Government Workers are Next for layoffs & furloughs

[JohnfrmClevelan]

In a nutshell you endorse trickle down, David Stockman would be impressed.

Not at all. I endorse "trickle up," which is the way money naturally flows anyway.

In either case, the govt can, and does, create and spend its own money. It needs no help from anybody to do so, and it certainly doesn't borrow its own currency in any reasonable sense of the word.

 

[Waddy]

You aren't paying for anything. We don't pay for deficit spending. The govt. creates its own money and spends it. Even when they issue bonds, the money is spent right back into the economy, and bondholders have the bonds they wanted. Who loses there? Nobody.

We pay for everything. Or our kids kids will. Why do you think the dollar is only worth a fraction of what it was even 20 years ago? Inflation keeps you poor. It greatly reduces the growth of the economy. Almost a quarter of the federal budget is now used to pay just the INTEREST on that debt you love so much. Why is it the Federal Reserve now buying all those bonds? Because the private market for them has dried up. BTW; that huge gov't debt is why you won't see interest rates much above zero ever again; interest rates have to be kept low so the gov't can continue to pay the interest on all that debt. Of course that means you won't make any interest on your savings account, either. Massive debt is what holds you down and keeps you down. The inflation it causes eats away your wage gains and destroys any chance for a better job because it slows down the economy to a crawl. Throwing even more debt at the economy won't help anyone except the 1%.

 

[JohnfrmClevelan]

We pay for everything. Or our kids kids will.

Not true. I explained how it works, and try as you may, you won't be able to link govt. deficit spending to your taxes.

Why do you think the dollar is only worth a fraction of what it was even 20 years ago?

There are lots of reasons why prices tend to go up. The money supply is not one of them. Increases in the money supply generally happen to boost investment and/or consumption.

Inflation keeps you poor.

Only if wages don't keep up with inflation. It's a weak labor market that keeps workers poor. Our businesses were making record profits very recently.

It greatly reduces the growth of the economy.

No, it doesn't. We generally get higher inflation when the economy is growing.

Almost a quarter of the federal budget is now used to pay just the INTEREST on that debt you love so much.

It still isn't coming out of your taxes. And the interest goes to the private sector.

Why is it the Federal Reserve now buying all those bonds? Because the private market for them has dried up.

Again, false. The Fed buys bonds to adjust the amount of reserves in the system, and to effect monetary policy. And there is still plenty of private sector demand for bonds.

BTW; that huge gov't debt is why you won't see interest rates much above zero ever again; interest rates have to be kept low so the gov't can continue to pay the interest on all that debt.

Well, at least you understand that the national debt isn't driving up interest rates. But paying interest at all, like issuing bonds, is a policy choice.

Of course that means you won't make any interest on your savings account, either.

Do you know why that is? It's because your savings aren't loaned out. Your savings are merely a cheap source of reserves, as far as banks are concerned. That interest you get on your bank accounts actually comes from the government and/or the Fed. Banks get interest on reserves, and you get a fraction of that.

Massive debt is what holds you down and keeps you down. The inflation it causes eats away your wage gains and destroys any chance for a better job because it slows down the economy to a crawl. Throwing even more debt at the economy won't help anyone except the 1%.

All money is the product of debt. Increased debt is how economies grow. And it obviously doesn't cause inflation, either, if you just check the data.

Starving the economy of demand certainly doesn't help out labor, either.

You have thrown out a whole bunch of incorrect assumptions in this post. Government debt isn't the boogeyman you think it is.

 

[aociswundumho]

If the feds would pay for it, they could.

But it would be fairer if the feds just gave states/cities $1000/head. Just like they gave people money, they could give states money.

If there's no downside, why not $100,000/head?

 

[JohnfrmClevelan]

If there's no downside, why not $100,000/head?

Do you even bother to read the thread before you jump in?

More demand than the economy can handle leads to inflation.

AOC would know that much.

 

[aociswundumho]

Do you even bother to read the thread before you jump in?

More demand than the economy can handle leads to inflation.

AOC would know that much.

What methodology did you use to determine what the economy can handle?

 

[JohnfrmClevelan]

What methodology did you use to determine what the economy can handle?

