Moot
DP Veteran
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- Oct 11, 2006
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The left isn't worrying about it because no one should worry about it. The federal deficit is the amount of money in the economy. You pay the interest only so The Fed gets a return on the loan, but the rest doesn't really matter. It is spent through the economy and is retracted through interest rates. The reason why the government is able to spend indefinately is because the way the banking system works money is created out of thin air on a per loan basis. For as much money that is owed to The Fed, that amount is created as well as treasury bonds which can be used as an asset. The Fed is getting rediculously rich, banks are getting richer on a per loan basis through the creation of money and financial instruments. Meanwhile, money is pumped through the government in projects which in theory are for the best interest of the common good while adding money to the money supply to satisfy the increasing demand for money because of continual economic growth.
The debt isn't a big deal. What is a big deal is people not knowing how the banking sector works and the overall flow of money. As the debt increases public confidence will decrease. If the government prints money to pay it back, which is perfectly fine because the money is removed from the money supply because it is going to the banks. This will also essentially give banks more power, will also decrease confidence and affect trading. The way things work also undermines the whole system. Why does the government have unlimited credit when the average citizen does not? Why can banks and the government just create money to eliminate their debt and we cannot?
It's a sticky situation. But as long as things run and people get their products, services, and entertainment everything should be okay.
You seem to have forgotten the trillions in cash the wealthy are still sitting on. TRILLIONS. But you're right, money has to circulate but if trillions are being sucked out of the economy and just sat on, then the Feds have to pump money out of thin air into the economy to circulate to keep it going and check inflation.
We are a debt driven economy and the economy can't grow unless money circulates through borrowing. Thats just the way it is. So if trillions aren't being circulated and the banks don't lend, then businesses can't borrow or create jobs, then people don't have income to spend, then the economy spirals into a recession. So the Feds lend to banks to encourage them to lend to businesses and consumers because borrowing is what makes a debt economy grow.
The deficit is not the public debt, they are two different things. Currently the deficit is showing a budget surplus and the public debt is the lowest it's been since post WW2. Why? Because the government isn't spending on a war in Iraq and the stimulus kept people working and the Feds are lending to banks at near zero interest and the banks are loosening up their lending to business and home buyers and people feel more confident to borrow again and have money to spend and circulate in the economy.
So what do you think is going to pay down the public debt that the right is so worried about, a growing economy creating jobs and tax revenue coming in...or... the government stop spending to stimulate the economy which will put millions out of work and no tax revenue coming in? Could you pay your mortgage if you didn't have income coming in? Unless you're sitting on trillions then probably not.
It's the uncertaintly that makes investors and people nervous. Uncertainty if congress is going to stop spending to stimulate the economy........uncertainty if they are going to default on the debt.....uncertainty if they are going to rein in Wall Street....uncertainty if they are ever going to create jobs...uncertainty if they are going to shut down the government....uncertainty what monkey wrench they are going to throw into the economy next.
Congress is creating the uncertainty. Who controls congress? The right does. You say the left doesn't care about the debt? I say the right doesn't care about the economy. To quote James Carville... "It's the economy, stupid."