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U.S. Total Debt Soars By $674 Billion In November

OrphanSlug said:
To the first question, it means putting pressure to devalue currency quicker than the basket of currencies we are compared to. Said another way, constantly putting pressure on monetary policy to support Federal spending policy, further divorcing the relation they should have. So far we have been able to escape that consequence as the Dollar is doing better than our competition, my concern is our ability to continue to do better than the competition.
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If that is really a problem, I don't understand why we wouldn't be experiencing inflation anyway. What difference does it make if other countries' economies are doing relatively worse than we are? What difference does any of that make if prices, denominated in dollars, aren't going up?

As for deliberate efforts to devalue various currencies, it turns out to be much more difficult than orthodox economic theory always thought it would be. Which means you should be questioning whether or not your fears are even based on solid reasoning. Instead, it looks a lot more like orthodox economists are coming up with explanations that attempt to explain away the failures of their economic models to line up with current realities, so they don't have to abandon their schools of thought altogether.

OrphanSlug said:
I am not talking in terms of Debt being a drag on the economy, I am talking about the usage of Debt to create an economic model dependent on government spending. I've said that many times, "for a while now." If we ever get to a point where we have complication then we very well might see interest rate controls that seem counter intuitive to whatever the status of the economy is. Again, many times over I've said all over these forums debating with you, it comes down to the purpose of government spending in relation to economic status. You continually ignore that for arguments to issue debt all the time.
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No I don't, you just don't seem to remember my arguments that well. I would be quite happy if the private sector alone was able to employ everybody and pay them a satisfactory wage, but it is quite clear to me that this model is no longer realistic. I have said many times before that our private sector is able to meet all demand using far less than 100% of our labor force, and this fact, along with globalism, blows the whole labor market to bits. If you can find some other solution to that problem besides expanding the public sector, feel free to share it with us.

Demand is the effective limit on how big your economy, and therefore your tax base, is going to be. Private sector saving subtracts from aggregate demand, and our trade deficit means that our economy loses a lot to savings. And the growing disparity in income that goes to the upper end exacerbates this problem even more. If you cut back on government spending, that only makes the labor problem worse, not better, because public sector jobs would be lost.

So you have two possible responses to the above: you can either demonstrate that deficits and debt are more harmful than high (and growing) unemployment, or you can put forth a plausible private sector solution. So far, I have seen neither.


OrphanSlug said:
To the last question, "spending beyond our means" is just the idea of constantly running deficits irregardless of the status of where we are in the economic cycle. Just about every economist I've ever studied, including Keynes, never suggested building an economic model dependent upon constantly issued Debt every single year. Also, not a one of them suggest economic micro management, which you get anyway by default when forcing an economic model where the expectation is government issued debt every single year.
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There are two key differences between the present day and Keynes' era: we used to be on the gold standard, where debt was real, and we used to have more demand for labor than we had laborers. Things change. It may be time for you to study some newer economists, ones that focus on the modern world and fiat currency.
 
DA60 said:
Low inflation is not because all the Krugmanite money printing and ZIRP was done 'skillfully'. The main reason - BY FAR - that there is such low inflation is this...
The velocity is THE LOWEST RATIO ON RECORD...BY FAR...and still falling.
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Velocity is a derived number, not a direct measurement. For instance, V will decrease whenever M1 increases, regardless of what else is happening in the economy. I don't think V is a terribly useful measurement of anything.

DA60 said:
Look at the charts, traditionally, low money velocity usually happens during recessions - because people do not spend and money does not change hands. How can the economy be thriving if the ratio is the lowest on record? Answer...it cannot be...it is only the government artificially pumping it up.
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GDP continues to grow. Companies are making record profits on record margins. This is, I believe, because labor is so cheap.

DA60 said:
Now, let's look at the quality of all these jobs being created:
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No need to bother with this argument, because I agree that the labor situation stinks. I have said so many times.

DA60 said:
Now I realize your mind is apparently COMPLETELY closed on this issue...
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DA, you really need to stop posting this kind of crap. Coming from a guy who regularly strafes a thread, then ends his post with, "I know your mind is closed, so I'm not going to bother debating," the irony is just over the top.

I have participated in real debates since the moment I got here. In that time, I haven't noticed you debating much of anything with anyone. The moment somebody asks you to substantiate any of your bold claims, you declare them close-minded and immediately bail out. And I don't think you will find too many people here that disagree with what I just said.

DA60 said:
But the truth is the fundamentals of the American economy - despite over $12 trillion in deficits/Fed stimulus AND ZIRP over the past 7 years or so - is still lousy.

If it were not for the government teat keeping it fed (pardon the pun - actually, I like that), it would almost surely start to starve.
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I agree, sort of - but for different reasons. Read my last post, where I explained why this is so. But it has nothing to do with government spending, it has to do with the lousy labor market.
 
