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Thread: Can Trillion Dollar Coins Save the Economy?

  1. #61
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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by j-mac View Post
    We aren't talking about a $500. CC bill either. But the principle is the same…
    You certainly haven’t provided anything to back up such an assertion. I assume because you don’t have a sniff of a clue about what you are discussing.
    This President who campaigned in his first run on cutting the deficit in half, and called Bush “unpatriotic” for a $5 Trillion debt in 8 years, has surpassed that by a Trillion dollars in 4.
    …in no small part due to the yearly deficit being well over $1T/year when he showed up (and the economy being a smoking hole in the ground). Which has a whole lot to do with said prior “unpatriotic” mismanagement.
    [quote]Plus his deficit spending projected is for another $5 trillion in the next 4 making our debt a whopping $21 Trillion dollars.

    The interest, or maintenance payment on that debt alone in 2016 will be $1 Trillion dollars…
    At current rates, not even 1/2 that (basic math, there). There-in is the sweet, sweet irony of this is that the total sum of promised interest to be paid on our current borrowing is lower than it was a decade back.

    What those rates will be, not sure of course. So we indeed should be planning changes for the longterm but the borrowing today? Relatively small issue, and this fixation on it and the antics of the GOP in Congress only costs us more interest
    Don’t give me the crap about Duke energy, because if I run up a bill with them and keep paying the bill using my credit to do it, at some point I will run out of credit, and default on the bill in which case Duke will cut the power…
    Again with the CC? LOL, you just can’t drop that BS, can you?

    Anyway, actually you can continue to borrow effectively indefinitely at a certain rate. As long as you continue to grow, and at the scale of a country inflation actually aids in this process. This country has over 200 year history of doing so, debt climbing save for very brief moments like in 2000 where it stood still.

    Businesses, and even people, do this as well. Lines of credit that keep rolling over, and even growing. Pretty much the whole of the real estate holding industry work with continually rotating debt.

    Yes, there are some analogues between the micro and the macro (but ways in which they are very different). However, besides your lack of grasp of how the comparisons work, you don’t actually seem to have much of a grasp on the micro, either.

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by Dwight View Post
    Loan/debt consolidation is a real thing. That grown up people use. To good effect.

    Your asinine description/analogy notwithstanding.
    I get the feeling you don't have any clue what you're talking about.

    Debt consolodation is typically used by people who have accrued massive amounts of debt with litttle consideration to how they're going to pay for it.

    Its verry CHILDISH and irresponsible and there is nothing "grown up" about it.

    Its exactly what our Govt doing.
    Last edited by Fenton; 01-06-13 at 07:22 PM.

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by Fenton View Post
    I get the feeling you don't have any clue what you're talking about.

    Debt consolidation is typically used by people who have accrued massive amounts of debt with little consideration to how they’re going to pay for it.
    Not a perfect fit but it certainly fits a whole lot better than this imagined CC thing. :P
    Its verry CHILDISH and irresponsible and there is nothing "grown up" about it.
    You make public statements planning and promising outlays for certain things. Time comes to pay and don’t have the cash in hand? What is the responsible thing to do?

    Assume at the moment that you are not insolvent, that credit is readily available.

    Now a discussion about future plans, totally makes sense. But promises for the short-term? You cover that best you can.

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by Dwight View Post
    Not a perfect fit but it certainly fits a whole
    lot better than this imagined CC thing.

    :P

    You make public statements planning and promising outlays for certain things. Time comes to pay and don’t have the cash in hand? What is the responsible thing to do?

    Assume at the moment that you are not insolvent, that credit is readily available.

    Now a discussion about future plans, totally makes sense. But promises for the short-term? You cover that best you can.
    Riiiight.....lol

    A promise from a Democrat to stop spending and do the responsible thing is akin to a promise from a Heroin addict to return the 50 bux you lent him for "Gas" or so he could get his Grandma's medicine.

    Panhandlers and Democrats have a lot in common. They'll always try to demagogue the issue.

    We DONT have the credit now. We have our Central Banks buying short term Treasuries at 0% who've leverage themselves up to a 70% origination of Treasury debt.

    Its the perception of credit and BTW the Fed plans on stopping their purchase of Treasuries this year.

    No wonder this goofy trillion dollar non-solution keeps popping up.

    With out the Treasury there is no money because Obamas definitely not getting new revenue out of the economy or "the rich".

    Alot of people had the same thought process in 2007 as they took out second loans on their new instant equity that the Democrat mandated Housing bubble gave them.

    "if the credit's available".....famous last words.

    Greece I'm sure uttered something along those lines as they sold massive amounts of junk bonds and placed massive weights on their private sector......sounds familliar.

