National Debt And Stuff

[Jimmy Higgins]

summary: We should rely on what we know works, not on unproven mystical money-manipulation to "grow the economy" and "create jobs" and other magic-wand slogans not based on economic fundamentals of improving performance in the market. Basic increasing of some taxes is part of the solution, and also budget cuts. And promoting science, such as more research for finding real solutions that improve how we live. We have no real evidence that the higher-debt magic is working, after 90 years of steady growth of debt-dependency, but we know there is risk of something going wrong if we keep running up debt so that the future is enslaved to debt-dependency and no option to reduce that dependency -- which is where we're heading. So we need some mechanism for choosing to reduce that dependency, and we have no such mechanism other than the debt ceiling.

What works? The Fed isn't perfect... it is kind of like Democracy. It is the best bad idea we've got. Currency issues were common in the 19th century. I keep hearing some people talk about the glory days before the Fed, which never existed!

The relative stability we've seen in the last 100 or so years has been quite something. Even when the national banks were collapsing, the system was able to interject and prevent a depression. Again, not great, again, the system failed in some areas. But overall, we have dollar value stability... and that stability is in large part due to the economy we have managed to grow using this Fed based currency system.

What doesn't work? I think we saw that with the Nixon Admin, our reaction to the Great Depression, and the laissez faire attitudes in regulation (see S&L scandal, ARM loans scandal, crypto scandal). Is debt a problem? Yes, it can be, but it isn't a black and white thing. Corporations hold a lot of debt. People hold a lot of debt. The Government has a lot of debt. Debt becomes an issue when it can not be managed or more importantly, when lenders think it can not be managed well. Governments have a special tool most others don't have, which when used well, can also deal with debt.

Which is why we need people that understand the voodoo that is economics to manage this thing with as little political interference as necessary, and not arm chaired coached to death.

 

[Jimmy Higgins]

Was it ten or fifteen years ago, maybe twenty years, can't remember exactly when Congress passed a bill that automatically cut spending across the board? But when that day came for the bill to take effect congress quickly reneged because it would have meant cuts in their individual districts to lots of spending. And that would have meant they would risk reelection.

So all this talk about debt and balancing spending is bullshit until you remove the incentive for congress critters to get reelected by overspending in their districts. It doesn't matter the party and it sure isn't ever going to happen with such a glaring conflict of interest.

That sounds familiar, like a GOP thing with Obama.

*looks it up*

Ah... the sequester thing.

 

[laughing dog]

There is no doubt that the improvements in standard of living around the world are directly tied to improvements in technology, science and knowledge. However, nothing in the Lumpenproletariat's wall of word salad ties scientific breakthroughs, advancement in knowledge and technological progress with national deficit spending or rnational eduction in national debt.

As to the rest of the word salad, there is plenty of evidence from around the world that activist monetary and fiscal policy have generally reduced the frequency and severity of economic downturns.

 

[T.G.G. Moogly]

Was it ten or fifteen years ago, maybe twenty years, can't remember exactly when Congress passed a bill that automatically cut spending across the board? But when that day came for the bill to take effect congress quickly reneged because it would have meant cuts in their individual districts to lots of spending. And that would have meant they would risk reelection.

So all this talk about debt and balancing spending is bullshit until you remove the incentive for congress critters to get reelected by overspending in their districts. It doesn't matter the party and it sure isn't ever going to happen with such a glaring conflict of interest.

That sounds familiar, like a GOP thing with Obama.

*looks it up*

Ah... the sequester thing.

At that time the debt was less than half of what it is today. The only viable solution is an increase in revenues and a reduction in spending. That approach has less than zero chance of working so the fix will be imposed from without, not within, as I've said in the past. Let's hope it's something gradual that can be weathered.

 

[Elixir]

nothing in the Lumpenproletariat's wall of word salad ties scientific breakthroughs, advancement in knowledge and technological progress with national deficit spending or rnational eduction in national debt.

Yeah, that's why I wonder how his experience of subservience ever came to be.
Hate to say it, but I suspect that Lumpy has never experienced any pain whatsoever as a direct result of our national debt or deficits, and he simply finds "debt" an easy boogeyman to blame for some pain or other that he HAS experienced.

