What's so bad about federal deficits and/or the national debt?

[imagep]

Is it a political choice? I guess I'm asking if inflation makes the choice for you - is inflation the indicator where "your economy can meet the increased demand". It seems to me, we're not necessarily looking for "full" employment since it is incredibly hard to quantify "full", both in terms of who is working and for how much. Instead we're looking for how much deficit dollars can be added before we get inflation.

If those deficit dollars result in the production of new goods and services, then there is no reason that those deficit dollars would cause inflation is there? All of those dollars would be backed by the value of the goods and services that result from them. But I can't really imagine why those dollars wouldn't result in the production of a sufficient value to back them, unless there was some sort of restriction in our ability to produce, such as a oil shortage.

I also suspect that it does matter where the government get's the deficit dollars from. If they are coming from the private sector, then they don't represent the creation of new dollars, and thus they don't dilute our money supply any. Seems to me that when the private sector purchases treasuries, this is money that otherwise would have been idle (as in stored in piggy banks or otherwise unproductively), and the government is just putting it back to good use.

When the fed purchases those treasuries, then I supposed that is the creation of new money, and thus a dilution of our money supply, and may tend to be more inflationary if those dollars don't result in adequate production.

 

[JohnfrmClevelan]

Is it a political choice? I guess I'm asking if inflation makes the choice for you - is inflation the indicator where "your economy can meet the increased demand". It seems to me, we're not necessarily looking for "full" employment since it is incredibly hard to quantify "full", both in terms of who is working and for how much. Instead we're looking for how much deficit dollars can be added before we get inflation.

Full employment wouldn't be hard to define - if you guaranteed a job for everyone who wanted to work, then anybody who wasn't working would be out of work by choice.

Significant inflation shouldn't hit unless/until you run into shortages (labor, energy, raw materials, etc.), and the obvious choice here is to make labor the first thing you run short of (safe assumption that public sector jobs aren't going to eat up a lot of raw materials). So that is definitely a political choice, since the govt. would be hiring the excess labor and setting the wage floor. But if we ever hit the point of demand-pull inflation (too much demand in general), I think inflation would be a big enough problem that it would take precedence.

 

[JohnfrmClevelan]

I also suspect that it does matter where the government get's the deficit dollars from. If they are coming from the private sector, then they don't represent the creation of new dollars, and thus they don't dilute our money supply any. Seems to me that when the private sector purchases treasuries, this is money that otherwise would have been idle (as in stored in piggy banks or otherwise unproductively), and the government is just putting it back to good use.

When the fed purchases those treasuries, then I supposed that is the creation of new money, and thus a dilution of our money supply, and may tend to be more inflationary if those dollars don't result in adequate production.

It's the same either way. Deficit spending adds net govt.-created assets to the economy, bonds or dollars or both. No matter who buys the bonds, the private sector or the Fed, dollars enter the economy through spending, and they end up buying bonds on the back end. There is a steady increase in the number of loose dollars in circulation, too. (I'm not 100% sure where you account for those.)

Anyway, whether you hold dollars or exchange them for bonds, you still have the same purchasing power, if you wanted to spend or invest. Bonds don't prevent spending. There's about $10(?) trillion in non-govt. hands that is available for spending/investing.

 

[pdog]

If those deficit dollars result in the production of new goods and services, then there is no reason that those deficit dollars would cause inflation is there? All of those dollars would be backed by the value of the goods and services that result from them. But I can't really imagine why those dollars wouldn't result in the production of a sufficient value to back them, unless there was some sort of restriction in our ability to produce, such as a oil shortage.

I guess I'm trying to address the long term, external "value" of our dollar. In my head there must be a difference between us providing jobs at chucky cheese vs providing education (thus more professors, etc) which eventually solves world problems (cancer, sustainable energy, etc). If we were isolationists with a completely self sustaining economy, then any labor against the dollar seems to been fine. But it seems to me we would be better off if there is continued desire for our currency, even if it's not for "borrowing" it back. Am I crossing wires somewhere. I'm just having trouble treating production as just production when that word has a great many shades. Maybe it's the aggregate that I'm missing - maybe starting with the bottom, no matter how simply, would accomplish "great things" naturally. But I tend not to think so. Private business doesn't seem to be to great at making the big risks - just short term profits. Leave chucky cheese for them, let the government cure cancer.

