US National debt is beyond staggering

[VanceMack]

But then they'd not be reelected anyways because people wouldn't vote for someone who did what was needed to balance the budget.

Man...couldnt we work at just being a little bit more responsible? Would that be so much to ask?

 

[jaeger19]

If it's a pissing contest you are interested in, then I am part of the upper 10% of income earners, plus I own property. I pay plenty of taxes.

If it's a debate you are interested in, then you need to do more than point to some big numbers and say, "Bad! Bad numbers!"

100% of the money we pay in taxes is spent right back into the economy, as long as the government isn't stupid enough to run a surplus. Tax money is not "allocated to debt spending," otherwise IT WOULDN'T BE DEBT SPENDING. These are very basic things that you are whiffing on. Deficit spending is a straight addition of financial assets to the private sector; it increases GDP and it puts more money in our pockets. If you think that there is a downside to that, then make your case.

See here is the problem john...

So,, you are right that there needs to be more than "big numbers bad"...

BUT you have to also be intellectually honest to admit that 100% of the money we pay in taxes is "spent right back in the economy"... that's not true.

And that money that we do spend back in the economy does not all have the same effect....

So be honest here.

 

[Hawkeye10]

Right.. so cutting the budget.. make the infrastructure worse, making American less competitive educationally, , BUT giving me a giant tax cut and exploding the debt... will "save the world"?... hardly. It will hasten the day that the US is not the preeminent economy and superpower in the world.

I am not in favor of tax cuts however I am very wide eyed that the Globalists have through lies idiocy and corruption of governments rigged a system where nations do not have enough taxing power to pay the bills, which is one of the many reasons we can be sure that the global economic system for sure and the global world order most likely are dead man walking.

 

[VanceMack]

You want to know what I am worried about? People who have no clue about how the economy works being voted in by even more people who have no clue about how the economy works. And that nightmare came true just a few short months ago.

If you are so worried about these things, then I suggest you take the time and effort to learn what they really are, and not just accept the first explanation you hear from FOX News or conservative politicians, who most certainly have a financial interest in keeping voters ignorant.

The list you have ticked off above is just a bunch of conservative talking points. Every friggin' one of them is based on a fundamental misunderstanding of federal finance. Let's go over that list...

Inflation? Where is it? It's almost nonexistent, and it doesn't come close to correlating with debt, deficits, or government spending, yet you continue to make the false claim that inflation is a problem/inflation is imminent.

What do you consider to be "the solution" to sovereign debt? Elimination of all sovereign debt? Elimination of all government liabilities? The U.S. government somehow making a profit? State your solution, and why you think it's a solution. (Then I'll explain to you why you are wrong.) Debt is money. The government's deficit is our surplus. That is certainly a good thing for us as American citizens - why do you think that is a bad thing, on balance, for the country?

What do you think is the damage being done by foreigners holding U.S. bonds?

What markets are being "artificially stimulated"? Can you link that artificial stimulation to deficit spending? Make your case.

Why are low interest rates "reckless"? What is the optimal interest rate? Why do you think so?

The debt increased quite a bit under Obama. Do you understand why that happened? Do you think the economy was better when he left than when he entered office?

Look - from my perspective, all of you guys just repeat the same talking points over and over, but none of you can actually explain why you believe what you believe. The answers all boil down to things like, "If you don't understand it, then I can't help you," or "we keep kicking the can down the road!" There isn't a speck of substance to be found. My team, on the other hand, has done their homework. We understand how federal finance works. We understand what those equations mean. We back up our claims with learned sources. And it is incredibly frustrating to have to argue with people who haven't even bothered to learn the subject. So, please - before you rattle off a laundry list of claims like that, look into them a little bit, and see if they hold water.

Good. You dont have top worry about me and I can be damn glad you are just internet John from Cleveland and dont go anywhere near budget decisions.

 

[JohnfrmClevelan]

You'd see how you went personal if only you understood the basic tenants of communication.

Tenets, not tenants.

 

[JohnfrmClevelan]

See here is the problem john...

So,, you are right that there needs to be more than "big numbers bad"...

BUT you have to also be intellectually honest to admit that 100% of the money we pay in taxes is "spent right back in the economy"... that's not true.

And that money that we do spend back in the economy does not all have the same effect....

So be honest here.

If the amount the government spends domestically > domestic tax receipts, then 100% of the money we pay in taxes is spent right back into the economy. How am I wrong here?

Also, I never claimed that all government spending has the same effect in the long term. Didn't I just make the claim that spending on education would be more beneficial to our economy in the long term than defense spending?

 

[akyron]

Theoretically we can just pay the interest forever and be fine. Governments don't die. I know how to fix the budget crisis. Raise taxes. But I can already hear the Republicans crying and belly aching. Raise taxes, cut defense, and provide free college. That will fix your budget problem.

