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Debt for anything other than an appreciating asset is bad. Going into debt to pay daily living expenses/luxuries for people who for generations refuse to educate themselves, and <gasp> earn their own way in life is the exact opposite of that principle. Same with throwing money away you don't have to provide aid for foreign countries. Are the futures of your children, grand children, and great grand-children worth that? (although the current fools have mortgaged many generations already)
Not only that, think about living with your credit cards completely maxed out. What happens if your transmission needs rebuilt, and you are barely able to pay your current bills? Not a very smart place to be, for an individual, or a government.
Of course, a government is not a person or a corporation. It need not generate returns in the sense that we think of them in our everyday lives. Instead, it is aiming to spend on infrastructure and services that are public goods.
Using your terms, government debt is essentially an investment in America's people and it's infrastructure. Historically, the returns have been quite good. And the government's credit is not maxed out. It's cost of borrowing is historically low, suggesting that in fact it's credit cards are carrying only a small balance.
Quote:
Originally Posted by DRob4JC
The private sector absolutely funds the government.
The analogy you got from whatever website is faulty. Government spending does not precede taxation... or it shouldn't.
Money facilitates the transfer of goods for work that is done. We have given the government the responsibility to manage the currency. They didn't just plop down, set up shop, and then waited for the people to come - as though they are a business.
What if I cut the grass for my neighbor for the exchange of 2 chickens... and I choose to deal with straight products instead of money? What does that mean for government? They get nothing, and I get what I need. What about the drug dealers and prostitutes that deal under the table... they don't pay taxes. How about the homeless? Under the analogy, they would HAVE to pay taxes to live in the country... but they don't.
Government should only spend what it is budgeted to spend, which should be based on what they receive.
For generations, we have used debt as part of our government finance strategy (in addition to taxation, fees, and other forms of finance). It works just fine.
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Originally Posted by TrapperJohn
The debt is the money supply which allows for the expansion of the economy at a rate greater than otherwise possible in a traditional economic sense. The excess money allows the banker class the ability to simultaneously borrow future human capital and lend it back to their own forefathers, skimming off the top for perpetuity.
Our economy expects a certain amount of government spending, which has downstream impacts on private companies that bid for government contracts or rely on services provided by that spending. Imagine momentarily that we decided to stop all deficit spending immediately. $439 billion (2015 amount) comes out of the economy, an amount equal to 2.5% of the nation's production. That money goes to consumers and private businesses. It buys goods and services that ultimately have downstream economic benefits. There would be a major economic impact if we decided to eliminate deficit finance of federal government spending.
I don't want to post a complex answer unless you don't get it (just tell me), but the banks don't "acquire" the money they lend from anywhere.
The idea of fractional reserve lending, or that banks need deposits to create loans is no longer true.
The loan creates the deposit. Reserves banks of course have reserves out the yin-yang right now. A relative lack of good borrowers is still our problem.
The government doesn't spend taxpayer money, not operationally at the federal level. Spending, literally, this is simple accounting, adds financial assets to the foreign/domestic sector. (Mostly domestic private sector.) Obama did indeed run cumulative annual deficits that amounted to $9 trillion, and we have a self imposed policy causing us to move numbers from reserve accounts to treasury bonds, or interest earning accounts if you will at the fed. It's not a real "debt" in any sense of the word. "paying off the debt" would simply mean converting the bonds back to numbers in the reserve accounts at the fed, and the dollars could only be spend on thing sold in USD. Anyways, those who hold bonds know we're not at risk of default and banks love they're savings account
Who gains financial assets? Who do you think? It should be noted that a fear of fiscal policy and a reliance on failed policies such as QE is mostly to blame. Look, it doesn't matter who gets it, this is reality.
...and when we are paying a few hundred billion each year, just servicing the interest on the debt, that's not real taxpayer money being spent either, I suppose. Well, not operationally any-who.
Our economy expects a certain amount of government spending, which has downstream impacts on private companies that bid for government contracts or rely on services provided by that spending. Imagine momentarily that we decided to stop all deficit spending immediately. $439 billion (2015 amount) comes out of the economy, an amount equal to 2.5% of the nation's production. That money goes to consumers and private businesses. It buys goods and services that ultimately have downstream economic benefits. There would be a major economic impact if we decided to eliminate deficit finance of federal government spending.
We spent $402 billion last year just servicing the fiscal operating debt, $200 billion of that was to service debt Obama added. We cannot keep expanding the debt by $400 billion a year into infinity, just so people with their hand out get their phat loots each year.
It is a symptom of the poor state the country is in.
You have to overspend to prop-up the illusion of prosperity...and in some cases keep the peace by paying people off.
and it is an illusion. Adding $9 trillion in new debt, and we add tens of millions of new people living in poverty, giving us a 50 year high in US poverty level... it's clear only the politically connected are getting wealthy, the rest of us are getting screwed over.
I'm genuinely curiously. Without a government budget deficit, how will the private sector gain net financial assets?
"I'm genuinely curiously"
I doubt it!
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