OrphanSlug said:
For liberal economics, there is nothing to fix. Assuming that debt does not cause economic lag (something I hear mentioned all the time) then there is no problem issuing more debt regardless of reason for it.

From their perspective the debate becomes restricted to consequence, and we have to hit the consequence to quit the policy. Sight of a potential consequence is not enough, unless opposition to liberal economics is the one issuing the debt. Then all of a sudden debt is a problem.

Good luck with all that...
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It is not just spending for spending's sake, it is spending to avoid more and more unemployment. There are far greater consequences to inaction.
 
jonny5 said:
Im more worried about the 400bn in interest we're paying every year. That right there accounts for the entire deficit. Which means, in a way, we are borrowing 400bn a year just to pay 400bn a year in interest.
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Typically (on average) the interest that we pay is around the same rate that the debt is being deflated due to inflation, so the net interest rate is zero. The debt doesn't cost the American tax payer a penny.
 
fmw said:
I think we are already borrowing money to pay interest on the debt. It amazes me that people think that isn't a problem.
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Why would it be a problem?
 
OrphanSlug said:
...Problem is absent economic growth you end up with pressure on monetary policy to engage in more devaluation...
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So then we should keep a pro-growth policy. Government spending is part of the GDP, if we reduced government spending the GDP would decline, which would mean that we would be reducing growth or even shrinking our economy. Deficit spending is an important part of a pro-growth policy.
 
fmw said:
Except the budget is too large. It causes more debt. Nothing is getting fixed.
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Too large for what? And yes, it does cause more debt - so what? Specifically what is not getting fixed?
 
fmw said:
You don't think it would be a problem if they couldn't find buyers for the bonds? I do. You don't think it would be a problem if investment money saw more value elsewhere and abandoned treasuries? There are no consequences at all for limitless borrowing?
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Yes, it would be a problem. What you don't seem to understand is that the system is rigged so that the treasury can ALWAYS find buyers. That's why the treasury doesn't set the rates, the rate for treasury bonds is set by auction, and auctioning the bonds guarantees that the bonds will be purchased. If there is not much demand for the bonds, the worst thing that can happen is the buyers will get a great deal.
 
imagep said:
The US treasury doesn't exactly have to fill out a credit application. What happens is it issues treasury bonds, and these are sold at auction to dealers who then resell them to whoever is willing to purchase them, including the federal reserve. If the demand for treasuries drops, then the price received for them at the auction drops (meaning that the effective ROI increases), but people will always buy.

If I was selling dollars for 50¢ each, wouldn't you chose to purchase all the dollars you could? There has never been an unsuccessful treasury bond auction, it's rigged so that it can't be unsuccessful.

There is no merit to the consequence you are worried about.

NEXT (UNFOUNDED CONCERN)...
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More on this, the Treasury is able to find buyers of its debt at near zero rates. During the economic crisis, the Treasury was paying negative real rates and had no shortage of buyers.
 
OrphanSlug said:
Out of control, and *not surprisingly* with very little media coverage.
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Just because one did not see an item does not mean it was not reported
Media coverage: There may appear a lack of coverage in the media for several reasons:
1. The number of news sources of the person is limited.
2. Many times the information is reported in specialty news reports more so than the daily news……..
3. Most news is not reported on TV
4. Maybe you just missed seeing it
That being said…….do you have any comment/opinion on the subject?
 
MTAtech said:
More on this, the Treasury is able to find buyers of its debt at near zero rates. During the economic crisis, the Treasury was paying negative real rates and had no shortage of buyers.
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Orthodox thinking says that the greater the supply of bonds, the lower the demand

Heterodox thinking says the more dollars out there, the more parking places needed, and the greater potential demand for bonds.
 
imagep said:
Yes, it would be a problem. What you don't seem to understand is that the system is rigged so that the treasury can ALWAYS find buyers. That's why the treasury doesn't set the rates, the rate for treasury bonds is set by auction, and auctioning the bonds guarantees that the bonds will be purchased. If there is not much demand for the bonds, the worst thing that can happen is the buyers will get a great deal.
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That's a good point. But I was thinking of investment money going elsewhere not because of the price of the treasuries but confidence in federal government. One day treasuries could become junk bonds.
 
imagep said:
Too large for what? And yes, it does cause more debt - so what? Specifically what is not getting fixed?
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The so what is visible in what happened to Greece.
 
fmw said:
The so what is visible in what happened to Greece.
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And here you could have used Weimar, a republic with a sovereign coin, but instead went with a EU state.

Oh why can't we have better commentary from libertarians?
 
Gimmesometruth said:
And here you could have used Weimar, a republic with a sovereign coin, but instead went with a EU state.