 

[Lumpenproletariat]

Letting the budget blow up now is preferable
(less drastic than waiting for it to happen later)

Debt (beyond what is necessary to oil the economy) is not good. However, nobody is actually willing to cut spending enough to get rid of the problem--the Republicans make lots of noise about it but actually run up the deficit. Given that reality tax & spend is less harmful than borrow and spend.

But another reality is that Reds & Blues will never agree on what taxes to increase, even if somehow they reach nominal agreement that higher taxes are part of the solution, which they probably will not.

So the crisis we're heading toward cannot be resolved by a consensus to increase taxes in preference to more borrowing. The reality is that we're heading to a debt crisis (ceiling will not get raised), and the only solution will be Executive Orders to drastically cut spending and drastically increase revenue however it can be done. Even if it's illegal, he'll take those steps (or his Treasury Secretary will) to get the debt due repaid and keep the lower-cost budget going, and he'll be impeached by the House just like Clinton and Trump were but were not convicted by the Senate. Ho-hum. Maybe the norm from now on will be for the President to be impeached.

Furthermore, abrupt changes are almost inevitably bad.

But how "abrupt"?

(I'll assume this means not raising the debt ceiling would be "abrupt" and lead to a disaster too great to be contemplated, and therefore the debt ceiling must be raised at all cost, because it would just be too abrupt. Maybe this is not what L.P. means, but this is what I'll answer anyway.)

The reality is that a not-raising-the-debt-ceiling crisis is probably coming. There's much pessimism about the current one, like maybe the unthinkable is going to happen. But even if somehow the current crisis is averted, the same is going to happen again later, and be worse than this one.

And so the "abrupt changes" caused by not raising the debt ceiling are going to happen SOONER OR LATER. So we must ask: Which will be more "abrupt" -- the changes from not raising the debt ceiling NOW, or the changes from not doing it A FEW YEARS FROM NOW?

And the answer obviously is: In a few years from now the debt/GDP will be greater, and the budget and deficit higher -- all percentagewise higher -- and so the pain when programs have to be slashed will be greater than if we do this now.

So the no-abrupt-changes doctrine suggests that we do this now rather than wait until later when the "inevitably bad" consequences will be even worse.

Look at what happens to countries that run out of ability to borrow.

That has to be prevented, which is why the President will have no choice but to do whatever "tyrannical" measures are necessary to slash spending and raise more revenue, no matter what it takes, and no matter how many times he gets impeached. Trump was impeached TWO times -- right?

Of course Biden will condemn Republicans and agree that the spending cuts are cruel and awful etc. etc., but he'll do what he has to do. The dire consequences of not doing it would be even worse a year or 2 later when there's no more ability to borrow, or perhaps much less ability, meaning the cost of borrowing will be much higher, and the same crisis will continue and be much worse than doing all the drastic measures needed in the first place to repay the bondholders.

 

[jonatha]

when there's no more ability to borrow

The US government will always be able to borrow more money. The financial system demands it.

 

[T.G.G. Moogly]

when there's no more ability to borrow

The US government will always be able to borrow more money. The financial system demands it.

Agreed. That's what I mean when I say that the fix will come from external factors. The cost of incurring more and more debt is a cost like any other cost that much be managed and paid. At some point borrowing will cease because it will become too expensive. When that happens is anyone's guess.

 

[bilby]

when there's no more ability to borrow

The US government will always be able to borrow more money. The financial system demands it.

The US government doesn't really borrow money in any sense similar to the way other entities borrow money.

What we call "National debt" is just an accounting tool. It's not something it can ever be difficult to obtain the means to repay. It's just what accountants call the difference between what the government has spent, and what it has subsequently collected back.

If you want to spend dollars, you first need to earn them, or steal them, or borrow them from someone else.

If the US government wants to spend dollars, it just does so. Then it decides whether, when, and how much, it wants to take from other entities, either as taxes or as loans.

Government "debt" isn't like household debt.

 

[Elixir]

subservience to debt... ...when there's no more ability to borrow

Above are two phantom threats that have yet to inflict any pain on Lumpy or anyone else afaik.
Lumpy has not seen fit to detail any suffering he has incurred due to National debt or federal deficits.

