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Thread: 18 astounding facts about the national debt

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    Re: 18 astounding facts about the national debt

    Quote Originally Posted by JohnfrmClevelan View Post
    No, the principle is not at all the same. There is no true debt with fiat currency. There is no operational need for the government to extinguish its liabilities.
    How do other countries feel about that?

    Some economists say that if the debt exceeds 75% to 80% of GDP then worry because it will slow the economy down. Currently, the US debt is over 100% of GDP and the economy is due for a bear market.

    A study by the World Bank found that countries whose debt-to-GDP ratios exceeds 77% for prolonged periods, experience significant slowdowns in economic growth. Pointedly: every percentage point of debt above this level costs countries 1.7% in economic growth. This phenomenon is even more pronounced in emerging markets, where each additional percentage point of debt over 64%, annually slows growth by 2%.

    The Definition of Debt-to-GDP Ratio
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    Re: 18 astounding facts about the national debt

    Quote Originally Posted by Moot View Post
    How do other countries feel about that?

    Some economists say that if the debt exceeds 75% to 80% of GDP then worry because it will slow the economy down. Currently, the US debt is over 100% of GDP and the economy is due for a bear market.

    A study by the World Bank found that countries whose debt-to-GDP ratios exceeds 77% for prolonged periods, experience significant slowdowns in economic growth. Pointedly: every percentage point of debt above this level costs countries 1.7% in economic growth. This phenomenon is even more pronounced in emerging markets, where each additional percentage point of debt over 64%, annually slows growth by 2%.

    The Definition of Debt-to-GDP Ratio
    That line of thinking has been thoroughly debunked.

    Consider this: a slowing economy causes increased debt, not the other way around. Tax receipts fall, and federal spending stays about the same, with some increases due to normal fiscal policy during slow years. Same data, better correlation, and much more logical.
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    Re: 18 astounding facts about the national debt

    Quote Originally Posted by JohnfrmClevelan View Post
    That line of thinking has been thoroughly debunked.

    Consider this: a slowing economy causes increased debt, not the other way around. Tax receipts fall, and federal spending stays about the same, with some increases due to normal fiscal policy during slow years. Same data, better correlation, and much more logical.
    No, it hasn't.

    Then a growing economy shouldn't increase the debt, right? Yet, Trump has added 2 Trillion to the debt in a growing economy. Why?
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    Re: 18 astounding facts about the national debt

    Quote Originally Posted by Moot View Post
    No, it hasn't.

    Then a growing economy shouldn't increase the debt, right? Yet, Trump has added 2 Trillion to the debt in a growing economy. Why?
    Savings, which is a demand leakage. Without that deficit spending, the economy would have contracted.
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    Re: 18 astounding facts about the national debt

    Quote Originally Posted by JohnfrmClevelan View Post
    Savings, which is a demand leakage. Without that deficit spending, the economy would have contracted.
    Savings? What is Trump saving?

    Sounds like your saying that's it been a weak economy for a long time if it still needs deficit spending to meet it's obligations.
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    Re: 18 astounding facts about the national debt

    Quote Originally Posted by Moot View Post
    Savings? What is Trump saving?

    Sounds like your saying that's it been a weak economy for a long time.
    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.
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    Re: 18 astounding facts about the national debt

    Quote Originally Posted by Moot View Post
    The principle is the same. Go into debt in times of need and pay it off when times are good.
    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.
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    Re: 18 astounding facts about the national debt

    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.

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    Re: 18 astounding facts about the national debt

    Quote Originally Posted by Moot View Post
    The defense budget.....especially if we're not going to get involved in "regime change wars" anymore.
    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.
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    Re: 18 astounding facts about the national debt

    Quote Originally Posted by KLATTU View Post
    Youre wrong on the interest number.
    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.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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