• Welcome to the Internet Infidels Discussion Board.

Trumponomics has the government borrowing more than at any time since the Great Recession

phands

Veteran Member
Joined
Jan 31, 2013
Messages
1,976
Location
New York, Manhattan, Upper West Side
Basic Beliefs
Hardcore Atheist
So much for rethuglican financial probity....

https://www.dailykos.com/stories/20...re-than-at-any-time-since-the-Great-Recession

Donald Trump is threatening to shut the government down if he doesn’t get billions to build his pointless border wall. But it’s a good thing Republicans have forgotten about all the threats they used to make over raising the debt ceiling, because thanks to Trump, that debt is going up faster than at any time in history. They’re going to need a crane to lift the ceiling this fast.
According to Bloomberg, the government will issue $329 billion in debt just for the third quarter, and expects that to go up to $440 billion in the final quarter. All of which, piled on already rising levels of debt, means that the government will be borrowing more money, and piling on more debt, than in any year since the economy crashed in 2008.

The deficit totaled $607 billion through the first nine months of the fiscal year that ends Sept. 30, compared with $523 billion from the same period a year earlier.
With the projections for debt at the end of the year, Trump will finish in the hole by more than $1 trillion. And the Congressional Budget Office is already forecasting that 2020 will add more then $1 trillion.
And, as Trump points out every day, if not every hour, that’s the level of debt he’s building when the economy is doing fairly well. Trump’s tax plan gave corporations a goose, but just as every economist predicted, it also tore a hole in the federal coffers. This isn’t high levels of government spending to pull the economy out of a temporary hole—it’s just everyday spending. The rising levels of debt are coming at the same time that Trump is bragging about record growth, which is just another sign of how simply unsustainable the situation remains.





If—no, when—the economy encounters a bump, Trumponomics leave the government with no option but to rack up even higher levels of debt, bringing with it a tightening money market and rising inflation. But that’s okay. Because Treasury Secretary Stephen Mnuchin says the economy is “on the path” to sustained growth, and as long as we never, ever falter we’ll … just be running up debt at a record pace.
 
The govt doesn't borrow, it issues debt.

Wow. Seriously?

Like, wow, yeah, man.

While this gets a bit technical, the operational purpose of such bond sales is to help the central bank hit its overnight interest rate target (called the fed funds rate in the US). Sales of treasury bonds reduce bank reserves and are used to remove excess reserves that would place downward pressure on overnight rates. Purchases of bonds (called an open market purchase) by the Fed add reserves to the banking system, prevent overnight rates from rising. Hence, the Fed and Treasury cooperate using bond sales/bond purchases to enable the Fed to keep the fed funds rate on target.

You don’t need to understand all of that to get the main point: sovereign governments don’t need to borrow their own currency in order to spend! They offer interest-paying treasury securities as an instrument on which banks, firms, households, and foreigners can earn interest. This is a policy choice, not a necessity. Government never needs to sell bonds before spending, and indeed cannot sell bonds unless it has first provided the currency and reserves that banks need to buy the bonds.

http://neweconomicperspectives.org/2014/06/modern-money-theory-basics.html
 
In a similar development: I don't eat, I ingest food.

Whatever, but you have no choice. The govt otoh can spend without borrowing. It can also direct the Fed to buy its debt, effectively "borrowing" from itself.

But maybe you eat your own shit...
 
In a similar development: I don't eat, I ingest food.

Whatever, but you have no choice. The govt otoh can spend without borrowing. It can also direct the Fed to buy its debt, effectively "borrowing" from itself.

But maybe you eat your own shit...

Shouldn't it have been... "I don't eat, I issue poop"?
 
In a similar development: I don't eat, I ingest food.

Whatever, but you have no choice. The govt otoh can spend without borrowing. It can also direct the Fed to buy its debt, effectively "borrowing" from itself.

But maybe you eat your own shit...

"The government can spend without borrowing" is not equal to "The govt doesn't borrow, it issues debt."

tip: issuing debt is borrowing. Someone gives you money, you give them a piece of paper promising to pay them back.
 
In a similar development: I don't eat, I ingest food.

Whatever, but you have no choice. The govt otoh can spend without borrowing. It can also direct the Fed to buy its debt, effectively "borrowing" from itself.

But maybe you eat your own shit...

"The government can spend without borrowing" is not equal to "The govt doesn't borrow, it issues debt."

tip: issuing debt is borrowing. Someone gives you money, you give them a piece of paper promising to pay them back.

In one sense it is, but in the critical sense of the govt requiring the cooperation of the bond markets to meet its obligations, it is not. Debt issuance is policy, not necessity.


Sent from my iPhone using Tapatalk
 
Back
Top Bottom