 

[Loren Pechtel]

Your example helps confirm the principle:

Republican President + Democrat Congress = higher debt

Democrat President + Republican Congress = reduced debt (or less increased debt)

That's what the Retards would have you believe. Reality is the opposite.

But of course we have to remember that it was the tech boom of the 1990s which really produced the higher revenue to the gov't, not the smart policies of the Dems or Repubs. Though it could be argued that the Dem President + Repub Congress contributed slightly.

It's not just the Clinton era. We see the same pattern repeatedly.

 

[Lumpenproletariat]

More Myths/Fantasies about the Debt

How is this not a clear indication that our past debt is imposing a net cost overall rather than an overall benefit?

It's not a clear indication of that because standards of living continued to increase over all those decades of increased past debt. Sure, there may come a day of reckoning, but I am having a hard time envisioning who/whatever is owed all that theoretical debt, suddenly showing up and demanding that the entire debt be cleared immediately. THAT would be imposing a cost!

Indeed.

But that's a fantasy scenario. No one owed could ever demand that the entire debt "be cleared immediately." It's nonsensical to suggest such a scenario.

What could happen is that the current bondholders who are supposed to be repaid will show up if they're not paid. But that too is fantasy, because they will all be repaid, each individual bondholder in turn, at the respective date when it's due. Regardless whether the debt ceiling is raised.

Even if the debt ceiling is not raised, all those bondholders will still get repaid, because the President will do whatever is necessary to ensure that it happens, however painful the measures are which he has to take. So it's silly to speculate about a mob "showing up" somewhere demanding anything.

And, until the pandemic/war/inflation, debt servicing cost as percentage of GDP was at relative historical lows and (mostly) falling for 20 years.

This probably refers to the annual interest payments, which are shown in the annual published budget ("pie chart"). This number doesn't tell us the real cost of repaying the debt. (If some expert wants to explain exactly how the federal debt is repaid to the bondholders, that would be informative. But you can't dismiss this with a quick one-liner about "debt servicing cost" which is only the annual published interest payment item in the budget.)

All you have to do is look at the total debt, over the years, all the deficits added up, and compare this to the interest payments published in the budget, and it's obvious that these interest payments come nowhere near to repaying the debt. There has to be much more repayment than this. One might try to distinguish between "principle" and "interest," but this doesn't explain much about the repayment process. One explanation sometimes given is that there are no "principle" payments at all, but that many interest payments over the years finally total up to a figure larger than the original "principle," and this then is how the "interest" is paid. But this explanation is probably not correct.

If anyone posting here really is an expert, it would be fine for them to explain about repayment of the "principle" -- however much it is, whatever the process is. There are many ways the debt can be repaid, maneuvers by the Treasury Secretary, etc., and somewhere in all of it, the whole debt, all the deficits added up over decades, plus "interest" is repaid. And that total repayment is vastly greater than the total of the interest payments we see published in the annual budget. There's more repayment than this which is not shown in the budget.

. . . as percentage of GDP was at relative historical lows and (mostly) falling for 20 years.

Only because the interest rates were so low for all that time. So this could mean that federal borrowing was easier during that period. But that's irrelevant compared to the debt/GDP ratio which has gotten so much worse. That interest rates are now rising shows that the cost or damage from the increasing debt is going to get still worse, and it's already at record high levels, and was even before the pandemic for any extended period of years. It had been the highest ever, prior to the pandemic, except for one year only, 1946, and so was a worse overall debt/GDP than even that of the WW2 period generally. So its dishonest to dismiss the current debt/GDP as insignificant, because it's the highest ever in history (though not just the U.S. but a few other countries also). It's a world debt crisis generally.

When was the last budget surplus year? I don't know, but I suspect it was during the Clinton administration.

Yep, ending in a recession. In fact every depression in U.S. history was preceded by a big drop in nominal Federal debt.

Yes -- no one's perfect, some of the excess surpluses were too much, but in general it was best to pay down some of the war debt. But anyway, that's not what's happening now -- there have been no surpluses recently. And the surpluses of the 1920s were not too much, but modest and normal following an expensive war. Maybe they were a minor factor in the short recession of 1929-1930 which then turned into a Depression as a result of the bad unprecedented policies of Hoover and FDR running up record deficits for peace time, and doing other measures to exacerbate a normal recession which should otherwise have ended in a couple years.

