The National Debt isn't the problem (how much, elect, government, state)

[gysmo]

Originally Posted by gwynedd1

I am tired of seeing it posted so I am going to savagely attack this idiotic, OP ed favorite of junk economics.

1. The national debt is the money supply. The debt is the sum total of dollars that was created by the government. It prints money by running deficits because we use a double entry system where one debt = one credit. The rest of the money is created by bank loans, also a double entry system with a few exceptions like coins which are debt free.

2. Its who owns the debt that matters which can be the FED, US institutions, citizens, and foreign. The unqualified nominal amount of debt is meaningless. Debt to self is largely meaningless unless of course its used as money. One of the fasted growing areas of our debt is to the FED which is at 1.7 trillion. It actually reduces real debt since it dilutes the rest of it. The debt isn't being increased to buy anything; its being used to create money. Its their incompetent or corrupt use of the liquidity that is the problem. Not a single tax payer was bailed out.

3. It does not all need to be paid back. It must not all be paid back, and to do so would destroy the money supply almost entirely.

4. The US trade deficit is the same issue. Even US treasury coins that are not created with the debt facade as "debt free" money still becomes "check book", zero interest debt when it leaves our shores(dollars are check book money and bonds are saving account money). The problem is when other countries like to use our money because it goes out but never comes back in. The real problem is that the US economy is now only a small part of the world economy. So we are now highly leveraged. Its the bonds and outstanding dollars that comprise the foreign debt which has all meaning; the nominal national debt has none.

The real problems are

* mortgage debt to GDP ratio
* high land prices
* foreign debt and shrinking share of world economy increasing dollar leverage
* dollar carry trade
* zero interest rate policy

If you continue to whine about the national debt, you are listening to some brain dead main stream economic pundit provided for you as cover while in the real world they are field striping the country.

when federal debt is monetized.the government does so with no intention of paying it back. this causes inflation. the new dollars introduce into the money supply dilutes the value of of the money supply. there by driving up the prize of thing we buy! its a direct effect on every single American, working for dollars! monetizing debt just to be able to borrow more money that will never be repay. is very dangerous! remember Germany barrel of money to buy a loaf of bread.

[pghquest]

Originally Posted by gwynedd1

but you just keep telling me that debt can't be money.

Thats not at all what I said.

Originally Posted by gwynedd1

You have gotten most of it wrong.

or maybe its just your comprehension thats off.

Originally Posted by gwynedd1

Golly, what do cars have to do with it? Are you changing the subject?
That's you above to a plus sized model-T

According to you, if the federal government regulates it, then they own it, you arent now admitting you are wrong, are you?

Originally Posted by gwynedd1

I am not the one boiling over. The chairmen is appointed by Congress unlike the CEO of GM. Not everything fits in like educational block toys of round block goes into round hole like you are used to. Its known as subtleties. There is no Car Act.

Actually the CEO of GM was put in place by the fedral government, and there was a federal seat belt law passed Jan 1, 1968. Two more examples of you being wrong

Originally Posted by gwynedd1

See carjacking above...

So you admit the EPA adds nothing to your point, I agree.

Originally Posted by gwynedd1

If people will trade with it, then its currency. My IOU is not very liquid thus it adds almost no effective exchange. Commercial paper is much closer to a currency. It doesn't increase the legal tender, just currency. Only government IOU's increase the legal tender.

They do not . the math goes like this
Government sells $x in US Treasuries
Investors buy $x in US Treasuries

There is no increase in legal tender due to this transaction, its a revenue neutral transaction, but the debt increases. Are you sure you studied these things in school because I'm starting to doubt it

Originally Posted by gwynedd1

It doesn't. That's a function of you and the Treasury. That just comes from Treasury general funds. That doesn't create new money. Only actions with the Treasury and the Federal Reserve creates new money. The Fed is the only one with a technically infinite balance sheet. In this case the money happens to also be the legal tender.

Wrong again, the funds come from the taxpayers

I've lost count on the number of errors you continue to make.

[pghquest]

Originally Posted by gysmo

when federal debt is monetized.the government does so with no intention of paying it back. this causes inflation. the new dollars introduce into the money supply dilutes the value of of the money supply. there by driving up the prize of thing we buy! its a direct effect on every single American, working for dollars! monetizing debt just to be able to borrow more money that will never be repay. is very dangerous! remember Germany barrel of money to buy a loaf of bread.

Zimbabwe is a prime example of what happens when the governmet creates inflation by continuing to issue new dollrs.. But hey, the OP thinks there isnt a problem.

[RCCCB]

You can say anything you want about this, but Rome burns and you think there is no problem.

[gwynedd1]

Originally Posted by RCCCB

You can say anything you want about this, but Rome burns and you think there is no problem.

I am the one trying to put out the fire. There is no domestic liquidity and Goldman Sachs is pumping out dollars as we speak. That means our economy implodes, with an added dose of stagflation. If the Fed gov would simply run a deficit to suspend social security withholding, our economy would improve immediately. However the plan by the banksters is for every excuse to tank the economy. They like people like you who want to have no domestic supply of money.


Here is the plan. The investment banks now want a monopoly of the reserve currency.

