Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
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?
IN PRINCIPLE, yes the budget can stay balanced during a war.
IN PRINCIPLE, yes the budget can stay balanced during a war.
IN PRACTICE, it usually doesn't.
Of course it doesn't.
The issue is not about the budget being balanced.
The issue is about
1) the LEVEL of debt however that is measured or referenced and ,
2) WHAT the debt is being used for.
As regard starting wars specifically...
not doing so without a concomitant increase in taxation.
Which would require a lot more agreement on policy than was the case.
Debt is good, not bad. All of the wealth, prosperity, jobs, homes -- everything -- revolves around debt. The paper dollars in your wallet is debt. The dollars in your bank account don't exist, they are just digits in a computer, more debt (the bank is making a promise to pay you paper dollars on demand). How does the supermarket line the shelves with goods? with a commercial line of credit. More debt.
People mistakenly believe that a high public debt is bad for the same reason that owing too much on your Visa card is bad. With public debt we can create more debt, issue more bonds, etc., to keep rolling it over forever. The only time public debt is a problem is if other countries think you have too much and they decide they'd rather base trading on Yen or Euros instead of the dollar. That's the risk, but given the state of affairs today, there is no currency ready to challenge the dollar as the No. 1 currency.
The Euro was positioned to function as a USD-Junior in international trade, but first a lack of care in setting up facilities to assist Euro-users in confronting imbalances, and second, a foolish embrace of mindless "austerity" in the wake of the Great Recession has rendered the currency questionable at best in consideration for such a role.
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.
It's a shell game, banks buy Treasury Notes knowing the Federal Reserve will buy them back. In early 2009, BOP (Before the Obama Period) the Federal Reserve held about 426 billion dollars in Treasury notes. In 2015 the treasury owned 2.460 Trillion dollars, and increase of over 2 trillion dollars.
Monetary malfeasance by the Federal Reserve, as seen in central bank efforts to provide
liquidity to a troubled banking system, and also to the U.S. Treasury. Despite the end of the
Federal Reserve’s formal asset purchases, the U.S. central bank monetized 78% of the U.S.
Treasury’s fiscal-2014 cash-based deficit (see Commentary No. 672).
78% of Treasury debt being purchased in 2014 by the Federal Reserve, indicates where the unlimited demand is coming from.
It's a shell game, banks buy Treasury Notes knowing the Federal Reserve will buy them back. In early 2009, BOP (Before the Obama Period) the Federal Reserve held about 426 billion dollars in Treasury notes. In 2015 the treasury owned 2.460 Trillion dollars, and increase of over 2 trillion dollars.
It's a double-entry system. A $10 bill in circulation is an asset to the holder and a liability to the issuer. There's not a lot of ways around that.
The issuer of the Sawbuck, the US government, doesn't owe anything. Wealth was produced out of thin air and was issued to a bank.
This isn't a gold/silver standard, the paper money doesn't represent convertible gold. The issuer merely
produced a good that has a live of its own. --- no body owes anything - it's NOT a liability.
Basically the US owes itself money in some cases, as the govt. buys treasuries. AKA lends itself money. This seems complicated. It is also hard to understand how that is either good or sustainable.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.