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The national "debt" isn't a debt in any sense of the word. The US, being the monopoly issuer of currency, a fiat regime, faces no risk of solvency. There will always be a keyboard to credit accounts. "Future generations." Hah. Tell me when the "debt" from world war 2 is going to cause us to send back 1 million cars. Real resources are not going anywhere. "Throwing money away." Yes, crediting accounts is going to kill us all one of these days.. The national "debt" is simply a representation of the sum of cumulative annual deficits. Private sector savings.
Thats great news. That means your tax base doesn't need to pay back the securities that are redeemed when SS runs a negative deficit (or any of the trust funds for that matter).
You have no idea what you're talking about. Those deficits are liabilities owed to real live people, states and companies and it's how the government operates. If your debt gets so large -- no matter what sort of special names you call yourself in regards to creditor -- that no one trust that they'll get their money back credit agencies will start downgrading your credit ratings and everything gets more expensive and then at some point no one buys your junk so you can't even run deficits now.
So instead of making sound decisions you ran your government like a child and now you're forced into austerity you claimed doesn't work. Without the ability to run deficits you can only spend what you take in. Why? Because you have no choice in the matter, you're an economic leper because of how poor of a decision maker you are.
". . .Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything. This has been the case since 1933. The notes have no value for themselves."
- - this is a violation of 12 USC Sec. 411
- - this is a declaration of bankruptcy
Read Art. 1, Sec.8, and Sec. 10, USCON.
That the government ceased complying with the constitution in 1933 highlights the depths they have sunk to.
America, the constitutional America, ended in 1933.
Insanity has ruled ever since. The madmen run the asylum.
". . .Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything. This has been the case since 1933. The notes have no value for themselves."
- - this is a violation of 12 USC Sec. 411
- - this is a declaration of bankruptcy
Read Art. 1, Sec.8, and Sec. 10, USCON.
That the government ceased complying with the constitution in 1933 highlights the depths they have sunk to.
America, the constitutional America, ended in 1933.
Insanity has ruled ever since. The madmen run the asylum.
Treasury securities are not Fed reserve notes. But they are both worth their weight in USD any day of the week almost all over the world.
Well, we have a communication break down.
You think a "dollar bill" (worthless note) is a dollar.
It's not. There have been NO DOLLARS in circulation since 1933.
(FDR 'liberated' all privately held gold dollars and criminalized the possession of them by "free" Americans).
LAWFUL MONEY - "The terms 'lawful money' and 'lawful money of the United States' shall be construed to mean gold or silver coin of the United States..."
Title 12 United States Code, Sec. 152.
"Dollars, or units; each to be of the value of a Spanish milled as the same is now current, and to contain three hundred and seventy-one grains and four-sixteenths parts of a grain of pure, or four hundred and sixteen grains of standard, silver."
"Eagles each to be of the value of ten dollars or units, and to contain two hundred and forty-seven grains and four eighths of a grain of pure, or two hundred and seventy grains of standard gold."
--- Sec. 9, Coinage Act of 1792, January 1792
(Silver was demonetized in the Coinage Act of 1873, so I will omit them from further consideration.)
You might raise the objection that those "worthless" notes do buy things. However, there is one important fact - only lawful money PAYS DEBT (see Art. 1, Sec. 8 and Sec. 10 of the USCON).
Using worthless notes is a revenue taxable privilege. That's how government can place an excise tax on practically everything. No one is exercising "rights" (which are not taxable).
Also, without lawful money (in excess of 20 dollars) one cannot demand a trial under the rules of the common law (7th amendment).
The "best joke" is that 320 million "human resources" are pledged as collateral on the national debt, of which those treasury bonds and FRNs are part of. So when CONgress finally flips the bird to the creditor, the American people are stuck holding the check. It's all in the law - that few Americans bother to read. Even CONgress doesn't read the laws it enacts.
Thats great news. That means your tax base doesn't need to pay back the securities that are redeemed when SS runs a negative deficit (or any of the trust funds for that matter).
