Balancing the Budget Wouldn't Be That Difficult

[JohnfrmClevelan]

No we don’t. The debt and deficits we have now are exponentially more than we’ve had in the past.

Yet the economy remains strong. You can't refute that. And our currency is holding its value relative to other currencies. None of these things that you fear are coming to pass. People have been worrying about the same things for 45 years, ever since Reagan exploded the debt (which was good for the economy, btw).

You can’t just print your way out of debt. That money has to have some sort of backing. The full faith and CREDIT of the US is what backs it, but as we get downgraded, they credit is diminished. Which is why ever increasing debt is not sustainable.

Creating more bonds isn't "printing your way out of debt." First of all, it doesn't extinguish any debt. Second, it's not money printing. That pile of bonds that you call "debt" is held as an asset by the private sector, the very people that make up the country that you insist is in debt. The pile of bonds is always growing (net savings out of income), so there are no net dollars from savings affecting the economy. It just sits there, like a compost heap in the backyard, doing nothing. It is perfectly sustainable.

No it isn’t. The limits on fiat currency is the full faith and credit in the government behind it. As we get downgraded, it diminishes.

Has the value of your dollars diminished because of the downgrade? Mine neither.

"Full faith and credit" simply means that the government is obligated to pay its bills. They always meet their bond obligations, and their checks never bounce. There is nothing magical about the phrase, and there is nothing about credit ratings that can change the government's ability to meet their obligations.

 

[rahl]

Yet the economy remains strong.

Not really. 2-3% annual GDP growth isn’t strong.

You can't refute that.

I have refuted that.

And our currency is holding its value relative to other currencies.

Not really. As we were just downgraded.

None of these things that you fear are coming to pass.

They are objectively coming to pass. It’s why we just got downgraded.

People have been worrying about the same things for 45 years, ever since Reagan exploded the debt (which was good for the economy, btw).

No, it wasn’t good for the economy. All he did was slash revenues and explode the debt. There was no magical increase in economic output as a result.

Creating more bonds isn't "printing your way out of debt."

First of all, it doesn't extinguish any debt. Second, it's not money printing. That pile of bonds that you call "debt" is held as an asset by the private sector, the very people that make up the country that you insist is in debt. The pile of bonds is always growing (net savings out of income), so there are no net dollars from savings affecting the economy. It just sits there, like a compost heap in the backyard, doing nothing. It is perfectly sustainable.

No, it isn’t sustainable.

Has the value of your dollars diminished because of the downgrade? Mine neither.

Yes.

"Full faith and credit" simply means that the government is obligated to pay its bills.

No. It means the government is ABLE to pay its bills.

They always meet their bond obligations, and their checks never bounce. There is nothing magical about the phrase, and there is nothing about credit ratings that can change the government's ability to meet their obligations.

If we can’t borrow money because our credit is bad, we can’t pay our debts. You can’t print your way out of debt. This is very basic stuff. MMT is complete hogwash.

 

[JohnfrmClevelan]

If we can’t borrow money because our credit is bad, we can’t pay our debts. You can’t print your way out of debt. This is very basic stuff. MMT is complete hogwash.

Do you remember the last couple of times our credit rating was downgraded? 2011 and 2023? I don't remember, either, because nothing happened.

 

[rahl]

Do you remember the last couple of times our credit rating was downgraded? 2011 and 2023? I don't remember, either, because nothing happened.

Meanwhile, we can’t print our way out of debt. As the US credit rating decreases, the value of the dollar also decreases. At some point, it will no longer be the world’s reserve currency. This is why endless runaway deficit spending and debt is not sustainable. This is basic stuff.

 

[JohnfrmClevelan]

Meanwhile, we can’t print our way out of debt. As the US credit rating decreases, the value of the dollar also decreases. At some point, it will no longer be the world’s reserve currency. This is why endless runaway deficit spending and debt is not sustainable. This is basic stuff.

Explain what you mean when you say "print our way out of debt." The more operational detail, the better.

The reason I brought up our past two downgrades is because nothing happened. The USD held its value, we had no problem selling treasuries, and the dollar remained the world's dominant reserve currency. The Euro is really the only other option, and they comprise under 20% of total reserves. You are way too worried about this credit downgrade. I would have downgraded us too, just because of trump's unpredictability and stupidity.

 

[rahl]

Explain what you mean when you say "print our way out of debt." The more operational detail, the better.

What is confusing you? I can’t be any clearer than I have been.

