• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

The federal debt is headed for the highest levels since World War II, CBO says

And I'm talking about the stuff that pays for your house or car when you get a loan. You are again focused solely on your bank's profitability.

So when you get a car loan for $5000, the car dealer ultimately gets a $5000 deposit into his account. Where do those funds come from? Nobody is interested in the grainy details that you are offering up.

But I'm talking about how you would get the stuff that pays for your house or car. Bank profitability is why a loan will be created, which is determined by loans and Treasury contributions, which is determined by the optimal volume of loans and deposits. This doesn't happen simply because society wants it to happen. Banks

Not at all. We just cut through all of the BS to get down to the basics of money creation. So all of the details you have been going on about, we cover with the simple phrase, "creditworthy borrower." That is plenty to get across that of course banks won't make unprofitable loans.

Money doesn't get created unless you understand this concept. There are constrains on this, like everything else. Banks are constrained by profitability; they're contained by capital, whether it's regulatory or self-imposed; and they're also constrained by the optimal volume of deposits. Everything you are citing is based on a theory; which is fine. However, your theory forgot to acquire a grasp of how banks operate..

Deposits are only important for being a cheap source of reserves. If you are saying something fundamentally different than this, then explain yourself in more detail.

Correct, thing is that deposits aren't the only sources of funds for a bank. If the bank wishes to increase it's loan portfolio, the expected income from an additional dollar of loan will go down because the bank needs to reduce the interest rate to attract the additional dollar of the loans, or because the bank accepts a loan of lower quality. A bank wouldn't do this because the funding cost of the loan would exceed the product price profitability of the loan.

I'm not crafting anything myself. The fact that banks create M1 money (loans create deposits) is widely accepted now, and no less an authority than the Bank of England has demonstrated this. https://www.bankofengland.co.uk/-/m...2014/money-creation-in-the-modern-economy.pdf

Your source is talking about expansion as a result, not the cause. I am referring to the cause, which is determined by a banks Treasury.

But just determining that banks don't necessarily need deposits to make loans is a very important step in getting to the correct answer and making people understand what is and isn't really key. Joe Schmo still believes in the loanable funds theory of banking. He also believes that the government is in trillions of dollars of actual debt. So these are important things to nail down.

But they do need deposits. That is how they are able to expand their loan portfolio. Commercial banks that operate with so little demand deposits run the risk of having a very small loan portfolio.

Now that we have established that deposits aren't necessary (because banks don't lend )...

Irrelevant. You've established on your own that deposits aren't necessary. I say that deposits are necessary, so I don't see the point in addressing this premise.

Not in any way similar to inventory that stacks up in warehouses, though.

Also irrelevant. Inventory can be used for the purposes of sales or the creation of services, which is the

I believe that this whole thing started based on the claim by Conservative that savings helped GDP. And I still hold the position that savings out of income - any savings - is a demand leakage, according to the circular flow of income model.

https://en.wikipedia.org/wiki/Circular_flow_of_income
[/QUOTE]

Leakages only occur if they are greater than injections. This was already pointed out, and your source even points that out. Leakages, similar to injections describe a disequilibrium. You keep talking about leakages, but you don't want to talk about equilibrium. At some point, you're going to have to recognize that they're both related in this model.
 
Who said that, except Dick Cheney? To quote Keynes (http://cas2.umkc.edu/economics/peop...Econ601 2012/readings/Keynes World Crises.pdf),
Dh05E2zW4AEw7Yv.jpg

I could have sworn that liberals on this very site have said that debt doesn't hurt an economy, no?
 
I could have sworn that liberals on this very site have said that debt doesn't hurt an economy, no?
I can't speak for others. However, I can say that deficits are like your car's brake pedal. Using it depends upon circumstances. Stepping on the brake pedal when the traffic light is red and relaxing it to step on the gas pedal, is not an example of hypocrisy. Likewise, having deficit spending in a recession is advisable and running surpluses in better days is sound policy.
 
Republicans rammed through their big tax cut and asserted that the tax-cuts would be paying for themselves, with so much more economic activity. That was another lie in a stream of lies.

There is a 8 trillion dollar gap that the democrats didn't give **** about also.
 
I can't speak for others. However, I can say that deficits are like your car's brake pedal. Using it depends upon circumstances. Stepping on the brake pedal when the traffic light is red and relaxing it to step on the gas pedal, is not an example of hypocrisy. Likewise, having deficit spending in a recession is advisable and running surpluses in better days is sound policy.

Deficits lead to increased debt, stop playing word games. They're either bad or not. If liberals said they weren't bad for the economy, then they need to STFU and sit down.
 
