coin, had actual worth, anywhere in the world. It was worth its weight in gold, be it actual gold or paper. A Reserve Note, on the other hand, is a debt instrument, which not only is not wealth but is the opposite of wealth. Its very existence is a sucking sound on wealth, wealth being transferred, in this case not to the poor masses (as defined by defunct and unworking Marxism) but to the top 1% (equally defunct and unworking, but its only now starting to go that way).
How is that you say? Why quite simple, but for that answer, again, we must follow the rabbit down the rabbit hole.

The Federal Reserve, unbeknownst to many outside the US and almost everyone in the US, is NOT a Federal, that is, government entity. It is about as governmental as Federal Express. In truth, it is a wholly private, untraded, and thus unsupervised, banking corporation, with a secret cabal of owners.

And here, poor ignorant dudes who believe the Federal Reserve is a governmental agency. ha ha ha ha...

https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124

Debt Held by the Public. The public holds the rest of the national debt ($14.7 trillion). Foreign governments and investors hold nearly half of it. One-fourth is held by other governmental entities. These include the Federal Reserve, as well as state and local governments. Fifteen percent is held by mutual funds, private pension funds and holders of savings bonds and Treasury notes. The remaining 10 percent is owned by businesses, like banks and insurance companies. It's also held by an assortment of trusts, companies, and investors.

You were asking "where or what is the danger"?

There you have it.

Psychology of suggestion at work. You don't see any problem with the current increasing of the national debt, others believe the Federal Reserve belongs to the government, and so forth.

And again, the whole countries of the world have their leaders working in a period of discussions every year to balance their budgets. Only the US maintains the path of periods of discussions solely to increase the debt limit, the word "balance" does not exist for the US congressmen, they use a different dictionary than yours.

 

[bilby]

Oh. yeah?

https://rgdn.info/en/komu_prinadlezhit_amerikanskiy_dollar



Same article from Pravda, but by a different source

http://www.marketoracle.co.uk/Article22708.html

For the truth of it, neither the people of America nor the government of America owns the US dollar. How's that, you say? Well, if one was to really dive just a bit deeper, before hitting the rocks just under the US greenback pond, one would quickly discover that the actual US dollar has not existed since 1913, where it was effectively killed. What is now called the US dollar is actually a Federal Reserve Note, says it right at the top of each bill...

...First of all, a US dollar, as something before 1913, was an instrument of wealth. That piece of paper, or just as common a gold or silver coin, had actual worth, anywhere in the world. It was worth its weight in gold, be it actual gold or paper. A Reserve Note, on the other hand, is a debt instrument, which not only is not wealth but is the opposite of wealth. Its very existence is a sucking sound on wealth, wealth being transferred, in this case not to the poor masses (as defined by defunct and unworking Marxism) but to the top 1% (equally defunct and unworking, but its only now starting to go that way).
How is that you say? Why quite simple, but for that answer, again, we must follow the rabbit down the rabbit hole.

The Federal Reserve, unbeknownst to many outside the US and almost everyone in the US, is NOT a Federal, that is, government entity. It is about as governmental as Federal Express. In truth, it is a wholly private, untraded, and thus unsupervised, banking corporation, with a secret cabal of owners.

And here, poor ignorant dudes who believe the Federal Reserve is a governmental agency. ha ha ha ha...

https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124

Debt Held by the Public. The public holds the rest of the national debt ($14.7 trillion). Foreign governments and investors hold nearly half of it. One-fourth is held by other governmental entities. These include the Federal Reserve, as well as state and local governments. Fifteen percent is held by mutual funds, private pension funds and holders of savings bonds and Treasury notes. The remaining 10 percent is owned by businesses, like banks and insurance companies. It's also held by an assortment of trusts, companies, and investors.

You were asking "where or what is the danger"?

There you have it.

Psychology of suggestion at work. You don't see any problem with the current increasing of the national debt, others believe the Federal Reserve belongs to the government, and so forth.

And again, the whole countries of the world have their leaders working in a period of discussions every year to balance their budgets. Only the US maintains the path of periods of discussions solely to increase the debt limit, the word "balance" does not exist for the US congressmen, they use a different dictionary than yours.

Your adherence to crazy conspiracist claptrap is noted.

