How to erase the national debt[W:1040]

[MTAtech]

Hmmm... :think:

How about we just have the government tally up the total debt and use that money Ponzi scheme we have to print out an equivalent amount of worthless dollars? Then buy back the debt with the worthless money, and then collect it all back and burn it down to present resources? :fueltofir

Voila! No more massive debt and we can go on pretending we are getting real value in exchange for our labor and production. :roll:

You're welcome. :2bow:

What you described is exactly why the U.S. government cannot go bankrupt, the way non-sovereign currency nations can. We can always pay the interest on the debt by printing more dollars (in whatever form that is.)

 

[David_N]

What you described is exactly why the U.S. government cannot go bankrupt, the way non-sovereign currency nations can. We can always pay the interest on the debt by printing more dollars (in whatever form that is.)

People don't like the truth.

 

[Moderate Right]

How is he quoting anything like the bible? You're the only one regurgitating the same link without understanding what it's actually saying.
What do you mean "practices it?" Can you elaborate on this? Are you telling me banking/reserve operations are not as MMT describes? You are disagreeing with the policy implications, which is completely different from the reality that MMT proponents accurately describe. Ask any questions you have, and do so honestly, instead of running behind your links.

Please tell me what he is actually saying then. And don't just quote where he talks about how MMT works so that he can make the reader better understand when he explains how it is flawed and wrong. Please explain to me how I misunderstand his figure on page 3 and his detailed rebuttals underneath. Please tell me where I don't understand the conclusion. Please tell me where the posters on DP know more than Cullen Roche.

 

[pdog]

Sentences you did not finish:

"A government in a democratic nation does not derive its
power from its ability to enforce power, but from the people who give it that power in the
first place."

I turn in my tax return not because the government has created taxes and the means to enforce them out of whole cloth, but because we the people (in a democratic nation) have endowed them with this ability. A Constitutional Convention could convene to amend or eliminate the Sixteenth Amendment and, voila, I would not have to turn in my tax return.

That's not the one I was quoting. I was quoting this one:

What’s not understood and
articulated in the MMT literature is why the government’s printing press has any power to begin
with. A government ultimately derives its taxing powers from the strength of the private
sector.

But that was my mistake in not pointing that out so I apologize.

 

[pdog]

Well, that's a different argument and John has liked your post. John has repeatedly said that Cullen is an MMT'r and that I misunderstand what he wrote in the 74 page critique of MMT. So, which way is it?

None of our arguments are mutually exclusive:
John has identified the author as a person that once supported MMT but has changed his tune (slightly): true.
Absentglare states that you do not understand the article anyway: likely true
I have stated that the article is poorly argued with strawmen: evidently true
I have stated that the author with a simple BA in finance is hardly an authority in economic theory regardless of his view: true

 

[pdog]

Please explain to me how I misunderstand his figure on page 3 and his detailed rebuttals underneath. Please tell me where I don't understand the conclusion. Please tell me where the posters on DP know more than Cullen Roche.

I have done this countless times now, with the latter time in #133 where you ignored it and instead went after a strawman about pointing out a (non-existing) disagreement.

I have also repeatedly stated that a BA in finance hardly makes somebody an authority in economic theory. And by continue to site him instead of his content you are submitting an appeal to authority fallacy (despite him being a poor authority to begin with).

 

[pdog]

I'm not sure that there is a specific metric you could rely on, but a spike in inflation would be bad. It's really more about confidence in the dollar world wide. If that starts to slip you have a problem.

Yes a spike (presumably spikelarge) would be bad. But this is a trivial fact and you did not use it to support a larger idea.

Why would "confidence" slip? What does that even mean?

The private sector is absolutely associated with the debt. The reason you're running debt is to avoid taxing the people, but in the long run the people will have to pay that debt back one way or another. If growth does not exceed the interest rate you're paying back more than what you generated as a result of it.

You would have to support the bolded claim -it is completely counter to the OPs message and the meat of the debate here.

