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U.S. Debt is a Myth

JohnfrmClevelan said:
Yes, that's inflation. But what is it caused by? If you are trying to imply that inflation is caused by government spending and not a bunch of other factors, you need to make your case.
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My only point is that you pooh pooh inflation as something that only raises its ugly head when we exceed the economy's ability to produce. Yes I don't think we have hit a productivity ceiling in my life time.
 
joG said:
The economy doesn't need industrial policy and employment programs to increase jobs. Quite the opposite. We need less debt, better regulation and less intervention.
So yes. We should have cut spending more than we did. We would already be better off, had Clinton done so.
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Yes, it does indeed need employment programs to create jobs. Remember the stimulus? Public sector work is still done by many people. Less debt? That's absolutely absurd, what makes you think government bonds, the savings of entities, is harming anything?
 
Renae said:
The OP starts from the absurd notion that money is magical, I merely took it to it's better conclusion.
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You should try starting with the assumption that your own notions about money are possibly incorrect, and just maybe a successful bond trader being interviewed might have a bit of insight that you lack. Until that time, you aren't going to improve on anybody's conclusions.
 
David_N said:
Inflation isn't always a bad thing and can't be attributed to government spending. John touches on this in post #22.
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I view it as always a bad thing. I didn't say government spending is the only cause of inflation.
 
JohnfrmClevelan said:
You should try starting with the assumption that your own notions about money are possibly incorrect, and just maybe a successful bond trader being interviewed might have a bit of insight that you lack. Until that time, you aren't going to improve on anybody's conclusions.
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You have to remember that most Americans, with their virtually non existent knowledge of economics, well, what little they do know is almost certainly in relation to the now dead gold standard.
 
David_N said:
Why is it always bad?
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Because it makes things harder to plan than a steady state situation. Also it hurts savers because their money loses buying power. The only advantage is for borrowers and I think borrowing is mostly bad as well.
 
David_N said:
Yes, it does indeed need employment programs to create jobs. Remember the stimulus? Public sector work is still done by many people. Less debt? That's absolutely absurd, what makes you think government bonds, the savings of entities, is harming anything?
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Why do you go on and on with opinions in a science you now relatively little about? Are you one of those disinformation guys the Russians pay to destabilize with false information? You see, you sound like Russia Today.
 
fmw said:
Because it makes things harder to plan than a steady state situation. Also it hurts savers because their money loses buying power. The only advantage is for borrowers and I think borrowing is mostly bad as well.
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Inflation makes things harder to plan? Not for a government that can easily control it with taxes.
 
joG said:
Why do you go on and on with opinions in a science you now relatively little about? Are you one of those disinformation guys the Russians pay to destabilize with false information? You see, you sound like Russia Today.
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You keep posting the same condescending statements and never actually address a post.
 
Ntharotep said:
I've never seen a real answer as to why the Government doesn't just give its citizenry money to be fair.
Would it create a surplus close to that just before the Great Depression?

Honest question.
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I suppose it's a political fireball.

But what would be wrong with paying, say, $0.20 for every dollar below median wage a person earns?
 
fmw said:
I view it as always a bad thing. I didn't say government spending is the only cause of inflation.
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Inflation is not inherently bad, there will always be inflation if the the economy is growing and inflation around 1% or 2% is perfectly manageable and is to be excepted.
 
JohnfrmClevelan said:
I have answered this one about a hundred times on this site alone.

Giving away too much money would cause inflation. Our economy couldn't meet that much demand, and prices would go up. On the other hand, when Bush gave everybody $400 back in 2001, it barely caused a blip in the graphs. So there is obviously some level that could be helpful, and would increase demand in a healthy way. Lots of countries are considering a BIG (Basic Income Guarantee) of a few thousand/year. Not enough for people to quit work, and not so much that our economy would be swamped by the demand.

Also - what pre-Depression surplus are you referring to?
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Thanks! Also the $400-$600 Bush/Obama was barely a blip in the wallet too! ;)
I've heard of the guaranteed income. It seems like a system with a hole in it still when you have to be careful of "how much the average person is allowed to have" with respect to the demand balancing act.
I was under the impression when we get too much surplus it causes recessions/depressions...but this may be from the balancing of the country's budget as a whole not from the public sector. I'm still wrapping my head around some of these concepts.