    Hell we'll keep borrowing and if it tanks thousands of European banks and Investors and then the European economy, Oh Well.We're Socialist Democrats, we really dont give a ****.

    Nope, a promise from a liberal is just a promise that your going to get ripped off.

    There is no growth on the horizon for America with a GDP thats inflated by massive Govt spending with borrowed money.

    You guys did this, everyone who stupidly voted for Obama had a hand in the perpetual misery of millions of American families and there is more to come.

    Hope you guys are proud of yourselfs.
    Last edited by Fenton; 01-06-13 at 07:54 PM.

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by Dwight View Post
    You certainly haven’t provided anything to back up such an assertion. I assume because you don’t have a sniff of a clue about what you are discussing.

    …in no small part due to the yearly deficit being well over $1T/year when he showed up (and the economy being a smoking hole in the ground). Which has a whole lot to do with said prior “unpatriotic” mismanagement.
    Plus his deficit spending projected is for another $5 trillion in the next 4 making our debt a whopping $21 Trillion dollars.


    At current rates, not even 1/2 that (basic math, there). There-in is the sweet, sweet irony of this is that the total sum of promised interest to be paid on our current borrowing is lower than it was a decade back.

    What those rates will be, not sure of course. So we indeed should be planning changes for the longterm but the borrowing today? Relatively small issue, and this fixation on it and the antics of the GOP in Congress only costs us more interest

    Again with the CC? LOL, you just can’t drop that BS, can you?

    Anyway, actually you can continue to borrow effectively indefinitely at a certain rate. As long as you continue to grow, and at the scale of a country inflation actually aids in this process. This country has over 200 year history of doing so, debt climbing save for very brief moments like in 2000 where it stood still.

    Businesses, and even people, do this as well. Lines of credit that keep rolling over, and even growing. Pretty much the whole of the real estate holding industry work with continually rotating debt.

    Yes, there are some analogues between the micro and the macro (but ways in which they are very different). However, besides your lack of grasp of how the comparisons work, you don’t actually seem to have much of a grasp on the micro, either.

    You need to drop the attitude and read:

    "Official Government Debt

    The official federal debt is $16 trillion. This debt represents 100% of current GDP. Ken Rogoff and Carmen Reinhart studied countries with high levels of government debt. This Time Is Different: Eight Centuries of Financial Folly contains their complete findings. The authors concluded:

    In our study "Growth in a Time of Debt," we found relatively little association between public liabilities and growth for debt levels of less than 90 percent of GDP. But burdens above 90 percent are associated with 1 percent lower median growth. Our results are based on a data set of public debt covering 44 countries for up to 200 years. The annual data set incorporates more than 3,700 observations spanning a wide range of political and historical circumstances, legal structures and monetary regimes.

    Elsewhere, the authors state:

    Our empirical research on the history of financial crises and the relationship between growth and public liabilities supports the view that current debt trajectories are a risk to long-term growth and stability, with many advanced economies already reaching or exceeding the important marker of 90 percent of GDP.

    The U.S. has passed their danger point, and recent U.S. GDP experience conforms to their findings. The economy is growing at subnormal rates despite unprecedented stimulus efforts. A recent Rasmussen survey found that only 27% believe that the economy is improving.

    Actual Government Liabilities

    Debt problems in the U.S. are worse than stated -- much worse. Three areas shed light on the problem:

    The Glide Path
    Treasury Obligations
    Unfunded Liabilities


    1. The Glide Path

    The glide path of expected spending and revenues indicates that the debt problem will get worse. While forecasting may be a fool's errand, especially when extended ten years out into the future, the CBO estimates (under its alternative budget):

    Under that alternative fiscal scenario, far larger deficits and much greater debt would result than are shown in CBO's baseline. Deficits would average 5.4 percent of GDP over the 2013-2022 period, rather than the 1.5 percent reflected in CBO's baseline projections.

    The assumptions supporting these numbers are suspect, meaning the estimate could be off either way, and possibly by large amounts. Assumed interest rates (a very important variable with regard to government expenditures), employment rates, the resolution of the European crisis, existing banking system problems, etc., etc. are difficult to forecast. So too are political biases and future economic policies which may alter projections, although not the ultimate outcome.

    If deficits do average 5.4% of GDP over the ten-year period, the debt-to-GDP ratio will worsen, because GDP growth typically averages much less over a long period.

    The Paul Ryan Budget Plan is every bit as subject to assumption risks as the CBO forecast. It may be more susceptible to political risk, according to David Stockman (obviously not a fan of the plan):

    Mr. Ryan's plan is devoid of credible math or hard policy choices. And it couldn't pass even if Republicans were to take the presidency and both houses of Congress. Mr. Romney and Mr. Ryan have no plan to take on Wall Street, the Fed, the military-industrial complex, social insurance or the nation's fiscal calamity and no plan to revive capitalist prosperity - just empty sermons.

