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"Fiscal conservatism is great when it's your own finances, but when it concerns national finances in a country that controls it's own currency, it's just plain stupid."
It is correct for "a country that controls it's own currency, it's just plain stupid."
We do not live in such a country. We have not controlled our own currency for over a century since we could buy a cow for $20. Now $20 in FRNs will get you five pounds of hamburg. Which would you rather have?
There's a very simple truism that applies in this scenario: what can't go on forever, won't.
At some point the government will run out of private and foreign buyers willing to accept any more of its debt at a low interest rate, and then you face the decision of explicit default, monetary default, or cripplingly fast and deep austerity.
NO!! There won't be a *default*! What will happen then is that the US$ will "weaken" on international exchanges and the trade gap will close. China isn't buying US$ because they think they are good investments, they buy them precisely to maintain that trade gap, which has allowed them to rapidly develop.
Don't even bring Greece into this! They do not have control over their currency, so have nothing in common with the US when it comes to fiscal debt. They function like a US state. The US can always print US$, as many as they need to pay the interest on the debt. Countries like China and Japan are well aware of this and buy them anyway to run their export-led economies.
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That's your opinion, but it isn't fact, and if you do believe in that opinion so strongly, you'd be best to support a bipartisan deal to balance the budget in a manner that is mild, gradual, and still allows deficits in recessions, because the writing is on the wall as to the future viewpoint of the Republican base (and eventually as these things go, the party) -- using the debt ceiling so aggressively to extract concessions is partially driven by anger and frustration with Obama, but also by a fear of default that is rapidly falling on the right as people reassess how undesirable one would really be.
Total nonsense. It isn't my opinion. The BS political theater isn't even anyone's opinion. The Reps *always* use the debt to extract concessions. This has been going on consistently since the Great Depression and FDR. As soon as a Rep is president they no longer worry about the debt and escalate it. Why do you think that is? They know it doesn't matter. They also know that the US public is ignorant and they can get them all stirred up by screaming and yelling about it on the "news". It's how they play the game. They know people are dumb and gullible, and they know that hardly anyone will notice that they do this same thing over and over.
"Fiscal conservatism is great when it's your own finances, but when it concerns national finances in a country that controls it's own currency, it's just plain stupid."
I'm the one who wrote that.
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We have not controlled our own currency for over a century since we could buy a cow for $20. Now $20 in FRNs will get you five pounds of hamburg. Which would you rather have?
Didn't you post the same thing a few days ago? I told you that you could buy long term treasuries with your $20 in fiat money and buy 3 cows 100 years later. Don't you understand that?
Why do you care if the US$ buys the same thing as it did 100 years ago? Are hiding your savings in $s under your mattress? Don't do that...
"Fiscal conservatism is great when it's your own finances, but when it concerns national finances in a country that controls it's own currency, it's just plain stupid."
It is correct for "a country that controls it's own currency, it's just plain stupid."
We do not live in such a country. We have not controlled our own currency for over a century since we could buy a cow for $20. Now $20 in FRNs will get you five pounds of hamburg. Which would you rather have?
False. We control our currency. The United States is monetarily sovereign; it creates money ad hoc, by spending.
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Originally Posted by misterno
US govnmt will never pay back the debt in real terms
Correct, because debt IS money. If the U.S. debt sheet were to revert to $0, there would be no dollars in existence.
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Originally Posted by misterno
they just print more money and give you worthless dollars
They are not worthless. They have value because the law says they have value. The U.S. dollar is backed by the full faith and credit of the United States government.
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Originally Posted by misterno
I feel sorry for people holding US debt
Why would you? You're holding U.S. debt as we speak (assuming your net worth is greater than $0)
The real issue is how much we owe other countries. We owe over 5 Trillion to other countries. Most of that being a debt to China if I'm not mistaken.
Incorrect.
We don't owe anything to China. Chinese investors save in U.S. denominated debt. The only country that can produce U.S. dollars is the United States. If we owed China $5 trillion in their currency as a treaty for war reparations (like the Weimar Republic), we could be forced into a situation of bankruptcy or hyperinflation.
1) There was NEVER a "surplus" during Clinton's eight fiscal years. Never. At no point did the federal government bring in more in tax revenue than it paid out. Don't believe me? Look at the debt under Clinton. It increased every single year. How does a surplus translate to higher debt levels? Answer-by robbing excess Social Security funds, Clinton was able to mask his deficits and claim that he had nearly balanced the budget, which was almost true for two years because......
2) Congress controls spending and the Republicans controlled Congress and forced Clinton into a budget deal that, combined with no wars and a Dot.Com economy, smoothed things over.
3) The Bush "tax cuts for the rich" benefitted EVERYONE. I am not rich and I received a tax cut. They also did not add to the deficit. In fact, in 2007, after the tax cuts and right before Democrats took control of Congress and ramped up their spending, the deficit was down to $162 billion-or about two months' worth of Obama deficits.
1) There was NEVER a "surplus" during Clinton's eight fiscal years. Never. At no point did the federal government bring in more in tax revenue than it paid out. Don't believe me? Look at the debt under Clinton. It increased every single year. How does a surplus translate to higher debt levels? Answer-by robbing excess Social Security funds, Clinton was able to mask his deficits and claim that he had nearly balanced the budget, which was almost true for two years because......
Play around with the two formulas:
Federal Balance + Private Sector Balance + Foreign Sector Balance = 0
GDP = Federal Spending + Non Federal Spending + Net Exports
I haven't played around with Clinton's years, but I suspect the answer lies in the Foreign Sector.
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Originally Posted by Nick538
2) Congress controls spending and the Republicans controlled Congress and forced Clinton into a budget deal that, combined with no wars and a Dot.Com economy, smoothed things over.
The budget deals and GOP Congress had nothing to do with the "dot.com economy." Economic trends are cyclical.
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Originally Posted by Nick538
3) The Bush "tax cuts for the rich" benefitted EVERYONE. I am not rich and I received a tax cut. They also did not add to the deficit. In fact, in 2007, after the tax cuts and right before Democrats took control of Congress and ramped up their spending, the deficit was down to $162 billion-or about two months' worth of Obama deficits.
Not necessarily. It benefits the rich a lot more than the poor. The only thing that matters is the gap. The gap is what makes someone rich, not the $$$ in their bank account. Inequality skyrocketed under Bush, especially leading up to the recession.
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Originally Posted by Nick538
Facts are inconvenient things.
You can't talk to anyone about economics.
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Three points....
