Debt Ceiling Keeps Receding; GOP Loses Another Issue

[Glen Contrarian]

Why? Government paid jobs don't help the economy. The economy needs jobs that can contribute to wealth building. That means private sector.

Really? Then how did we get out of the Great Depression? Remember, all those jobs in our build-up to and during World War II were taxpayer-funded. If government-paid jobs don't help the economy, then instead of getting us out of the Depression, we should have gone deeper into the Depression.

 

[fmw]

Really? Then how did we get out of the Great Depression?

The economy finally fixed itself.

Remember, all those jobs in our build-up to and during World War II were taxpayer-funded. If government-paid jobs don't help the economy, then instead of getting us out of the Depression, we should have gone deeper into the Depression.

I didn't suggest the war had anything to do with ending the depression. The reason the war didn't kill us is that we didn't go so far in debt to pay for it. We borrowed money from the public (war bonds) and paid back the debt quickly. People had to do with less in order to help pay for the war effort. It was a different America in those days.

 

[Kushinator]

The "Clinton surplus" was nothing but a shell game it is 100% impossible to have a surplus at the same time the debt increases.

Not really, no. There are other reasons to issue debt other than to finance a revenue short fall. For example, cost of borrowing would skyrocket if the supply of risk free securities were to suddenly dry up. Why? It would necessarily shift the security market lines in all capital asset pricing models (including various beta differentiation models) that are fundamental to financial modeling.

 

[Glen Contrarian]

The economy finally fixed itself.



I didn't suggest the war had anything to do with ending the depression. The reason the war didn't kill us is that we didn't go so far in debt to pay for it. We borrowed money from the public (war bonds) and paid back the debt quickly. People had to do with less in order to help pay for the war effort. It was a different America in those days.

Oh, the economy magically "fixed itself"! Never mind that in 1938 we were still in the Depression, and in 1939 FDR dramatically ramped up spending on the military and on heavy military industries. But maybe there were a couple of weeks in there that somebody waved a magic wand and made it all better before WWII.

Guy, if you'll research the Depression, you'll find that it was a 'double-dip' depression. Thanks to the stimulus measures taken by FDR immediately after he took office, by 1936 we were pretty much out of the Depression...but then the conservative wing of the Democratic Party in Congress - the Dixiecrats, who would be welcomed as brothers in today's Republican Party - forced FDR to institute austerity measures...and down we went into the Depression again. And we didn't begin digging our way out until the government began ramping up our industries in preparation for WWII.

 

[fmw]

Oh, the economy magically "fixed itself"! Never mind that in 1938 we were still in the Depression, and in 1939 FDR dramatically ramped up spending on the military and on heavy military industries. But maybe there were a couple of weeks in there that somebody waved a magic wand and made it all better before WWII.

Guy, if you'll research the Depression, you'll find that it was a 'double-dip' depression. Thanks to the stimulus measures taken by FDR immediately after he took office, by 1936 we were pretty much out of the Depression...but then the conservative wing of the Democratic Party in Congress - the Dixiecrats, who would be welcomed as brothers in today's Republican Party - forced FDR to institute austerity measures...and down we went into the Depression again. And we didn't begin digging our way out until the government began ramping up our industries in preparation for WWII.

Trust me, I've read books about it. I just don't agree with you.

 

[Kushinator]

We borrowed money from the public (war bonds) and paid back the debt quickly.

The U.S. has never paid back a penny of it's debt. We simply roll it over on a continuous basis.

 

[Glen Contrarian]

Trust me, I've read books about it. I just don't agree with you.

Funny thing about fact is, you might disagree with the facts, but that doesn't keep them from being facts. See "global warming".

 

[Glen Contrarian]

The U.S. has never paid back a penny of it's debt. We simply roll it over on a continuous basis.

Really? Perhaps you should take a look at what happened in the 1950s. After WWII, we had a higher federal debt (relatively speaking) than we do now...but we very nearly paid it all off by the end of the 1950s...and that was during a time that the top marginal tax rate was 90%.