    The Ryan budget, if achieved, would not stop the rise in government debt, although it would slow the rate of increase. Under his plan, debt rises by $3 trillion. That compares favorably with other plans -- e.g., Obama's plan increases debt by almost $7 trillion and the size of government even more, covering some of the higher spending with increased taxes. The Ryan plan does not end deficits but could result in GDP growing at a faster rate than debt, lowering somewhat the ratio of debt to GDP.

    2. Treasury Obligations

    In addition to the debt of $16 trillion, the Treasury has explicitly guaranteed the debts of certain government agencies. Furthermore, Treasury undoubtedly would underwrite the failure of certain other agencies or private entities, as demonstrated by bank and auto bailouts. How much this could add to the federal debt over the next several years is moot and a function of what happens to the economy.

    The Treasury nationalized Fannie Mae and Freddie Mac, effectively guaranteeing $6 trillion of debt not recognized on government's balance sheet. A host of other government agencies probably would be backed by Treasury as necessary. These include the Postal Service, Amtrak, the Federal Deposit Insurance Corporation, the Pension Benefit Guaranty Corporation, and others. Arguably, every one of these entities is bankrupt and will need assistance before the economic crisis terminates.

    The pension problem in this country is enormous. For example, General Motors and Chrysler are estimated to have a potential $42-billion liability for the PBGC. At the end of 2009, the exposure of this agency was estimated to be $168 billion. A recent estimate suggests that private pension plans are underfunded by $435 billion, a number that could worsen dramatically if financial markets do not improve.

    Public-sector pensions are estimated to be over a trillion dollars underfunded. Would the PBGC step in when municipalities routinely begin to file for bankruptcy to rid themselves of these liabilities?
    The FDIC has virtually no funds to bail out depositors in the event of bank failures.

    These shortfalls are likely to be funded by the federal government, although none of these exposures is recognized as federal government debt or obligations.

    3. Unfunded Liabilities

    The unfunded liabilities of the federal government are enormous, dwarfing everything else. They arise from promises made to citizens, primarily with respect to Social Security and Medicare. Government maintains that it has no legal liability to honor these promises and hence does not recognize them as debt. For seniors or near-to-be seniors counting on what they have paid all these years, that attitude is not comforting.

    It is unlikely that these programs will be canceled, although they will eventually be modified. Even so, there is likelihood that the promises will not be kept.

    Estimates of the present value of these obligations range from $50 trillion to over $200 trillion, depending upon the actuarial assumptions made. Gary North uses Laurence Kotlifkoff's figures and explains the calculation (my italics):
    The total obligation of the federal government to voters that is not funded at the present time is now $222 trillion. This does not mean that, over the entire life of the program, the government will be short $220 trillion. It means that the present value of the unfunded liability is $220 trillion. This means that the government would have to set aside $220 trillion immediately, invest this money in non-government projects that will pay a positive rate of return, and will therefore fund the amortization of this debt. I have written about the estimate here.

    This estimate is 14 times what government reports as debt ($16 trillion). The number is unfathomable. To put it into perspective, the entire net worth of the U.S. is estimated to be only $60 trillion, as shown in this chart:

    According to Kotlikoff's calculations, the U.S. government has promised its citizens almost four times the entire net worth of the nation. If the government confiscated everyone's net worth, people would be left penniless, and the government would still be unable to fund these promises.

    At the risk of confusing readers, the annual government deficit using Generally Accepted Accounting Principles (GAAP) is $11 trillion per year, not the $1.3 trillion that will be reported. Kotlikoff's calculations of the unfunded liabilities may be high. Other estimates are lower, but not enough to alter the conclusion that the U.S. is hopelessly broke. Gary North comments on lower estimates:

    Even if Kotlikoff is wrong by a hundred trillion dollars, it becomes clear that Congress is completely incapable of dealing politically with this problem. It could not possibly raise the funds to balance the budget if the budget really is increasing by, say, $5 trillion per year [GAAP calculation].

    Conclusion

    The claimed debt of the federal government ($16 trillion) is enough to threaten its viability and that of the U.S. economy. The current glide path of spending and revenues ensures that debt will increase. Explicit and implicit Treasury guarantees will require additional debt to bail out failing public and private agencies. The situation becomes hopeless when the unfunded liabilities are taken into account.

    Buckle up for a very scary ride."


    Read more: Articles: The Government Is Bankrupt and Will Destroy the Economy
    Americans are so enamored of equality that they would rather be equal in slavery than unequal in freedom.

