Do you care about the national debt?

[aociswundumho]

I guess they believe inflation under control is better than deflation.

No, MMT isn’t just about avoiding deflation, it’s about weaponizing inflation as policy and calling the resulting hidden tax "modern".

The great depression was a result of big deflation.

Deflation didn’t cause the Great Depression, but it definitely made it much worse. Thanks central bankers, stellar job as always.

 

[cpwill]

Since WW2, the world does as the USA does.

Since the Napoleonic Wars, Britain ruled the seas. Since 1917, the Soviet Union has always existed. Housing always goes up 5%. Global pandemics are a thing of the past, and its ridiculous to think that people will want a computer in their houses.

Systems change. We are talking about the ending of the current system as the consequence of decades of US overspending.

And some of the rest of the world, is buying our bonds. We hurt, they hurt.

They will indeed hurt - we will hurt far worse.

There's nothing we can do about congress and their spending and debt.
Voters don't care. Congress doesn't care.

That is probably true. We will insist this isn't going to happen and people telling us it will are all mean until it does happen, at which point we as a people will angrily demand to know Why No One Told Us This Was Coming.

See the last 30 yrs. Or go back to Reagan even.

If they flee the $$$, where do they get a more secure return?

Uh. What investments give a greater than, say, a guaranteed 20% loss every year, compounding?

Lots of places.

 

[JohnfrmClevelan]

Elsewhere, the same as when any other country loses the ability to borrow at reasonable rates.

Countries don't "go elsewhere." They have dollars as a result of a trade surplus with the U.S. The only thing they can do with those dollars is buy dollar-denominated goods, buy Treasuries (or other dollar-denominated bonds), or trade them, which just puts somebody else in their shoes.

There is always a market for safe investments with a low return, because cash brings no return.

Yeah. That's part of what we are talking about, here. When the rest of the world notices that we are trying to inflate our way out of our debt, they will flee the dollar (and US Bonds) because it will be guaranteed to lose most of (if not almost all of) it's value. That's what we are headed towards if we don't enact deeply painful cuts and tax increases.

The whole idea of "inflating our way out of debt" is just wrong. It's not a real thing. Inflation doesn't make government debt any easier or harder for the government to pay. There is no value tradeoff, as there is with long-term household debt, like a mortgage that becomes easier to pay as your wages increase over time. That's just not true of the government. There is no real cost to the government to create more money, so it really doesn't matter how much interest they need to pay. They can do it.

Does the large pile of treasuries cause inflation? No.
Does the large pile of treasuries affect interest rates? Surprisingly, no.
Does deficit spending cause inflation? Not as long as the economy can handle the demand. It doesn't increase the number of dollars.
Is there any reason to think that the dollar will lose value relative to other currencies? Yes, mostly because of tariffs are making things more expensive, dollar-wise, in both directions, and especially relative to other currencies that are not burdened.
Is it reasonable to expect a total collapse of the dollar? No. We are still a major exporter with a diversified economy.
Will austerity (spending cuts and tax increases) fix any of these perceived problems? No, austerity just hurts GDP.

If you are worried about the stability of the dollar, watch the economy, not the debt. If the economy is OK, the dollar will be OK. The biggest potential problem we have right now is the possibility of decreased foreign trade and decreased domestic consumption due to tariffs.

 

[cpwill]

Countries don't "go elsewhere."

They do indeed, as they have done repeatedly before

They have dollars as a result of a trade surplus with the U.S. The only thing they can do with those dollars is buy dollar-denominated goods, buy Treasuries (or other dollar-denominated bonds), or trade them, which just puts somebody else in their shoes.

There is always a market for safe investments with a low return, because cash brings no return.

Yeah that's the point. They aren't going to be safe investments, because they will be repayed with devalued dollars.

The whole idea of "inflating our way out of debt" is just wrong. It's not a real thing. Inflation doesn't make government debt any easier or harder for the government to pay. There is no value tradeoff, as there is with long-term household debt, like a mortgage that becomes easier to pay as your wages increase over time. That's just not true of the government. There is no real cost to the government to create more money, so it really doesn't matter how much interest they need to pay. They can do it.