I know, like all crazy conspiracists, you are convinced that my calling out your crazy conspiracy theory is hard evidence that I am a brainwashed dupe (or a paid shill; or a member of the secret cabal that is plotting to rule the world). But realistically, what kind of shithouse conspiracy goes to all the trouble of secretly taking over the currency, and then prints its name on all the banknotes for anyone to see?

Let me guess - that's just what they want me to think.

 

[barbos]

Such extreme debt-to-GDP over so many years is unlike anything before in history.

It's partly just the recent years, from the 60s or 80s, but it's also the overall trend from about 1930 to the present. You cannot compare this to one short spike in 1943-48 and say that short spike is worse than the overall trend of high debt-to-GDP over such a long period.

I wasn't thinking of historical, but in comparison to other countries.

http://www.nationmaster.com/country-info/stats/Economy/Public-debt

We are 37th.

Zimbabwe is a basket case so Japan is really number 1. But this is misleading. You need to look who owns that debt and in the case of Japan taxpayers themselves are owning that debt so this debt is fictitious Japan can decide to reduce that debt to zero overnight. In case of Greece and to a lesser extent US this can't be done because a lot of that debt is owned by foreign countries - specifically China/Japan/Germany.

 

[humbleman]

Oh. yeah?

https://rgdn.info/en/komu_prinadlezhit_amerikanskiy_dollar



Same article from Pravda, but by a different source

http://www.marketoracle.co.uk/Article22708.html



And here, poor ignorant dudes who believe the Federal Reserve is a governmental agency. ha ha ha ha...

https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124



You were asking "where or what is the danger"?

There you have it.

Psychology of suggestion at work. You don't see any problem with the current increasing of the national debt, others believe the Federal Reserve belongs to the government, and so forth.

And again, the whole countries of the world have their leaders working in a period of discussions every year to balance their budgets. Only the US maintains the path of periods of discussions solely to increase the debt limit, the word "balance" does not exist for the US congressmen, they use a different dictionary than yours.

Your adherence to crazy conspiracist claptrap is noted.

I know, like all crazy conspiracists, you are convinced that my calling out your crazy conspiracy theory is hard evidence that I am a brainwashed dupe (or a paid shill; or a member of the secret cabal that is plotting to rule the world). But realistically, what kind of shithouse conspiracy goes to all the trouble of secretly taking over the currency, and then prints its name on all the banknotes for anyone to see?

Let me guess - that's just what they want me to think.

No.

I just wrote that there is no balancing of the budget in the US for several administrations, but a rising of the debt limit only.

That the dollar bill doesn't belong to you or to the US government but belongs to the Federal Reserve which is at the end of the day a private bank.

 

[Horatio Parker]

Such extreme debt-to-GDP over so many years is unlike anything before in history.

It's partly just the recent years, from the 60s or 80s, but it's also the overall trend from about 1930 to the present. You cannot compare this to one short spike in 1943-48 and say that short spike is worse than the overall trend of high debt-to-GDP over such a long period.

I wasn't thinking of historical, but in comparison to other countries.

http://www.nationmaster.com/country-info/stats/Economy/Public-debt

We are 37th.

Zimbabwe is a basket case so Japan is really number 1. But this is misleading. You need to look who owns that debt and in the case of Japan taxpayers themselves are owning that debt so this debt is fictitious Japan can decide to reduce that debt to zero overnight. In case of Greece and to a lesser extent US this can't be done because a lot of that debt is owned by foreign countries - specifically China/Japan/Germany.

Greece is in no way comparable to the US or Japan; Greece is a currency user not an issuer.

 

[Canard DuJour]

Suppose Peter has $100 and Paul does not. At this point we're dealing with $100 of assets.

Government comes along and borrows that $100 from Peter and gives him back a promissory note for $100, and then gives that $100 to Paul.

No it doesn't. It marks the bond buyer's current account down, her savings account up and Paul's current account up, in no particular order. The bond issue is a private sector asset swap, Paul gains $100 purchasing power de novo and the government's purchasing power is unchanged since it just marks private sector bank balances up and down with keystrokes.

Govt spends. Private sector assets increase. Govt taxes. Private sector assets decrease. Net assets are unchanged.

You gain 100 lbs and eventually lose 100 lbs. Your net weight is unchanged. Not.