 

[blaxshep]

Really? Perhaps you should take a look at what happened in the 1950s. After WWII, we had a higher federal debt (relatively speaking) than we do now...but we very nearly paid it all off by the end of the 1950s...and that was during a time that the top marginal tax rate was 90%.

So you support a 90% tax?

 

[Kushinator]

Really? Perhaps you should take a look at what happened in the 1950s. After WWII, we had a higher federal debt (relatively speaking) than we do now...but we very nearly paid it all off by the end of the 1950s...and that was during a time that the top marginal tax rate was 90%.

But there was never a pay-down of any debt. The economy grew while inflation deteriorated the nominal amount of debt in terms of GDP.

For example, the U.S. cost of WWII in nominal terms was roughly $243 billion, of which the U.S. accumulation of fiscal deficits from 1940-1944 was $130 billion. In relative terms, the fiscal deficit for February 2013 was $203 billion!

 

[Glen Contrarian]

But there was never a pay-down of any debt. The economy grew while inflation deteriorated the nominal amount of debt in terms of GDP.

For example, the U.S. cost of WWII in nominal terms was roughly $243 billion, of which the U.S. accumulation of fiscal deficits from 1940-1944 was $130 billion. In relative terms, the fiscal deficit for February 2013 was $203 billion!

Crap. Okay, I looked again and you're right that there never was a truly substantial pay-down of debt. I'm seeing different numbers from different (usually reliable) sites, but the real improvements were in the percentage of debt-to-GDP...and when that ratio is compared to who was in charge at the time (while bearing in mind when the economic downturns were), the success of Keynesian economics is pretty obvious:

 

[WhyNotWhyNot]

Oh, the economy magically "fixed itself"! Never mind that in 1938 we were still in the Depression, and in 1939 FDR dramatically ramped up spending on the military and on heavy military industries. But maybe there were a couple of weeks in there that somebody waved a magic wand and made it all better before WWII.

Guy, if you'll research the Depression, you'll find that it was a 'double-dip' depression. Thanks to the stimulus measures taken by FDR immediately after he took office, by 1936 we were pretty much out of the Depression...but then the conservative wing of the Democratic Party in Congress - the Dixiecrats, who would be welcomed as brothers in today's Republican Party - forced FDR to institute austerity measures...and down we went into the Depression again. And we didn't begin digging our way out until the government began ramping up our industries in preparation for WWII.

I think you give too much credit to the effects of the economic actions implemented in the FDR era and far to little credit to the effects of his leadership. FDR drove the nation to resolve to overcome the depression - to work together, to go drive forward no matter how hard, to overcome hardship. Then he teamed with Winston Churchill to do the same for the free world. That is the only way to "fix the economy" and it will not happen anytime soon (no matter what technical economic actions we may try) because electioneering by "divide and conquer" has replaced unifying national leadership for the last 30+ years.

The 20th century was blessed with a few exceptional leaders in the Presidency - Teddy Roosevelt, FDR, Eisenhower, JFK, (and marginally Reagan). These were people that had vision, people that enhanced the national pursuit of happiness, people that caused the population to pull together to overcome a challenge... The important things that they did had nothing to do with legislation or monetary policy.

In another of your posts you point out that the national debt was paid down following WWII. That is because FDR incited the nation to buy War Bonds for the purpose of "saving the world". It was just one of the enormous sacrifices that nation made together. Those War Bonds spiked the national debt with the promise that the money would be paid back when the goal was achieved. Eisenhower made sure that FDR's promise was kept.

Today we borrow money as a matter of habit. There is no unifying cause with a defined conclusion that we are pursuing with the borrowed money - and hence there is no promise to pay back the loan when "success" is achieved

 

[Kushinator]

Crap. Okay, I looked again and you're right that there never was a truly substantial pay-down of debt.

In order to pay down debt, the U.S. Treasury would have to actively repurchase non-mature issues in the secondary market or not issue any more debt while running a surplus. To my knowledge, this has never occurred.

