Back To $1 Trillion Dollar Deficits

[dismal]

Well, it's a certainty that you can't grow debt/GDP forever, which by the fundamental laws of ratios you are doing as long as you grow debt faster than GDP.

There's a chart of debt/gdp in this article that illustrates the trend. The trend can't continue.

https://www.cnbc.com/2019/02/13/tha...r-is-huge-but-heres-what-it-really-means.html

Japan's been doing it for decades, GDP/debt currently at 236%. Betting on Japan's demise is being deemed a widowmakers position.

The real question is are there enough goods and services to spend those dollars on. If we're at full capacity, can't produce more, can't employ anyone else, than yes increasing that ratio is dangerous. If, OTOH, there is an output gap, a demand deficiency, then the economy will absorb the extra spending.

Well, I suppose there's some non-zero probability you're the guy who has figured out the easy solution to prosperity that has eluded all serious economists.

No need for pesky things like taxes anymore, the government can just perpetually borrow and print money right?

There's no reason we can't all have shrimp and lobster cocktails on the decks of our luxury yachts. Assuming there is no limit to the government's ability to print and borrow money, it can print and borrow enough money to buy them for everyone.

 

[Horatio Parker]

Well, it's a certainty that you can't grow debt/GDP forever, which by the fundamental laws of ratios you are doing as long as you grow debt faster than GDP.

There's a chart of debt/gdp in this article that illustrates the trend. The trend can't continue.

https://www.cnbc.com/2019/02/13/tha...r-is-huge-but-heres-what-it-really-means.html

Japan's been doing it for decades, GDP/debt currently at 236%. Betting on Japan's demise is being deemed a widowmakers position.

The real question is are there enough goods and services to spend those dollars on. If we're at full capacity, can't produce more, can't employ anyone else, than yes increasing that ratio is dangerous. If, OTOH, there is an output gap, a demand deficiency, then the economy will absorb the extra spending.

Well, I suppose there's some non-zero probability you're the guy who has figured out the easy solution to prosperity that has eluded all serious economists.

No need for pesky things like taxes anymore, the government can just perpetually borrow and print money right?

There's no reason we can't all have shrimp and lobster cocktails on the decks of our luxury yachts. Assuming there is no limit to the government's ability to print and borrow money, it can print and borrow enough money to buy them for everyone.

You're partially right. Govt's don't need tax revenue to spend. So why tax?

1. As an instrument of fiscal policy to help stabilize the purchasing power of the dollar;

2. To express public policy in the distribution of wealth and of income, as in the case of the progressive income and estate taxes;

3. To express public policy in subsidizing or in penalizing various industries and economic groups;

4. To isolate and assess directly the costs of certain national benefits, such as highways and social security.

Supplying everyone with shrimp and yachts is a pleasant idea, but I doubt there are sufficient supplies for everyone. Attempting to do so sounds like a waste of productive effort.

 

[dismal]

Well, I suppose there's some non-zero probability you're the guy who has figured out the easy solution to prosperity that has eluded all serious economists.

No need for pesky things like taxes anymore, the government can just perpetually borrow and print money right?

There's no reason we can't all have shrimp and lobster cocktails on the decks of our luxury yachts. Assuming there is no limit to the government's ability to print and borrow money, it can print and borrow enough money to buy them for everyone.

You're partially right. Govt's don't need tax revenue to spend. So why tax?

1. As an instrument of fiscal policy to help stabilize the purchasing power of the dollar;

2. To express public policy in the distribution of wealth and of income, as in the case of the progressive income and estate taxes;

3. To express public policy in subsidizing or in penalizing various industries and economic groups;

4. To isolate and assess directly the costs of certain national benefits, such as highways and social security.

Supplying everyone with shrimp and yachts is a pleasant idea, but I doubt there are sufficient supplies for everyone. Attempting to do so sounds like a waste of productive effort.

Ok, but there's no reason they couldn't just cut everyone a check for $10,000,000 a year and we could each decide if we wanted shrimp, crab, lobster, dom perrignon, yachts, or ferraris right?

 

[Horatio Parker]

You're partially right. Govt's don't need tax revenue to spend. So why tax?



Supplying everyone with shrimp and yachts is a pleasant idea, but I doubt there are sufficient supplies for everyone. Attempting to do so sounds like a waste of productive effort.

Ok, but there's no reason they couldn't just cut everyone a check for $10,000,000 a year and we could each decide if we wanted shrimp, crab, lobster, dom perrignon, yachts, or ferraris right?

You do realize that increasing nominal resources does nothing to increase the supply of real resources.

 

[dismal]

You're partially right. Govt's don't need tax revenue to spend. So why tax?



Supplying everyone with shrimp and yachts is a pleasant idea, but I doubt there are sufficient supplies for everyone. Attempting to do so sounds like a waste of productive effort.

Ok, but there's no reason they couldn't just cut everyone a check for $10,000,000 a year and we could each decide if we wanted shrimp, crab, lobster, dom perrignon, yachts, or ferraris right?