Deficits lead to increased debt, stop playing word games. They're either bad or not. If liberals said they weren't bad for the economy, then they need to STFU and sit down.
As I said, saying that deficits are always bad is like saying one should never step on the gas pedal. That's not even economics. It's just logic.
 
I'll have to go with MTA Tech on this one.Although as a general rule it's best to not spend more than you have, it's not absolute.
Deficits are context dependent.
 
Deficits lead to increased debt, stop playing word games. They're either bad or not. If liberals said they weren't bad for the economy, then they need to STFU and sit down.

If deficits leads to debt, and if debt is so bad, then why do you all cut taxes which creates deficits?

Seems to me you're doing it on purpose to force a conversation about cuts to spending that you ideologically oppose.

So how is deliberately flying planes of tax cuts into the budget to manufacture a deficit crisis in order to cut spending on those whom you sanctimoniously judge not terrorism?

Because it sure sounds terrorist-y to me.
 
I'll have to go with MTA Tech on this one.Although as a general rule it's best to not spend more than you have, it's not absolute.
Deficits are context dependent.


Yes, but governments don't "have" a limited, finite pile of pre-existing money. Nor do private banks. This is a point we have been trying to get across for some time now, because deficit hawks argue about dollars in the same way one would argue about oil - that the well can run dry eventually - which is true for oil, but not dollars.

Governments issue liabilities in order to spend. There is no limit to the number of liabilities (bonds and dollars) that can be created, and it costs nothing to create them. What is limited is what can be purchased with those liabilities. So approaching the "national debt" as if it is real debt is worrying about nothing. What we should be worrying about are the effects of government spending, and the effects of having those dollars and bonds in private sector hands.


As for federal deficits themselves, for a country that runs a large and persistent trade deficit, it is probably never going to be wise to run a federal surplus, or even balance the budget. So even in times of growth, that trade deficit means we are losing a bunch of our potential aggregate demand to foreign economies. Deficit spending is (most of) what makes up for that.
 
Yes, but governments don't "have" a limited, finite pile of pre-existing money. Nor do private banks. This is a point we have been trying to get across for some time now, because deficit hawks argue about dollars in the same way one would argue about oil - that the well can run dry eventually - which is true for oil, but not dollars.

Governments issue liabilities in order to spend. There is no limit to the number of liabilities (bonds and dollars) that can be created, and it costs nothing to create them. What is limited is what can be purchased with those liabilities. So approaching the "national debt" as if it is real debt is worrying about nothing. What we should be worrying about are the effects of government spending, and the effects of having those dollars and bonds in private sector hands.


As for federal deficits themselves, for a country that runs a large and persistent trade deficit, it is probably never going to be wise to run a federal surplus, or even balance the budget. So even in times of growth, that trade deficit means we are losing a bunch of our potential aggregate demand to foreign economies. Deficit spending is (most of) what makes up for that.

The real issue here is what the Federal Govt. spends taxpayer money and the requirements of the Constitution. With over 60% of the budget entitlement spending therein lies the problem and apparently there still isn't enough to fund the liberal spending appetite. We currently have a 4 trillion dollar budget made up of the following:

National defense
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment and social services
Health
Medicare
Income security
Social security
Veterans benefits and services
Administration of justice
General Government
Net interest

The true problem is many of these expenses expand the role of the Federal Govt. and are duplicated at the state and local levels. In addition the items bolded have specific taxes to fund but the unified budget puts all dollars into one pot to be spent as the bureaucrats see fit. Solution, pull all the items in bold out of the unified budget and return most social programs to the state and tell me how much of an actual budget the US govt. needs

Now here is the revenue stream

Income Taxes
Corporate Taxes

Employment and general retirement(FICA/Payroll)
Unemployment insurance(FUTA Tax)
Other retirement


Excise taxes(Gasoline taxes paid at pump)

Other:
Estate and gift taxes
Customs duties
Miscellaneous receipts

Pull out the specific taxes and expenses and you will end up with about a 1.5 trillion dollar govt. a far cry from the 4 trillion we have
 
The real issue here is what the Federal Govt. spends taxpayer money and the requirements of the Constitution. With over 60% of the budget entitlement spending therein lies the problem and apparently there still isn't enough to fund the liberal spending appetite. We currently have a 4 trillion dollar budget made up of the following:

National defense
International affairs
General science, space, and technology
Energy
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and regional development
Education, training, employment and social services
Health
Medicare
Income security
Social security
Veterans benefits and services
Administration of justice
General Government
Net interest

