The National Debt isn't the problem (employment, dollar, economic, financial)
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Did you read the part about what was done with the national debt? It went directly to the banks which became more monetary base, and does not circulate in the economy.
So much for that argument.
But thats a lie because it doesnt go directly to the bank, it goes to pay employees, like IRS agents, it goes to the states, it goes to welfare, unemployment, military, social security etc
in fact the money comes FROM the banks. Where on gods earth do you think the money comes from to buy the US Treasuries? People on welfare?
the debt is actually 60-80 trillion dollars, if you take into considertaion all the promises the gov. has made to its citizens. This could be potentially a huge problem, as we are counting on future tax revenunes to pay for these things.
Hi Lady's Man,
This is currently the best have in this asylum style economics. If anything it has a side benefit of extinguishing the FIRE economy's share of the money supply. If the dollar was not completely controlled by the FIRE economy, then is would be a net obligation. However its not, so one source of liquidity is better than none.
It would be nice if we would give money to the producers, but we are so far from that idea it isn't funny. Any money dumped into the private sector without changing tax policy will make it worse since its not going to labor or industrial capital. We would be better off giving money to pimps and hookers because they at least will not drive up the cost of doing business by driving up asset prices. Driving up the price of toll bridges is worse than giving money to dope addicts and I ain't kidding -See revolutionary France and internal tariffs and access charges to the peasantry.
Quote:
If our base to collect tax keeps shrinking or if our relationship with china goes south (either because we cannot affor to make interest payments or the american people can longer support their consumption), then we end up like greece. Debt is not inherently bad, but it becomes an issue when you cannot honor it.
Its already shrinking because we let finance tax labor and capital by financing real estate and monopolies.
We aren't Greece. We don't owe a in a currency controlled by Germany.
The progressives are closer to the truth because at least they would provide indirect liquidity in the hands of pimps instead of monopolists who will put a toll gate on your drive way with their money as they "invest it". They, by a random quirk of fate, are the least destructive school of modern idiot economics.
But thats a lie because it doesnt go directly to the bank, it goes to pay employees, like IRS agents, it goes to the states, it goes to welfare, unemployment, military, social security etc
in fact the money comes FROM the banks. Where on gods earth do you think the money comes from to buy the US Treasuries? People on welfare?
The bailouts went directly to banks. None of those deficits went into the pimp economy( as I call it). They went into currency speculation for a nice dose of stagflation... nice source of liquidity with investment banks skimming the top handing my money to foreigners ...
Like I said, an argument of total ignorance of the facts.
Money comes from bank credit AND deficits. Your description is the EU banking system where French and German banks are the top of the food chain. The top of the food chain in the US is the treasury.
Take a look at the debate over monetizing sovereign debt in the EU that we do routinely here, in Britain and Japan.
No surprise to see you think a posting full of errors = great. Even funnier is your simplification is also wrong, because we dont print and give to the banks, we actually borrow it from the federal reserve, who gets their money from the banks
The Fed does not get any money from banks. Any kind of theory you can produce with this grave and ridiculous error is sucked into a black hole.
The whole value of the currency is based on taxing power. To demonstrate the authority, all Uncle Sam would need to do is change legal tender laws and implode the banks. Not only that, the treasury has the power to create coins directly from the treasury. One again, all the treasury would need to do is pay them with a trillion dollar coin, tax them directly, whatever.
Anyway, the Fed creates a note like any bank that was historically backed by "specie" like gold and silver. The bank note is worthless without the specie. In the case of a Federal Reserve note, the specie is a government bond and it is that fungible debt good for paying taxes that is the value. The FED is a facade.
The bailouts went directly to banks. None of those deficits went into the pimp economy( as I call it). They went into currency speculation for a nice dose of stagflation... nice source of liquidity with investment banks skimming the top handing my money to foreigners ...
Like I said, an argument of total ignorance of the facts.
Money comes from bank credit AND deficits. Your description is the EU banking system where French and German banks are the top of the food chain. The top of the food chain in the US is the treasury.
Take a look at the debate over monetizing sovereign debt in the EU that we do routinely here, in Britain and Japan.
