I think that pretty much every thread in this "Government Spending and Debt" section misses the mark in a fundamental way. Governments with their own currency do not go into true, household-type debt when they issue bonds. It is simply another way that governments exercise their power to create and spend their own currency.
When our government deficit spends, it does so by issuing bonds. The private sector buys those bonds, and the government promptly spends the proceeds right back into the economy; the net result is an increase in bonds held by the PS as rock-solid assets, an increase in aggregate demand, and no change in the number of dollars. (The Fed adjusts the number of reserves/dollars up or down in a separate operation, as they see fit.) The government essentially buys what it wants by issuing bonds, and those bonds never need to be extinguished (just maintained, by issuing more bonds). i.e., the government is self-funding, and does not borrow in order to spend. Understanding this changes the whole cost/benefit analysis of government spending.
For reference, GDP = G + C + I + (X-M). G is govt. spending, including deficit spending, C is consumption, I in investment, and (X-M) is net exports.
So why do we run deficits, anyway? Discuss.
Deficits exist because tax income is less than expenditure.
Debt exists because, as you say, US treasuries are isseud to cover the difference.
G is government purchases by the way, not simply government spending. It's a subtle yet important distinction.
These are the obvious easy answers, of course. I was trying to get into a discussion about the dollars - why the economy needs an exogenous source of demand even when the national income should be enough to consume all production.
We get to export Dollars as a result of our trade imbalances. This leaves cash in countries which is often used to purchase US Treasuries.
We get to export Dollars as a result of our trade imbalances. This leaves cash in countries which is often used to purchase US Treasuries.
Because we don't take in enough revenue to redeem mature bond plus issue. new bonds for new debts. Every year's budget has to fund all the current obligations, finance new spending and pay interest on outstanding issues. This past year interest on the debt was higher than FY 2025 military spending.I think that pretty much every thread in this "Government Spending and Debt" section misses the mark in a fundamental way. Governments with their own currency do not go into true, household-type debt when they issue bonds. It is simply another way that governments exercise their power to create and spend their own currency.
When our government deficit spends, it does so by issuing bonds. The private sector buys those bonds, and the government promptly spends the proceeds right back into the economy; the net result is an increase in bonds held by the PS as rock-solid assets, an increase in aggregate demand, and no change in the number of dollars. (The Fed adjusts the number of reserves/dollars up or down in a separate operation, as they see fit.) The government essentially buys what it wants by issuing bonds, and those bonds never need to be extinguished (just maintained, by issuing more bonds). i.e., the government is self-funding, and does not borrow in order to spend. Understanding this changes the whole cost/benefit analysis of government spending.
For reference, GDP = G + C + I + (X-M). G is govt. spending, including deficit spending, C is consumption, I in investment, and (X-M) is net exports.
So why do we run deficits, anyway? Discuss.
Oooo, ooo, I know!, I know! Pick me!!! Pick me!!!....lolwhy can't we just run a balanced budget and pay for it all with taxes?
Oooo, ooo, I know!, I know! Pick me!!! Pick me!!!....lol
I'm sorry to have to point this out. But people really need to stop using this quote. "Infinite growth" is not a thing. The human race 30 years ago was predicted to hit a global population rate of 11 billion (today the replacement rate is falling and we're likely to hit max population sooner than expected). At best what you have is perpetual growth and as far as a "finite planet", the planet is not finite in any real real terms. If you took every human being on earth and put them in the same place, we'd all fit in an area about 500 square miles. From a human perspective, the earth is, for all intents and purposes infinite, especially when you consider that the suns energy is constantly promoting renewal.but can we truly expect infinite growth on a finite planet?
I dunno /shrug. I don't now how I missed this thread!Where were you a week ago?
Capitalism requires growth in profits to succeed someday thats not going to be feasible not in the malthusian way but under capitalism we’re not able to allow ourselves a break from the growth in profits else we have downturns.I'm sorry to have to point this out. But people really need to stop using this quote. "Infinite growth" is not a thing. The human race 30 years ago was predicted to hit a global population rate of 11 billion (today the replacement rate is falling and we're likely to hit max population sooner than expected). At best what you have is perpetual growth and as far as a "finite planet", the planet is not finite in any real real terms. If you took every human being on earth and put them in the same place, we'd all fit in an area about 500 square miles. From a human perspective, the earth is, for all intents and purposes infinite, especially when you consider that the suns energy is constantly promoting renewal.
I think what the quote you've posted alludes to is that as humanity increases it's global footprint, it becomes more and more important to be responsible stewards of the land we occupy, or we risk making the planet uninhabitable, but we shouldn't handwave away the idea that we can continue to grow and that growth means that at some point we'll reach some theoretical end.