 

[Lumpenproletariat]

"What do we want?" Austerity!
"When do we want it?" Now!

Bush. Large tax cuts. War in Iraq. Sub-prime derivative disaster and resultant massive Federal government bailout. And huge deficits. Nothing to do with Clinton's balanced budgets.

Yes, lucky Clinton, to serve during a time of spending cuts (with help from a Republican Congress) and the tech boom, and prior to 9-11.

The surpluses would not have happened with a Democrat Congress (= higher spending),

Nor with a Republican President (= no additional tax increases)

US Federal Budget Restraint in the 1990s: A Success Story

Many observers think that it is impossible to cut federal government spend- ing as a percentage of Gross Domestic Product (GDP). But it can be done. And the evidence is hidden in plain sight: it’s called the 1990s. Between 1990 and 2000, federal spending fell from 21.85 percent of GDP to 18.22...

www.mercatus.org

A Surplus, If We Can Keep It: How the Federal Budget Surplus Happened | Brookings

Brookings Review article by Allen Schick (Winter 2000)

www.brookings.edu

The latter gives credit to tax increases (both Bush (after his "No New Taxes" pledge) and Clinton tax increases), and also to the tech boom.

But the 1st source above says it was only the spending cuts that deserve credit for the surplus.

It's obvious that today we need more of both the spending cuts and tax increases =

Austerity

When we start hearing this word more, there might be hope. But because instant gratification takes priority, we probably won't hear it.

 

[bilby]

Austerity is an utter disaster, and attempting to implement it in modern (post Bretton-Woods) economies has always lead to needless misery.

It's the perfect partner to closed borders. Only total simpletons want it, and whenever they get their way, it fucks everything up in surprisingly short order.

 

[Jimmy Higgins]

"What do we want?" Austerity!
"When do we want it?" Now!

Bush. Large tax cuts. War in Iraq. Sub-prime derivative disaster and resultant massive Federal government bailout. And huge deficits. Nothing to do with Clinton's balanced budgets.

Yes, lucky Clinton, to serve during a time of spending cuts (with help from a Republican Congress) and the tech boom, and prior to 9-11.

The surpluses would not have happened with a Democrat Congress (= higher spending),

Nor with a Republican President (= no additional tax increases)

US Federal Budget Restraint in the 1990s: A Success Story

Many observers think that it is impossible to cut federal government spend- ing as a percentage of Gross Domestic Product (GDP). But it can be done. And the evidence is hidden in plain sight: it’s called the 1990s. Between 1990 and 2000, federal spending fell from 21.85 percent of GDP to 18.22...

www.mercatus.org

A Surplus, If We Can Keep It: How the Federal Budget Surplus Happened | Brookings

Brookings Review article by Allen Schick (Winter 2000)

www.brookings.edu

The latter gives credit to tax increases (both Bush (after his "No New Taxes" pledge) and Clinton tax increases), and also to the tech boom.

But the 1st source above says it was only the spending cuts that deserve credit for the surplus.

It's obvious that today we need more of both the spending cuts and tax increases =

Austerity

When we start hearing this word more, there might be hope. But because instant gratification takes priority, we probably won't hear it.

Okay, we cut all discretionary spending, we break even? Is that winning?

 

[Cheerful Charlie]

Before the internet, there were bulletin boards. I got into some fierces debates there. This new guy on the radio, Lush Limpbrain was braying Reagan balanced the budget but those free spending Democrats spent and spent. They caused the Reagan deficits. All lies. There were 2 arrogant Limpbrain fans that baught this lie and dittoed it again and again. Democrats always caused deficits. Bush 41 was president.

By law, the president must present an official preliminary presidential budget in January. Bush did so. With no help from Democrats. The day afterwards, Richard Darman, Bush's head of OMB announced that his calculations showed the U.S. running an estimated $400 billion dollars deficit. Dwarfing Reagan's biggest yearly deficit of $229 billions. I never got my two Limpbrain fans to admit all this deficit was the GOP and Bush's fault. I soon left for this new internet thing.