The reason I brought up our past two downgrades is because nothing happened. The USD held its value, we had no problem selling treasuries, and the dollar remained the world's dominant reserve currency. The Euro is really the only other option, and they comprise under 20% of total reserves. You are way too worried about this credit downgrade. I would have downgraded us too, just because of trump's unpredictability and stupidity.

Runaway, exponentially increasing debt is not sustainable. To claim otherwise is simply a complete detachment from reality.

 

[JohnfrmClevelan]

What is confusing you? I can’t be any clearer than I have been.

Yes you can, if you truly understand what you are arguing for. Do you want the U.S. to be "out of debt," meaning we extinguish our outstanding bonds? Or do you want the Fed to buy up bonds in exchange for reserves, thereby removing the "debt" but not the liabilities?

Runaway, exponentially increasing debt is not sustainable. To claim otherwise is simply a complete detachment from reality.

If it were actual debt, I'd agree with you. In fact, if it were actual debt, we probably would have collapsed by now.

Good thing it's not real debt, eh?

 

[rahl]

Yes you can, if you truly understand what you are arguing for. Do you want the U.S. to be "out of debt," meaning we extinguish our outstanding bonds? Or do you want the Fed to buy up bonds in exchange for reserves, thereby removing the "debt" but not the liabilities?

We are way past being “out of debt”. I’ve never argued for paying off our current national debt.

If it were actual debt, I'd agree with you.

It is actual debt. Your agreement has no bearing on reality.

In fact, if it were actual debt, we probably would have collapsed by now.

It is actual debt, and we haven’t collapsed yet because we (currently at least) hold the world’s reserve currency, and control international waters and have the most powerful military on the planet.

Good thing it's not real debt, eh?

Objectively real debt. The economic ignorance of MMT proponents is hilarious.

 

[JohnfrmClevelan]

We are way past being “out of debt”. I’ve never argued for paying off our current national debt.

It is actual debt. Your agreement has no bearing on reality.

It is actual debt, and we haven’t collapsed yet because we (currently at least) hold the world’s reserve currency, and control international waters and have the most powerful military on the planet.

Objectively real debt. The economic ignorance of MMT proponents is hilarious.

OK. Who is the government borrowing their own currency from, and why? Where did those dollars come from in the first place?

Do you agree that the government has the power to create and spend its own currency?

 

[rahl]

OK. Who is the government borrowing their own currency from, and why? Where did those dollars come from in the first place?

Lots of places. Other countries for one.

Do you agree that the government has the power to create and spend its own currency?

You can’t print your way out of debt.

 

[AConcernedCitizen]

Why would we want to balance the budget in the first place?

Why not target deficit spending to optimize a balance between employment and inflation in the near term, with debt-to-GDP anchors for longer term sustainability?

Deficits can be run sustainably, and can be a very useful tool. Why would we want to get rid of them altogether?

 

[rahl]

Why would we want to balance the budget in the first place?

Is this a serious question?

Why not target deficit spending to optimize a balance between employment and inflation in the near term, with debt-to-GDP anchors for longer term sustainability?

Because trillion dollar deficits are not sustainable.

Deficits can be run sustainably, and can be a very useful tool.

In emergencies or recessions, sure. In a healthy economy, absolutely not.

Why would we want to get rid of them altogether?

Because you can’t borrow your way out of debt, nor continue to spend more than you take in indefinitely. You aim for a surplus or deficit neutral budget in good economic times, so you can afford to deficit spend in bad economic times or emergencies. Running trillion dollar deficits non stop no matter where, leads to total fiscal collapse.

 

[JohnfrmClevelan]

Lots of places. Other countries for one.

Other countries can't create USD.

Where did those American (hint) dollars come from in the first place?

You can’t print your way out of debt.

You're in over your head here.

 

[rahl]

Other countries can't create USD.

Strawman

Where did those American (hint) dollars come from in the first place?

Full faith and credit of the US.

You're in over your head here.

I love MMT proponents. The economic ignorance and fiscal detachment from reality is hilarious.

 

[JohnfrmClevelan]

Because you can’t borrow your way out of debt, nor continue to spend more than you take in indefinitely. You aim for a surplus or deficit neutral budget in good economic times, so you can afford to deficit spend in bad economic times or emergencies. Running trillion dollar deficits non stop no matter where, leads to total fiscal collapse.

Do you think that there are a limited number of dollars or something? Because that's what this sounds like.

In reality, there is a continuous one-way flow of dollars from the government - who creates them - to the private sector. Most of these end up converted to bonds. It's not complicated. And it's not debt, either.

 

[rahl]

Do you think that there are a limited number of dollars or something?

Uh, yes.

Because that's what this sounds like.