You have no idea what you're talking about. Those deficits are liabilities owed to real live people, states and companies and it's how the government operates. If your debt gets so large -- no matter what sort of special names you call yourself in regards to creditor -- that no one trust that they'll get their money back credit agencies will start downgrading your credit ratings and everything gets more expensive and then at some point no one buys your junk so you can't even run deficits now.
So instead of making sound decisions you ran your government like a child and now you're forced into austerity you claimed doesn't work. Without the ability to run deficits you can only spend what you take in. Why? Because you have no choice in the matter, you're an economic leper because of how poor of a decision maker you are.
"L"
They don't. The government (I simplify by lumping together the reserve/treasury/congress, my point still stands) simply credits accounts. When social security "runs a negative deficit" it simply means we have stopped the accounting in regards to the trust fund showing positive numbers. The trust fund isn't a saved amount of dollars we spend, it's simply an accounting record. When the government spends, it simply credits accounts! It doesn't "take" from somewhere, not operationally. Politicians may believe they need to "tax to fund" but it doesn't mean it actually happens. A gold coin doesn't drop somewhere at the fed when accounts are debited. Deficits are, by definition, adding financial assets to the private sector. Please explain how a deficit is a liability. How long until we send 1 million cars back to 1960 to pay for the debt? Real resources don't get sent back in time, and a nation sovereign in its own currency without a pegged currency/foreign debts is at no risk of default. It can always credit accounts. Let's look at Japan. Now, Japan has reached the point where growth is virtually impossible due to the aging population, but they have a massive debt with low interest rates and, despite pumping so much money, they're desperately trying to INFLATE. Japan is doing fine, all things considered. Now, in regards to the worthless credit rating. Were bond yields affected when our rating dropped? And you do know the reason it dropped was because of the debt ceiling hysteria? Bond holders aren't worried about not getting their money back, they know the government will always credit their account with a tiny bit of interest. The government shouldn't be run like a household. Austerity only works to reduce growth and harm the population, and is always self imposed, unless you're a nation stuck using the euro, in which case, I feel sorry for them.
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.
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.
They do, actually. There is a mechanism between the central bank and the primary dealers that creates new currency on-demand, as the consumer demand for loans calls for it.
I'm on board with what you're saying about the relationship between the national debt, government, and how that works -- however you're missing a HUGE part of the system. The public sector creates fewer dollars via debt than the private sector does.
Just look at the size of the dollar-denominated economy -- there are many times more dollars in circulation than there are U.S. Government deficits. It is mathematically impossible for all dollars to originate from government debts.
Or look at the housing bubble -- that money did not enter the economy via the government's financing mechanisms, it entered the economy via the private sector's financing mechanisms. If mortgage lending worked as you say it does, a sharp rise in mortgage originations would yield an identical rise in government debt, at the exact same time. And that isn't the case.
They do, actually. There is a mechanism between the central bank and the primary dealers that creates new currency by design.
Listen I'm on board with what you're saying about government, however the public sector creates fewer dollars via debt than the private sector.
Just look at the size of the dollar-denominated economy -- there are many times more dollars in circulation than there are historical U.S. Government deficits.
Or look at the housing bubble -- that money did not enter the economy via the government's financing mechanisms, it entered the economy via the private sector's financing mechanisms.
I thought you were talking banks using deposits to loan (Which is silly.) Sorry, I was thinking of something else. Anyways, I do agree that the public sector creates fewer dollars, however, we have to recognize that when loans are paid off, it all goes back to zero. Dollars are created and destroyed constantly, and the growth of dollars is slow when people aren't taking loans. Now, imagine if the government wasn't running a net deficit. Financial assets for the private sector, a liability for the government. I do like that you bring up the bubble, driven by an unsustainable increase in private sector debt and small government deficits not being able to adequately fill the gap, we got a horrific recession. Or how about the clinton surplus, which led to a recession in the early 2000's, and built up to the 07-08 recession.
It's all smoke and mirrors, just moving ones and zeros around from one account to another. Meanwhile, the people are losing take home income, because the government is moving ones and zeros from their accounts, and putting them into the accounts of the political and corporate friends of government politicians.
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