Cutting the deficit, post 2017 tax reform

[Horatio Parker]

Fiat currency with central banking is patently the norm (Shawshank notwithsatnding).

I agree it is the norm now. I never denied that it is the norm now. That doesn't change that it being the norm is the prison norm.

In a historic perspective, it is not the norm, but most people are completely institutionalized.

Yeah, before that norm, there were bank panics and cornering attempts on commodities. The US hasn't suffered from a bank panic in several decades, though that is more FDIC than Fed related.

You look at bitcoin and anyone that stood by it the entire time is a billionaire now. Of course, when the currency keeps deflating and increasing in value, makes it hard to justify using it. And of course, the volatility is incredible based on the fact the money has absolutely no basis for a value, other than libertarian Fed paranoia.

Banks are in effect govt institutions.

 

[bilby]

Yeah, before that norm, there were bank panics and cornering attempts on commodities. The US hasn't suffered from a bank panic in several decades, though that is more FDIC than Fed related.

You look at bitcoin and anyone that stood by it the entire time is a billionaire now. Of course, when the currency keeps deflating and increasing in value, makes it hard to justify using it. And of course, the volatility is incredible based on the fact the money has absolutely no basis for a value, other than libertarian Fed paranoia.

Banks are in effect govt institutions.

Banks are subject to government regulation; But they are only 'Government institutions' in the same way that bars and nightclubs are 'Government institutions' - ie they are required to operate within the regulations that are imposed upon them.

 

[Horatio Parker]

Yeah, before that norm, there were bank panics and cornering attempts on commodities. The US hasn't suffered from a bank panic in several decades, though that is more FDIC than Fed related.

You look at bitcoin and anyone that stood by it the entire time is a billionaire now. Of course, when the currency keeps deflating and increasing in value, makes it hard to justify using it. And of course, the volatility is incredible based on the fact the money has absolutely no basis for a value, other than libertarian Fed paranoia.

Banks are in effect govt institutions.

Banks are subject to government regulation; But they are only 'Government institutions' in the same way that bars and nightclubs are 'Government institutions' - ie they are required to operate within the regulations that are imposed upon them.

Which are far more extensive than bars or nightclubs. When bar managers can be dismissed by govt regulators, as bank officers can be, we'll talk.

 

[bilby]

Banks are subject to government regulation; But they are only 'Government institutions' in the same way that bars and nightclubs are 'Government institutions' - ie they are required to operate within the regulations that are imposed upon them.

Which are far more extensive than bars or nightclubs. When bar managers can be dismissed by govt regulators, as bank officers can be, we'll talk.

The government can close a bar down - effectively dismissing every member of staff from the janitor to the manager.

 

[Horatio Parker]

Banks are subject to government regulation; But they are only 'Government institutions' in the same way that bars and nightclubs are 'Government institutions' - ie they are required to operate within the regulations that are imposed upon them.

Which are far more extensive than bars or nightclubs. When bar managers can be dismissed by govt regulators, as bank officers can be, we'll talk.

The government can close a bar down - effectively dismissing every member of staff from the janitor to the manager.

Have another drink...

 

[LordKiran]

Yeah, before that norm, there were bank panics and cornering attempts on commodities. The US hasn't suffered from a bank panic in several decades, though that is more FDIC than Fed related.

You look at bitcoin and anyone that stood by it the entire time is a billionaire now. Of course, when the currency keeps deflating and increasing in value, makes it hard to justify using it. And of course, the volatility is incredible based on the fact the money has absolutely no basis for a value, other than libertarian Fed paranoia.

Banks are in effect govt institutions.

Banks are subject to government regulation; But they are only 'Government institutions' in the same way that bars and nightclubs are 'Government institutions' - ie they are required to operate within the regulations that are imposed upon them.

It is important to recognize that in most countires banks cannot create money without the approval of the governing body who's currency they wish to issue, assuming they can do so at all.

 

[Lumpenproletariat]

Why are budget deficits necessary?

Or, why is it wrong for us to balance the budget?


Up until the 1930s, the only purpose of deficits was to finance war. And after each war that debt was gradually paid down. And there were more surplus years than deficit years.

But beginning 1931-32, the purpose of deficits has been mainly to pay for

"Jobs! Jobs! Jobs!"​

So, except for the "Jobs! Jobs! Jobs!" babble, we would not need to run these deficits. Right? Instead, we could gradually pay down war debt like before 1930.

So, why don't we ever question the "Jobs! Jobs! Jobs!" religion?

 

[Hermit]

It is important to recognize that in most countires banks cannot create money without the approval of the governing body who's currency they wish to issue, assuming they can do so at all.

It is even more important to recognize that in most countries banks "create" money because they can actually write loans with money that does not exist in their own vaults or anyone else's. There's a name for it. It's called   Fractional-reserve banking. So, a bank might write loans to the tune of 10 billion dollars even though it only has, say 1 billion dollars in its coffers. No problem until depositors get nervous an withdraw everything they got from that bank. That's where the reserve bank steps in and covers the difference. It's basically the underwriter. It does become a problem, though, when enough depositors get nervous about enough banks for the reserve bank running out of funds to cover the withdrawals. That's when fractional-reserve banking is revealed to be just another Ponzi scheme: financing stuff with non-existent money.

The beauty of it for banks - while the scheme works anyway - is that it makes a profit by way of interest charges on money, most of which does not exist, and the banks don't actually have it in their possession, but the interest payments come from real earnings of the borrower. It takes a special person to run banks.

 

[bilby]

Or, why is it wrong for us to balance the budget?


Up until the 1930s, the only purpose of deficits was to finance war. And after each war that debt was gradually paid down. And there were more surplus years than deficit years.