What makes the U.S. Dollar valuable is the fact that people have faith in it. If you undercut that faith too much you destroy it. If investors around the world just suddenly decide they're getting screwed by the U.S. government and decide to move to a different currency you may suddenly be faced with massive inflation that is out of your control. It's not a question of if that will happen, it's a question of how much leverage does America have before people lose faith. How far can you push it before it blows up in your face. In my opinion it would be very foolish to risk erring on the risky side of that spectrum. It's a game of chicken that you don't want to lose.

You still need to support this idea of "faith" and "confidence". What are you referring to? Investing in dollar dominated assets? Why would somebody loose faith in that? It has been stated time and time again, but phds, fed chairs etc, that there is no danger of default beyond the stupid decision to do so willfully and needlessly.

Would they loose "faith" in what the dollar can purchase? Will our goods and services disappear overnight?

 

[MrWonka]

Why would "confidence" slip? What does that even mean?

Why would somebody loose faith in that?

Your entire argument seems to be "let's be economic dickholes and see how long the world lets us get away with it."

Why should anybody even attempt to produce any real goods when all they have to do is hand out fake money to their people and let them buy products from someone else?

What stops Mexico from saying **** it and printing 900 Trillion Peso's? They could trade them in for $52.2 Trillion Dollars and turn the country into an economic powerhouse overnight? Why don't all countries just start doing the same thing? The answer is simple. Because if Mexico tried the world would tell them to go **** themselves and keep their worthless peso's. They'll give America a little more slack than that, but not an infinite amount.

 

[Moderate Right]

None of our arguments are mutually exclusive:
John has identified the author as a person that once supported MMT but has changed his tune (slightly): true.
Absentglare states that you do not understand the article anyway: likely true
I have stated that the article is poorly argued with strawmen: evidently true
I have stated that the author with a simple BA in finance is hardly an authority in economic theory regardless of his view: true

So you are saying that a few here on DP who are novice economics hobbyists know more than someone with a BA in finance. Got it.

 

[Moderate Right]

I have done this countless times now, with the latter time in #133 where you ignored it and instead went after a strawman about pointing out a (non-existing) disagreement.

I have also repeatedly stated that a BA in finance hardly makes somebody an authority in economic theory. And by continue to site him instead of his content you are submitting an appeal to authority fallacy (despite him being a poor authority to begin with).

I'm glad that you and the others are more knowledgeable than someone with a BA in finance, following a monetary economic theory that almost no one believes in.

 

[RenoCon]

What you described is exactly why the U.S. government cannot go bankrupt, the way non-sovereign currency nations can. We can always pay the interest on the debt by printing more dollars (in whatever form that is.)

Give me one example of where "printing more dollars," or whatever currency may be appropriate, has been a successful in all of history. It didn't work for Hungary in 1946, it didn't work for Zimbabwe in 2008 and it isn't currently working for the worlds 7th largest economy Brazil. Yes, technically the US government will not declare bankruptcy, and they will pay off the face value of my $1000 government bond, but this won't do me much good if I have to spend all of it just to get a loaf of bread.

 

[JohnfrmClevelan]

Give me one example of where "printing more dollars," or whatever currency may be appropriate, has been a successful in all of history. It didn't work for Hungary in 1946, it didn't work for Zimbabwe in 2008 and it isn't currently working for the worlds 7th largest economy Brazil. Yes, technically the US government will not declare bankruptcy, and they will pay off the face value of my $1000 government bond, but this won't do me much good if I have to spend all of it just to get a loaf of bread.

How about just about every year of our existence? Over the course of America's history, we have had relatively few years of a federal surplus, and many, many years of federal deficits. After all of that deficit spending, your loaf of bread is still about a buck.

You are comparing America to postwar Hungary and post-revolutionary Zimbabwe. Hyperinflation happens when an economy's productive capacity takes a large hit. That is when there is significantly more demand than there is supply - when food is scarce, prices go up. Not in a well-functioning economy like ours.