I didn't. But giving everybody $100K would certainly swamp the economy.

 

[aociswundumho]

I didn't.

So you just pulled a number out of your ass and assumed the country would be better off? You might want to consider going into politics. You seem to have what the Democratic party is looking for.

But giving everybody $100K would certainly swamp the economy.

What does "swamp" mean in this context, and assuming it's bad, how do you know?

 

[JohnfrmClevelan]

So you just pulled a number out of your ass and assumed the country would be better off? You might want to consider going into politics. You seem to have what the Democratic party is looking for.

If you don't have anything to say, outside of just being argumentative, tell me now so I can ignore your posts in the future, thanks.

What does "swamp" mean in this context, and assuming it's bad, how do you know?

We have a $20 trillion economy (or we did, until recently). It's capable of growing a reasonable amount. It's not capable of instantly doubling. Per capita income is around $50K right now.

How would you know? There would be shortages, and prices would rise because of it.

 

[EMNofSeattle]

Why should the federal government extend UE checks "past July?"

People need to get back to work. Right now MANY people are getting paid more for sitting home "sheltering" than they would be paid at their old jobs. No incentive to return to work, and every incentive to lose their jobs, as long as they can ride the Federal gravy train.

IMHO the only people who are pushing every effort for the economy to falter are doing so for two reasons.

One, to blame Trump for a bad economy so that the Democrats can use that for their campaign.

Two, so the Democrats can subsequently claim credit for the economic recovery after November 2020, if they win.

I think if the dems win there will be a collapse. Investors know more regulation is coming, some version of the green new deal, etc

 

[Waddy]

Not true. I explained how it works, and try as you may, you won't be able to link govt. deficit spending to your taxes.



There are lots of reasons why prices tend to go up. The money supply is not one of them. Increases in the money supply generally happen to boost investment and/or consumption.



Only if wages don't keep up with inflation. It's a weak labor market that keeps workers poor. Our businesses were making record profits very recently.



No, it doesn't. We generally get higher inflation when the economy is growing.



It still isn't coming out of your taxes. And the interest goes to the private sector.



Again, false. The Fed buys bonds to adjust the amount of reserves in the system, and to effect monetary policy. And there is still plenty of private sector demand for bonds.



Well, at least you understand that the national debt isn't driving up interest rates. But paying interest at all, like issuing bonds, is a policy choice.



Do you know why that is? It's because your savings aren't loaned out. Your savings are merely a cheap source of reserves, as far as banks are concerned. That interest you get on your bank accounts actually comes from the government and/or the Fed. Banks get interest on reserves, and you get a fraction of that.



All money is the product of debt. Increased debt is how economies grow. And it obviously doesn't cause inflation, either, if you just check the data.

Starving the economy of demand certainly doesn't help out labor, either.

You have thrown out a whole bunch of incorrect assumptions in this post. Government debt isn't the boogeyman you think it is.

It's because your savings aren't loaned out. Your savings are merely a cheap source of reserves, as far as banks are concerned.

You sure don't understand fractional banking.

Debt causes inflation. Inflation negates your wage gains. Which results in stagnation of your standard of living.

High levels of debt undermine growth. It also pushes interest rates down on savings.

Personally, I don't care how much money is printed. We aren't going to pay it back anyways. But to claim high debt doesn't have associated costs is just plain ignorance.

New calculations in the Congressional Budget Office's Long-Term Budget Outlook show that the high debt projected under current law could diminish average annual income by $2,000 within 25 years, and that a $4 trillion debt reduction package would not only prevent that $2,000 hit but could also increase average income in the economy by another $2,000, among other findings.

In its report, CBO has analyzed the harmful effects of debt. If its economic projections are modified to include these negative effects, the economy is 3 percent smaller in 25 years. If lawmakers return to their more profligate ways and follow the policies in the AFS, the economy will be another 5 percent smaller. In contrast, reducing the debt can lead to modest but real gains in economic growth: a 2 percent larger economy within 25 years.

High Debt Drags Down The Economy | Committee for a Responsible Federal Budget

Debt has consequences. But keep drinking the Koolaid that debt doesn't matter.

 

[JohnfrmClevelan]

You sure don't understand fractional banking.