Does the large pile of treasuries cause inflation? No.
Does the large pile of treasuries affect interest rates? Surprisingly, no.
Does deficit spending cause inflation? Not as long as the economy can handle the demand. It doesn't increase the number of dollars.
Is there any reason to think that the dollar will lose value relative to other currencies? Yes, mostly because of tariffs are making things more expensive, dollar-wise, in both directions, and especially relative to other currencies that are not burdened.
Is it reasonable to expect a total collapse of the dollar? No. We are still a major exporter with a diversified economy.
Will austerity (spending cuts and tax increases) fix any of these perceived problems? No, austerity just hurts GDP.

If you are worried about the stability of the dollar, watch the economy, not the debt. If the economy is OK, the dollar will be OK. The biggest potential problem we have right now is the possibility of decreased foreign trade and decreased domestic consumption due to tariffs.

Sure the basic laws of economics don't count anymore, because that would be inconvenient.

Can we print 360 Trillion dollars and just make everyone a trillionaire without inflation? No

We cannot print our way out of massive debt without hyperinflation. That is what that is and means.

 

[JohnfrmClevelan]

They do indeed, as they have done repeatedly before

They will no longer accept American business, which we pay for with American dollars? Nobody turns down business.

Yeah that's the point. They aren't going to be safe investments, because they will be repayed with devalued dollars.

If dollars do lose their value, it will have nothing to do with treasuries and everything to do with the economy relative to other economies.

Sure the basic laws of economics don't count anymore, because that would be inconvenient.

You are trying to apply the basic laws of household economics to a country with its own currency. Those "basic laws" do not apply, as I explained.

Can we print 360 Trillion dollars and just make everyone a trillionaire without inflation? No

We cannot print our way out of massive debt without hyperinflation. That is what that is and means.

Why would we need to "print our way out of debt"? People are very happy to hold treasuries as savings instruments.

If you are going to invent a doomsday scenario, make it make sense. There are plausible scenarios where our economy takes a hit, like this us-against-the-world tariff trade war. But the mechanics of bond issuance are pretty easy to follow, and pretty hard to eff up. I can't really think of any advanced economy that went belly-up based on your fears.

 

[Felis Leo]

If you are on this list:

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• @Phys251
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• @longview
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• @craig
• @SuperDS77
• @Mr Natural

and supported Biden's Budget-busting bills because then it was your guy doing the spending...

....or you demonize (or support demonizing) anyone who attempts entitlement reform....

....you voted incorrectly.

I have said before and I will say it again: we need to raise taxes and pass a national wealth tax.

 

[cpwill]

They will no longer accept American business, which we pay for with American dollars? Nobody turns down business.

They will not accept markedly less in exchange for the value of their goods and services, and will instead demand inflation-adjusted prices (and then seek to get rid of the dollars as fast as possible).

If dollars do lose their value, it will have nothing to do with treasuries and everything to do with the economy relative to other economies.

Dollars will be losing their value because we will be massively expanding their supply - that will indeed have destructive economic effects, however, that does not make it okay that we will also see a loss in overseas willingness to purchase US dollar-denominated public debt.

You are trying to apply the basic laws of household economics to a country with its own currency.

I am not. I am pointing to the basic economics of what has happened every time a country has tried what you propose: Hyperinflation and Destruction.

Why would we need to "print our way out of debt"?

Because in the scenario asked for, we proved unwilling to deeply reduce spending and raise taxes.

People are very happy to hold treasuries as savings instruments.

Until holding those treasuries guarantee large losses, in which case they no longer will be.

Assuming that current conditions are just some kind of automatic God-decreed Default in the face of the those conditions changing dramatically is a bad plan. You are standing on the walls of Rome in 410 AD insisting that Rome Has Ruled The World For Hundreds Of Years And That's Not Going To Change.

If you are going to invent a doomsday scenario, make it make sense.

I'm not inventing a doomsday scenario. Every major institution, study group, and resource that has looked at our long term projections has reached the exact same broad conclusion: our current path is unsustainable.

As in: It Will Not Be Sustained.

We can:

1. deeply cut spending (which isn't likely), or​

2. we can painfully cut spending and painfully raise taxes, or​

3. we can tell ourselves that it's Silly And Mean Of Anyone to insist we make hard choices, and try to print our way out of it, causing massively-destructive hyperinflation.​

Those are the options we have now. The required pain will only get worse as we go forward.