 

[barbos]

Zimbabwe is a basket case so Japan is really number 1. But this is misleading. You need to look who owns that debt and in the case of Japan taxpayers themselves are owning that debt so this debt is fictitious Japan can decide to reduce that debt to zero overnight. In case of Greece and to a lesser extent US this can't be done because a lot of that debt is owned by foreign countries - specifically China/Japan/Germany.

Greece is in no way comparable to the US or Japan; Greece is a currency user not an issuer.

I was not comparing Greece to Japan. My point was about owners of the debt. Japan does not have foreign debt. So effectively their debt is zero despite being #2 on that chart. Now virtually all Greece debt is to foreign entities (Germany&Co). US has large chunk of debt owned by China and already mentioned Japan and it is bad. Yes US can technically print dollars and ship them to Japan/China. But I doubt they will appreciate such an obvious scam. So this "We can print money" theory is just theory. In practice they will say "Nope, you can't do that"

 

[jonatha]

Yes US can technically print dollars and ship them to Japan/China. But I doubt they will appreciate such an obvious scam. So this "We can print money" theory is just theory. In practice they will say "Nope, you can't do that"

?

When it comes time for the US to redeem the bonds held by Japan/China do you think we'll be shipping them supertankers full of pennies?

 

[Horatio Parker]

Zimbabwe is a basket case so Japan is really number 1. But this is misleading. You need to look who owns that debt and in the case of Japan taxpayers themselves are owning that debt so this debt is fictitious Japan can decide to reduce that debt to zero overnight. In case of Greece and to a lesser extent US this can't be done because a lot of that debt is owned by foreign countries - specifically China/Japan/Germany.

Greece is in no way comparable to the US or Japan; Greece is a currency user not an issuer.

I was not comparing Greece to Japan. My point was about owners of the debt. Japan does not have foreign debt. So effectively their debt is zero despite being #2 on that chart. Now virtually all Greece debt is to foreign entities (Germany&Co). US has large chunk of debt owned by China and already mentioned Japan and it is bad. Yes US can technically print dollars and ship them to Japan/China. But I doubt they will appreciate such an obvious scam. So this "We can print money" theory is just theory. In practice they will say "Nope, you can't do that"

Leave Greece out of it altogether. You weaken your argument by including Greece. Everyone knows the dangers of borrowing foreign currencies, which in effect is Greece's situation.

In the first place, what US trading partners agreed to is to accept dollars for goods. So they went to the trouble and expense of obtaining materials and fashioning goods, while we gave them dollars of which we have as many as we want. But instead of keeping a reserve account at the Fed, they buy Treasuries for the simple reason that they're interest bearing.

So if they want to use their natural and acquired resources and their labor to manufacture goods in obtain dollars in order to sink us - well, let them. We get the goods and they get dollars. Who wins?

What they've really done afaict is put themselves in the position of tying themselves to us, joining fates or whatever.

We're the number one debtor nation, but we're calling the shots because everyone is using and wanting dollars(which btw perpetuates the need to run trade deficits). I think it's basically a protection racket. We provide security, and in return countries accept dollars for goods.

I don't think anyone knows how it will end, but the only part that really worries me is how we treat our own population. Instead of a healthy, educated, productive, innovative workforce, we prefer to put up obstacles to these goals and let insiders profit. And no planning at all, let the money boys call the shots.

 

[Lumpenproletariat]

Are the chronic deficits really accomplishing their goal? Is it worth the cost?

My basic question is: Why do we run up these chronic deficits? which we did not do prior to the 1930s?

And I think the answer is: We do it to prevent recessions, or unemployment.

Is this correct or not? Before the 1930s we ran some deficits to pay for war, but from the 30's onward we've been doing it mainly to prevent recessions, or to reduce unemployment.

Maybe it has partly worked, but is it worth the 21 trillion debt we now have? Isn't the benefit relatively small, since the only jobs we've created have to keep being created again and again with ever-new debt, onward to no end? What if we stopped doing this? What would be the disaster?

Before 1930 they didn't pay them to do nothing. Paying people to do nothing is more common now than back before chronic deficits.

. . . which is inefficient; or they chop your fucking head off with a guillotine, which is uncomfortable.

No one's head was chopped off because of unemployment.

Before 1930 countries did not run up deficits to combat unemployment.