Actually, I have a pretty good handle on it. I study this stuff quite a bit.

Debt causes inflation. Inflation negates your wage gains. Which results in stagnation of your standard of living.

Again, you are just making stuff up, with nothing to back up your claims. Look at the data. Debt does not cause inflation. See Japan.

High levels of debt undermine growth. It also pushes interest rates down on savings.

Really? High debt pushes down interest rates? Find me two economists that agree with that. It's the absolute opposite of what mainstream economists claim.

Personally, I don't care how much money is printed. We aren't going to pay it back anyways. But to claim high debt doesn't have associated costs is just plain ignorance.

High debt is bad for you and I. But government debt is not true debt. There are consequences (not all of them bad) to having a lot of govt. liabilities in the private sector, but debt overhang is not one of them.

You have been told for years that government debt is a bad thing. But look around; things work, the economy works, the government isn't "going broke." We just came up with trillions this spring - without borrowing. Consider the possibility that you don't truly understand the economy all that well, that maybe you have some things wrong. Do you put a lot of time and efffort into studying economics? If not, you probably shouldn't be married to what you think you know.

High Debt Drags Down The Economy | Committee for a Responsible Federal Budget

Conservative think tank. Who bankrolls them? The Koch Bros.?

Debt has consequences. But keep drinking the Koolaid that debt doesn't matter.

I don't "drink the Kool Aid" so much as I study the things that I want to understand better. Drinking Kool Aid is just parroting what somebody else (like the CRFB) says without really understanding why you agree with them, and not questioning their motives.

 

[Waddy]

Actually, I have a pretty good handle on it. I study this stuff quite a bit.



Again, you are just making stuff up, with nothing to back up your claims. Look at the data. Debt does not cause inflation. See Japan.



Really? High debt pushes down interest rates? Find me two economists that agree with that. It's the absolute opposite of what mainstream economists claim.



High debt is bad for you and I. But government debt is not true debt. There are consequences (not all of them bad) to having a lot of govt. liabilities in the private sector, but debt overhang is not one of them.

You have been told for years that government debt is a bad thing. But look around; things work, the economy works, the government isn't "going broke." We just came up with trillions this spring - without borrowing. Consider the possibility that you don't truly understand the economy all that well, that maybe you have some things wrong. Do you put a lot of time and efffort into studying economics? If not, you probably shouldn't be married to what you think you know.




Conservative think tank. Who bankrolls them? The Koch Bros.?



I don't "drink the Kool Aid" so much as I study the things that I want to understand better. Drinking Kool Aid is just parroting what somebody else (like the CRFB) says without really understanding why you agree with them, and not questioning their motives.

high debt slows growth, pushes inflation, and stagnates wages. The fed keeps interest rates artificially low so gov't can pay the interest on the debt. That's just Econ 101.

Your argument would be more feasible if you were talking about a way to increase the velocity of money. Your bailout plan only works for the 1%.

 

[Kushinator]

Why have balanced budgets at all? Nobody can ever answer this with sound logic and reasoning, let alone data.

I've made many arguments with sound logic and reasoning as to why there are times to reduce or eliminate borrowing.

Deficit spending adds to GDP. That's a positive. Show me the negatives, if you can, that outweigh the positives.

Crowding out private investment is net-negative externality. Just like there are times to have deficits, there are times for surpluses. A static state of fiscal policy is an idea that lacks both logic and reasoning.

 

[Tbird19482]

Actually, I have a pretty good handle on it. I study this stuff quite a bit.



Again, you are just making stuff up, with nothing to back up your claims. Look at the data. Debt does not cause inflation. See Japan.



Really? High debt pushes down interest rates? Find me two economists that agree with that. It's the absolute opposite of what mainstream economists claim.



High debt is bad for you and I. But government debt is not true debt. There are consequences (not all of them bad) to having a lot of govt. liabilities in the private sector, but debt overhang is not one of them.

You have been told for years that government debt is a bad thing. But look around; things work, the economy works, the government isn't "going broke." We just came up with trillions this spring - without borrowing. Consider the possibility that you don't truly understand the economy all that well, that maybe you have some things wrong. Do you put a lot of time and efffort into studying economics? If not, you probably shouldn't be married to what you think you know.