 

[JohnfrmClevelan]

Dollars will be losing their value because we will be massively expanding their supply - that will indeed have destructive economic effects, however, that does not make it okay that we will also see a loss in overseas willingness to purchase US dollar-denominated public debt.

Explain how and why this would happen. Through what mechanism would the government expand the money supply?

I am not. I am pointing to the basic economics of what has happened every time a country has tried what you propose: Hyperinflation and Destruction.

Give me one example of a country that has tried whatever it is you think I'm proposing here.

Because in the scenario asked for, we proved unwilling to deeply reduce spending and raise taxes.

Are you suggesting that we extinguish government liabilities, or just replace bonds with dollars? Then tell me why we should do either one.

 

[cpwill]

Explain how and why this would happen. Through what mechanism would the government expand the money supply?

Through ever-increasing debt-fueled deficit spending, supported by the Fed.

Give me one example of a country that has tried whatever it is you think I'm proposing here.

Enjoy?

We just finished a minor lesson in this when the COVID expansions of government spending combined with delayed consumption and disrupted supply chains to produce painful - but (again) relatively minor - inflation.

Are you suggesting that we extinguish government liabilities, or just replace bonds with dollars? Then tell me why we should do either one.

I think we should reduce long term unfunded government liabilities through structural reform to our largest spending programs (including cuts that are painful, including to programs and activities I like), and increase tax revenues (though we should seek to do so in the least disruptive manner possible), and I think we should start doing it now.

We should do this because it is better than

 

[JohnfrmClevelan]

Through ever-increasing debt-fueled deficit spending, supported by the Fed.

Deficit spending doesn't expand the money supply. I have explained this a number of times already.

Enjoy?

So you think I'm proposing that America redistributes farmland to people who don't know how to farm? Or we become overly dependent on the oil industry, and wait for the price of oil to crash? Because those are the type of large drops in production, real or de facto, that precipitate high inflation.
https://www.investopedia.com/articles/personal-finance/122915/worst-hyperinflations-history.asp

We just finished a minor lesson in this when the COVID expansions of government spending combined with delayed consumption and disrupted supply chains to produce painful - but (again) relatively minor - inflation.

That expansion of government spending still didn't equal the loss of private sector activity. The government didn't overwhelm the economy's ability to meet demand, except in temporary, and understandable, ways, like sudden demand for N95 masks and ventilators - neither of which really made a dent in CPI. COVID's effects on supply chains and production were the problem.

I think we should reduce long term unfunded government liabilities through structural reform to our largest spending programs (including cuts that are painful, including to programs and activities I like), and increase tax revenues (though we should seek to do so in the least disruptive manner possible), and I think we should start doing it now.

Any cuts in govt. spending are cuts in income for somebody. That comes right off the top of GDP. Tax increases aren't such a problem, as long as the government doesn't run a surplus. But shrinking the economy in the name of austerity isn't going to help anything. It's just going to lead to more deficit spending in the form of a recession package.

We run deficits because people save part of their income. Coupled with our sizeable trade deficit, that makes deficit spending structurally necessary. If we don't, the economy shrinks.

 

[cpwill]

Deficit spending doesn't expand the money supply. I have explained this a number of times already.

Ah. So the Federal Reserve literally expanding the money supply by creating dollars and giving them to the US government to spend does not increase the money supply?

So you think I'm proposing that America redistributes farmland to people who don't know how to farm? Or we become overly dependent on the oil industry, and wait for the price of oil to crash? Because those are the type of large drops in production, real or de facto, that precipitate high inflation.

No. I think you and the other MMTers' are proposing we can print money indefinitely with no consequences, and that this is both repeatedly disproven by history... and also, like, kinda nuts.

That expansion of government spending still didn't equal the loss of private sector activity. The government didn't overwhelm the economy's ability to meet demand, except in temporary, and understandable, ways, like sudden demand for N95 masks and ventilators - neither of which really made a dent in CPI. COVID's effects on supply chains and production were the problem.

No, supply chain issues were part of the problem, and a major part of why we got inflation was because the government started borrowing trillions of dollars and just sending it to people. We wound up with fewer goods and more dollars at the same time.