 

[pdog]

Full employment wouldn't be hard to define - if you guaranteed a job for everyone who wanted to work, then anybody who wasn't working would be out of work by choice.

Is it really that simple? How do you choose the wage floor? In the theme of my last post, assuming that a person all the way to a 50k salary spends 100% of their earnings, then from the aspect of the economy isn't that hardly different than spending 10k on 5 jobs? What if you put 50k into the system (over 1 or 5 people) and you still didn't see inflation - despite having a job everybody was still willing to "produce" more - at least produce something that is of higher quality. Couldn't put more money into the system.

I guess I'm trying to say that I see no way for anybody to know how much money is the "right" amout of money to put into the system. You can only experiment and look for the feedback. And the only feedback that I see that we have a bit of a grasp on is inflation.

 

[pdog]

Right. Dollars flow from poor to rich - the production they elicit along the way is wealth. And the cycle stops when that dollar is hoarded away by the rich. The key to lower deficits is to make those dollars last longer and cycle around the economy more before they are hoarded away.

I had to come back to this (sorry, I get new ideas at random times).

So why not just "tax the rich". Wouldn't that make those dollars last longer? Again tough to separate from keynesianism - totally get the adversion to "paying back" debt, but it definately seems like we can put existing dollars back to productive use and rely on less deficit spending.

Is this really that different from the gold standard? In order to get more money we'd have to get more gold right? We'd literally pay somebody to take a shiny rock out of the ground. What is the difference to paying somebody the same wage to type a treasury. I realize there's no universal desirability with a treasury, but beyond that, how is it different from the aspect of money creation?

 

[imagep]

...If we were isolationists with a completely self sustaining economy....

this is a little off topic, but I think that due to changes in the world economy, mostly rising labor rates abroad, and improvements in technology, ultimately most nations will become mostly self sustaining, and international trade will diminish.

A computer or robot can be operated just as cheap in the US as in any other country, and the US is large enough and diverse enough in climate and geology, that we have most all of the natural resources that we need. Over time, there will be less and less need for foreign trade, especially since there is less and less need for human labor. Any efficiencies saved by foreign trade wont be enough to offset the cost of transportation and import/export red tape.

A lot of people are blaming our economic woes on immigrants, and their might be some validity to that, but the way I see it, right now we either import cheap labor or we import the goods produced by cheap labor, either way the result it about the same. But long term we won't have much need for cheap labor, it will all be replaced by technology, so it really won't matter. Outsourcing to China is little different to our economy than outsourcing to technology.

Which brings me to the question of whether we should be planning our economy for what it is today, or what it will be in decades to come.

 

[imagep]

I had to come back to this (sorry, I get new ideas at random times).

So why not just "tax the rich". Wouldn't that make those dollars last longer? ...

that's about the way I see it. Dollars never wear out, they just disappear into unproductive investments and unproductive savings. We have to keep replacing those disappeared dollars by printing more and distributing them to the bottom so that they can cycle and trickle up.

We could just as easily tax away those unproductive dollars and put them back into our main street economy, rather than to keep printing new ones. It would harm the standard of living of no one, and help even out whatever economic and political power advantages that the rich and uber rich have over the poor and middle class.

 

[jaeger19]

What are the consequences of paying back a loan in the currency that was loaned?

None.. as long as that currency is perceived to have value. I have explained this several times. If the way you try to pay back that loan is to devalue that currency by simply printing more.. then the consequence is that your currency will have no value and others will not want to do business with you.

Things don't work that way? Because you say so? Wow what an awesome debate this is?