Conservative think tank. Who bankrolls them? The Koch Bros.?



I don't "drink the Kool Aid" so much as I study the things that I want to understand better. Drinking Kool Aid is just parroting what somebody else (like the CRFB) says without really understanding why you agree with them, and not questioning their motives.

Like I have said before the debt is out of control and I believe what we m have to do is have a 1% maybe as high as a 2% national sales tax to pay off the debt and we have to make sure that AFTER the debt is paid off the sales tax is rescinded and could never put back on again Unless we had to run a deficit because
of a Recession /Depression or a war like WWII
We all have gotten some sort of Benefit from running the debt up so we all should help pay it off
Have a nice night

 

[JohnfrmClevelan]

Like I have said before the debt is out of control and I believe what we m have to do is have a 1% maybe as high as a 2% national sales tax to pay off the debt and we have to make sure that AFTER the debt is paid off the sales tax is rescinded and could never put back on again Unless we had to run a deficit because
of a Recession /Depression or a war like WWII
We all have gotten some sort of Benefit from running the debt up so we all should help pay it off
Have a nice night

A sales tax used to "pay off" the national debt amounts to this: the govt. takes more dollars out of the active economy (consumption), and gives it to rich bondholders; or, it uses the tax revenues for spending so fewer bonds need to be issued in the future (depending on your understanding of "paying off the national debt"). Either way, demand would be negatively affected, and for no good reason.

If you want to "pay off" the debt without harming the economy, we should simply institute a wealth tax. Take money away from rich people, basically, since they are the ones holding most of the bonds. Not sure how that would help the economy, though.

 

[JohnfrmClevelan]

I've made many arguments with sound logic and reasoning as to why there are times to reduce or eliminate borrowing.

Sure, there is. When there is too much economic activity, the govt. should adjust its spending. But that's not realistic under our normal circumstances (large trade deficit and large net savings from income).

Crowding out private investment is net-negative externality. Just like there are times to have deficits, there are times for surpluses. A static state of fiscal policy is an idea that lacks both logic and reasoning.

You are going to have a hard time convincing me that crowding out is a thing, outside of wartime.

 

[OrphanSlug]

Think your missing the point. The goal should always be to have a balanced budget during good times and deficit spend during the bad. God deficits spend during good times and end up creating huge recessions.

There is no economic principle to support a balanced budget, in the context you went with or the umpteenth mentioned "balanced budget amendment."

I would ask anyone to explain what the economic logic is behind the need for this.

The reality is the government is an active participant in the economy and if anything we should be looking to the nature of both aggregate demand and the economic cycle. In any mixed economic model there will be times of economic boom followed by trough and the one arbiter to a moderate economic growth trend line is the federal government.

If we were at all linking government fiscal policy (tax revenues and spending) to economic need we would already see years of little to no deficit spending and other years of massive deficit spending, and all of it is net positive as it adds to GDP every year. The fiscal years from Bush 41 to Clinton to Bush 43 taught us that lesson, even though technically we did not need that level of taxation as a fiat money system. The good news is looking back we can see that it did not cause enough harm running that tax policy in comparison to other ventures down that path.

Our issue is our fiscal policy is often linked to political ideology over any sense of economic reasoning, and that tends to cause such amplification of our economic cycle. Said another way, I would argue that Congress is the biggest contributor to our bubble and pop economic model as they persistently meddle through initiatives that encourage unnecessary risk, reward only the highest earners, inflate the costs of doing business, or some terrible combination of the three.

The goal of government spending should be to throttle bubble and pop economics. Period. Reduce the amplification of the economic cycle. If we ever did that, saw fiscal policy and monetary policy line up to that need, the majority of our economic faults would be handled.

The harsh truth is there is only one participant in our economy that can handle severe economic aggregate demand fault no matter what it is, happens to be the federal government.

Balanced budget talk misses the point... consistently.

 

[OrphanSlug]

I'd be okay with small deficits instead of balanced budgets.

It is not about being okay with small deficits, it is about why you may have one based on economic condition.

 

[OrphanSlug]

high debt slows growth, pushes inflation, and stagnates wages. The fed keeps interest rates artificially low so gov't can pay the interest on the debt. That's just Econ 101.