Any cuts in govt. spending are cuts in income for somebody. That comes right off the top of GDP.

The portion of income that becomes consumption, yes.

However, here:

Tax increases aren't such a problem, as long as the government doesn't run a surplus. But shrinking the economy in the name of austerity isn't going to help anything. ... that makes deficit spending structurally necessary. If we don't, the economy shrinks.

You are forgetting that government does not create value; it redistributes it via taxing/borrowing and spending/lending. This is the broken window fallacy of assuming that, if government does not tax or borrow funds, they would not otherwise exist. The lost income you are pointing to becomes income for someone else instead.

However, yes, it's going to be painful. Mostly that will be because irresponsible decisions made over decades will catch up with us, but also because political incentives will require excess tax hikes relative to spending cuts, and we will harm growth when we need to protect it.

We run deficits because people save part of their income.

No. We run deficits because we spend more than we bring in from tax revenue. At current, our bonds that result from this are a fairly safe place for folks to park their savings.

Coupled with our sizeable trade deficit, that makes deficit spending structurally necessary.

Our trade deficit also does not make deficit spending structurally necessary. As above, this is the fallacy of assuming that, if holders of dollars did not use them to purchase US bonds, those dollars would cease to exist.

If we don't, the economy shrinks.

How's Argentina doing?

 

[JohnfrmClevelan]

Ah. So the Federal Reserve literally expanding the money supply by creating dollars and giving them to the US government to spend does not increase the money supply?

The Fed doesn't create new reserves when the govt. deficit spends. Treasury issues bonds, the PS (the primary dealers, actually) buy them with pre-existing reserves, and the government spends those old reserves back into the economy. No increase in dollars. We don't deficit spend without issuing bonds.

The Fed, in a completely separate operation, can adjust the supply of reserves up or down as needed by buying or selling bonds to/from their own portfolio. When the Fed buys bonds in exchange for newly-created reserves, this is called "money printing." The last time they did this to any great degree was QE, when they bought up treasuries and MBSs, to little effect, except to lower the overnight rate. Then they switched to paying IOR to control the base rate.

No. I think you and the other MMTers' are proposing we can print money indefinitely with no consequences, and that this is both repeatedly disproven by history... and also, like, kinda nuts.

I just explained the mechanics of funding deficit spending above, and it's the correct explanation (and the MMT explanation). Printing money has nothing to do with MMT, and we don't do that anyway. And historically, you won't find any examples of a government deficit spending its way to hyperinflation without a serious underlying economic problem (which I also explained). Examples of countries printing up tons of money is always precipitated by very high inflation caused by real economic problems that affect trade.

No, supply chain issues were part of the problem, and a major part of why we got inflation was because the government started borrowing trillions of dollars and just sending it to people. We wound up with fewer goods and more dollars at the same time.

Like I said before, the amount that the government gave to people was less than the normal private sector contribution. Most of that money went to paying rent and food, same as it would have if people were still working. What got more expensive because of too-high demand? Toilet paper? Bleach? Nothing major. Companies raised prices higher than necessary because they are companies, and companies are greedy.

The portion of income that becomes consumption, yes.

You are forgetting that government does not create value; it redistributes it via taxing/borrowing and spending/lending. This is the broken window fallacy of assuming that, if government does not tax or borrow funds, they would not otherwise exist. The lost income you are pointing to becomes income for someone else instead.

This is just incorrect. The government is the economy's biggest customer, plus they are productive - just not in a putting-products-on-shelves way. Government employees earn their money doing useful stuff.

And while taxes are a redistribution, deficit spending is a net addition to GDP. Deficit spending results in a net increase in financial assets (treasuries) held by the private sector.

Lost income is just that - a loss of GDP. It is not anyone else's gain. Don't make the mistake of conflating money with income. You can have high incomes with a low money supply and vice versa. The only relationship is that newly-created financial assets (treasuries and bank-created loans) generally represent increased income. Increased debt is somebody else's increased income, unless the borrower just sits on the loan and doesn't spend it.

 

[JohnfrmClevelan]

No. We run deficits because we spend more than we bring in from tax revenue. At current, our bonds that result from this are a fairly safe place for folks to park their savings.