Taxes are already near highest in the world. So..no.

 

[JohnfrmClevelan]

I make a habit of saying what I mean and meaning what I say is the first thing.

Second thing: I make it a habit to read far and wide and of course I read this.

Third Thing: I dont know who you are.

Fourth Thing: I was responding to someone else.

Then I'm glad to hear you have joined the MMT crowd!

Here are some of the important points from your article:

So while President Clinton and the GOP Congress were building a federal surplus in the 1990s, they were also pushing the private sector into debt.

"If the government is able to reach a surplus, that means it's draining funds out of the economy," Tymogine explained. "It's taxing away more money from the other sectors than it's injecting."

And unlike any entity in the other two sectors, the federal government isn't cash-constrained: it controls the supply of U.S. dollars, so in a pinch it can always print more to pay off whatever debt obligations it has stocked up.

...it's basically impossible for the federal government to suffer a debt crisis.

Meanwhile, the private domestic sector is cash-constrained, and can suffer a debt crisis quite easily. It only went into deficit a little bit for short periods in the late 1990s and 2000s, and that was enough to blow up the entire economy.

In other words, federal surpluses are horrible for the economy, while federal deficits are good, and even necessary, for the economy.

 

[Gonzo Rodeo]

Tenets, not tenants.

Bah, you got me. My phone changed a word, and now you have sole access to all understanding and knowledge.

Good game, bro. Good game.

 

[Moderate Right]

Bah, you got me. My phone changed a word, and now you have sole access to all understanding and knowledge.

Good game, bro. Good game.

That very same thing happened to me once and John got me on it. He thinks that proves everything he says though. It's part of his intimidation strategy. If he can find an error in anything you do he tries to exploit it to show that he knows more than the person he "caught". In doing so he can dodge making an actual argument.

 

[upsideguy]

The liberal economists have told the politicians what they want to hear - that debt is positive for the economy. Actually, since most of the debt is in the hands of the FED and since the FED creates the money out of thin air, it is likely that there isn't all that much debt. The people are paying for it by the loss in the value of the dollar. It is like a tax. However, a 70% cut in the cost of government would go a long way toward making it better.

Actually, the value of the dollar rose more under Obama than the previous President... So, the people are not paying for it in loss of value. If your are speaking only of domestic value, there too you are not correct. At no time during the Obama years did inflation reach the level of that of the Bush years. Try again!

https://www.forexcrunch.com/dollar-stronger-under-obama/
United States Inflation Rate | 1914-2017 | Data | Chart | Calendar

 

[Visbek]

The infrastructure is rotting, and the world is falling apart....

Infrastructure can be fixed.

Despite the recent trends towards nationalism, the world is emphatically not falling apart. In many respects, the world is far better off today than at pretty much any previous time in history.

The debt will explode as far as they eye can see....

Yes, that's what happens when you elect an incompetent Republican with no understanding of economics. Again.

the economy is dying due to lack of sound management of the national and global economies...this is the road to certain doom.

Good grief. I've spent my entire life hearing predictions of doom, many connected to federal debt, and it keeps never happening. Meanwhile, the people who scream the most about the debt are the ones that make it worse. They're also the ones who don't want to manage the national economy in any way, and have even less interest in any sort of management structure for international trade.

 

[JohnfrmClevelan]

Bah, you got me. My phone changed a word, and now you have sole access to all understanding and knowledge.

Good game, bro. Good game.

You made three claims way back in post #32. I rebutted all three. Then, you changed the subject.

 

[Hawkeye10]

Infrastructure can be fixed.

Despite the recent trends towards nationalism, the world is emphatically not falling apart. In many respects, the world is far better off today than at pretty much any previous time in history.

Not the important things....of the things that matter the trend is negative.

Yes, that's what happens when you elect an incompetent Republican with no understanding of economics. Again.

The system has been allowed to rot and the costs have been allowed to rise far faster than inflation by all partiies...for your claim to work the D's would have needed to be talking about the broken system and coming up with ways to fix it all down the way. They did none of this.

Good grief. I've spent my entire life hearing predictions of doom, many connected to federal debt, and it keeps never happening. Meanwhile, the people who scream the most about the debt are the ones that make it worse. They're also the ones who don't want to manage the national economy in any way, and have even less interest in any sort of management structure for international trade.

You got told right, but we never got to work, and now we pay for that neglect.

 

[Fishking]

Man...couldnt we work at just being a little bit more responsible? Would that be so much to ask?

It's not, but so long as people are in the business of getting elected there will be few who will do such.

 

[Gonzo Rodeo]

You made three claims way back in post #32. I rebutted all three. Then, you changed the subject.

