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Reverand Paul gives a sermon on the Book of Fiscal Conservatism

JohnfrmClevelan said:
Debt, in and of itself, does not matter. Debt-to-GDP, for instance, doesn't matter. The existence of bonds has no effect on the economy. Debt, or the level of debt, does not prevent the government from spending.

Taxes are useful and/or necessary for other reasons; lowering aggregate demand/claiming space for government consumption; social policy (like combating huge income disparity). And taxes were useful when we were on the gold standard, when the government's creation of MB was limited.
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to say debt does not matter is to infer that one can do anything with money and there are no consequences and there is no truth in that.
 
Master PO said:
to say debt does not matter is to infer that one can do anything with money and there are no consequences and there is no truth in that.
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That's your wild inference, and your strawman. If you can't see the distinction, that's not my problem to solve.
 
Master PO said:
no, but since the government can do with money as they will 1 million is a nice figure, for them to give to me.
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Look, your arguments are getting even more ridiculous than usual. Get back to reality, or I'm out of this discussion.
 
JohnfrmClevelan said:
So it was issued in dollars. Which backs up what we have been saying all along. If you have foreign debt, that is what is going to be impossible to pay off. Argentina cannot print dollars.
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No.. once again you forget this thing called exchanging. Country A borrows in Country B's currency. Country A gives Country B it's currency and Country B give Country A it's currency. All Argentina had to do was issue pesos to buy up US dollars. Argentina came to the realization it couldn't issue 340b Pesos either by just printing it or borrowing it without destroying it's 40% inflation economy.
 
JohnfrmClevelan said:
I understand it just fine. Every MMTer knows, better than most, that if you have debts in a foreign currency, if you peg your currency, if you tie your currency to anything and don't let it float, you are subject to real problems. You should know this by now - I don't understand why you are trying to use it as a "gotcha!", except you seem to delight in challenging whatever MMT says at every opportunity.
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You just confirmed you actually understand very little. Argentina did a one time 1:1 Peso to Dollar peg. Then Argentina allowed the Peso to float. The Peso collapsed against the Dollar requiring Argentina to issue more and more Peso to borrow Dollars to make payments, making their inflation MUCH MUCH worse.
 
JohnfrmClevelan said:
Debt, in and of itself, does not matter. Debt-to-GDP, for instance, doesn't matter. The existence of bonds has no effect on the economy. Debt, or the level of debt, does not prevent the government from spending.

Taxes are useful and/or necessary for other reasons; lowering aggregate demand/claiming space for government consumption; social policy (like combating huge income disparity). And taxes were useful when we were on the gold standard, when the government's creation of MB was limited.
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Uh once again you are showing your ignorance of the finance industry. Debt to GDP matters because it a portion of pricing mechanisms. Bonds have MAJOR effect on the economy. They do everything from determine commercial interest rates (what you and I pay) to act as collateral for Banks balance sheets because they are easy to sell.
 
Incisor said:
Not all countries can do that, however. Many of the nations in the European Union cannot, like Greece.
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Never stopped Greece for issuing Greek bonds.
 
austrianecon said:
You just confirmed you actually understand very little. Argentina did a one time 1:1 Peso to Dollar peg. Then Argentina allowed the Peso to float.
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The Peso was pegged to the dollar for over a decade, between 1991 and 2002, and they ended the peg because the strength of the dollar put considerable strain on exporters. It would seem your understanding is highly overstated.
 
austrianecon said:
Uh once again you are showing your ignorance of the finance industry. Debt to GDP matters because it a portion of pricing mechanisms. Bonds have MAJOR effect on the economy. They do everything from determine commercial interest rates (what you and I pay) to act as collateral for Banks balance sheets because they are easy to sell.
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Debt to GDP matters insofar as debt service payments crowd out other types of expenditure/investment.
 
austrianecon said:
You just confirmed you actually understand very little. Argentina did a one time 1:1 Peso to Dollar peg. Then Argentina allowed the Peso to float. The Peso collapsed against the Dollar requiring Argentina to issue more and more Peso to borrow Dollars to make payments, making their inflation MUCH MUCH worse.
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Key phrase: "borrowing dollars to make payments."
 
Master PO said:
since the U.S. government runs deficits every year because they don't collect enough revenue to pay for what they government is involved in, debt is created.
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Investments in things like education and infrastructure enable future tax collection.
 
Kushinator said:
The Peso was pegged to the dollar for over a decade, between 1991 and 2002, and they ended the peg because the strength of the dollar put considerable strain on exporters. It would seem your understanding is highly overstated.
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Yes (with a float) and during that time any time there was a budget shortfall, Argentina borrowed (hence the $80 to $100b borrowing in USD). But recession did them in. Argentina had the methods to pay that debt back by devaluation at anytime.. and that's what JfC is missing. Argentina could devalued up right in 2001 and paid that debt back but they couldn't because Peso was going for 1.4:1 dollar on the local market.
 
Kushinator said:
Debt to GDP matters insofar as debt service payments crowd out other types of expenditure/investment.
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So at what level do you consider that? $400b? 6 of the last 7 year it was over $400b.
 
austrianecon said:
Yes (with a float) and during that time any time there was a budget shortfall, Argentina borrowed (hence the $80 to $100b borrowing in USD). But recession did them in. Argentina had the methods to pay that debt back by devaluation at anytime.. and that's what JfC is missing. Argentina could devalued up right in 2001 and paid that debt back but they couldn't because Peso was going for 1.4:1 dollar on the local market.
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So you go from 1 time 1:1 peg to admitting it was fixed for a decade. Then you contradict this ridiculous argument by claiming they could have devalued, but they couldn't....
 
austrianecon said:
So at what level do you consider that? $400b? 6 of the last 7 year it was over $400b.
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Whatever the level is for interest rate expenses to reduce real fixed investment. Do you have any evidence that government borrowing has crowded out private investment these past 8 years?
 
Kushinator said:
So you go from 1 time 1:1 peg to admitting it was fixed for a decade. Then you contradict this ridiculous argument by claiming they could have devalued, but they couldn't....
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No, I admitted to a fixed peg then they let it float. For almost a decade Argentina didn't pay after change.
 
austrianecon said:
No, I admitted to a fixed peg then they let it float. For almost a decade Argentina didn't pay after change.
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They let it float after more than a decade. Your entire premise is based on revisionism.
 
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