But beginning 1931-32, the purpose of deficits has been mainly to pay for

"Jobs! Jobs! Jobs!"​

So, except for the "Jobs! Jobs! Jobs!" babble, we would not need to run these deficits. Right? Instead, we could gradually pay down war debt like before 1930.

So, why don't we ever question the "Jobs! Jobs! Jobs!" religion?

Because if people don't have jobs, you either have to pay them to do nothing, which is inefficient; or they chop your fucking head off with a guillotine, which is uncomfortable.

 

[Lumpenproletariat]

Is the "JOBS" doctrine an article of faith we cannot question?

Or, why is it wrong for us to balance the budget?


Up until the 1930s, the only purpose of deficits was to finance war. And after each war that debt was gradually paid down. And there were more surplus years than deficit years.

But beginning 1931-32, the purpose of deficits has been mainly to pay for

"Jobs! Jobs! Jobs!"​

So, except for the "Jobs! Jobs! Jobs!" babble, we would not need to run these deficits. Right? Instead, we could gradually pay down war debt like before 1930.

So, why don't we ever question the "Jobs! Jobs! Jobs!" religion?

Because if people don't have jobs, you either have to pay them to do nothing, which . . .

Before 1930 they didn't pay them to do nothing. Paying people to do nothing is more common now than back before chronic deficits.

. . . which is inefficient; or they chop your fucking head off with a guillotine, which is uncomfortable.

No one's head was chopped off because of unemployment.

Before 1930 countries did not run up deficits to combat unemployment.

So, why can't we question the JOBS! doctrine? Why couldn't we return to the doctrine that debt is only for emergencies, or something irregular, and it's paid down in the years afterwards? by reduced spending, or with higher taxes to pay for the spending? even though it might mean fewer jobs?

What was wrong with that system?

 

[Hermit]

No one's head was chopped off because of unemployment.

Well, no one's head was chopped off because of unemployment until the rulers ran out of cake to give to the starving.

Anyway, Trump's coming deficit is not caused by giving people jobs. It will be caused by giving the rich more wealth. Company taxes down. Income taxes down for those in the upper tax brackets. You know, that sort of thing.

 

[Malintent]

Why do we need to balance the budget? Is the USA planning for its retirement, or anticipating the possibility of being fired or forced to take early redundancy?

currently, the US appears to be on disability.

 

[Horatio Parker]

Or, why is it wrong for us to balance the budget?


Up until the 1930s, the only purpose of deficits was to finance war. And after each war that debt was gradually paid down. And there were more surplus years than deficit years.



So, why don't we ever question the "Jobs! Jobs! Jobs!" religion?

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[Horatio Parker]

Sorry about that post...

If we want to incentivize savings, the govt must run deficits.

And if we want to be a reserve currency, we must run a trade deficit.

Otherwise, the govt will not be injecting enough dollars into the economy to enable savers, domestic or foreign, to save.


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[Jimmy Higgins]

Before 1930 they didn't pay them to do nothing.

People didn't want to be paid to do nothing, they needed a job! The Great Depression really screwed things up, and Great War veterans were marching in the streets wanting pensions to help deal with the economic problems in the US thanks to a bunch of dumb ideas by businesses, investors, and global Governments.

Paying people to do nothing is more common now than back before chronic deficits.

So we keep being told. I've yet to see a conservative actually take advantage of such pay for nothing.

Before 1930 countries did not run up deficits to combat unemployment.

Nor did doctors treat cancer patients with chemotherapy either. Did you have a point?

 

[bilby]

Before 1930 they didn't pay them to do nothing. Paying people to do nothing is more common now than back before chronic deficits.

. . . which is inefficient; or they chop your fucking head off with a guillotine, which is uncomfortable.

No one's head was chopped off because of unemployment.

Before 1930 countries did not run up deficits to combat unemployment.

So, why can't we question the JOBS! doctrine? Why couldn't we return to the doctrine that debt is only for emergencies, or something irregular, and it's paid down in the years afterwards? by reduced spending, or with higher taxes to pay for the spending? even though it might mean fewer jobs?

What was wrong with that system?

You are right; they didn't have unemployment, they had poverty. You can have one or the other (or if you do a half arsed job of your unemployment policy, both).

So people got their fucking heads chopped off.

Read some history, why don't you?

 

[Jason Harvestdancer]

Sorry about that post...

If we want to incentivize savings, the govt must run deficits.

And if we want to be a reserve currency, we must run a trade deficit.

Otherwise, the govt will not be injecting enough dollars into the economy to enable savers, domestic or foreign, to save.

Institutionalized prison normal again. Because currently the government is the biggest debtor, it is therefore soaking up the most loanable funds. This is the way it currently is. You are committing an "is-ought" fallacy.

 

[Horatio Parker]

Sorry about that post...

If we want to incentivize savings, the govt must run deficits.

And if we want to be a reserve currency, we must run a trade deficit.

Otherwise, the govt will not be injecting enough dollars into the economy to enable savers, domestic or foreign, to save.

Institutionalized prison normal again. Because currently the government is the biggest debtor, it is therefore soaking up the most loanable funds. This is the way it currently is. You are committing an "is-ought" fallacy.

The govt is not soaking up loanable funds, because through its spending it's increasing available funds to the exact amount of the issued debt. It's a wash.

Pay off the national debt, and you will deplete private savings. A govt surplus must come from somewhere, and that somewhere can only be the private sector, either domestic or foreign. You confuse a currency issuer with a currency user.

 

[Jason Harvestdancer]

No, that's just moving money around. It is taking the money in with one hand and doling it out with the other.

 

[Horatio Parker]

No, that's just moving money around. It is taking the money in with one hand and doling it out with the other.

No, what? What is spending and selling bonds but "moving money around"? You're vague to the point of incoherence.