Your argument would be more feasible if you were talking about a way to increase the velocity of money. Your bailout plan only works for the 1%.

There is nothing factual in your post.

High debt is a problem for individuals going up to the state level, but not for the federal government as they control their own money supply.

Inflation has been roughly the same going back to the 1980's year on year, with few exceptions here and there and none of which qualify as faults in inflation drawing concern. If anything we have had bouts of worry over deflation indicating concerns over healthy economic expansion and condition. Despite what FoxNews and Gold Line tells you, our "high debt" is not pushing inflation and we have not had enough inflation to justify panic into overpriced gold coins.

Wages are stagnated because of a concept called monopsony power, or labor market concentration where you have too few high powered employers capable of depressing wages (said another way removal of competition.) 60 years ago the top 10 employers in this nation all paid on average at the 2nd and 3rd income quintile, today it is more like 3 or 4 of the top 10 employers pay at that rate with the rest paying out at the lowest 5th income quintile. This trend has been playing out greatly over the past 4 decades specifically where there is direct, empirical, economic evidence that corporate concentration has stagnated pay from the 3rd income quintile down.

Velocity of money has many influencers and since we know the lower income quintiles spend just about everything they make (i.e., not savers) then what we are really talking about is overall money movement in an economy. When there is aggregate demand fault we have no choice but for the federal government to step in and increase deficit spending, that speaks directly to GDP and speaks to supporting those participants that spend all they make anyway.

Control over interest rates is one tool in the monetary policy bag the Fed can go with in concert with other efforts, but all of that means a complicit Congress with fiscal policy to handle whatever is going on in the economy good or bad. Again, condition of the economy not the condition of debt.

As long as there is aggregate demand in an economy with somewhat healthy expansion as expected in trend (not any one year,) we have no real reason to conclude the government will run out of money or not be able to pay interest on debt. One, all money in the system is the result of issuing debt. Two, there is still still demand for that debt as an investment vehicle. Lastly, the federal government is the one and only entity that can "print their own money" in this equation (for the purposes of this discussion.)

 

[OrphanSlug]

Like I have said before the debt is out of control and I believe what we m have to do is have a 1% maybe as high as a 2% national sales tax to pay off the debt and we have to make sure that AFTER the debt is paid off the sales tax is rescinded and could never put back on again Unless we had to run a deficit because
of a Recession /Depression or a war like WWII
We all have gotten some sort of Benefit from running the debt up so we all should help pay it off
Have a nice night

Why do you guys want to remove money from the economy by taxing everyone? All this does is harm GDP and cause an aggregate demand fault.

If removing the debt is so important to you then you should be all for taxing the highest percentage of the 1st income quintile. They are the ones that benefit most from "paying off the debt" as they tend to invest in vehicles that contain the most US issued debt, and are the ones that tend to have the most money at a condition of rest. As opposed to the rest of the nation that tends to spend most if not all of what they make.

Another thing to note is our monetary system is not the same as it was in WWII, trying to compare debt and the reasons for it then to now makes no sense at all.

This part specifically you said... "We all have gotten some sort of Benefit from running the debt up"... is not accurate at all. When looking across all the income quintiles going back 4 to 6 decades, the biggest beneficiary of our "running the debt up" is corporate concentration and the highest percentage of that top 1st income quintile.

For everyone else, it never... repeat never... "trickled down."

 

[Kushinator]

When there is too much economic activity, the govt. should adjust its spending.

That's simply an unreasonable expectation, and therefore unfeasible. In a market oriented economy, productivity is driven by private investment.

(large trade deficit and large net savings from income).

And still you continue to push the demand leakage argument. Trade deficits are a byproduct of a savings mismatch. Their existence doesn't mean money is leaving the economy. Mercantilisim has been abandoned for more than a century.

Sectoral balances cannot explain economic growth.

You are going to have a hard time convincing me that crowding out is a thing, outside of wartime.

Because you are emotionally and physically invested in an economic reality where such a thing cannot exist.

Crowding out occurs when deficits grow in tandem with output, while labor markets exhibit little or no slack.

 

[Waddy]

There is nothing factual in your post.

High debt is a problem for individuals going up to the state level, but not for the federal government as they control their own money supply.