No... things don't work that way because the underlying assumptions of MMT are incorrect. Largely because the believers of MMT fail to recognize that what they observe happening.. is actually the result of people that understand that deficits and debt matter and that its not as simple as having a printing press and ink.

MMT also fails to realize that the reason they don't see the failure of their belief currently (though history certainly has shown it) is because other countries work hard to prevent what would happen if countries really did operate on a MMT belief.

So you’re assertion is that MMT is not very valid because a)because you said so and b) because things don’t change. Got it. Awesome.

Nope.. I pointed out why it was not valid. The observations that have been made here.. about "well look at how other countries are doing well, and look china is on MMT and they do great".. blah blah... these observations don't take into account that the rest of the world by and large does NOT operate under MMT principles and specifically AVOIDS doing such. Why do you think the Chinese expressed concern over the US debt load and the effect it might have on paying interest on the US bonds they held? If they were such believers in MMT, they shouldn't care because the US could just fire up the press.

Which real world are you talking about? Personal/regional/state finances or one a country with it’s own currency. The assertion is that these two things are NOT the same, for reasons that you conceded – we create the money that can service the “debt” we accumulate. Don’t jump down the hyperinflation trail yet, just let that key difference soak in.

The real world is a global one.. and the idea that its "one country with its own currency".. is a faulty paradigm.

Again – assertion with no evidence. I have no idea why I’m supposed to or not supposed to believe this.

The evidence is all around you. Look at how almost all the major economies take care abou their deficit and their debt. If according to you.. they can just print money to pay their bills, then they should not have to worry.

Wait, you don’t believe it because it’s never been done before???

no... I don't believe it because history has proven such assertions false. MMT believers say "look it works".. see no hyper inflation, no doom and gloom, etc etc... because they have not seen such things in the last 60 or so years. And that's because the world has worked hard to prevent such things. In earlier times, the idea that a country could just print itself out of debt, that the only thing that was a problem is hyperinflation etc, have been shown to simply not been true.

Wow I thought hyperinflation was gloom and doom. Nice one-upper

That's reality. One that we forget at our peril. We have had two world wars in almost less than a generation (though we are forgetting).. those wars came about largely, as most wars do.. from economic reasons.

 

[JohnfrmClevelan]

I guess I'm trying to address the long term, external "value" of our dollar. In my head there must be a difference between us providing jobs at chucky cheese vs providing education (thus more professors, etc) which eventually solves world problems (cancer, sustainable energy, etc). If we were isolationists with a completely self sustaining economy, then any labor against the dollar seems to been fine. But it seems to me we would be better off if there is continued desire for our currency, even if it's not for "borrowing" it back. Am I crossing wires somewhere. I'm just having trouble treating production as just production when that word has a great many shades. Maybe it's the aggregate that I'm missing - maybe starting with the bottom, no matter how simply, would accomplish "great things" naturally. But I tend not to think so. Private business doesn't seem to be to great at making the big risks - just short term profits. Leave chucky cheese for them, let the government cure cancer.

This is where the debate gets political. MMT proponents are still at the (very slow) stage where we are still trying to get it across to people that the government does not go into debt that they later have to climb out of with the proceeds of their investments. The whole cost/benefit analysis that is debated every four years is based on this incorrect belief. Most MMTers are in favor of increased government spending because we understand that more government spending does not have the negative effects that most people (and economists) are worried about. But you have already witnessed how spending debates deteriorate. Ignorance spreads like dandelions.

So of course it is better to have research positions available than jobs at Chuck E. Cheese's, but one does not come at the expense of the other. The private sector does a very nice, efficient job at some things, and pretty much everybody agrees that it should be left to do what it does best - put stuff on the shelves to buy. There are plenty of resources not being used (including labor) for the public sector to fund research, build bridges, etc. Everything necessary is already in place, save for a willingness to deficit spend (or tax) to fund such things.