The true problem is many of these expenses expand the role of the Federal Govt. and are duplicated at the state and local levels. In addition the items bolded have specific taxes to fund but the unified budget puts all dollars into one pot to be spent as the bureaucrats see fit. Solution, pull all the items in bold out of the unified budget and return most social programs to the state and tell me how much of an actual budget the US govt. needs

Now here is the revenue stream

Income Taxes
Corporate Taxes

Employment and general retirement(FICA/Payroll)
Unemployment insurance(FUTA Tax)
Other retirement


Excise taxes(Gasoline taxes paid at pump)

Other:
Estate and gift taxes
Customs duties
Miscellaneous receipts

Pull out the specific taxes and expenses and you will end up with about a 1.5 trillion dollar govt. a far cry from the 4 trillion we have

Well, that's your interpretation of the Constitution, not mine, and not that of most people. And not that of the rest of the developed world, either. Most people see the benefit of larger government programs, even with higher taxes, and also agree with the "general welfare" interpretations of the Constitution.

In fact, all of that entitlement spending you are worried about helps the economy (in addition to helping people directly). Cut that spending and you are cutting a large chunk out of GDP.

The real shame of our present budget isn't the money spent on citizens (SS and Medicare), but the ridiculous amount spent on the military, and the relatively tiny amount spent on just about everything else. The money we spend on research meant to cure people is a tiny fraction of the money we spend to kill people.
 
Well, that's your interpretation of the Constitution, not mine, and not that of most people. And not that of the rest of the developed world, either. Most people see the benefit of larger government programs, even with higher taxes, and also agree with the "general welfare" interpretations of the Constitution.

In fact, all of that entitlement spending you are worried about helps the economy (in addition to helping people directly). Cut that spending and you are cutting a large chunk out of GDP.

The real shame of our present budget isn't the money spent on citizens (SS and Medicare), but the ridiculous amount spent on the military, and the relatively tiny amount spent on just about everything else. The money we spend on research meant to cure people is a tiny fraction of the money we spend to kill people.
so you speak for most people? that being the case how is President Hillary and Democratic Congress doing?

Sent from my SAMSUNG-SM-G930A using Tapatalk
 
so you speak for most people? that being the case how is President Hillary and Democratic Congress doing?

When I said "most people," I wasn't talking about the electoral college. Don't forget who won the popular vote.

And I do speak for most lawyers and judges, the vast majority of whom are not strict interpretationists.
 
When I said "most people," I wasn't talking about the electoral college. Don't forget who won the popular vote.

And I do speak for most lawyers and judges, the vast majority of whom are not strict interpretationists.

Yep California, 4 million vote win all legal voters and all promoting that massive central govt. you want and need. Interpretationists? LOL, yep, not sure this country wants your kind of interpretation for if they did we would have a Democratic Congress and President but we don't. You do realize that the popular vote does elect Congress. You lost and aren't nearly as mainstream as you want to believe
 
When I said "most people," I wasn't talking about the electoral college. Don't forget who won the popular vote.

And I do speak for most lawyers and judges, the vast majority of whom are not strict interpretationists.

Some great advice, suggest you heed it

"The Budget should be balanced, the Treasury should be refilled,
public debt should be reduced, the arrogance of officialdom should be
tempered and controlled, and the assistance to foreign lands should be
curtailed, lest Rome will become bankrupt. People must again learn to work
instead of living on public assistance." - Cicero , 55 BC

The entitlement crowd is out of touch with reality as are you
 
Your understanding of economics is properly placed in 55 B.C.

And yours is exactly where? why don't we just shutdown private business and let the govt. pay everyone for doing basically nothing for that of course in your world will benefit the economy? Not sure where you went to school but your understanding of business, economics, and civics is an embarrassment.
 
And yours is exactly where? why don't we just shutdown private business and let the govt. pay everyone for doing basically nothing for that of course in your world will benefit the economy? Not sure where you went to school but your understanding of business, economics, and civics is an embarrassment.

Don't even start with me. EVERY economic debate you have tried to participate in ends with you falling back on calling people liberals and/or socialists because you can't muster up any response based in economics. Like your brilliant statement earlier in this thread that savings and paying down debt contributed to GDP. You bailed out on that argument quite a while back, but I haven't forgotten.
 
Don't even start with me. EVERY economic debate you have tried to participate in ends with you falling back on calling people liberals and/or socialists because you can't muster up any response based in economics. Like your brilliant statement earlier in this thread that savings and paying down debt contributed to GDP. You bailed out on that argument quite a while back, but I haven't forgotten.

You are indeed a legend in your own mind. You are a liberal, you are naïve, gullible, and economically and civics challenged. that is reality. Stop thinking with your heart and start using your brain.
 
Back
Top Bottom