Actually the planet is finite in the resources it has. Thats just a plain truth. We dont have even by your reasoning an infinite planet of resources. Thats patently absurd. Ive never heard any actual economist claim this.I'm sorry to have to point this out. But people really need to stop using this quote. "Infinite growth" is not a thing. The human race 30 years ago was predicted to hit a global population rate of 11 billion (today the replacement rate is falling and we're likely to hit max population sooner than expected). At best what you have is perpetual growth and as far as a "finite planet", the planet is not finite in any real real terms. If you took every human being on earth and put them in the same place, we'd all fit in an area about 500 square miles. From a human perspective, the earth is, for all intents and purposes infinite, especially when you consider that the suns energy is constantly promoting renewal.
I think what the quote you've posted alludes to is that as humanity increases it's global footprint, it becomes more and more important to be responsible stewards of the land we occupy, or we risk making the planet uninhabitable, but we shouldn't handwave away the idea that we can continue to grow and that growth means that at some point we'll reach some theoretical end.
Capitalism requires growth in profits to succeed someday thats not going to be feasible not in the malthusian way but under capitalism we’re not able to allow ourselves a break from the growth in profits else we have downturns.
Theoretically. Hows that been going for ya?That's more of a concentration-of-money problem, though, which is fixable.
Theoretically. Hows that been going for ya?
I used to ride the DC metro into (drum roll plz), DC.Just printing the money that the government wants to spend results in a excess of dollars driving the currency downward thereby [the b]uying power of average citizens goes down with it.
I would agree there are aspects of US capitalism that are fundamentally unsustainable.Capitalism requires growth in profits to succeed someday thats not going to be feasible not in the malthusian way but under capitalism we’re not able to allow ourselves a break from the growth in profits else we have downturns.
In theory, yes, but what is it that you think we're going to run out of that can't be replaced?Actually the planet is finite in the resources it has.
So assume infinite until we run out? We cant infinitely burn fossil fuels and still have a planet we can live on because that would just recreate the carboniferous period. We cant infinitely dump unlimited garbage and we cant recycle our plastics anymore. We can feed everyone yes thoughIn theory, yes, but what is it that you think we're going to run out of that can't be replaced?
So assume infinite until we run out? We cant infinitely burn fossil fuels and still have a planet we can live on because that would just recreate the carboniferous period. We cant infinitely dump unlimited garbage and we cant recycle our plastics anymore. We can feed everyone yes though
Exactly but also the only reason we need infinite line go up is because of capitalism. Its also why not going into debt is so scary.Renewable energies are more than enough, they are just untapped. Water doesn't go anywhere. Garbage and recycling issues are a matter of us being both lazy and cheap. But change the priorities (from profits to quality of life), and those are also solvable problems. It looks impossible because we are looking at it through a capitalist lens.
Don't forget paying off the debt they accrue by borrowing, e.g. issuing notes, bills, bonds.Lots of reasons
Emergency spending, economic investment, changes in tax policy, “social spending” exceeding anticipated numbers (healthcare, education, pensions, general welfare), needing to stimulate an economy, economic conditions changing, etc.
There’s no singular answer or reason
Infinite what?So assume infinite until we run out?
Agreed, but there are already viable alternatives and running out of dino soup would certainly accelerate making alternatives feasible. We could, relatively easily convert to any one of the renewables or nuclear and spend greater effort on energy storage. The reason we don't is that fossil fuels are cheap and they have a distinct advantage that no other portable energy source has. Gasoline uses oxygen from the surrounding air to catalyze. The beauty is, you don't have to carry it on board. If you had to bring and store the oxygen required to catalyze 1 gallon of gas (about 6.26lbs) you'd need 2.34 gallons of Liquid 02 weighing in at a whopping 21lbs. For better or worse, that's what makes gasoline so attractive, you only need to carry about 40% of the fuel on board. Batteries have only the energy they bring on board.We cant infinitely burn fossil fuels and still have a planet we can live on
Again, it's not "unlimited", it is perpetual. There is a limit and that limit can increase or decrease. At some point (hopefully soon) we'll do better with policy and create less waste at the point-of-sale, we'll engage in creative problem solving. Right now, the cost of dumping everything is so cost effective there's no appetite for improvement. But there's no reason to believe that there are no improvements to be made. I speculate that there might come a time in the far off future when landfall become a resource as common materials today could be rare and we end up digging up our trash and recycling the things we didn't in the past.We cant infinitely dump unlimited garbage
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