That doesnt at all support your statement, because funds were LOANED to the banks, which GENERATED A PROFIT to the government thereby REDUCING the debt
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.
The 15 Trillion balance would be meaningless if we could afford it. If the GDP was 30 Trillion, then the debt would be 50% of the GDP, and not a problem.
I understand the move away from a gold standard, but I don't think its worked out the way we hoped.
The general idea was that all countries would own all countries debts. So they are buying our bonds, we are buying theirs, and so forth and so on. And as long as we are all buying each others stocks, then growth will be based on the size of ones economy, which encourages growth. It added for more fluidity in the markets.
But now we use this as an economic weapon, not buying bonds is a form of warfare. Russia went to China already, on the record, and asked them to ban together to dump all of their US bonds on the market in one day, that would destroy our economy.
And heres the thing, the largest single holder of US debt, is the United States citizens. Most of the debt is tied up in bonds bought with social security funds.
The system is rigged, its going to have to change, dramatically.
That is why it was originally with fixed exchanged rates, capital controls and an international gold standard. Nixon destroyed us all.
This is basically like free Scottish banking between the Royal Bank of Scotland and the Bank of Scotland. The only problem is the ones producing the paper are not the ones in their respective counties to redeem them. Goldman Sachs prints into fresh air, and we eat the exhaust. What its going to do is create an effective tariff as capital controls and world wide poverty.
But hey, who care about that? Lets pay down that national debt and strengthen the currency for the sake of the benevolent investment banks so they can buy things like the Suez canal, Panama canal, El Gordo, broadcast bands, fishing rights, land etc so they can up charge us to paradise.
The 15 Trillion balance would be meaningless if we could afford it. If the GDP was 30 Trillion, then the debt would be 50% of the GDP, and not a problem.
All that would mean is more money is in the form of bank credit. The national debt is publicly created money and nothing more. That is why Japan has such a big ratio. Much of their money is in the form of public debt instead of private credit. Their money is cheaper than ours because more of ours is rented from banks with interest charges.
the debt is actually 60-80 trillion dollars, if you take into considertaion all the promises the gov. has made to its citizens. This could be potentially a huge problem, as we are counting on future tax revenunes to pay for these things. If our base to collect tax keeps shrinking or if our relationship with china goes south (either because we cannot affor to make interest payments or the american people can longer support their consumption), then we end up like greece. Debt is not inherently bad, but it becomes an issue when you cannot honor it.
the problem is and was government spending.
greece has government spending at 50% of GDP and it is not sustainable.
greece will default. (the only issue is whether it will be soft or hard, and trigger credit default swaps)
speaking of spending over your means, we have this here in the US -with congress raiding earmarked funds:
In cash-strapped Washington, President Obama’s $1 trillion health care law is presenting a tempting target for lawmakers seeking funds for other projects, as Congress last week raided the health care piggy bank for the third time in less than a year.
All told, Congress and the president have tapped some $50 billion earmarked to pay for benefits and programs in the health care overhaul in future years to fund more-immediate spending needs.
how sad is that really?
Last edited by floridasandy; 11-27-2011 at 12:42 PM..
That doesnt at all support your statement, because funds were LOANED to the banks, which GENERATED A PROFIT to the government thereby REDUCING the debt
All money is loans, and the one with access to the lowest rates sucks up all the wealth. In a depression, the first one to get the cheapest money wins.
If I have 100 seats and 10 of them are empty, then new liquidity is going to fill those empty seat and drive up the profits of the other 90. Thus if I am losing money at $4 a seat with a profit starting at $5, Then the prices on all of them will be driven up quickly by a bidding war for the 100th seat, say up to $10.
The first one to get the cheapest money wins, and that was the banks, again. Now they can up real estate access charges with their seat monopoly.
They were also given treasuries for junk which is like exchanging a dead beat alcoholics IOU for a VP at DuPont.
BTW an IOU from a VP in DuPont among dope addicts is as good as MONEY. They'd pass it around and trade it for needles. If you just understood that then you will finally know what money is. Its a debt. All money, no matter what form it takes is debt. In this system, its created as a debt because before the VP at DuPont became indebted, it didn't even exist. Fail to understand this, and you may as well just babble terms out of an economic dictionary.
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