Because that’s reality.

In reality, there is a continuous one-way flow of dollars from the government - who creates them - to the private sector.

No there isn’t.

Most of these end up converted to bonds. It's not complicated. And it's not debt, either.

Of course it’s debt.

MMT proponents are almost as whacky as libertarians.

 

[JohnfrmClevelan]

Uh, yes.

Wow.

So how many USD did we start this country with? And how many do we have now?

 

[rahl]

Wow.

So how many USD did we start this country with? And how many do we have now?

MMT proponents are almost as whacky as libertarians.

I have sufficiently refuted your premise. You can continue dwelling in your own make believe world. I will remain here in reality.

 

[JohnfrmClevelan]

MMT proponents are almost as whacky as libertarians.

I have sufficiently refuted your premise. You can continue dwelling in your own make believe world. I will remain here in reality.

You don't understand where money comes from, do you?

 

[rahl]

You don't understand where money comes from, do you?

I’m schooling you on where it comes from, and why it’s not infinite and why you can’t print your way out of debt. But, as an MMT proponent, you dwell outside fiscal and economic reality.

 

[AConcernedCitizen]

Is this a serious question?

Yes.

Because trillion dollar deficits are not sustainable.

Why not? Suppose we were to maintain an annual deficit of $1 trillion. As the GDP continues to grow, our debt-to-GDP ratio will shrink. How is that not sustainable?

In emergencies or recessions, sure. In a healthy economy, absolutely not.

Why not? Could you show your work here? Why shouldn’t deficit spending be used as a tool to close the employment gap?

Because you can’t borrow your way out of debt,

Why would we need to get out of debt?

nor continue to spend more than you take in indefinitely.

That’s just not true. Government debt is sustainable so long as economic growth outpaces the effective interest rate on the debt.

You aim for a surplus or deficit neutral budget in good economic times, so you can afford to deficit spend in bad economic times or emergencies.

That doesn’t sound like a great plan. Destroy the economy as soon as things are going well? Why?

Valve doesn’t need to save up Steam points so it will have enough Steam points to give to gamers later. Instead, Valve needs to balance the utility from Steam points against maintaining the value of Steam points.

They don’t need to worry about saving Steam points for a rainy day.

Valve can and does issue more Steam points each year than the amount of Steam points redeemed by users each year.

Why do you suppose they haven’t had a total Steam point collapse yet?

 

[rahl]

Yes.



Why not?

When you ask this, we know you aren’t serious.

Suppose we were to maintain an annual deficit of $1 trillion. As the GDP continues to grow, our debt-to-GDP ratio will shrink. How is that not sustainable?



Why not? Could you show your work here? Why shouldn’t deficit spending be used as a tool to close the employment gap?



Why would we need to get out of debt?



That’s just not true. Government debt is sustainable so long as economic growth outpaces the effective interest rate on the debt.



That doesn’t sound like a great plan. Destroy the economy as soon as things are going well? Why?

Valve doesn’t need to save up Steam points so it will have enough Steam points to give to gamers later. Instead, Valve needs to balance the utility from Steam points against maintaining the value of Steam points.

They don’t need to worry about saving Steam points for a rainy day.

Valve can and does issue more Steam points each year than the amount of Steam points redeemed by users each year.

Why do you suppose they haven’t had a total Steam point collapse yet?

 

[AConcernedCitizen]

When you ask this, we know you aren’t serious.

Why wouldn’t I be serious? Do you have an actual argument for why trillion dollar deficits are not sustainable? Or any nominal value of deficit for that matter?

As long as a reasonable debt-to-GDP ratio is maintained, deficits are sustainable. It doesn’t matter whether we are talking about billions, trillions, or quadrillions. It is the proportion that matters.

 

[rahl]

Why wouldn’t I be serious?

Because you pretended to be ignorant and asked a retarded question you don’t actually believe.

Do you have an actual argument for why trillion dollar deficits are not sustainable? Or any nominal value of deficit for that matter?

As long as a reasonable debt-to-GDP ratio is maintained, deficits are sustainable. It doesn’t matter whether we are talking about billions, trillions, or quadrillions. It is the proportion that matters.

 

[AConcernedCitizen]

Because you pretended to be ignorant

I’m not feigning ignorance at all. In fact, I will readily admit to being much more knowledgeable on this subject than yourself.

and asked a retarded question you don’t actually believe

I’m not sure you really understand how questions work. They aren’t something one ‘believes.’

Also, I generally find ableist slurs in poor taste. Though I suppose if it is a reappropriation of the term, that’s alright.