You do realize that increasing nominal resources does nothing to increase the supply of real resources.

Pretty sure all those $10,000,000 checks would cause a huge surge in demand, which the supply would rise up to meet.

In any case, I think we can all agree that it's time to get rid of taxes.

 

[Horatio Parker]

Pretty sure all those $10,000,000 checks would cause a huge surge in demand, which the supply would rise up to meet.

So the seafood population would explode due to the demand? I'm pretty sure we'd run out.

In any case, I think we can all agree that it's time to get rid of taxes.

If you want your dollars rendered valueless, that is. Seems to me you value your dollars. I'd think you'd want to protect their value.

 

[Treedbear]

...
It is also worth noting that the majority of US debt is held by the US itself. Foreign investors and governments only hold 30%.

Do you have a citation for that? That figure sounds like it comes from around Ross Perot's era.

 

[Jimmy Higgins]

Who own's the US Debt?



China and Japan have over a Trillion dollars each. But, then again, the US Treasury Bonds are held in high regard when it comes to a guarantee.

 

[dismal]

Pretty sure all those $10,000,000 checks would cause a huge surge in demand, which the supply would rise up to meet.

So the seafood population would explode due to the demand? I'm pretty sure we'd run out.

In any case, I think we can all agree that it's time to get rid of taxes.

If you want your dollars rendered valueless, that is. Seems to me you value your dollars. I'd think you'd want to protect their value.

Wait, so you're saying printing too much money and issuing too much debt will cause dollars to become valueless?

I knew there must be a catch.

 

[Horatio Parker]

So the seafood population would explode due to the demand? I'm pretty sure we'd run out.




If you want your dollars rendered valueless, that is. Seems to me you value your dollars. I'd think you'd want to protect their value.

Wait, so you're saying printing too much money and issuing too much debt will cause dollars to become valueless?

I knew there must be a catch.

I'm saying that eliminating taxes also eliminates the need and hence the value of dollars. The dollar is backed by authority, and taxes represent that authority in the economy.

 

[Treedbear]

You're partially right. Govt's don't need tax revenue to spend. So why tax?



Supplying everyone with shrimp and yachts is a pleasant idea, but I doubt there are sufficient supplies for everyone. Attempting to do so sounds like a waste of productive effort.

Ok, but there's no reason they couldn't just cut everyone a check for $10,000,000 a year and we could each decide if we wanted shrimp, crab, lobster, dom perrignon, yachts, or ferraris right?

Actually if you weren't being so freakin hyperbolic your idea makes sense. If you're in favor of capitalism for everyone give everyone a monthly stipend of whatever it takes to meet basic expenses. Everyone gets the same amount. It goes into a special account that makes an unnaturally high interest rate paid for by the government, thereby encouraging people with little savings to keep it there for as long as possible. What makes it special is that the interest rate is inversely proportional to the balance where eventually it becomes a standard money market rate. This way everyone gets treated equally and everyone gets to have some savings (and to understand the value of saving) and therefore gets to participate and have a stake in our capitalist economy. Otherwise it's not capitalism because large segments of the population are taught to believe they can never participate.

 

[Horatio Parker]

You're partially right. Govt's don't need tax revenue to spend. So why tax?



Supplying everyone with shrimp and yachts is a pleasant idea, but I doubt there are sufficient supplies for everyone. Attempting to do so sounds like a waste of productive effort.

Ok, but there's no reason they couldn't just cut everyone a check for $10,000,000 a year and we could each decide if we wanted shrimp, crab, lobster, dom perrignon, yachts, or ferraris right?

Actually if you weren't being so freakin hyperbolic your idea makes sense. If you're in favor of capitalism for everyone give everyone a monthly stipend of whatever it takes to meet basic expenses. Everyone gets the same amount. It goes into a special account that makes an unnaturally high interest rate paid for by the government, thereby encouraging people with little savings to keep it there for as long as possible. What makes it special is that the interest rate is inversely proportional to the balance where eventually it becomes a standard money market rate. This way everyone gets treated equally and everyone gets to have some savings (and to understand the value of saving) and therefore gets to participate and have a stake in our capitalist economy. Otherwise it's not capitalism because large segments of the population are taught to believe they can never participate.

Or give them jobs, health care and education. That way they have money, health, education and society has the benefit of their productivity.

 

[dismal]

You're partially right. Govt's don't need tax revenue to spend. So why tax?



Supplying everyone with shrimp and yachts is a pleasant idea, but I doubt there are sufficient supplies for everyone. Attempting to do so sounds like a waste of productive effort.

Ok, but there's no reason they couldn't just cut everyone a check for $10,000,000 a year and we could each decide if we wanted shrimp, crab, lobster, dom perrignon, yachts, or ferraris right?