 

[blaxshep]

... the success of Keynesian economics is pretty obvious:

Keynesian economics has been a global failure:

The central banks have been working straight from the playbook that John Maynard Keynes devised in the 1930s, and it has been a dismal failure. They are competing for a stagnant volume of world trade. Quantitative easing has shifted the pain around the world, but it hasn’t restored growth. Once again, the world has to learn the hard way that Keynesian economics fails. It’s disheartening that no major political party anywhere in the world has articulated a clear alternative.

Spengler » The Global Failure of Keynesianism

 

[fmw]

Funny thing about fact is, you might disagree with the facts, but that doesn't keep them from being facts. See "global warming".

What makes people confuse fact with opinion?

 

[fmw]

The U.S. has never paid back a penny of it's debt. We simply roll it over on a continuous basis.

I think you'll find that all the war bonds have been redeemed.

 

[head of joaquin]

But there was never a pay-down of any debt. The economy grew while inflation deteriorated the nominal amount of debt in terms of GDP.

For example, the U.S. cost of WWII in nominal terms was roughly $243 billion, of which the U.S. accumulation of fiscal deficits from 1940-1944 was $130 billion. In relative terms, the fiscal deficit for February 2013 was $203 billion!

Krugman and James Hamilton sparred over this issue.

http://krugman.blogs.nytimes.com/2009/08/28/the-burden-of-debt/?_r=0

Econbrowser: $9 trillion-- what, me worry?

It did take a long time to pay off the war debt (I believe it wasn't fully paid until the 80s). But leaving that aside the factors that resulted in the debt becoming manageable apply to the current situation (pace Hamilton). Namely, the stabilization of the economy and end of Bush's expensive wars means that the budget can be reduced significantly in coming years, while inflation and growth will do the rest, just as they did in the post WWII situation. Add that to the fact that Europe is in austerity doldrums, and the fundamental parallels are quite striking.

 

[Kushinator]

I think you'll find that all the war bonds have been redeemed.

With the proceeds from auctioning various treasury securities.

 

[Kushinator]

Keynesian economics has been a global failure:

The central banks have been working straight from the playbook that John Maynard Keynes devised in the 1930s, and it has been a dismal failure. They are competing for a stagnant volume of world trade. Quantitative easing has shifted the pain around the world, but it hasn’t restored growth. Once again, the world has to learn the hard way that Keynesian economics fails. It’s disheartening that no major political party anywhere in the world has articulated a clear alternative.

Spengler » The Global Failure of Keynesianism

Keynesianism is the protector of the market system. In fact, if you are a true supporter of markets, you must be a supporter of Keynesianism (true socialists must be anti-Keynesian by definition).

 

[blaxshep]

Keynesianism is the protector of the market system. In fact, if you are a true supporter of markets, you must be a supporter of Keynesianism (true socialists must be anti-Keynesian by definition).

Huh? I am a libertarian and as such I am against any government involvement in the free market.

Keynesianism does not protect the market, it artificially inflates it.

Socialist would be all for the government running the market, I don't get where you would think otherwise.

 

[head of joaquin]

Huh?
Keynesianism does not protect the market, it artificially inflates it..

Jesus.

 

[Kushinator]

Socialist would be all for the government running the market, I don't get where you would think otherwise.

You confuse Keynesianism with government running the market. Instead, it prevents financial crises from steering the populace towards a redefinition of property rights that paves the way toward full scale worker controlled means of production.

 

[Master PO]

Yeah, we need a jobs bill. Too bad the GOP has blocked it.

NEXT RIGHTWING MEME!

where is the job creation, enumerated power in the constitution.

focus.... focus.....you dont see it do you?

 

[head of joaquin]

where is the job creation, enumerated power in the constitution.

focus.... focus.....you dont see it do you?

Where is a border patrol an enumerated power in the constitution?

Jesus, it's like fifth grade in here sometimes.

 

[Master PO]

Where is a border patrol an enumerated power in the constitution?

Jesus, it's like fifth grade in here sometimes.

do you mean immigration or secure against invasion.....Jesus, cant you be clear?