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The USA prints it's own money.
The government creates the money, and people are the end users by
spending it.
If the Government of the USA had no national debt, there would be NO MONEY
for anyone to spend.
So, please correct me if I am wrong, I think of the "debt ceiling" as this,
The USA government is filling up a giant pool with water from a hose,
but there are other hoses in this giant pool that go to other pools and so
forth.
The other pools will be states, people, ect.
If the debt ceiling if ignored, the Congress ignores the date in October,
technically, someone is turning off the hose.
If the hose is turned off, the flow of water will stop.
The giant pool and all the other smaller pools it feeds, will begin to dry
up.
Do I have this right? I have to think about it like this, it's easier for me to
understand.
I would classify that as the foreign debt, but one where the US has much more leverage given its in its own currency. There are consequences if it becomes large enough, but foreclosure isn't one of them.
Much more important is how its distributed. If it continues to be a wealth elite in China, the buying power will not chase the broad side of the US economy.
We have a form of Dutch disease , only in this case its from a reserve currency. If we export currency we must have a balance of trade deficit. That means we need to consume more foreign made goods and services which drives down the demand for US labor and capital.
For example, suppose you were the most popular person in town. Suppose again a simple invitation to your family gatherings were of great political value. Suppose again I would send my children over to mow your lawn and wipe your windows for this invitational favor, and its document with an RSVP . Suppose the children were paid an allowance. It is the children of the wealthy with no stream of income. This is the state of the US labor force, but there is no love for them....We do not need workers to grant favors. China certainly does.
The USA prints it's own money.
The government creates the money, and people are the end users by
spending it.
If the Government of the USA had no national debt, there would be NO MONEY
for anyone to spend.
So, please correct me if I am wrong, I think of the "debt ceiling" as this,
The USA government is filling up a giant pool with water from a hose,
but there are other hoses in this giant pool that go to other pools and so
forth.
The other pools will be states, people, ect.
If the debt ceiling if ignored, the Congress ignores the date in October,
technically, someone is turning off the hose.
If the hose is turned off, the flow of water will stop.
The giant pool and all the other smaller pools it feeds, will begin to dry
up.
Do I have this right? I have to think about it like this, it's easier for me to
understand.
There is nothing to correct . You have described it precisely. Unless the savings rate becomes zero, we are going to have a problem , or worse. What if people pay off their bank credit?
Like I keep saying, if people don't like debt then perhaps its not a good idea to use it as money.
I would classify that as the foreign debt, but one where the US has much more leverage given its in its own currency. There are consequences if it becomes large enough, but foreclosure isn't one of them.
Much more important is how its distributed. If it continues to be a wealth elite in China, the buying power will not chase the broad side of the US economy.
We have a form of Dutch disease , only in this case its from a reserve currency. If we export currency we must have a balance of trade deficit. That means we need to consume more foreign made goods and services which drives down the demand for US labor and capital.
For example, suppose you were the most popular person in town. Suppose again a simple invitation to your family gatherings were of great political value. Suppose again I would send my children over to mow your lawn and wipe your windows for this invitational favor, and its document with an RSVP . Suppose the children were paid an allowance. It is the children of the wealthy with no stream of income. This is the state of the US labor force, but there is no love for them....We do not need workers to grant favors. China certainly does.
Maybe in a generation when China becomes more consumer oriented they might throw us a bone and we might employ more here.
I want to know why severe deficite spending is good for our country.Can anyone explain that to me? It seems to me it's a house of cards that can bring the nation down at some point in time.
It seems that John Meynard Keynes' philosophies have taken over our thinking about how to run a government.
My philosohy is to NOT spend more than 'you' take in and not accumulate a lot of debt.
I guess that's pretty stupid huh?
CIB
I don't know what you imagine Keynesian economics to be but it is NOT spend more than 'you' take in and not accumulate a lot of debt.
Keynes believed that in severe recessions and depressions fiscal spending and loose monetary policy can be effective at dampening the recession or depression or reversing it. He also believed that high inflation boom times can be controlled by running fiscal surpluses and raising interest rates.
Keynes' theories have been well proven.
Oh, how many here know that the deficit is plummeting?
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