government walls and spending

america complains they are broke but instead we spend all the money in the wrong places, giving money to other countries, but instead of helping our own people i thought thats what we were trying to do "america first" we spend so much in the military and scared that if we take 1 dollar out that we will be defenseless, we dont have enough money but we have enough for a wall?

memberya2 said:

america complains they are broke but instead we spend all the money in the wrong places, giving money to other countries, but instead of helping our own people i thought thats what we were trying to do "america first" we spend so much in the military and scared that if we take 1 dollar out that we will be defenseless, we dont have enough money but we have enough for a wall?

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We spend 75% of every dollar on 'helping our own people'. Defense is only 15%. Immigration is less than 1%.

memberya2 said:

america complains they are broke but instead we spend all the money in the wrong places, giving money to other countries, but instead of helping our own people i thought thats what we were trying to do "america first" we spend so much in the military and scared that if we take 1 dollar out that we will be defenseless, we dont have enough money but we have enough for a wall?

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and don't forget the US borrows about $0.40 of every dollar it spends. So yes, we are broke. I will agree we need to reprioritize.

mike2810 said:

and don't forget the US borrows about $0.40 of every dollar it spends. So yes, we are broke. I will agree we need to reprioritize.

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I don't understand what you mean by being broke. Have we ever run out of our own money issued by our own government? How can a nation that creates it own currency ever run out of the currency it creates?

Vadinho said:

I don't understand what you mean by being broke. Have we ever run out of our own money issued by our own government? How can a nation that creates it own currency ever run out of the currency it creates?

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Inflation, but we are broke in the sense that we spend more than we "make" and we have a lot of debt.

jonny5 said:

Inflation, but we are broke in the sense that we spend more than we "make" and we have a lot of debt.

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We have created trillions upon trillions of new money in the last 40 years, inflation is no where to be found. At some point, the fear of inflation will have to be tempered with the continued absence of inflation despite massive increases in the money supply. I understand that inflation is taught in standard economics classes as the dreaded outcome of money expansion but its time to throw that idea out the window for a nation like ours. It simply has nothing to do with the money supply at all.

Vadinho said:

I don't understand what you mean by being broke. Have we ever run out of our own money issued by our own government? How can a nation that creates it own currency ever run out of the currency it creates?

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Based on your questions why would the US Govt. need to borrow money? Why would the US Govt. need to raise the debt limit? What do you think would happen to the value of the dollar is the Govt. printed more money than it can support?

We could make it simpler. Why does California State Government spend more than it bring in? California state debt - Ballotpedia

Back to the OP. The US Govt. shift money around all the time based on priorities, emergencies, etc.

mike2810 said:

Based on your questions why would the US Govt. need to borrow money? Why would the US Govt. need to raise the debt limit? What do you think would happen to the value of the dollar is the Govt. printed more money than it can support?

We could make it simpler. Why does California State Government spend more than it bring in? California state debt - Ballotpedia

Back to the OP. The US Govt. shift money around all the time based on priorities, emergencies, etc.

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Good questions and it reveals gaps in common knowledge about how money is created by the government and its proxies, the Fed and private lenders. First of all, states cannot create their own money. At one time in our history, states did have their own money but it was worthless outside of the state. We created a single national currency to facilitate business and prosperity everywhere. The federal government can create money, states cannot. As for why the system is set up so that the Treasury department must borrow money if taxes do not cover expenses, look to the creation of the Fed for your answers. Everything we think of in terms of our currency is formed by the creation of interest bearing debts being the basis for new money creation. Debt is how we increase the money supply. We could ignore debt as the means to expand the money supply but it would take an act of Congress to do so.

Vadinho said:

We have created trillions upon trillions of new money in the last 40 years, inflation is no where to be found. At some point, the fear of inflation will have to be tempered with the continued absence of inflation despite massive increases in the money supply. I understand that inflation is taught in standard economics classes as the dreaded outcome of money expansion but its time to throw that idea out the window for a nation like ours. It simply has nothing to do with the money supply at all.

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Except its happened many times in history. Venezuela is a perfect recent example of how a country that creates its own currency can run out. No, at the moment, the US wont have runaway inflation because we have strong fundamentals. Things can change. Maybe its starts with 20 trillion in Green Deal borrowing.

jonny5 said:

Except its happened many times in history. Venezuela is a perfect recent example of how a country that creates its own currency can run out. No, at the moment, the US wont have runaway inflation because we have strong fundamentals. Things can change. Maybe its starts with 20 trillion in Green Deal borrowing.

