18 astounding facts about the national debt

Moot said:

Savings? What is Trump saving?

Sounds like your saying that's it been a weak economy for a long time.

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Do you spend every cent of your income? Some do, but lots do not.

Put simply, if the national income is $18 trillion, and we spent every cent of our income, we could afford to purchase 100% of our production. And we would remain an $18 trillion economy.

If we (as a nation) save $2 trillion, we can only purchase $16 trillion of our production, and the economy would shrink in response. Savings is a "demand leakage." The trade deficit is just saving by foreign parties.

That loss is made up for by both increases in credit and federal deficit spending. In this example, if those increase by more than $2 trillion, the economy grows. If less, the economy still shrinks.

Normally, we have a trade deficit, we net save domestically, we increase private sector credit, and we run a federal budget deficit, all adding up to a small increase in aggregate demand.

Remove $1 trillion in deficit spending, and you lop at least $1 trillion off of GDP. (Not counting knock on effects of that spending.) A super-hot economy might withstand that loss; I doubt ours would.

Moot said:

The principle is the same. Go into debt in times of need and pay it off when times are good.

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Actually, in times of low interest rates it's a good time to use debt to finance long-term investments, like infrastructure. However, the Republicans have used debt to offset their unnecessary tax-cuts on the wealthy.

Moreover, it's not necessary to actually reduce the debt. Merely keep deficit growth below that of economic growth and the debt becomes irrelevant over time. But right now, we are increasing deficits far above economic growth, >5% of GDP.

if we cut the taxes of the five guys with all of the money, the debt will pay itself off, too. it's trickle down magic.

Moot said:

The defense budget.....especially if we're not going to get involved in "regime change wars" anymore.

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Even if you cut defense to zero, which you can't, that wouldn't eliminate the trillion dollar deficit. My point was to show KLATTU that it isn't all about spending. It's relentless tax-cuts that have gotten us here.

KLATTU said:

Youre wrong on the interest number.

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Why have you abruptly cowered away from these false statements?



There is no need to respond because we know why... you're here only to push a poorly constructed partisan agenda. It takes very little effort to refute your claims.

First, a truism: a nation's debt level is of no real concern until the interest payments begin to pinch.

Next, a problem. One of the ways to reduce a nation's debt has been, traditionally, through inflation. [Ed.: Read 'devaluation'.] With time, the dollars with which a debt is repaid are worth less, reducing the cost. That's all well and good as long as a nation is not at the point where the interest on the debt is becoming burdensome. When that obtains, inflation becomes a two-edged sword. Increasing the rate of inflation is no longer a good thing.