    Alexis de Tocqueville

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    Re: Can Trillion Dollar Coins Save the Economy?

    You need to drop the attitude and read:

    Read more: Articles: The Government Is Bankrupt and Will Destroy the Economy
    Anyone that asserts that the US Government is bankrupt is entirely economically ignorant or is being willfully misleading. That isn’t “attitude”, that is simple finances 101.

    Not that the Federal debt isn’t an issue, and in fact I have said exactly the opposite of that. But refusing to raise the debt ceiling today is penny-wise at the cost of being pound foolish.

    Of course we are in a crappy situation but wishing we had a balanced budget today doesn’t mean that is the prudent financial decision. Sure it would be nice to be in, say, Canada’s situation where their debt as a percentage of GDP is way lower. But that is water under the bridge. They (initiated by the Liberal government) spent the first decade of this century dealing with their finances while we did not. So we are where we are, we have the hand we have. The real question is the best way forward to deal with it, and methodically turn it around longterm.

    They did not do it in a year or two or really even three, they did not do it via some panicked knee-jerk [that is actually driven by an entirely different agenda], and they certainly did not do have to try do it in the face of the worst economic recession in several decades.

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by Dwight View Post


    Anyone that asserts that the US Government is bankrupt is entirely economically ignorant or is being willfully misleading. That isn’t “attitude”, that is simple finances 101.

    Not that the Federal debt isn’t an issue, and in fact I have said exactly the opposite of that. But refusing to raise the debt ceiling today is penny-wise at the cost of being pound foolish.

    Of course we are in a crappy situation but wishing we had a balanced budget today doesn’t mean that is the prudent financial decision. Sure it would be nice to be in, say, Canada’s situation where their debt as a percentage of GDP is way lower. But that is water under the bridge. They (initiated by the Liberal government) spent the first decade of this century dealing with their finances while we did not. So we are where we are, we have the hand we have. The real question is the best way forward to deal with it, and methodically turn it around longterm.

    They did not do it in a year or two or really even three, they did not do it via some panicked knee-jerk [that is actually driven by an entirely different agenda], and they certainly did not do have to try do it in the face of the worst economic recession in several decades.
    You might try explaining that when all teh banks of the World know that the USA is trapped into a debt spiral that interest rates are suddenly about 0%. When demand is up, rates go up. When demand is down, rates go down. That old supply and demand thing. Give me a play by play on the current circumstance, please.

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by Dwight View Post


    Anyone that asserts that the US Government is bankrupt is entirely economically ignorant or is being willfully misleading. That isn’t “attitude”, that is simple finances 101.

    Not that the Federal debt isn’t an issue, and in fact I have said exactly the opposite of that. But refusing to raise the debt ceiling today is penny-wise at the cost of being pound foolish.

    Of course we are in a crappy situation but wishing we had a balanced budget today doesn’t mean that is the prudent financial decision. Sure it would be nice to be in, say, Canada’s situation where their debt as a percentage of GDP is way lower. But that is water under the bridge. They (initiated by the Liberal government) spent the first decade of this century dealing with their finances while we did not. So we are where we are, we have the hand we have. The real question is the best way forward to deal with it, and methodically turn it around longterm.

    They did not do it in a year or two or really even three, they did not do it via some panicked knee-jerk [that is actually driven by an entirely different agenda], and they certainly did not do have to try do it in the face of the worst economic recession in several decades.
    Canada got rid of a lot of useless pork spending (though not enough) and there is no reason why the US can't do the same right now. But rather than make any move in that direction they added more pork.

    Eight Corporate Subsidies in the Fiscal Cliff Bill, From Goldman Sachs to Disney to NASCAR « naked capitalism

    The president has also shown no desire to cut spending either. Quite the opposite in fact.

    Now Moodys is talking of a possible downgrade with the possibility then of higher interest rates, with the added interest on the debt involving many billions of dollars for the American taxpayer.

    It seems to me that you don't realize just how much $16,000,000,000,000 really is.

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    Re: Can Trillion Dollar Coins Save the Economy?

    Its just a dumb, zippy pinhead idea. Its just raising the debt ceiling by a trillion.

    The reason it is dumb is because it is so bizarre that people would see money as a joke - and if that is so the game's over.

    Finally, the whole concept of it is to try to find a way for bureaucratic government to make an end run around Congress.

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by buck View Post
    I typically don't tell the future. It may be raised. But, as the topic of the op and the post of mine you responded to, I am certain it will not be due to the printing of a trillion dollar coin. The republican's will not allow that to occur. In other words, they will play the adult in this scenario.
    Doesnt matter how it was raised...every republican president raised the debt ceiling...let me remind you there have been more GOP presidents...the debt ceiling as it is didnt get here only because of democrat potus

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