 

[JohnfrmClevelan]

Please tell me what he is actually saying then. And don't just quote where he talks about how MMT works so that he can make the reader better understand when he explains how it is flawed and wrong. Please explain to me how I misunderstand his figure on page 3 and his detailed rebuttals underneath. Please tell me where I don't understand the conclusion. Please tell me where the posters on DP know more than Cullen Roche.

Do your own homework. If you are incapable of understanding the paper on your own, then you shouldn't have acted like a jerk, because nobody is going to bother trying to explain it to you now.

 

[Mycroft]

Do your own homework. If you are incapable of understanding the paper on your own, then you shouldn't have acted like a jerk, because nobody is going to bother trying to explain it to you now.

"Do your own homework."

Nice dodge, dude. I don't blame you, though. What else can you do when you cannot answer a question?

 

[David_N]

"Do your own homework."

Nice dodge, dude. I don't blame you, though. What else can you do when you cannot answer a question?

You need to see previous exchanges with MR to understand John's frustration.

 

[JohnfrmClevelan]

"Do your own homework."

Nice dodge, dude. I don't blame you, though. What else can you do when you cannot answer a question?

I can answer all of the questions. But why should I? He won't be able to understand the discussion unless and until he does his own homework.

 

[RenoCon]

How about just about every year of our existence? Over the course of America's history, we have had relatively few years of a federal surplus, and many, many years of federal deficits. After all of that deficit spending, your loaf of bread is still about a buck.

You are comparing America to postwar Hungary and post-revolutionary Zimbabwe. Hyperinflation happens when an economy's productive capacity takes a large hit. That is when there is significantly more demand than there is supply - when food is scarce, prices go up. Not in a well-functioning economy like ours.

"...still about a buck"...it has been a while since you had to do your own shopping...like the early 70s But I get your point. I agree that not all deficit spending is bad, especially in a "well-functioning economy." Did Brazil or Argentina think they had a "well-functioning economy" prior to their many episodes of hyperinflation over the last 50 years? Brazil's current government spending is 41% of GDP, spending more isn't helping boost their economy and inflation is 9+%. Fortunately, responsible people in our government are making ongoing efforts to constrain our deficit spending. "Printing money" irresponsibly is not a solution. Growing GDP at 4% is a well-functioning economy that can manage the obligations of our government. I am not sure that our current GDP growth of 1.4% is a well functioning economy for the long term. China isn't doing well at GDP growth of 7.7%.

The problem with the OP and your defense of it is that you cannot predict the response of a population to the inevitable inflation (not hyperinflation) that will occur with an increase in the money supply. (Personally, I will be out buying more bullets before the price doubles...creating a rare commodity...thus increasing the price). I don't think there is really a political response that will prevent hyperinflation when there is a perceived economic emergency. Politicians will develop a response to the behavior of the populace but these efforts are just as likely to worsen the problem (see current events in Brazil).

 

[JohnfrmClevelan]

"...still about a buck"...it has been a while since you had to do your own shopping...like the early 70s But I get your point. I agree that not all deficit spending is bad, especially in a "well-functioning economy." Did Brazil or Argentina think they had a "well-functioning economy" prior to their many episodes of hyperinflation over the last 50 years? Brazil's current government spending is 41% of GDP, spending more isn't helping boost their economy and inflation is 9+%. Fortunately, responsible people in our government are making ongoing efforts to constrain our deficit spending. "Printing money" irresponsibly is not a solution. Growing GDP at 4% is a well-functioning economy that can manage the obligations of our government. I am not sure that our current GDP growth of 1.4% is a well functioning economy for the long term. China isn't doing well at GDP growth of 7.7%.

The problem with the OP and your defense of it is that you cannot predict the response of a population to the inevitable inflation (not hyperinflation) that will occur with an increase in the money supply. (Personally, I will be out buying more bullets before the price doubles...creating a rare commodity...thus increasing the price). I don't think there is really a political response that will prevent hyperinflation when there is a perceived economic emergency. Politicians will develop a response to the behavior of the populace but these efforts are just as likely to worsen the problem (see current events in Brazil).

