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If the budget is perfectly balanced in good times, then there will be a deficit again the next time there's a war...
Only if (when) the President and Congress don't insist on some specific means to pay for them.
The most common of those means being the (ta dah!) War Bond.
Which of course is the real source of the problems we face today...
an unwillingness to identify debt being for purpose X apart from purpose Y.
SOME of the debt is both useful and largely inevitable.
But not all of it by any means... especially debt required to carry that debt.
Only if (when) the President and Congress don't insist on some specific means to pay for them.
The most common of those means being the (ta dah!) War Bond.
Which of course is the real source of the problems we face today...
an unwillingness to identify debt being for purpose X apart from purpose Y.
SOME of the debt is both useful and largely inevitable.
But not all of it by any means... especially debt required to carry that debt.
This isn't new information to you... is it?
Spending money you don't have by borrowing is still doing just that even if you call said debt by a specific name
I've pretty much concluded that this is too esoteric for most people to understand. But I'll give it another try.
Our perpetual trade deficit has been instrumental in the .01% taking all the productivity gains the last 40 years. It would have been impossible otherwise. It's gutted unions and depressed wages across the board. The median incomes of professionals has been flat for 40 years, it isn't just low income workers or manual laborers.
So even though you don't see any direct effect of imports on your income, the indirect effect is immense.
My income has indeed been flat, but since I started out so high I suffer not. My income has been flat due to central controls, not due to globalization and off shoring. Medical payments being set by state and Federal gov'ts, with the privates always following close behind. The rates are kept down so as to reduce deficit spending/national debt. So if people were less worried about spending, my income would be higher. i.e. more national debt, more for me. Not less.
I should also add that my income hasn't changed, but my work load, responsibility and stress are markedly lower than earlier. So I complain not.
Of course this is my anecdote alone and have little knowledge of where other professionals are or have come from.
There is an unlimited demand as the Federal Reserve will buy as many Treasury notes as required to fund the U.S. budget.
The Fed cannot buy Treasury securities directly from the Treasury -- only from banks in secondary markets. This is what the Federal Open Market Committee is all about. FOMC operations are garden-variety monetary policy.
You may have been alarmed instead by distortional media reporting concerning the Fed's Quantitative Easing programs. Under QE, offers were made to banks to swap certain types of note assets for credits to the bank's reserve account at the Fed. Some banks chose to accept those offers. The resulting increases in bank reserve accounts were an increase to the monetary base, but not to the money supply, although the Fed may well have been hoping that banks themselves would choose to use those expanded reserves as a reason to lend more into a then still stimulus-starved economy.
And by the way, the budget deficit is the excess of federal operational outlays over receipts. Debt operations are entirely excluded from the calculation.
Quote:
Originally Posted by functionofx
The money is invented with a mouse click today, earlier it required two entries into a ledger.
The mouse-clicks of today occur while a ledger is on-screen.
There is an unlimited demand as the Federal Reserve will buy as many Treasury notes as required to fund the U.S. budget. The money is invented with a mouse click today, earlier it required two entries into a ledger.
The Fed does not typically buy Treasuries. With QE's they have swapped a like amount of new money they created out of thin air for them.
So why not just.... blow it out non-stop... spend like there's no tomorrow.... that's the logic?
The monetary exchanges will let you know if you are over doing it by reducing the relative value of your currency. The US$ is over valued and has been for a long time as evidenced by our perpetual trade deficit.
Japan's debt/GDP ratio is ~250%. Apparently that isn't too high for them. The US is only ~100%.
The interest rate is always high enough to boost the US$ value and force our trade deficit. The *only* reason there is "insatiable desire" for US$ is because we are willing to absorb other country's production and make them rich. Of course they must accept US$ in exchange.
Official and unofficial foreigners combined hold less than 30% of US public debt outstanding. Interest rates on new notes are set by Treasury prior to auction. Those rates are fixed and remain exactly the same over the lifetime of the security.
Only if (when) the President and Congress don't insist on some specific means to pay for them. The most common of those means being the (ta dah!) War Bond.
This article indicates that no "war bonds" have been issued since WWII, which ended more than 70 years ago. The word "common" wouldn't seem to apply very well anymore.
Quote:
Originally Posted by MrRational
Which of course is the real source of the problems we face today...an unwillingness to identify debt being for purpose X apart from purpose Y.
General debt isn't issued for any purpose at all other than that outlays from the General Fund have exceeded receipts, meaning that borrowing must be undertaken in order to make good on US checks and drafts being presented for payment.
Quote:
Originally Posted by MrRational
SOME of the debt is both useful and largely inevitable. But not all of it by any means... especially debt required to carry that debt.
Interest on the public debt is paid from funds appropriated for that purpose. There is no appropriation for repayment of principal. Most note-holders of course wish to maintain their positions. The reasons that led them to hold Treasuries to begin with still apply. For them, maturing notes are simply replaced with new notes at updated terms. Those actually wishing to close out a position are paid off with funds received from some among the many entities clamoring to purchase new debt. Things have worked this way for quite a long time now.
Valid statistics are only one part of rational analysis.
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