In order for the economy to just stay the same size, we need to sell all production. If you have a $20 trillion economy, you have a national income of $20 trillion, enough to consume all production. If people save 5% of their income, you are left with just $19 trillion to spend, leaving a demand gap. That demand gap is normally filled (and then some) with increased bank loans and federal deficit spending. That is why savings from income necessitate deficit spending. A year or two ago, deficit spending accounted for 6.4% of GDP, but growth was only about 2.8%. Remove that deficit spending, and the economy shrinks.

Our trade deficit also does not make deficit spending structurally necessary. As above, this is the fallacy of assuming that, if holders of dollars did not use them to purchase US bonds, those dollars would cease to exist.

Again, don't conflate dollars with income. And the trade deficit is just savings by foreign parties, with the same (negative) effect on our GDP.

How's Argentina doing?

Probably not great, but they have mismanaged their economy for decades.

 

[cpwill]

The Fed doesn't create new reserves when the govt. deficit spends. Treasury issues bonds, the PS (the primary dealers, actually) buy them with pre-existing reserves, and the government spends those old reserves back into the economy. No increase in dollars. We don't deficit spend without issuing bonds.

The Fed, in a completely separate operation, can adjust the supply of reserves up or down as needed by buying or selling bonds to/from their own portfolio. When the Fed buys bonds in exchange for newly-created reserves, this is called "money printing."

Congratulations. It took you a minute to get there, but, get there you did

I just explained the mechanics of funding deficit spending above, and it's the correct explanation (and the MMT explanation). Printing money has nothing to do with MMT, and we don't do that anyway. And historically, you won't find any examples of a government deficit spending its way to hyperinflation without a serious underlying economic problem (which I also explained).

Nice. Is this like saying that no one has died of disease unless they are very sick?

Examples of countries printing up tons of money is always precipitated by very high inflation caused by real economic problems that affect trade.

Like I said before, the amount that the government gave to people was less than the normal private sector contribution. Most of that money went to paying rent and food, same as it would have if people were still working. What got more expensive because of too-high demand? Toilet paper? Bleach? Nothing major.

I guess we aren't counting Food as major?

Companies raised prices higher than necessary because they are companies, and companies are greedy.

No, companies raised prices for a variety of reasons (complex phenomena are rarely monocausal), not least because:

A) The price of their inputs rose, and
B) there was an increase in dollars competing for the goods and services they were providing.

This is just incorrect. The government is the economy's biggest customer, plus they are productive - just not in a putting-products-on-shelves way. Government employees earn their money doing useful stuff.

:lol: I've been a government employee. Some of them do, sometimes, but no - we don't create value; at most some of us helped create the conditions that allowed others to do so.

And while taxes are a redistribution, deficit spending is a net addition to GDP. Deficit spending results in a net increase in financial assets (treasuries) held by the private sector.

Lost income is just that - a loss of GDP. It is not anyone else's gain.

That is not true in the (categorical) sense that you are attempting to apply it.

Sure, I suppose, if instead of spending money on Item A you stick it in a security box and never touch it; but even then, by reducing the amount of currency in circulation you are increasing (even infinitesimally) the value of everyone else's holdings.

Don't make the mistake of conflating money with income. You can have high incomes with a low money supply and vice versa. The only relationship is that newly-created financial assets (treasuries and bank-created loans) generally represent increased income. Increased debt is somebody else's increased income, unless the borrower just sits on the loan and doesn't spend it.

And in this case, that income is taken from someone else, because government redistributes value, it does not create it. Government is not creating the wealth represented by the dollars it is giving out in transfer payments.

 

[cpwill]

In order for the economy to just stay the same size, we need to sell all production. If you have a $20 trillion economy, you have a national income of $20 trillion, enough to consume all production. If people save 5% of their income, you are left with just $19 trillion to spend, leaving a demand gap. That demand gap is normally filled (and then some) with increased bank loans and federal deficit spending. That is why savings from income necessitate deficit spending. A year or two ago, deficit spending accounted for 6.4% of GDP, but growth was only about 2.8%. Remove that deficit spending, and the economy shrinks.

Again, don't conflate dollars with income. And the trade deficit is just savings by foreign parties, with the same (negative) effect on our GDP.

Probably not great, but they have mismanaged their economy for decades.