No you didn't.

There. Consider yourself rebutted.

 

[JohnfrmClevelan]

No you didn't.

There. Consider yourself rebutted.

Par for the course. Yet another thread about the horrors of the national debt, and yet another failure to demonstrate that any of those horrors are real.

 

[Gonzo Rodeo]

Par for the course. Yet another thread about the horrors of the national debt, and yet another failure to demonstrate that any of those horrors are real.

No it's not.

 

[Hawkeye10]

Par for the course. Yet another thread about the horrors of the national debt, and yet another failure to demonstrate that any of those horrors are real.

The horrors of excessive debt are well known, and beyond debate amongst educated folks.

 

[cuban smokes]

there's an ole saying in the oil field ............

"if you can't fix it get a bigger hammer; if you still can't fix it f*** it up so no one else can"

well, what we have AFA the debt is concerned is the later ........... the debt is beyond ANY fix ..............

 

[JohnfrmClevelan]

The horrors of excessive debt are well known, and beyond debate amongst educated folks.

Do you mean like the educated folks that were cited in your paper? Because they don't agree with you.

Face it, most of the people still stoking fears about the national debt are fat radio personalities, conservative pundits, and Republican politicians, not educated folks.

Why don't you humor me and list those realized horrors of excessive debt that you guys have been harping about for the past 36 years? You know, the ones that are beyond debate, because they have come to pass. Inflation? Inability of the government to meet its obligations? You're the expert on these horrors, not me. But I'll start you off:

1. ?
2. ??
3. ???

 

[Hawkeye10]

Do you mean like the educated folks that were cited in your paper? Because they don't agree with you.

Face it, most of the people still stoking fears about the national debt are fat radio personalities, conservative pundits, and Republican politicians, not educated folks.

Why don't you humor me and list those realized horrors of excessive debt that you guys have been harping about for the past 36 years? You know, the ones that are beyond debate, because they have come to pass. Inflation? Inability of the government to meet its obligations? You're the expert on these horrors, not me. But I'll start you off:

1. ?
2. ??
3. ???

At some point people decide that they want their money back, and when they cant get it the system implodes.

 

[JohnfrmClevelan]

At some point people decide that they want their money back, and when they cant get it the system implodes.

That goes for private banks, where there is actually a risk of not recovering your money. That is not a risk for a monetarily sovereign government with debt in their own currency.

If private banks overextend, their customers' deposits are backed about 10% by hard currency (govt. money), 10% by liquid bank credits, and 80% by outstanding promissory notes (loans that have not been fully paid back yet). The money is not there to be had. But the government can create hard assets simply by printing them up. When your bond comes due, it is just a simple accounting procedure for the government to convert the bond on their books to dollars on their books, or vice versa. They make over $50 trillion in those transactions every year. The money is always there to be had, unless an idiotic Congress decides to voluntarily default.

 

[Visbek]

The horrors of excessive debt are well known, and beyond debate amongst educated folks.

Uh huh

If you're referring to government debt, the "horror" a default, which happens when the government can't pay off the interest. This would be highly problematic for the United States, as we still have a reserve currency and the biggest economy in the world.

However, the chances of the US defaulting because it is unable to pay its bills? Extremely low.

In 2015, interest on the debt was $229 billion. Revenues were $3.2 trillion. Interest on debt is around 7% of federal revenues (and around 6% of federal spending).

And while default would be disastrous, it won't be the end of the world. Many nations have come back strong after a default... including the US, which effectively defaulted in 1790 and 1933.

While we should not take this as an excuse to continue profligate spending and a total abandonment of fiscal responsibility (such as, oh... slashing taxes for the wealthy and corporations, while increasing spending on defense and screwing our economy by starting trade wars), the reality is that federal debt is incredibly safe. The Horrors of Debt will not be visited up us any time soon.

Most educated people understand this, by the way. :mrgreen:

 

[Visbek]

At some point people decide that they want their money back, and when they cant get it the system implodes.

You, uh... do understand that's not how government debt works, right?

Government debt is sold as bonds with set terms. If an investor purchases a bond and wants or needs the money back sooner, they basically have to sell it.

And given the current circumstances -- that interest rates are likely to go up -- anyone who wants to sell US debt early is gonna get quite the haircut, because debt that pays a higher interest rate is right around the corner.

I don't know if a huge institutional bond holder (like China) could redeem massive amounts of Treasuries before they reach maturity. If that is possible, they'd take such a massive haircut that they'd be better off trying to sell it. Or, the federal government could issue more debt to cover it, or possibly just print up a bunch of USD to pay for it.

I.e. The federal government doesn't operate like a savings bank. There will be no run on the Treasury Department. Yet another reason why federal debt is not quite the disaster as so often presumed.