Is it really that simple? How do you choose the wage floor? In the theme of my last post, assuming that a person all the way to a 50k salary spends 100% of their earnings, then from the aspect of the economy isn't that hardly different than spending 10k on 5 jobs? What if you put 50k into the system (over 1 or 5 people) and you still didn't see inflation - despite having a job everybody was still willing to "produce" more - at least produce something that is of higher quality. Couldn't put more money into the system.

I guess I'm trying to say that I see no way for anybody to know how much money is the "right" amout of money to put into the system. You can only experiment and look for the feedback. And the only feedback that I see that we have a bit of a grasp on is inflation.

Exactly, inflation is the limit. But, as you said, it's hard to know how much is the "right" amount of money, how much is the "right" amount of taxation, etc. It boils down to being a political choice. The theoretical answer is that you can spend until you hit inflation, which (I think) can go beyond just 100% employment. Who knows where the real limit is, because we have tons of unused resources right now. But some of those resources are limiting right now, in that there are real tradeoffs. For instance, we have lots of available energy, but how much fracking do you want to allow to get it?

To my way of thinking, you set a wage floor (fairly arbitrarily), get to 100% employment, and see where things go from there. Then periodically bump up the wage floor.

The other consideration with deficit spending is how much/how fast it piles up in the hands of the rich, and how much you claw back with taxes. Because no matter how much good the initial spending does, and how many times dollars cycle around in the economy, dollars are still going to pile up in the hands of capitalists, and that brings its own set of problems.

I had to come back to this (sorry, I get new ideas at random times).

So why not just "tax the rich". Wouldn't that make those dollars last longer? Again tough to separate from keynesianism - totally get the adversion to "paying back" debt, but it definately seems like we can put existing dollars back to productive use and rely on less deficit spending.

Sure, you can do that. But how much? That's not an MMT question, that's (again) a political question. (Sorry to keep going back there.)

There is no "aversion" to "paying back debt." That "debt" is just money previously earned. There are two ways to eliminate it (if that's what you want to do): you can claw it back with taxes (which doesn't work for bonds held by other countries), or you can draw it back into the economy and recycle it that way. Or number three, you can try to minimize the deficits/debt and wait for inflation to whittle down the piles. There are problems with any approach.

Is this really that different from the gold standard? In order to get more money we'd have to get more gold right? We'd literally pay somebody to take a shiny rock out of the ground. What is the difference to paying somebody the same wage to type a treasury. I realize there's no universal desirability with a treasury, but beyond that, how is it different from the aspect of money creation?

Because you can't always get more gold, even if you are the U.S. government. (And even if you could, you had to trade real resources to buy that gold.) Bonds back then had a very real element of risk. Plus, international trade meant that gold piled up in a few hands. If your gold when overseas, so did your ability to back that much currency. America collected so much gold after WWII that we had to send tons of money overseas just to keep trade going.

 

[JohnfrmClevelan]

None.. as long as that currency is perceived to have value. I have explained this several times. If the way you try to pay back that loan is to devalue that currency by simply printing more.. then the consequence is that your currency will have no value and others will not want to do business with you.

Picture a teller window at the Fed. On the outside is the economy (which includes both the domestic economy and foreign countries); on the inside is the government. There are $10 trillion net dollars in the economy. The government has $10 trillion in liabilities.

You come up to the window with $1 billion that you have earned, and you want to buy a bond. Fine, the govt. prints up a $1 billion bond. You hand $1 billion through the window, and they hand you the bond. You still have $1 billion, the economy still has $10 trillion, and the government still has $10 trillion in total liabilities.

When your bond matures, you bring it back to the Fed's window, give them the bond, and they give you back $1.01 billion in dollars. You now have $1,010,000,000; the economy now has $1,000,010,000,000; and the government now has $1,000,010,000,000 in total liabilities.

What, exactly, are you calling "money printing"? The $1.01 billion? Or the $0.01 billion in interest?

 

[imagep]

...
What, exactly, are you calling "money printing"? The $1.01 billion? Or the $0.01 billion in interest?

When the roi on treasuries is negative adjusted for inflation, are we essentially "unprinting" money?