Indeed. Among other issues, they spent decades overspending, and suffered a major debt burden and resulting inflation.

Then they decided to drastically cut governmental spending - the "austerity" that you claim will only cause unnecessary pain, without impacting inflation.

But wouldn't you know it, for some darn reason, inflation plummeted while economic growth recovered and then increased.

Gosh. Who'da thunk.

 

[JohnfrmClevelan]

Congratulations. It took you a minute to get there, but, get there you did

Are you still contending that the Fed prints money so the government can spend? Because that's incorrect, as I tried to explain.

Nice. Is this like saying that no one has died of disease unless they are very sick?

Not sure what you are trying to say here, but if you are standing by your old contention that deficit spending leads to economic ruination, you haven't said anything that brings that argument back from the dead.

I guess we aren't counting Food as major?

The price of foods definitely went up, because the cost of some of the inputs went up, which is logical. But grocery stores and food producers also made record profits during this period, so greed was also a factor.

No, companies raised prices for a variety of reasons (complex phenomena are rarely monocausal), not least because:

A) The price of their inputs rose, and
B) there was an increase in dollars competing for the goods and services they were providing.

Think about your claim for a minute here. Who was getting rich during the pandemic? Workers who couldn't work? They were struggling just to pay the rent and get by. Some of us were able to work and get a couple of stimmy checks as well, but I certainly didn't sink all of mine into buying more food than usual. Food is one of those things that is self-limiting - nobody buys more food than they can eat just because they have more money.

:lol: I've been a government employee. Some of them do, sometimes, but no - we don't create value; at most some of us helped create the conditions that allowed others to do so.

You earned your money doing something useful. It all contributes. But a lot of the economy isn't based on anything truly valuable. Where is the value created by tanning booths, palm readers, life coaches, etc.?

That is not true in the (categorical) sense that you are attempting to apply it.

Eh, it's pretty true. With the exception of bond interest, the govt. either buys stuff, or they pay people who buy stuff.

And in this case, that income is taken from someone else, because government redistributes value, it does not create it. Government is not creating the wealth represented by the dollars it is giving out in transfer payments.

No, you have this wrong. Nothing is taken from anybody else. Production increases to meet higher demand.

Banks don't create wealth when they create loans "from thin air" either, but those loans sure make a lot of investment and consumption possible. Don't make this about your anti-government feelings, just look at the facts the way they are. Money makes things happen, and the government supplies money. So do banks.

 

[JohnfrmClevelan]

Indeed. Among other issues, they spent decades overspending, and suffered a major debt burden and resulting inflation.

Then they decided to drastically cut governmental spending - the "austerity" that you claim will only cause unnecessary pain, without impacting inflation.

But wouldn't you know it, for some darn reason, inflation plummeted while economic growth recovered and then increased.

Gosh. Who'da thunk.

You completely missed the point here. Also, what time period(s) are you referring to? And which country?

 

[cpwill]

You completely missed the point here. Also, what time period(s) are you referring to? And which country?

.......

How's Argentina doing?

Probably not great, but they have mismanaged their economy for decades.

Indeed. Among other issues, they spent decades overspending, and suffered a major debt burden and resulting inflation.

Then they decided to drastically cut governmental spending - the "austerity" that you claim will only cause unnecessary pain, without impacting inflation.

But wouldn't you know it, for some darn reason, inflation plummeted while economic growth recovered and then increased.

Gosh. Who'da thunk.

 

[cpwill]

Are you still contending that the Fed prints money so the government can spend? Because that's incorrect, as I tried to explain.

Certainly it can - and, as described, when we have to respond to massive deficits by monetizing the debt and having the fed print money to purchase bonds with, it does.

Not sure what you are trying to say here, but if you are standing by your old contention that deficit spending leads to economic ruination, you haven't said anything that brings that argument back from the dead.

Except for history, which holds up pretty well, here. Governments' have repeatedly been wrecked by large debts; you are attempting to spin it by pointing out that this often comes with other troubles (which it creates, exacerbates, and is exacerbated by), and saying that it is always those trouble's faults instead.

It's like saying that the bullet didn't kill someone, the hole through his heart did, and using that to justify the argument that shooting people doesn't hurt them.