Bush, went to Tip O'Neal privately, and asked him and the Democrats to raise taxes and cut programs. Tip refused. And went public. No way were the Democrats going to raise taxes and slash spending only to get slaughtered at the voting booths next election. Bush would have to admit publically the U.S. had problems and stop blaming all of these problems on tax and spend Democrats. And lead the nation in necessary cuts and tax raises.

Bush did the deed. It was a hard sell, rebranded as the "Peace Dividend" Nutty Newt Gingrich, Trent Lott and other republicans tried to stop this and failed. It took two weeks of arm twisting by Bush to finally get this set of bills passed after the due date, with help of Tip and the Democrats. And three days later Bush that little bastard repudiated this and trashed talked the Democrats and O'Neal.

"Read my lips, no new taxes!" was empty braggadacio in the end. My introduction to debating politics over modems. The good old days.

 

[Lumpenproletariat]

Does the USA have UNLIMITED ABILITY to pay any debt
by creating however much money is required?

The present and future ability of the USA to pay any debt of any magnitude, denominated in US Dollars, is unlimited.

Yes, it's true that the US can do what Germany did in the 1920s and print enough currency to pay its debt.

No, it's not true that the US can do what Germany did in the 1920s.

It's true if I amend the above:

Yes, it's true that the US can do what Germany did in the 1920s and print enough currency to pretend to pay its debt.

I.e., it pretended to pay its debt, and the USA today could do the same, with its "unlimited ability to pay any debt of any magnitude" by creating the needed currency, as Germany did. What's the difference?

Germany's liability under the Treaty of Versailles wasn't denominated in German Marks, but in gold - which is one reason why it was a disaster for the German economy.

But that's irrelevant to your point that the U.S. can run up all the debt it wants to and repay it by printing the necessary currency, as Germany did. Nevermind the nitpicking details exactly how Germany printed that money --- who cares how they did it? Do you want to make an issue out of what brand of printing presses they used?

Your point that there is unlimited ability to run up debt and print currency to repay it is just as true for the U.S.A. today as it was for Germany. Of course it didn't really work, but that doesn't mean they couldn't do it and then claim the debt was paid, just as the U.S. today could do that. -- (that's "could" not "should").

The spending also didn't go into German infrastructure, but instead went into the economies of France, Britain and the USA. Which boomed.

You can give your source if you wish -- not sure of your facts here. If you're saying that in the 1920s Germany paid off a significant part of its debt in gold = real payment of debt, to the allies, then that's different than I thought. I'm skeptical if this is true, but if you have sources saying this, I'll believe it.

Nevertheless, my point about Germany is that they tried to pay much of their obligations by just "printing" money, not by paying in gold. And this did not work, and so later, many decades later, they began paying it for real.

But back in the 1920s they did try to pay much of it by "printing" the money, which did not work. But in the same way it would not work for the U.S. today to just "print" money and pay it to bondholders, in order to get rid of its debt. So the 2 cases are analogous. In both cases it cannot really work as a way to pay debt. Perhaps the U.S. could do it and claim it's legitimate and tell the bondholders to shove it. And those bondholders would be shafted. However, it's still not practical, because then the U.S. could never again sell bonds, so it's still essentially as futile and illegitimate as what Germany did in the 1920s. So the analogy is correct, even though the 2 situations are not exactly the same.

The point is that it's nonsensical for you to say the U.S. can simply run up all the debt it wants to, without limit, and has an endless supply of currency to pay for it because it has endless money-creation ability. In practice it does not, and so it's nutty for anyone to speak this way about today's U.S. debt (that the U.S. has "unlimited ability" to pay any amount, through money creation).

It would not be "zero-effort for a nation to "produce" their own fiat "gold certificates" (just declared as worth a ton of gold) and pay these for anything they want to buy", any more than it would be zero-effort for you to do the same. Nobody would accept such meaningless certificates unless they had good reason to believe they were backed by actual physical gold. Commodity money is irrelevant to the discussion anyway, as nobody sane still uses gold as money.

Whatever -- it sounds like now you're retracting your earlier point:

The present and future ability of the USA to pay any debt of any magnitude, denominated in US Dollars, is unlimited.