Actually if you weren't being so freakin hyperbolic your idea makes sense. If you're in favor of capitalism for everyone give everyone a monthly stipend of whatever it takes to meet basic expenses. Everyone gets the same amount. It goes into a special account that makes an unnaturally high interest rate paid for by the government, thereby encouraging people with little savings to keep it there for as long as possible. What makes it special is that the interest rate is inversely proportional to the balance where eventually it becomes a standard money market rate. This way everyone gets treated equally and everyone gets to have some savings (and to understand the value of saving) and therefore gets to participate and have a stake in our capitalist economy. Otherwise it's not capitalism because large segments of the population are taught to believe they can never participate.

If there's no limit on debt then why is it "hyperbolic"?

 

[Treedbear]

Who own's the US Debt?

View attachment 22586

China and Japan have over a Trillion dollars each. But, then again, the US Treasury Bonds are held in high regard when it comes to a guarantee.

Thanks. I thought the foriegn owned part must be up to over 50% by now. It seems it hasn't increased and may even have gone down as a percentage. That means we mostly owe it to ourselves. It seems to me that's a problem we can easily deal with with a little redistribution. It would be all in the name of saving capitalism you understand.

 

[Treedbear]

Actually if you weren't being so freakin hyperbolic your idea makes sense. If you're in favor of capitalism for everyone give everyone a monthly stipend of whatever it takes to meet basic expenses. Everyone gets the same amount. It goes into a special account that makes an unnaturally high interest rate paid for by the government, thereby encouraging people with little savings to keep it there for as long as possible. What makes it special is that the interest rate is inversely proportional to the balance where eventually it becomes a standard money market rate. This way everyone gets treated equally and everyone gets to have some savings (and to understand the value of saving) and therefore gets to participate and have a stake in our capitalist economy. Otherwise it's not capitalism because large segments of the population are taught to believe they can never participate.

If there's no limit on debt then why is it "hyperbolic"?

People still need an incentive to work. It kind of goes along with capitalism.

 

[dismal]

Actually if you weren't being so freakin hyperbolic your idea makes sense. If you're in favor of capitalism for everyone give everyone a monthly stipend of whatever it takes to meet basic expenses. Everyone gets the same amount. It goes into a special account that makes an unnaturally high interest rate paid for by the government, thereby encouraging people with little savings to keep it there for as long as possible. What makes it special is that the interest rate is inversely proportional to the balance where eventually it becomes a standard money market rate. This way everyone gets treated equally and everyone gets to have some savings (and to understand the value of saving) and therefore gets to participate and have a stake in our capitalist economy. Otherwise it's not capitalism because large segments of the population are taught to believe they can never participate.

If there's no limit on debt then why is it "hyperbolic"?

People still need an incentive to work. It kind of goes along with capitalism.

Not sure I'm following. The limit on borrowing is "people need an incentive to work"?

What if we filled up bottles with $1,000,000 US treasury bearer bonds and buried them in a field and made people dig them up. Seems like that would give people an incentive to work.

 

[Treedbear]

People still need an incentive to work. It kind of goes along with capitalism.

Not sure I'm following. The limit on borrowing is "people need an incentive to work"?

What if we filled up bottles with $1,000,000 US treasury bearer bonds and buried them in a field and made people dig them up. Seems like that would give people an incentive to work.

Clearly you are confused. The big advantage capitalism has over socialism is that the work tends to be productive.

 

[Jimmy Higgins]

People still need an incentive to work. It kind of goes along with capitalism.

Not sure I'm following. The limit on borrowing is "people need an incentive to work"?

What if we filled up bottles with $1,000,000 US treasury bearer bonds and buried them in a field and made people dig them up. Seems like that would give people an incentive to work.

Clearly you are confused. The big advantage capitalism has over socialism is that the work tends to be productive.

dismal somehow has managed to survive without dying of alcohol poisoning.

dismal: Well gee, if drinking 2 beers won't kill me, then drinking 2,000 beers in the same amount of time won't either.

So clearly, he doesn't even buy this garbage.

 

[dismal]

Clearly you are confused. The big advantage capitalism has over socialism is that the work tends to be productive.

dismal somehow has managed to survive without dying of alcohol poisoning.

dismal: Well gee, if drinking 2 beers won't kill me, then drinking 2,000 beers in the same amount of time won't either.

So clearly, he doesn't even buy this garbage.

Jimmy, if you didn't notice we have people here who disagreed with me when I said there was a limit on debt.

It's OK, reading for comprehension is hard.

 

[Jason Harvestdancer]

Pretty sure all those $10,000,000 checks would cause a huge surge in demand, which the supply would rise up to meet.

So the seafood population would explode due to the demand? I'm pretty sure we'd run out.

In any case, I think we can all agree that it's time to get rid of taxes.

If you want your dollars rendered valueless, that is. Seems to me you value your dollars. I'd think you'd want to protect their value.

You mean there's actually a limit to what the Magic Money Tree (MMT) can do? But the dollar is the reserve currency so that can never change!