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Tax cuts don't cost money, spending money costs money. If the money wasn't being spent, there wouldn't be a debt. It's tough to debate with people who believe that debt is caused by tax cuts, not spending.
Tax cuts, less tax revenue. Loss of money that could've been collected.
The debt is not that big of a deal. If spending increases are kept below the rate of GDP growth, tax receipts will grow faster than the debt (tax rates remaining equal). That's all it takes to be on a sustainable trajectory. There's no reason to blow up the economy, default on our obligations or any other scorched earth madness. That stuff is just a preppers wet dream.
Not that simple. Debt has interest, and that interest has to be serviced. If interest rates get back to historic norms, the existing national debt would be unsustainable in the near term because the federal government couldn't raise the taxes to cover the increase. It was Bernanke who embarked on a strange policy brew of financial repression and flim flam asset purchases with other central banks to try and keep interest rates abnormally low. This is killing elderly savers, pension funds, and insurance companies. Some economists believe this misguided Fed strategy may even be responsible for the slowdown in economic growth.
Janet Yellen is telling anyone who will listen that the madness will have to end.
Not that simple. Debt has interest, and that interest has to be serviced. If interest rates get back to historic norms, the existing national debt would be unsustainable in the near term because the federal government couldn't raise the taxes to cover the increase. It was Bernanke who embarked on a strange policy brew of financial repression and flim flam asset purchases with other central banks to try and keep interest rates abnormally low. This is killing elderly savers, pension funds, and insurance companies. Some economists believe this misguided Fed strategy may even be responsible for the slowdown in economic growth.
Janet Yellen is telling anyone who will listen that the madness will have to end.
I agree and disagree. As long as the trajectory is such that tax receipts increase faster than spending growth, we're good to go. If interest rates rise, we'll have to adjust some spending elsewhere in order to service our debt obligations. Nobody said it will be painless, but it does not have to be scorched earth.
Yellon hinting that it's time to wind down fiscal policy, and get debt growing more in line with GDP growth is not the same as her admitting that the sky is falling and we need a depression to purge the system. If it was true, I doubt a fed chairman would be so blunt as to say that in congress because it's not their place to dictate fiscal policy.
Debt levels can rise forever if debt increase is kept in line with GDP growth more or less.
That and it would be entirely irresponsible to do such a thing. Claiming we need a crash, will cause one. People will sell off stock. What this says is that we need to try and let the market ride and not chain it directly. Kind of in line with what she wanted to do under the end of the Obama regime.
"Could you have predicted that from 1970 until today we'd lose most of our manufacturing? Could you have predicted going from a creditor nation to a debtor nation since Reagan?"
As a matter of fact, yes. In 1971, I had an Econ prof who had terminal cancer. He taught to the end. He taught us here money comes from, where it is and here it goes. You see, you can destroy money. Inflation is a tax.
I'm 1917 you old buy a cow with. $20 gold piece. Today you can buy a cow with that same gold piece, but a $20 FRN will buy you five pounds of good hamburg.
Not that simple. Debt has interest, and that interest has to be serviced. If interest rates get back to historic norms, the existing national debt would be unsustainable in the near term because the federal government couldn't raise the taxes to cover the increase. It was Bernanke who embarked on a strange policy brew of financial repression and flim flam asset purchases with other central banks to try and keep interest rates abnormally low. This is killing elderly savers, pension funds, and insurance companies. Some economists believe this misguided Fed strategy may even be responsible for the slowdown in economic growth.
Janet Yellen is telling anyone who will listen that the madness will have to end.
Exactly, and thank you!
Thanks to GOP and others in Washington, D.C. raising revenue via tax increases has been horror for past few decades. So everything is going on the nation's credit card, this includes everything from the Iraq War on down to social spending. Ms. Yellen is simply pointing out the truth; something that cannot go on forever will stop.
Past eight or so years with the world economies in various states of fiscal and or credit distress, markets have largely given the USA a pass. Well things are stabilizing and sooner or later people are going to start taking long and hard looks at the USA debt problem.
Fact that Congress has not passed an on time budget in a decade or more shows how bad things are; each fiscal year brings more budgetary tricks and gimmicks to fund the government, which largely looks like a game of chess as things are moved about. It is rather like a housewife trying to make the housekeeping go further without any increase in income.
No surprise Yellen isn't saying what you are saying
Quite so, and the thread quickly went from bad to worse and beyond, as ridiculous excesses of populist misunderstanding came more an more into play, one arrow of causation after another having been pointed in entirely the wrong direction.
What Yellen was actually chiding of course was Congress and its current "tax cuts for the rich" fiscal mentality, one that seems not to have learned a single thing from what happened when Bush-43 employed the same boneheaded tactics 15 years ago. There was a recent time for stimulus, but Congress refused to go along with that. The time for stimulus has now ended, and Congress refuses to go along with that either. What a bunch of out-of-touch, worthless chumps.
And of course your pontification has no detail of where people are wrong and just decrees it so. Just another day of wafting your farts to your nose.
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