The price of foods definitely went up, because the cost of some of the inputs went up, which is logical. But grocery stores and food producers also made record profits during this period, so greed was also a factor.

Grocery stores were equally greedy before the Government started sending people thousands of dollars in waves of checks. Why didn't they hike prices then?

Greed is a constant in our system. Competition ameliorates its effects. I don't recall people complaining about the rise in salaries that occurred, despite it being just as "greedy".

Think about your claim for a minute here. Who was getting rich during the pandemic? Workers who couldn't work? They were struggling just to pay the rent and get by. Some of us were able to work and get a couple of stimmy checks as well,

The vast majority of us were. Unemployment peaked at 14.7% in April of 2020 and fell from there.... but all of us got stimmy check after stimmy check after stimmy check.

but I certainly didn't sink all of mine into buying more food than usual. Food is one of those things that is self-limiting - nobody buys more food than they can eat just because they have more money.

You earned your money doing something useful. It all contributes. But a lot of the economy isn't based on anything truly valuable. Where is the value created by tanning booths, palm readers, life coaches, etc.?

We had a guy in my office who had a couple of DUI's and wasn't allowed in the building. Thanks to the byzantine nature of Federal procedures, it took two years to fire him. For two years he was sitting at home collecting GS 14 pay (north of $100K) for breathing.

What value was he creating? I'd say, probably less than a palm reader.

No, Government workers do not create value, even if they are doing something useful. The police allow us to have commercial exchange by protecting us against theft and violation of contracts - but they are not productive. They are simply creating the conditions that allow others to produce.

Eh, it's pretty true. With the exception of bond interest, the govt. either buys stuff, or they pay people who buy stuff.

No, you are again falling prey to the broken window fallacy.

No, you have this wrong. Nothing is taken from anybody else.

Well that's a HUGE relief. I can stop paying taxes, then?

Because I'm looking at a pay stub, and I could swear this "FIT" and "FICA" guy are taking money from me.

Banks don't create wealth when they create loans "from thin air" either, but those loans sure make a lot of investment and consumption possible. Don't make this about your anti-government feelings, just look at the facts the way they are. Money makes things happen, and the government supplies money. So do banks.

Sure - I am not claiming that government is inherently bad. Government is needed for this whole thing to function.

It is simply not productive, and when it tries to seize the means of production, we inevitably get a lesson about why that's a bad idea.

 

[JohnfrmClevelan]

.......

They had considerable foreign-denominated debt, which they have no control over. Among other problems. Maybe you can bring it back to relevance, but I suspect you just want to blame their problems on deficit spending, or credit austerity for any recovery, all out of context for a question with a ton of variables that neither one of us is sufficiently familiar with to discuss.

 

[pedex]

You forgot about Clinton.

Regardless, maybe if Republicans would stop crashing the economy, requiring massive government intervention, we could get back to the Clinton years.

You mean mote accounting tricks and lies.

 

[JohnfrmClevelan]

Certainly it can - and, as described, when we have to respond to massive deficits by monetizing the debt and having the fed print money to purchase bonds with, it does.

What is it about my explanation that you aren't grasping? Monetizing debt does not fill Treasury's account; the Fed cannot legally buy treasuries direct from the government. The size of the deficits has nothing to do with anything.

Except for history, which holds up pretty well, here. Governments' have repeatedly been wrecked by large debts; you are attempting to spin it by pointing out that this often comes with other troubles (which it creates, exacerbates, and is exacerbated by), and saying that it is always those trouble's faults instead.

History is on my side of the argument, not yours. Find an example of a government that has been wrecked by large debts IN ITS OWN CURRENCY, and doesn't have any other big economic problems. This isn't spin, this is correctly diagnosing economic problems.

It's like saying that the bullet didn't kill someone, the hole through his heart did, and using that to justify the argument that shooting people doesn't hurt them.

Your arguments would be better if they didn't rely so heavily on folksy analogies.

Grocery stores were equally greedy before the Government started sending people thousands of dollars in waves of checks. Why didn't they hike prices then?

Because COVID and the problems that came with it caused some legitimate inflation, and people were conditioned to accept more.

The vast majority of us were. Unemployment peaked at 14.7% in April of 2020 and fell from there.... but all of us got stimmy check after stimmy check after stimmy check.