Sorry, these weird little things that don't make any sense keep popping into my mind.

 

[jaeger19]

Walmart has never refused my dollars, and I don't expect them to ever refuse my dollars. Even the treasury requires me to pay my taxes in dollars, and I expect them to continue requiring me to pay my taxes in dollars - they don't accept gold or chickens for payment.

Thus, the dollar has value, and will continue to have value.

Thanks for making that point. Now what are we debating?

Yep.. you certainly expect that they will. Other countries have expected the same thing. Heck, at one time, the Confederate states thought that their currency would be great forever too. I am sure at the height of the Roman empire, the citizens of Rome felt that same way.

But things don't stay the same.

The reason that your dollar has value.. is in large part because the government of the united states is careful NOT to subscribe to the philosophies of "well dollars and bonds are the same thing, you can never default if you just print money" and debts and deficits don't matter. Its that combined with our economic and military might that gives the dollar value.

 

[jaeger19]

Picture a teller window at the Fed. On the outside is the economy (which includes both the domestic economy and foreign countries); on the inside is the government. There are $10 trillion net dollars in the economy. The government has $10 trillion in liabilities.

You come up to the window with $1 billion that you have earned, and you want to buy a bond. Fine, the govt. prints up a $1 billion bond. You hand $1 billion through the window, and they hand you the bond. You still have $1 billion, the economy still has $10 trillion, and the government still has $10 trillion in total liabilities.

When your bond matures, you bring it back to the Fed's window, give them the bond, and they give you back $1.01 billion in dollars. You now have $1,010,000,000; the economy now has $1,000,010,000,000; and the government now has $1,000,010,000,000 in total liabilities.

What, exactly, are you calling "money printing"? The $1.01 billion? Or the $0.01 billion in interest?

Problem... the government has more than 10 trillion in liabilities... because they are liable for the interest on the bond as well as the bond.. so now they have 10 trillion plus a billion plus interest (and not just the interest on my bond.. but the interest on all the other bonds as well).

Second problem. Where did they get the money to pay me at the window? If simply ramped up the printing press and increase the money supply.. now my bond and interest are worth less. If done enough... they are worthless.

 

[imagep]

... simply ramped up the printing press and increase the money supply.. now my bond and interest are worth less. If done enough... they are worthless.

That's always possible, but not likely.

People investing in our bonds take that into account, yet they still purchase, and purchase at low yield rates. Obviously, they are using money that isn't particularly valuable to them (excess money that they don't really need), or either they simply don't think it's likely that we are going to print so much that it becomes worthless.

Anyhow, so what? If you really believe that dollars are going to become worthless, then you should exchange them for whatever you feel will retain it's value, like land or gold or stocks or whatever. No one is stopping you from doing that. as a matter of fact, you now have MORE freedom to purchase gold than you did when we were on the gold standard.

 

[JohnfrmClevelan]

Problem... the government has more than 10 trillion in liabilities... because they are liable for the interest on the bond as well as the bond.. so now they have 10 trillion plus a billion plus interest (and not just the interest on my bond.. but the interest on all the other bonds as well).

You know, I was just taking a guess for the sake of the example, but I was pretty close. Out of $17 trillion in bonds, the federal govt. owns 41% of that, and 59% is held by various other entities. 59% of 17 trillion is 10.03 trillion. Plus, there is about 1.2 trillion in loose dollars. So the government's total liability is 11.2 trillion in real life. I'm sure you'll want to count internal holdings as well, as it feeds into your paranoia, but I think it's ridiculous to count that.

Your $1 billion, btw, was part of the $10 trillion held by the non-governmental sector.

The interest is new money. Is that your big concern, the interest?

Second problem. Where did they get the money to pay me at the window? If simply ramped up the printing press and increase the money supply.. now my bond and interest are worth less. If done enough... they are worthless.

You handed over $1 billion when you bought the bond, remember? $10 million (the interest) is new money, but the $1 billion is the same old money you traded in for the bond. So if that's what you imagined to be "money printing," you were waaaaaaay off.