So, why can't we question the JOBS! doctrine? Why couldn't we return to the doctrine that debt is only for emergencies, or something irregular, and it's paid down in the years afterwards? by reduced spending, or with higher taxes to pay for the spending? even though it might mean fewer jobs?

What was wrong with that system?

You are right; they didn't have unemployment, they had poverty.

They had both, with poverty gradually decreasing due to improved agriculture technology. Just like today.

You can have one or the other . . .

We have both poverty and unemployment, and we always did have both. And the huge debt we've racked up since the 1930s cannot be shown to have alleviated either. But suppose it slightly reduced unemployment, hypothetically -- has this really made us enough better off to be worth the $21 trillion price tag? or the trillions we've paid in interest?

. . . . (or if you do a half arsed job of your unemployment policy, both).

What would a whole-arsed "unemployment policy" be? How would it make us better off? How much would it cost? Why do you think it's worth it?

So people got their fucking heads chopped off.

Not because they didn't run up debt. There was plenty of debt. Some of the irresponsible debt even caused the heads to be chopped off. Why do you think we have to run up debt out-of-control in order to prevent someone's head from being chopped off? You mean the job-seekers are a rampaging mob who can be stopped only with phony makework "jobs" to keep them off the streets?

Read some history, why don't you?

History of what? The closest to what you're talking about were the Luddites, demanding "jobs" or they'd chop off heads or whatever, or burn down the factory, etc. Their rampaging was finally brought to a halt not by running up deficits to create phony "jobs" for them, but by hanging them in the public square. Nothing "half-arsed" about that employment policy.

 

[Lumpenproletariat]

The "jobs! jobs! jobs!" are not worth the cost. It's only the genuine production that has value.

Why your obsession with nations being debt free?

So you think more debt, just for its own sake, is good for a nation? You think the U.S. in the 19th century would have been better off with a debt-to-GDP ratio of 100%, all else being equal?

What do you think is the point of all of this economic activity anyway?

The point of legitimate economic activity is to produce wealth for people, so they can have the stuff they want. But phony artificial "jobs" caused by deficits, for the sake of "jobs" per se, just to keep the riff-raff off the streets, or bring down "unemployment" a few percentage points, is not the point of economic activity.

What would YOU have the economy achieve and WHY?

Produce stuff people will pay for because they want it and will pay the real price for it. Without artificially goosing the economy with budget deficits to "stimulate" artificial demand.

WHY? Because it's good for people to have what they want, if they're willing to pay the real price for it. Satisfying genuine demand is what the market does, without artificially kicking the economy in the butt with phony "economic stimulus" schemes.

Who benefits from a nation without debt, and why should I care about those people?

Genuine debt, which we pay for later, in order to produce benefit sooner, is legitimate and makes us better off. We all benefit from it. But that means we pay for it later, running the debt only temporarily, not ever higher and higher only in order to cause phony makework "jobs" to keep people out of mischief and get the riff-raff off the streets. The idea that we benefit from this is delusional.

 

[Lumpenproletariat]

What they're laughing at.

But why are they "giving the rich more wealth"? The reason is in order to stimulate the economy and create more jobs.

View attachment 13996

Guess who they are laughing about? Yes, you. You among millions of other suckers. There's a difference between what they tell you and what actually happens. I suspect understanding historical data is beyond you, so here is an explanation in pictures.

View attachment 13997

Only a fool thinks that tax cuts don't stimulate some hiring. It's a virtual certainty that tax cuts and spending increases will cause more "jobs" to be created. At least in the first 1 or 2 or 3 years, after which maybe further "stimulus" measures are needed to keep it going.

The question is whether these extra "jobs" are worth the cost, in terms of later repayment of the debt and interest payments.

What the partiers above are laughing at is the popular delusion that the government must do these "stimulus" measures to goose the economy in order to provide more "jobs" for the riff-raff. And the politicians are more than happy to oblige, giving us more tax cuts and spending increases to provide more "jobs" and more applause and more votes and more "jobs! jobs! jobs!" babble.

 

[Lumpenproletariat]

Doesn't all debt have a cost? at least the interest payments, if nothing else? Doesn't that mean that . . .

. . . that the burden of proof is on the debt-promoter to prove the benefit of the debt? While the opponent of debt is correct until proven wrong?

You're demanding that everyone just believe you, on faith, that "large portions of the economy" are made better by running up debt out of control worse than it's ever been done in history. Why should we believe that?