Did you buy a lot more food than usual?

We had a guy in my office who had a couple of DUI's and wasn't allowed in the building. Thanks to the byzantine nature of Federal procedures, it took two years to fire him. For two years he was sitting at home collecting GS 14 pay (north of $100K) for breathing.

What value was he creating? I'd say, probably less than a palm reader.

Who cares? You are going far afield in an attempt to justify your general distaste for anything related to the government.

No, Government workers do not create value, even if they are doing something useful. The police allow us to have commercial exchange by protecting us against theft and violation of contracts - but they are not productive. They are simply creating the conditions that allow others to produce.

So where do cashiers fall on that spectrum? Do they produce, or do they allow others to produce? How about NIH scientists? Again, you are going far afield to incorporate one of your anti-government screeds.

No, you are again falling prey to the broken window fallacy.

No, I'm not. But you are failing to grasp the simple math behind federal finance. Jot it all down on paper if you have to. Deficit spending is a net addition of financial assets to the private sector, and that results in more investment and consumption than would have happened otherwise.

Well that's a HUGE relief. I can stop paying taxes, then?

Your taxes don't pay for deficit spending. Remember that paper you were supposed to jot this stuff down on? Take another look at it.

Because I'm looking at a pay stub, and I could swear this "FIT" and "FICA" guy are taking money from me.

Yes, those are taxes. What is your point?

Sure - I am not claiming that government is inherently bad. Government is needed for this whole thing to function.

It is simply not productive, and when it tries to seize the means of production, we inevitably get a lesson about why that's a bad idea.

Do you accept that the government can and does create financial assets and spend them into the economy? Because that was the point you were supposedly responding to. And when did we start talking about the government seizing the means of production?

 

[cpwill]

How's Argentina doing?

Probably not great, but they have mismanaged their economy for decades.

Indeed. Among other issues, they spent decades overspending, and suffered a major debt burden and resulting inflation.

Then they decided to drastically cut governmental spending - the "austerity" that you claim will only cause unnecessary pain, without impacting inflation.

But wouldn't you know it, for some darn reason, inflation plummeted while economic growth recovered and then increased.

Gosh. Who'da thunk.

They had considerable foreign-denominated debt, which they have no control over. Among other problems. Maybe you can bring it back to relevance, but I suspect you just want to blame their problems on deficit spending, or credit austerity for any recovery,

Argentina's Milei 'Miracle'

Argentina’s economy is growing at 7.7 percent, according to the latest year-over-year data. It grew by 1.9 percent in April, the most recent month for which data are available...

Argentina is achieving this growth not through a strategic industrial policy or a mercantilist trade policy. It’s achieving it by rolling back the overextended public sector, slashing the government budget, controlling the money supply, and removing price controls.

Milei eliminated rent controls in Buenos Aires, and the apartment market was flooded with new properties and the average real price went down. He turned a budget deficit into a surplus in his first full year in office. He eliminated half of the country’s cabinet departments.

When Milei took office in December 2023, inflation was 25 percent per month. In May, it was 1.5 percent.​

Turns out that getting rid of massive deficits helps improve growth and reduce inflation. Who knew.

 

[JohnfrmClevelan]

Argentina's Milei 'Miracle'

Argentina’s economy is growing at 7.7 percent, according to the latest year-over-year data. It grew by 1.9 percent in April, the most recent month for which data are available...​

​

Argentina is achieving this growth not through a strategic industrial policy or a mercantilist trade policy. It’s achieving it by rolling back the overextended public sector, slashing the government budget, controlling the money supply, and removing price controls.​

​

Milei eliminated rent controls in Buenos Aires, and the apartment market was flooded with new properties and the average real price went down. He turned a budget deficit into a surplus in his first full year in office. He eliminated half of the country’s cabinet departments.​

​

When Milei took office in December 2023, inflation was 25 percent per month. In May, it was 1.5 percent.​

Turns out that getting rid of massive deficits helps improve growth and reduce inflation. Who knew.

That article doesn't go into nearly enough detail to explain why Argentina is doing better. It's barely worth talking about.

The U.S., on the other hand, we know, and we have numbers. Last I checked, you were still under the impression that we printed money in order to deficit spend, so there is still work to be done on that subject.