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We are not Venezuela or Argentina or Zimbabwe.

Are you claiming that hyper-inflation in each instance was a factor of the government increasing the money supply so quickly that it led to hyper-inflation? This argument implies that within itself, that is an economy in isolation, ordinary people buying and selling goods made in Venezuela drove up the price of those goods in a free for all auction type economy where bidding wars drove up the prices of ordinary goods. How else can you explain your point? No. The real driver was the loss of faith in the money in relation to external debts in dollars and other hard currencies. Just as in Weimar Germany, those external debts drove the inflationary cycle into hyper-inflation. If you have ever been to Venezuela you would see that millions upon millions have been living in dire poverty for decades. Is you argument that suddenly they had so much cash that they drove up prices?

Vadinho said:

We are not Venezuela or Argentina or Zimbabwe.

Are you claiming that hyper-inflation in each instance was a factor of the government increasing the money supply so quickly that it led to hyper-inflation? This argument implies that within itself, that is an economy in isolation, ordinary people buying and selling goods made in Venezuela drove up the price of those goods in a free for all auction type economy where bidding wars drove up the prices of ordinary goods. How else can you explain your point? No. The real driver was the loss of faith in the money in relation to external debts in dollars and other hard currencies. Just as in Weimar Germany, those external debts drove the inflationary cycle into hyper-inflation. If you have ever been to Venezuela you would see that millions upon millions have been living in dire poverty for decades. Is you argument that suddenly they had so much cash that they drove up prices?

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I answered the question you asked as to how a country that can print its own money can ever run out.

jonny5 said:

I answered the question you asked as to how a country that can print its own money can ever run out.

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I checked, your replies had nothing to do with this country. Other factors precipitated each and every instance of hyper-inflation on record. Care to give us your explanation for why we had high inflation in the 70s using your logic and examples of "other" countries and linking it to our past? IN the history of mankind, runaway inflation is extremely rare.

Vadinho said:

I checked, your replies had nothing to do with this country. Other factors precipitated each and every instance of hyper-inflation on record. Care to give us your explanation for why we had high inflation in the 70s using your logic and examples of "other" countries and linking it to our past? IN the history of mankind, runaway inflation is extremely rare.

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You didnt say THIS country. You said A country.

jonny5 said:

Except its happened many times in history. Venezuela is a perfect recent example of how a country that creates its own currency can run out. No, at the moment, the US wont have runaway inflation because we have strong fundamentals. Things can change. Maybe its starts with 20 trillion in Green Deal borrowing.

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"Running out of money" is absolutely not a problem. Did Zimbabwe "run out" of money? Of course not. They ran short of domestic production to buy.

Nor is "borrowing" in one's own currency, because it's completely under the control of the government and the central bank.

And the only worry about the GND is whether or not we have the real resources to get that stuff done; the money is always there.

jonny5 said:

You didnt say THIS country. You said A country.

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OK, I meant our country so now what do you say? I get tired of these silly replies to serious issues, do you have anything mature to add or are you just kidding yourself you are winning some moral and philosophical debate here?

jonny5 said:

I answered the question you asked as to how a country that can print its own money can ever run out.

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Let's make it easy for you to grasp. Say there is an island, no imports, no exports. Everything you can buy is made locally. There is a limited supply of goods to buy because the island is small and there are not that many people. So the output of that economy is X. Now, that island has it's own currency which all the people use to buy goods from each other. The currency costs nothing to produce, it is just script with a number on it and a stamp saying it is backed by the government. If the government starts to print money in excess of capacity, money will accumulate in the hands of people faster then they can spend it. Now they could invest it for interest or drive up the costs of goods by a bidding war. In isolation, this is an example of the money supply outstripping the capacity to provide goods and services. But only at a certain price level. Who cares if the price goes up when all you can buy is what is made on the island? Today it costs one, tomorrow its two. As long as the government keeps your income rising at the same rate, nothing really happens to you. But inflation will occur. Now what happens when that island wants to buy stuff from another island? Well, they have to exchange money that is of value to both parties. What is it? Which islands money is worth anything on the other island? In our world, they buy US dollars and use those to buy things from other islands. But what is the price of a US dollar? That's where inflation creeps up because no one will sell their dollars for an islands currency if that currency is worthless or that island does not have anything the holder of dollars wants to buy. Get it?