Kitco - Commentaries - Jim Willie CB

Furthermore, installation of the USDollar Carry Trade will assure that No Exit Strategy will be available to the USFed also. Wall Street firms will participate in this free lunch carry trade, just like all others. Wall Street will not permit a USFed rate hike to firm the US$ exchange rate. Talk about a strong perverse factor behind the USDollar. This is every bit as powerful as the ‘Beijing Gold Put’ analyzed in the Hat Trick Letter issued in September.

In other words the plan is to choke the US economy with not enough money to insure a free lunch dollar carry trade which now replaces gold and yen carry trade.

To reverse this we need deficits and higher interest rates to stop dollars from spewing over seas and getting our economy moving again. However do we expect Wall Street to lose Trillions? They are counting on you to stop government spending so they can spend it on kangaroo bonds or cheap assets from imploded Euro-zone economies.

You stop domestic monetary growth by doing one thing. You create alarm about Americans having too much money(I mean deficits to fund tax relief). Thus they will seal this politically and it seems you have bought into it. No money for you is good. Let banks print money for their schemes.


We want high taxes on labor you see. High taxes on labor and a balanced budget will really do the trick!
/ end sarcasm

The banks now have the best printing press in the world of free ZIRP reserve currency.

That is what stagflation is from as we speak. American assets and labor are deflating. Everything else is inflating just as we would expect.

[gwynedd1]

Originally Posted by gysmo

when federal debt is monetized.the government does so with no intention of paying it back. this causes inflation. the new dollars introduce into the money supply dilutes the value of of the money supply. there by driving up the prize of thing we buy! its a direct effect on every single American, working for dollars! monetizing debt just to be able to borrow more money that will never be repay. is very dangerous! remember Germany barrel of money to buy a loaf of bread.

Oh Wiemar again. Hyperinflation was caused by WWI and the biggest war indemnity ever devised. A gold standard would have saved them surely...Even though there was not in ounce in all of Germany.

As of now we have domestic stagnation and deflation. If its bolted down in the US like real estate or US labor, there is no money for it. All new money is being poured on the international markets and not a peep about it from all this faux fiscal conservatism.

[gysmo]

Originally Posted by pghquest

Zimbabwe is a prime example of what happens when the governmet creates inflation by continuing to issue new dollrs.. But hey, the OP thinks there isnt a problem.

inflation leads to price controls witch leads to shortages. after leads to blaming the producers and businesses for the shortages. insted of blaming government policies good example Brazil 1975. there is no such thing as a free luch!

[gwynedd1]

Originally Posted by pghquest

Thats not at all what I said.

or maybe its just your comprehension thats off.

According to you, if the federal government regulates it, then they own it, you arent now admitting you are wrong, are you?

No its just that all you can do is rock, paper, scissors. You comparison to cars is completely wrong.

Actually the CEO of GM was put in place by the fedral government, and there was a federal seat belt law passed Jan 1, 1968. Two more examples of you being wrong

Yeah OK, a perfect example of why its just like the FED.

So you admit the EPA adds nothing to your point, I agree.

It is the point. There is no false dichotomy you would have.

They do not . the math goes like this
Government sells $x in US Treasuries
Investors buy $x in US Treasuries

And your math is missing the buyer with an infinite pile of cash.

FRB: Open market operations - Credit and Liquidity Programs and the Balance Sheet

Open market operations (OMOs)--the purchase and sale of securities in the open market by a central bank--are a key tool used by the Federal Reserve in the implementation of monetary policy. Historically, the Federal Reserve has used OMOs to adjust the supply of reserve balances so as to keep the federal funds rate around the target federal funds rate established by the Federal Open Market Committee (FOMC). OMOs are conducted by the Trading Desk at the Federal Reserve Bank of New York. The range of securities that the Federal Reserve is authorized to purchase and sell is relatively limited. The authority to conduct OMOs is found in section 14 of the Federal Reserve Act.

FRB: H.4.1 Release-- Factors Affecting Reserve Balances -- November 25, 2011

Total U.S. Treasury, agency debt, and mortgage-backed securities 1,2 2,612,305

That's new money not already in the economy.

Oh yeah and the profits are sent back to the Treasury....Just like GM.. and since you like them so..

There is no increase in legal tender due to this transaction, its a revenue neutral transaction, but the debt increases. Are you sure you studied these things in school because I'm starting to doubt it

That's what I said. You can't read it seems.

It doesn't increase the legal tender, just currency.

Wrong again, the funds come from the taxpayers

I've lost count on the number of errors you continue to make.

I don't even know what you are talking about. You are paid by tax payers? you are taxed by the Federal Reserve?

Yeah I think I am done here with you. Say hi to Alice for me.

[gwynedd1]

Originally Posted by gysmo

inflation leads to price controls witch leads to shortages. after leads to blaming the producers and businesses for the shortages. insted of blaming government policies good example Brazil 1975. there is no such thing as a free luch!

You mean like Australia now being skimmed ?

I don't get it. You think the budget of the US is the only source of money? What about ZERO interest rates?

[MTAtech]

Originally Posted by Memphis1979

The debt in proportion to GDP growth is the problem.

No, it's not. Denominators matter.