 

[JohnfrmClevelan]

When the roi on treasuries is negative adjusted for inflation, are we essentially "unprinting" money?

Sorry, these weird little things that don't make any sense keep popping into my mind.

No, because we're still increasing the number of dollars.

 

[Born Free]

You'll get no disagreement from me that politicians suck up to the lowest common denominator in order to win votes. Plus I don't fault anybody with household economic thinking since I was once one of them. It's the people the people that have a religion that they refuse to deviate from that are a bigger problem.

What do you say BF. Fenton refused to answer a simple yes or no question. Will you take me up on the challenge? Or do you want to continue posting video clips that support your ideas?

Try answering my post 142, JC could not respond to it. Maybe you can.

 

[pdog]

Try answering my post 142, JC could not respond to it. Maybe you can.

Can you be specific? The focus there is the credit downgrade but it's a pretty big post with quite a few questions.

 

[Eric7216]

I asked this question many times in other threads, and I never have received a coherent answer, so let's try it again.

What are the negative aspects of running federal deficits?

What are the positive aspects of running federal surpluses?

What are the negative aspects of government debt?

What are the positive aspects of lowering government debt?

I think that John Maynard Keynes answers those questions as well as anyone and he seems to be recognized as a believer in deficit spending. Of course, that is not completely true.

"His radical idea that governments should spend money they don't have may have saved capitalism."[

, to quote Time Magazines statement about Keynes. But Keynes was opposed to the high price demanded from Germany after WW1 and Germany's struggles to pay the debt led to WW2.

Keynes's predictions of disaster were borne out when the German economy suffered the hyperinflation of 1923, and again by the collapse of the Weimar Republic and the outbreak of World War II.

Keynes did not support deficit spending, even in times of war.

During World War II, Keynes argued in How to Pay for the War, published in 1940, that the war effort should be largely financed by higher taxation and especially by compulsory saving (essentially workers lending money to the government), rather than deficit spending, in order to avoid inflation.

John Maynard Keynes - Wikipedia, the free encyclopedia

 

[pdog]

I think that John Maynard Keynes answers those questions as well as anyone and he seems to be recognized as a believer in deficit spending. Of course, that is not completely true.
, to quote Time Magazines statement about Keynes. But Keynes was opposed to the high price demanded from Germany after WW1 and Germany's struggles to pay the debt led to WW2.



Keynes did not support deficit spending, even in times of war.


John Maynard Keynes - Wikipedia, the free encyclopedia

What about in peace time?

 

[JohnfrmClevelan]

Keynes did not support deficit spending, even in times of war.

That's not true at all. Keynes supported deficit spending to keep up aggregate demand when the economy slumped. When Keynes suggested paying for WWII with compulsory saving and higher taxes, it was because he recognized that the economy would not have been able to keep up with both the (government's) demand of the war effort plus normal consumer demand, and inflation would ensue. The purpose of saving and taxation was to curb consumer demand.

Welcome to the discussion, btw. :2wave:

 

[JohnfrmClevelan]

Try answering my post 142, JC could not respond to it. Maybe you can.

JC responded to it just fine. You just didn't like my answer.

 

[Born Free]

Can you be specific? The focus there is the credit downgrade but it's a pretty big post with quite a few questions.

Be my quest answer them all.

You see your argument is not with me. You and JC need to take on Obama and his many speeches about our national debt and our deficit, you said yourself he is an idiot, so expand why he is dead wrong according to you and JC. You know the video. You need to take on all the credit agencies that measure and grade our national debt and deficit and who issue downgrades for being able to pay our debt. You need to take on all the economists that say our national debt and deficits mean something. Take on Congress who say our debt and deficits mean something. And you need to take on Congress for taxing the people, if the national debt and deficits mean nothing why tax the people.

According to you and JC all the government has to do is push a button and all the debt and deficits go away. But it's worse than that according to you and JC there really is no national debt or deficits.