Inflation has been roughly the same going back to the 1980's year on year, with few exceptions here and there and none of which qualify as faults in inflation drawing concern. If anything we have had bouts of worry over deflation indicating concerns over healthy economic expansion and condition. Despite what FoxNews and Gold Line tells you, our "high debt" is not pushing inflation and we have not had enough inflation to justify panic into overpriced gold coins.

Wages are stagnated because of a concept called monopsony power, or labor market concentration where you have too few high powered employers capable of depressing wages (said another way removal of competition.) 60 years ago the top 10 employers in this nation all paid on average at the 2nd and 3rd income quintile, today it is more like 3 or 4 of the top 10 employers pay at that rate with the rest paying out at the lowest 5th income quintile. This trend has been playing out greatly over the past 4 decades specifically where there is direct, empirical, economic evidence that corporate concentration has stagnated pay from the 3rd income quintile down.

Velocity of money has many influencers and since we know the lower income quintiles spend just about everything they make (i.e., not savers) then what we are really talking about is overall money movement in an economy. When there is aggregate demand fault we have no choice but for the federal government to step in and increase deficit spending, that speaks directly to GDP and speaks to supporting those participants that spend all they make anyway.

Control over interest rates is one tool in the monetary policy bag the Fed can go with in concert with other efforts, but all of that means a complicit Congress with fiscal policy to handle whatever is going on in the economy good or bad. Again, condition of the economy not the condition of debt.

As long as there is aggregate demand in an economy with somewhat healthy expansion as expected in trend (not any one year,) we have no real reason to conclude the government will run out of money or not be able to pay interest on debt. One, all money in the system is the result of issuing debt. Two, there is still still demand for that debt as an investment vehicle. Lastly, the federal government is the one and only entity that can "print their own money" in this equation (for the purposes of this discussion.)

You're not even close. Interest rates are being held down artificially so the feds can continue to pay the INTEREST on that debt. But that means individual savers can't get any return on their money if they leave it in a safe place like a savings account, and are forced into the risky stock market, artificially pushing up the stock market. And right now the feds have no "tools", as interest rates are near zero. Negative interest rates next?

You can bail out all the banks but if there is no velocity of money it stays with the 1% and Joe the Plumber never sees a dime of it.

Monetizing the debt has been a disaster for the working person. Cheap money also promotes automation, and finances off shoring. But keep up the good work; you're being played like a fiddle by those who benefit from this cheap money system you admire so much.

 

[OrphanSlug]

You're not even close. Interest rates are being held down artificially so the feds can continue to pay the INTEREST on that debt. But that means individual savers can't get any return on their money if they leave it in a safe place like a savings account, and are forced into the risky stock market, artificially pushing up the stock market. And right now the feds have no "tools", as interest rates are near zero. Negative interest rates next?

You can bail out all the banks but if there is no velocity of money it stays with the 1% and Joe the Plumber never sees a dime of it.

Monetizing the debt has been a disaster for the working person. Cheap money also promotes automation, and finances off shoring. But keep up the good work; you're being played like a fiddle by those who benefit from this cheap money system you admire so much.

You have any evidence of this? (As all the metrics out there generally disagree with every conclusion you made.)

 

[Waddy]

Waddy; You're not even close. Interest rates are being held down artificially so the feds can continue to pay the INTEREST on that debt. But that means individual savers can't get any return on their money if they leave it in a safe place like a savings account, and are forced into the risky stock market, artificially pushing up the stock market. And right now the feds have no "tools", as interest rates are near zero. Negative interest rates next?

You can bail out all the banks but if there is no velocity of money it stays with the 1% and Joe the Plumber never sees a dime of it.

Monetizing the debt has been a disaster for the working person. Cheap money also promotes automation, and finances off shoring. But keep up the good work; you're being played like a fiddle by those who benefit from this cheap money system you admire so much.

You have any evidence of this? (As all the metrics out there generally disagree with every conclusion you made.)

So show me how the billions in bailouts since 2008 have benefited the middle class. After all those bailout $$$$ billions, the middle class must be doing really great; the money just flowed in. Let's see your "metrics". Let's see your stats. Put them up here, so we can discuss them.