You are demanding everyone just believe you - that gov't debt is evil because we will not be able to pay it back. Why should we believe that? You've given us no fact-based or reality-based reasons.

I'm asking people to believe that they're better off if they're not in debt, all else being equal. In other words, if there's no good reason to go into debt, then they're better off to stay out of debt. I.e., individuals, families, groups, nations, etc. --- any entity is better off to not be in debt if the debt doesn't produce any net benefit.

But you're asking people to believe that debt is good just for its own sake, so we're better off if we're in debt, all else being equal. Or at least the nation is better off being in debt than not being in debt.

To prove otherwise you have to address WHY we must take on this chronic debt, persistently every year with no stopping. What is the point of it? How do you know it's worth the cost?

 

[Lumpenproletariat]

Why would it be wrong to run up the deficit to 4 trillion $$$ to pay the whole federal budget?

Isn't there such a thing as bad debt? (including bad public debt)

Has there ever been chronic debt in history as bad as this one?
Has there ever been one entity owing this much over an extended time period? (as a percent of its total wealth)

There's never been an economy this large. So, no. But so what?

First of all, the debt is not debt in the traditional sense. It's a legacy of the times when the money supply was fixed to a commodity. That has not been the case since 1971.

Now it's a reserve management operation, a way for our trading partners to earn interest on the dollars we pay for imports, and corporate welfare.

There is no issue with repaying the debt. It never has to be repaid. It's money we owe ourselves.

What does it mean to say it doesn't have to be repaid? Don't bond-holders receive back the principal they paid? That repayment might be offset by new bond-buyers, or, maybe not. It's not a certainty that all the earlier principal paid back will be offset by new buying. So isn't it false to say it "never has to be repaid"? It is repaid just as private debt is.

Like Jason, you have no understanding that a dollar spent into the private sector is an asset to the private sector and a liability to the govt. Collectively, these liabilities are the national debt. If the govt taxed back all of its spending every year, the private sector wouldn't be able to save any of it. Selling exports is another way to accumulate savings, but we buy more than we sell. So, again, deficits are necessary to satisfy the savings desire of the private sector.

Currency issuing govts are not like households or businesses. They create the money they need, ex nihilo. They can never run out, they can always pay bills due in their own currency. No matter how large ten gazillions, whatever. It's just a number. The US cannot be forced to default, not by foreign powers, not by the bond markets.

Show

"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default." Alan Greenspan

“In the case of United States, default is absolutely impossible. All U.S. government debt is denominated in U.S. dollar assets.” Peter Zeihan, Vice President of Analysis for STRATFOR

“In the case of governments boasting monetary sovereignty and debt denominated in its own currency, like the United States (but also Japan and the UK), it is technically impossible to fall into debt default.” Erwan Mahe, European asset allocation and options strategies adviser

“There is never a risk of default for a sovereign nation that issues its own free-floating currency and where its debts are denominated in that currency.” Mike Norman, Chief Economist for John Thomas Financial

“There is no inherent limit on federal expenses and therefore on federal spending…When the U.S. government decides to spend fiat money, it adds to its banking reserve system and when it taxes or borrows (issues Treasury securities) it drains reserves from its banking system. These reserve operations are done solely to maintain the target Federal Funds rate.” Monty Agarwal , managing partner and chief investment officer of MA Managed Futures Fund

"As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational." Federal Reserve Bank of St. Louis

“A sovereign government can always make payments as they come due by crediting bank accounts — something recognized by Chairman Ben Bernanke when he said the Fed spends by marking up the size of the reserve accounts of banks.” L. Randall Wray, Professor of Economics at the University of Missouri-Kansas City and a Senior Scholar at the Levy Economics Institute

If you want to critique the money system, you need to understand it. And you don't.

This is babble unless you state when debt is more harm than good, which you do not. I.e., to increase the federal deficit to $4 trillion would be more harm than good, wouldn't it? even though it would be a tremendous "economic stimulus"?

Unless you believe all debt is inherently good, no matter how huge the debt becomes.

What's an example of bad debt, and why was it bad? And how do you know that chronic debt with 100% Debt-to-GDP is necessarily good for the country? What makes it good? Unless you're just saying ALL debt is necessarily good? Why must a surplus always be wrong, in every case? Why was the U.S. wrong to run some surpluses in the 19th century?