So have at it, go take on all these agencies and institutions around the world that say we really have a national debt problem and deficits matter. Like in my post 142 where I quoted the reason for the downgrade and that downgrade is still in effect.

But of course JC avoided to take on the downgrade and the reason it is still in effect. Really if the national debt and deficits don't matter why the world are institutions even grading our debt in the first place.

Again your argument is not with me but with all the institutions in the world and the people in our own government like Obama that says our national debt and deficits do matter. Hell take on Obama's speech, it's not just a video and it's not a joke, it's him, our president, speaking to the American people. Yet you toss it aside as a video that someone made up.

Why do we even have a national debt clock? According to you and JC it's meaningless.

You have your work cut out taking on all the institutions and governments around the world and our government and convince them our national debt and deficits don't matter and it can all go away with a push of a button.

 

[Mizuho]

Be my quest answer them all.

You see your argument is not with me. You and JC need to take on Obama and his many speeches about our national debt and our deficit, you said yourself he is an idiot, so expand why he is dead wrong according to you and JC. You know the video. You need to take on all the credit agencies that measure and grade our national debt and deficit and who issue downgrades for being able to pay our debt. You need to take on all the economists that say our national debt and deficits mean something. Take on Congress who say our debt and deficits mean something. And you need to take on Congress for taxing the people, if the national debt and deficits mean nothing why tax the people.

Taxation is merely a means to curb the money supply and prevent inflation. The only reason they actually take money form taxpayers instead of simply injecting less money into the economy is that dumb people who think their tax dollars pay for the debt provide a form of check on the government to ensure productive investments. It's odd in a way because people like you who think taxes are actually tied to the deficit are wrong, and yet in your ignorance you do discipline the government into more efficient investments.

According to you and JC all the government has to do is push a button and all the debt and deficits go away. But it's worse than that according to you and JC there really is no national debt or deficits.

That's true. But clearly if we operated in such a manner and it was understood by the public, there wouldn't be much constraint on politicians to productively allocate what the government spends. To look at it another way, pulling down the interest rate (or QE once we hit zero), is really just the Fed buying government debt through a middle man (banks) with money it has created out of thin air.

So have at it, go take on all these agencies and institutions around the world that say we really have a national debt problem and deficits matter. Like in my post 142 where I quoted the reason for the downgrade and that downgrade is still in effect.

Well of course they have to say that, it puts political pressure on governments to make more productive investments.

But of course JC avoided to take on the downgrade and the reason it is still in effect. Really if the national debt and deficits don't matter why the world are institutions even grading our debt in the first place.

Because it measures the productivity of how the government is allocating new money! it also should be noted that countries that do not control their own currency, like Italy, cannot simply monetize their debt like the US or UK can. We won't "default" because we can always print more dollars to pay down any debt (obviously at the cost of ruinous inflation but the point remains in theory). Italy can default because it can't simply print euros of it's own accord to pay down debt. So in that sense it does matter to countries like Italy.

Again your argument is not with me but with all the institutions in the world and the people in our own government like Obama that says our national debt and deficits do matter. Hell take on Obama's speech, it's not just a video and it's not a joke, it's him, our president, speaking to the American people. Yet you toss it aside as a video that someone made up.

Why do we even have a national debt clock? According to you and JC it's meaningless.

You have your work cut out taking on all the institutions and governments around the world and our government and convince them our national debt and deficits don't matter and it can all go away with a push of a button.

It's a matter of perspective. Our government has a blank check but if they operated in such a manner then they would do what all people with blank checks do. Abuse it until something stops them. But because people like you think deficits have to be paid back by taxes and other nonsense, it creates a strong political check on the government not keep spending money in progressively worse investments. Unfortunately you lot take it a bit to far and prevent the government from making good investments because of your ideological dogma that deficits are bad. This is what leads to absurd but necessary policies like QE, where the fed ends up injecting money into the economy in an extremly inefficient manner that primarily benefits bankers and financiers.