This is incorrect, you're now saying. As a practical matter the USA has no such ability. Just as Germany had no ability to do such a thing, though it pretended to. And no country today, U.S. or any other, can presume to do such a thing, pretending it has such power "to pay any debt of any magnitude" by creating however much currency. So now we agree.

That you don't understand this goes a long way to explaining why you're so woefully wrong about the entire topic.

"woefully"? Is that a lot?

Suppose I inscribe your parable on the wall, or stone tablets, and recite it 1000 times a day:

___________________________________________________________________​

"The present and future ability of the USA to pay any debt of any magnitude, denominated in US Dollars, is unlimited."

_____________________________________________________​

Do you think putting it to music would help?

 

[Cheerful Charlie]

"Deficits don't matter!"
- President Dick Cheney

 

[Swammerdami]

Lumpen and I DO agree on one key point: Excessive debt is best avoided. Despite this general agreement, the following post is riddled with errors.

Also, the higher U.S. trade deficit is probably a RESULT or sign of something wrong in the production, indicating something went wrong, not with trade policy but with U.S. market competitiveness in relation to other countries, which then produces trade protectionism demagoguery leading to still worse results. So some things are wrong, despite the better standard of living, and thus it's not clear that the higher-debt philosophy is producing the better results.)

The huge trade deficit leads directly to debt — consumer and corporate debt as well as Treasury debt. How else could it be? If more goods cross the U.S. borders in one direction than the other, then U.S. money has to travel in the opposite direction to keep trade "balanced." At the proper level of abstraction it makes no difference whether those dollars flowing from the U.S. to China are in the form of banknotes, electronic money, corporate or Treasury bonds or mortgages. Some of the bonds or mortgages will be converted to stocks or real estate at some point; but to think such conversions negate the net investment position is very short-sighted.

increasing the debt and thus passing on its share to the future in the form of still more debt. 90 years of this is too long!

PLEASE get your facts straight. Your own Google searches have shown you that the deficit was under control as recently as the Clinton Administration. The obscene ballooning, though it started under Reagan, is largely a 21st-century thing.

(It's necessary to clarify that it's only high budget deficit which is a false economic policy choice doing harm. This policy is a CAUSE of other damage in the economy, whereas the so-called TRADE DEFICIT is itself never a CAUSE of anything wrong, but only a result of something wrong in the production process, such as uncompetitiveness. It's only debt which has to be repaid which causes harm, not a trade imbalance where there is no debt owed by the importing nation to the exporting nation.)

Again ... Hunh? "there is no debt owed by the importing nation to the exporting nation." Do you imagine that China's exporters provide their products for free? As some sort of charity? No, they receive dollars. Those dollars are themselves a form of debt. When converted into debt paper — who wants to keep Benjamins under their mattress? — they clearly become the debt you claim they are not. Conceptually it makes little difference whether China or its exporters end up with bonds, mortgages, or stocks, but I've given up getting you to wrap your brain around that.

What really causes increased living standard? -- clever monetary tricks played by the Fed? cute new money-creating theories by Keynes and Galbraith and other Economics Wizards? No.

Keynes was born in 1883; Galbraith in 1908. You attribute "NEW money-creating theories" to them? Milton Friedman — right-wing darling — is your guy if you want to point fingers at an early advocate of Quantitative Easing.

New science and technology is by far the obvious cause of higher living standard, not games played by the politicians and economists pretending to manipulate the money and create instant wealth with their magic tricks.

Your ideas are not ALL wrong. Stick to areas you understand and your contributions could be positive.

Scholars in the social sciences put on this charade that somehow their expertise in how to manipulate society is what causes our improvements in health and industry and production and wellness. This enhances their prestige and recognition and wins them Noble Prizes and higher salaries in the academic world.

Cite?

This adverse trend would not be happening if the new unlimited debt philosophy adopted by the U.S. in the 1930s was producing an overall net benefit over time. Such a benefit ought to lead to a system of repaying the debt with higher production instead of with only higher debt without limit. Arguably this debt philosophy could have become successful if it had been brought under control in the 1950s and 60s

Again: Your dates are wrong. 1930s????? There WAS a large debt to finance World War II, but it was paid off with relative ease. Clinton started us on a road to deficit reduction, reversed when the GOP took control.

Which Party is really to blame for the debt?