Vadinho said:

OK, I meant our country so now what do you say? I get tired of these silly replies to serious issues, do you have anything mature to add or are you just kidding yourself you are winning some moral and philosophical debate here?

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If you cant be civil, I see no point in continuing.

JohnfrmClevelan said:

"Running out of money" is absolutely not a problem. Did Zimbabwe "run out" of money? Of course not. They ran short of domestic production to buy.

Nor is "borrowing" in one's own currency, because it's completely under the control of the government and the central bank.

And the only worry about the GND is whether or not we have the real resources to get that stuff done; the money is always there.

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Yes, Zimbabwe ran out. They literally had 89,000,000,000,000,000,000% inflation (sextillion). They actually had to stop printing currency because it was worthless. Great example.

jonny5 said:

If you cant be civil, I see no point in continuing.

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I see that you are a libertarian. This is usually when libertarians find some excuse to stop debating. One day you may discard your libertarian fantasies in favor of reality. Until then, good luck winning any debate with anyone who understands macro economics.

Vadinho said:

I see that you are a libertarian. This is usually when libertarians find some excuse to stop debating. One day you may discard your libertarian fantasies in favor of reality. Until then, good luck winning any debate with anyone who understands macro economics.

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Or maybe youre just an asshole.

jonny5 said:

Inflation, but we are broke in the sense that we spend more than we "make" and we have a lot of debt.

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So we spend more than we are worth. When I bought my house I only had few thousand in the bank but borrowed 20 times that. Then I bought a truck and borrowed even more while in debt 20 times what I was worth. It is not spending that is the problem. It is what you are buying that is. Securing our border is a worthwhile expense the same as a doors and walls on your house. Witch hunts over losing the election is wasted money.

Vadinho said:

We have created trillions upon trillions of new money in the last 40 years, inflation is no where to be found. At some point, the fear of inflation will have to be tempered with the continued absence of inflation despite massive increases in the money supply. I understand that inflation is taught in standard economics classes as the dreaded outcome of money expansion but its time to throw that idea out the window for a nation like ours. It simply has nothing to do with the money supply at all.

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Inflation is huge and wipes out people's savings plus reduces relative wages. Debt spending causes a greater lose in inflation.

PIPEWRENCH said:

So we spend more than we are worth. When I bought my house I only had few thousand in the bank but borrowed 20 times that. Then I bought a truck and borrowed even more while in debt 20 times what I was worth. It is not spending that is the problem. It is what you are buying that is. Securing our border is a worthwhile expense the same as a doors and walls on your house. Witch hunts over losing the election is wasted money.

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We dont spend more than we are worth, but rather more than we can afford, which means borrowing. Which of course brings all sorts of problems.

memberya2 said:

america complains they are broke but instead we spend all the money in the wrong places, giving money to other countries, but instead of helping our own people i thought thats what we were trying to do "america first" we spend so much in the military and scared that if we take 1 dollar out that we will be defenseless, we dont have enough money but we have enough for a wall?

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I agree that we spend far too much on the military, (about 1 trillion total) and also spend too much on foreign aid. We spend about 50 billion on foreign aid which is 1% of the budget, but every little cut counts.

The cost of the wall is estimated to be 25-70 billion to construct with a few billion in maintenance every year. However, compare to that the 116 billion the government spends on illegals per year, and that doesn't include border enforcement and deportations. Half of illegals come over illegally by visa, but Trump is making that harder already, and another half comes across the border, which a wall will discourage.

Vadinho said:

We have created trillions upon trillions of new money in the last 40 years, inflation is nowhere to be found. At some point, the fear of inflation will have to be tempered with the continued absence of inflation despite massive increases in the money supply. I understand that inflation is taught in standard economics classes as the dreaded outcome of money expansion but its time to throw that idea out the window for a nation like ours. It simply has nothing to do with the money supply at all.

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Except for the recent crisis and a brief period in the early 1980s, the primary instrument through which monetary policy was managed in the United States was the Feds Funds Rate. In mainstream economic models, usually, you have a Taylor rule capturing the behavior of the central bank and it defines a nominal interest rate for the economy. The standard view is that a credible monetary authority will control inflation through its interest rate in normal times and that money supply is just along for the ride.

If you go for abnormal circumstances, equally typical macroeconomic models would say it's very hard to get inflation to spike rapidly at the ZLB. The difference between what, say, Paul Krugman predicted and what Peter Schiff predicted is that Krugman didn't stop following the literature in 1959.