The problem with your criticism of the OP is that you (like many people) look at the economy, and especially inflation, through a monetarist lens - because equating government finance with household finance is instantly familiar to people (even though it is wrong).

Inflation is not "ineveitable." The money supply has been increasing steadily for many years. But so what? Production has been increasing steadily for many years as well. Our economy is huge, yet it could also be far larger.

Also, excessive deficit spending isn't what is behind Brazil's and Argentina's economic problems. Picking a couple of troubled economies out of the headlines and trying to use them as ammo in this debate is weak. If you really think that their problems have something to do with this thread, then you need to make that case, not just throw them in the path of the debate for more knowledgeable posters to dispose of. Just like MR, you need to do your homework before making those kinds of arguments. Brazil is it's own case, and Argentina is its own case, and neither one relates very well to the U.S. economy.

 

[Moderate Right]

Do your own homework. If you are incapable of understanding the paper on your own, then you shouldn't have acted like a jerk, because nobody is going to bother trying to explain it to you now.

Yet another dodge. This is all you know how to do when you can't answer a question.

 

[David_N]

Yet another dodge. This is all you know how to do when you can't answer a question.

He's not dodging anything MR. Notice how he is engaging Renocon and others on all of their points. BRING SOMETHING RELEVANT TO THE TABLE.

 

[Mycroft]

If you really think that their problems have something to do with this thread, then you need to make that case, not just throw them in the path of the debate for more knowledgeable posters to dispose of.

He's not dodging anything MR. Notice how he is engaging Renocon and others on all of their points. BRING SOMETHING RELEVANT TO THE TABLE.

LOL!!

Another dodge.

John...all you are doing is promoting a "yes he is", "no he isn't" conversation and then, instead of supporting your "no he isn't" you are demanding the other guy support his "yes he is".

Debating doesn't really work that way, you know. If I say something you disagree with, then you are obligated to explain why. Anything else is just childish playground arguing.


David...relying on bias as a basis to your comments is usually a useless prospect.

 

[MTAtech]

"Do your own homework."

Nice dodge, dude. I don't blame you, though. What else can you do when you cannot answer a question?

On the contrary, this is a nice Dodge:

 

[MTAtech]

How about just about every year of our existence? Over the course of America's history, we have had relatively few years of a federal surplus, and many, many years of federal deficits. After all of that deficit spending, your loaf of bread is still about a buck.

You are comparing America to postwar Hungary and post-revolutionary Zimbabwe. Hyperinflation happens when an economy's productive capacity takes a large hit. That is when there is significantly more demand than there is supply - when food is scarce, prices go up. Not in a well-functioning economy like ours.

That's a bit of an exaggeration, John. The U.S. has been in existence since 1789. The debt only existed since 1835. Clearly, disaster has been looming for 181 years. But that's nothing: Britain hasn't been debt-free since at least 1692.

 

[Critter7r]

LOL!!

Another dodge.

John...all you are doing is promoting a "yes he is", "no he isn't" conversation and then, instead of supporting your "no he isn't" you are demanding the other guy support his "yes he is".

...

So, wait a minute ... MR or James or whomever can make a wholly unsupported claim, but when John says, "no, that isn't how it works. Please provide some proof that what you're saying is what really happened", and then it's JOHN'S responsibility to make the case that MR's case is WRONG??? The original claim was never supported to begin with!!

I don't think you understand this whole debate thing as well as you think you do.

 

[Critter7r]

That's a bit of an exaggeration, John. The U.S. has been in existence since 1789. The debt only existed since 1835. Clearly, disaster has been looming for 181 years. But that's nothing: Britain hasn't been debt-free since at least 1692.

AAANNNNNNDDD!!! Don't forget that in two (or three, I forget) non-consecutive years during that measly 181 years, there was NO debt!! Those were banner years!!