When was the last budget surplus year? I don't know, but I suspect it was during the Clinton administration.

When Gingrich and Republican Congress heroically restrained spending so they could claim credit for balancing the budget. Right.

Oh my. You're relying on Republican lies. Many of your underlying ideas are correct but your facts are so VERY wrong, it's painful to read your posts.

The Ds had, barely and almost by the very thinnest of margins, control of Congress in 1993-94 when the Deficit Reduction Act was passed — the highly-praised reforms that put the U.S. on the path to debt reduction. That famous Act received ZERO Republican votes in the House and ZERO Republican votes in the Senate. It was not until 1995 that Gingrich and the hate-filled idiots took control. That they won election was due in large measure to backlash at the tax hikes the Ds had passed.

 

[Lumpenproletariat]

When did the Great Depression "bad times" begin?

Why Congress should vote NO on raising the debt ceiling


Is the national debt too high? Are the annual deficits too high?

If the answer is "yes," then the next question is: What can be done to stop it from going ever higher?

And there's only one answer (at this time), and that is: a NO vote on raising the debt ceiling. Because there is no other mechanism to stop the increasing debt.

If this is a bad way to limit the debt, then we must find another way to limit it. What is that other way? Whatever other means there might be, it's obvious that it's not going to happen any time soon, probably not for many years, as long as the Reds and Blues keep bashing each other and living in their separate realities. Which they will probably continue to do. Not even the separate factions WITHIN each party can agree on this.

You must like 1929. Because this approach would make that look like good times.

You mean the crash brought on by excess debt?

Whatever similarity there is, the long-term damage will be greater if we keep increasing the debt as we've been doing. It's not true that inflicting net damage onto all future generations is the only way to avoid another 1929 crash.

Actually 1929-1930 was not bad times. Are you referring to the Great Depression of 1932 and later, which was caused largely by the new excess debt which began with Hoover running up unprecedented budget deficits? and interfering in the market rather than the laissez-faire approach years earlier when there was a similar recession which subsided in less than 2 years? in which there were spending cuts and balanced budgets and lots of whining before the quick recovery followed by several years of good times?

The Great Depression is acknowledged as starting in 1929 starting with the stock market crash in October, 1929.

But unemployment level is the usual indicator for "bad times" and recession and depression. This did not rise at all in '29, and only slightly in 1930. By '31 it was bad, but still far below the 1932-1940 average. Meanwhile the wage level rose strongly in 1929-32 rather than falling (maybe as a result of Hoover's intervention to prop up the wage level). So who was hurting during this early part of the "Depression"? Not the workers generally (except some layoffs in '31). Not until '32 and after did workers generally suffer.

By comparison, in 1921 there was a similar stock market crash, just as bad, with no intervention by the gov't or any "economic stimulus" deficit as in 1931-32, and the recovery was very quick, rather than dragging on and on for 10 years as in the "Great Depression" following the Hoover-FDR intervention to "stimulate" the economy.

US GDP fell in 1930.

OK, you got me there. It fell in 1930 just like it did in 1920-21. But then why did the '21 Depression end so quickly, without any gov't intervention like in 29-32? There's obviously no evidence that the Hoover-FDR "economic stimulus" deficits worked, but rather that they did more harm than good.

And we have every reason to believe that "economic stimulus" deficits since then have done more harm than good, as in 1931-33 where all the following years were worse in comparison to earlier crashes and recessions.

Your argument indicates an unfamiliarity with the facts and a callous perception that the beginning of the Depression was not "bad times".

Again, who had "bad times" in 1929-30 other than some (no longer) wealthy stock market investors who leaped from high windows to their deaths? Who? not the workers.

Again, unemployment was not bad until 1931 -- slightly more than 1922 when that earlier recession was already decreasing after no action by Congress or President Harding to help them. And even in 1931 the unemployment was much lower than it became in 1932-40. There are many web pages which give these facts. e.g. https://shec.ashp.cuny.edu/items/show/1510 (graph of unemployment 1930-40)

But you're right about the gdp decline in 1930 and the usual mantra that the "Great Depression" began in 1929, even though no one but a few rich stockholders suffered at that time. Will you be taking up a collection for them when the next crash hits? Why do you shed more tears for the fat cats than the little guy?