David_N said:
You're talking about a basic income guarantee which is being experimented with, and which will ultimately be necessary due to productivity, automation.. (Some time in the future, not anytime soon.)
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I was thinking of the Bush/Obama style incentive but yes, we've discussed a lot about the eventual automation bubble. I fear for the generation who is stuck in the middle of that transition.

Any thoughts on the bleeding USD value and when/if that becomes an issue?
 
joG said:
The economy doesn't need industrial policy and employment programs to increase jobs. Quite the opposite. We need less debt, better regulation and less intervention.
So yes. We should have cut spending more than we did. We would already be better off, had Clinton done so.
Click to expand...

This kind of thinking disregards the numbers. "If we had less debt and just cleared the way for business, we would increase jobs." But you never say where the demand is going to come from. First, you want to lower government spending, but govt. spending is a large component of aggregate demand. If you put government workers out of their jobs, they won't have any money to spend. And just ask anybody who has the government as a customer - they don't want to lose that business.

So where is this new demand going to come from? Do you seriously think that a few bucks saved by business is going to be re-invested into increasing production when there is no reasonable source of increased demand? Did the rules of economics suddenly do an about-face?
 
IF, and that's a big if, your MMT nonsense was true, why on earth does the government rob its citizens of their hard earned cash in taxes?
 
David_N said:
You keep posting the same condescending statements and never actually address a post.
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That is because your economic ideas are so obtuse that they cannot seriously be debated. There is just too little reality in them.
 
fmw said:
My only point is that you pooh pooh inflation as something that only raises its ugly head when we exceed the economy's ability to produce. Yes I don't think we have hit a productivity ceiling in my life time.
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I don't pooh pooh inflation at all. In fact, it is the one problem that I see as a limit. But you have to weigh that against the very real problems that we face in the meantime - mostly high unemployment.

If we had full employment, don't you think you could live with a bit more inflation (if it even were to happen)? Full employment would mean an improved economy. We would, as a group, stand to make more money. Home values up, etc. As long as your wages or earnings go up along with inflation (and full employment would help with that), what is the problem?
 
JohnfrmClevelan said:
This kind of thinking disregards the numbers. "If we had less debt and just cleared the way for business, we would increase jobs." But you never say where the demand is going to come from. First, you want to lower government spending, but govt. spending is a large component of aggregate demand. If you put government workers out of their jobs, they won't have any money to spend. And just ask anybody who has the government as a customer - they don't want to lose that business.

So where is this new demand going to come from? Do you seriously think that a few bucks saved by business is going to be re-invested into increasing production when there is no reasonable source of increased demand? Did the rules of economics suddenly do an about-face?
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All true. That is why the spending and debt reductions should be accomplished in times of expansion.
 
fmw said:
Because it makes things harder to plan than a steady state situation. Also it hurts savers because their money loses buying power. The only advantage is for borrowers and I think borrowing is mostly bad as well.
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Inflation only hurts savers who save in the form of dollars. If you hold stocks, they go up. If you invest in your house, it goes up.
 
Ntharotep said:
Thanks! Also the $400-$600 Bush/Obama was barely a blip in the wallet too! ;)
I've heard of the guaranteed income. It seems like a system with a hole in it still when you have to be careful of "how much the average person is allowed to have" with respect to the demand balancing act.
I was under the impression when we get too much surplus it causes recessions/depressions...but this may be from the balancing of the country's budget as a whole not from the public sector. I'm still wrapping my head around some of these concepts.
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Federal surpluses take more money out of our pockets than government spending adds to them. Plus, they don't come out of the pockets of the big savers - China, Japan, Saudi Arabia, etc. Surpluses come from taxation, and that's you and me. And that's money that would normally be spent.

So if today's $500 billion deficit were turned into a $100 billion surplus, that would mean $600 billion would come right off the top of GDP. Assuming an interest rate of 3%, that would save about $1.8 billion/year in interest. But,... assuming a job is worth $100,000 (just a guess), it would also mean the loss of 6 million jobs.
 
Ellis_G said:
IF, and that's a big if, your MMT nonsense was true, why on earth does the government rob its citizens of their hard earned cash in taxes?
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You still need taxation. It drives demand for the currency.
 
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