Oh why can't we have better commentary from libertarians?
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The problem with the Weimar republic was inflation. The problem with Greece was overspending. I was referring to overspendiing. Sorry I didn't make that clear.
 
fmw said:
The problem with the Weimar republic was inflation. The problem with Greece was overspending. I was referring to overspendiing. Sorry I didn't make that clear.
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The base problem with your analogy remains, Greece does not have a sovereign coin, the US is not getting massive loans from German and French banks.

"Overspending" is a canard, austerity in a time of slack employment and under-utilization is the means to extending a recession, not quickly reversing it.
 
Gimmesometruth said:
The base problem with your analogy remains, Greece does not have a sovereign coin, the US is not getting massive loans from German and French banks.

"Overspending" is a canard, austerity in a time of slack employment and under-utilization is the means to extending a recession, not quickly reversing it.
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So we disagree on all counts. I'm rather surprised that even economics has become politicized.
 
fmw said:
So we disagree on all counts. I'm rather surprised that even economics has become politicized.
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So it is called "politics" when nations use proven methods for limiting financial upsets? Economic theory changes based on what works, not politics. Those that choose to see it as political are expressing "sour grapes" I fear.
 
fmw said:
So we disagree on all counts.
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If you say so.
I'm rather surprised that even economics has become politicized.
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I wasn't making political argument, I was stating common sense actions in a recession/recovery while countering your false analogy.
 
Gimmesometruth said:
If you say so.I wasn't making political argument, I was stating common sense actions in a recession/recovery while countering your false analogy.
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I understand you didn't say anything political. But you can name the economic approach the poster is going to support by understanding the political lean. It is just like the global warming issue. As to my false analogy, do you think Greece didn't overspend?
 
iguanaman said:
So it is called "politics" when nations use proven methods for limiting financial upsets? Economic theory changes based on what works, not politics. Those that choose to see it as political are expressing "sour grapes" I fear.
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I responded to Gimmesometruth on this subject.
 
fmw said:
I understand you didn't say anything political. But you can name the economic approach the poster is going to support by understanding the political lean.
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Well that is a pretty stupid comment, you just lamented that "economics is politicized" but explain it by stating that a poster's lean determines his economics. So then, in effect, you are sad that your libertarianism causes you to spout lousy libertarian economic ideas and analogies. Here is a thought....stop it.
It is just like the global warming issue.
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Well, if anti-science is a political choice....there you are....and I agree, the rejection of analysis is lamentable......so again.....why not stop doing it?
As to my false analogy, do you think Greece didn't overspend?
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In the same, equivalent way the US has supposedly "overspent" during the recovery?....um....no. Your analogy doesn't even rise to an apples to oranges comparison. You still cannot accept the sovereignty issue, beyond the obvious differences of loans prior to a recession versus spending during a recovery.
 
Gimmesometruth said:
Well that is a pretty stupid comment, you just lamented that "economics is politicized" but explain it by stating that a poster's lean determines his economics. So then, in effect, you are sad that your libertarianism causes you to spout lousy libertarian economic ideas and analogies. Here is a thought....stop it.Well, if anti-science is a political choice....there you are....and I agree, the rejection of analysis is lamentable......so again.....why not stop doing it?In the same, equivalent way the US has supposedly "overspent" during the recovery?....um....no. Your analogy doesn't even rise to an apples to oranges comparison. You still cannot accept the sovereignty issue, beyond the obvious differences of loans prior to a recession versus spending during a recovery.
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Sorry, I will say what I like. You don't take disagreement very well do you?
 
fmw said:
I understand you didn't say anything political. But you can name the economic approach the poster is going to support by understanding the political lean.
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Or maybe it's the other way around. I didn't study economics from a political viewpoint, I (for example) studied what worked and what was supported by evidence. Of course, from what I learned about economics, siding with liberals/Democrats was only logical. Conservatives (erroneously) believe that the United States is deep in real debt, so they logically follow conservative/Republican leaders who say the same thing. But Gimmesometruth is absolutely correct; if you stop your analysis of economics at that point, and dismiss everything that liberals say simply because they are liberal, you are never going to learn anything. It is the anti-intellectual path.

fmw said:
As to my false analogy, do you think Greece didn't overspend?
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No, overspending wasn't Greece's problem at all. Austerity only makes their situation worse. Cutting government spending further shrinks the tax base. Austerity only "works" to make an economy self-sustaining if you are willing to let a large percentage of your population starve. The economies that are trumpeted as austerity "success stories" have invariably shrunk a ton before they stabilized, leaving many unemployed.

Greece's problem, like almost all Euro countries besides Germany, is that the system is designed so that Germany sucks euros out of all of the weaker economies. It is completely different than having your own currency. This has been explained dozens of times before.
 
fmw said:
Sorry, I will say what I like. You don't take disagreement very well do you?
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They irony being, I'm slamming your COMMENTS, not your person.
 
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