"America is in debt" - To WHOM?? What fool would lend American government money?

[Bombur]

Are you suggesting Congress control monetary policy directly or that the Fed Reserve have more power to control the creation and destruction of currency?

Here's my point: the Treasury doesn't "borrow" from the Federal Reserve in any real sense of the word or what out leaders and media pundits imply. They seem to imply that the FED has some source of $$$$ not available to the Treasury, and that the Federal Reserve lends $$$$ to the Treasury at some market price or something. This is utterly crazy talk. All the FED does is provide a monetary basis for Treasury's fiscal policy.

Either way the people making those decisions is not really the issue and neither is the accounting. I have never argued with your assessment of the accounting btw, I just find the analysis immaterial.

If you found the accounting logic sound, why would you say the federal government has to borrow its own fiat?

In the end you still have a formula with dependent variables. The capacity to issue currency is dependent on inflation. IMO you are essentially trying to merge this variable with the borrowing and taxation variables in an attempt to establish that if there is capacity to issue more currency there is capacity to increase borrowing or decrease taxation. Alternatively I would consider the two as being segregated as the decision to issue more currency should be largely based on inflationary implications and taxation/spending/borrowing should be based on cost benefit analysis.

Inflationary conditions change and the impact of borrowing yesterday has most certainly impacted our spending today.

Spending is only a political decision.

For example, from a macroeconomic perspective, the federal government should base its spending and taxing decisions to ensure that total net spending in the overall economy is enough to produce a sufficient level of real output at which any and all firms employ any and all available labor. Logically, in my opinion, budgets should revolve around this goal.

I'm NOT saying deficits don't matter as some have tried to imply. Yes, only risk is inflation, not insolvency, as many of this board don't seem to understand no matter how many times I walk them through it. With that being said, any type of OVERSPENDING can lead to inflation whether it's exports, consumption, investments, or government spending. Increased government spending isn't always the culprit.

I totally realize that budget deficits can become excessive and they can also be extremely deficient, such as is the case over the last eight years. Budget deficits can be too small or too large, the goal of the federal government should be to get them just right as to employ and and all productive capacity.

The Federal government's budget still has debt service payments. Describing the accounting doesn't negate that fact and it is those payments that ultimately matter.

The limiting factor on spending shouldn't really be inflation but cost benefit analysis. By combining inflationary implications (and to a certain extent employment) you distort the nature of that marginal analysis.

In other words when considering spending the marginal benefit of that spending should be compared to the cost of the marginal change in borrowing (or possibly taxation) as opposed to a marginal change in monetary policy. Monetary policy should essentially be considered first with taxation/borrowing considered last.

 

[Kimura]

The Federal government's budget still has debt service payments. Describing the accounting doesn't negate that fact and it is those payments that ultimately matter.

And? The government will always be able to service its debts. This isn't even really debatable.

Besides taxing and "borrowing", the federal government has an unlimited capacity to issue $$$$. When it taxes and "borrows", $$$$ is removed from the private sector, and when it creates $$$$, it's added to the financial sector in the form of financial assets. Essentially, the deficit is the net amount of $$$$ minus the amount of $$$$ "unprinted" through taxation.

The limiting factor on spending shouldn't really be inflation but cost benefit analysis. By combining inflationary implications (and to a certain extent employment) you distort the nature of that marginal analysis.

In other words when considering spending the marginal benefit of that spending should be compared to the cost of the marginal change in borrowing (or possibly taxation) as opposed to a marginal change in monetary policy. Monetary policy should essentially be considered first with taxation/borrowing considered last.

You said you agreed with my analysis, and you still insist on saying borrowing. From whom is the government borrowing this fiat? Also, the government isn't run like a corporation, it exists to serve public purpose.

It's fiscally ignorant to follow a long-term deficit reduction agenda when we have output gaps and trade deficits. By accounting alone, such a plan would remove more $$$$ from our economy than would happen if such a plan wasn't pursued. If deficit reduction is pursued long enough, we'll see decreased financial assets, which will increase the output gap, decreasing aggregate demand, and this will result in capital and labor becoming atrophied. This will decrease the productive capacity of the US economy, and affect the federal government's ability to to maintain deficits which produce outputs of lasting and required social value without triggering inflationary events.

 

[Kimura]

By the way, I'm not saying government $$$$ is a free lunch. It might look that way, but this is NOT the case. The spending/money creation of the federal government is limited by REAL RESOURCES and LABOR. Basically, the government can buy anything for sale in US $$$$. If it attempts to purchase more than can possibly be supplied (outstripping demand) then prices will get bid up and we'll have inflation. However, with high unemployment rates, the government could create more $$$$ and hire people through a Job Guarantee with no inflationary risk. If the work served public purpose and was useful, it would increase national income and grow the economy, and these workers would have more $$$$ to spend and support businesses, etc.

 

[Bombur]

The Federal government's budget still has debt service payments. Describing the accounting doesn't negate that fact and it is those payments that ultimately matter.

And? The government will always be able to service its debts. This isn't even really debatable.

Besides taxing and "borrowing", the federal government has an unlimited capacity to issue $$$$. When it taxes and "borrows", $$$$ is removed from the private sector, and when it creates $$$$, it's added to the financial sector in the form of financial assets. Essentially, the deficit is the net amount of $$$$ minus the amount of $$$$ "unprinted" through taxation.

The limiting factor on spending shouldn't really be inflation but cost benefit analysis. By combining inflationary implications (and to a certain extent employment) you distort the nature of that marginal analysis.

In other words when considering spending the marginal benefit of that spending should be compared to the cost of the marginal change in borrowing (or possibly taxation) as opposed to a marginal change in monetary policy. Monetary policy should essentially be considered first with taxation/borrowing considered last.

You said you agreed with my analysis, and you still insist on saying borrowing. From whom is the government borrowing this fiat? Also, the government isn't run like a corporation, it exists to serve public purpose.

It's fiscally ignorant to follow a long-term deficit reduction agenda when we have output gaps and trade deficits. By accounting alone, such a plan would remove more $$$$ from our economy than would happen if such a plan wasn't pursued. If deficit reduction is pursued long enough, we'll see decreased financial assets, which will increase the output gap, decreasing aggregate demand, and this will result in capital and labor becoming atrophied. This will decrease the productive capacity of the US economy, and affect the federal government's ability to to maintain deficits which produce outputs of lasting and required social value without triggering inflationary events.

They still have to make the payments now and in the future. This will impact the cost benefit analysis in the present and the future.

I am not interested in semantic games about the word "borrowing." If you have a material point then make it.

I never said it was run like a corporation. Cost benefit analysis in the public sector is vastly different than the private but theoretically it should still take place. I assume you are not arguing against that.

I didn't say we should push deficit reduction now.

 

[Kimura]

The Federal government's budget still has debt service payments. Describing the accounting doesn't negate that fact and it is those payments that ultimately matter.

And? The government will always be able to service its debts. This isn't even really debatable.

Besides taxing and "borrowing", the federal government has an unlimited capacity to issue $$$$. When it taxes and "borrows", $$$$ is removed from the private sector, and when it creates $$$$, it's added to the financial sector in the form of financial assets. Essentially, the deficit is the net amount of $$$$ minus the amount of $$$$ "unprinted" through taxation.

The limiting factor on spending shouldn't really be inflation but cost benefit analysis. By combining inflationary implications (and to a certain extent employment) you distort the nature of that marginal analysis.

In other words when considering spending the marginal benefit of that spending should be compared to the cost of the marginal change in borrowing (or possibly taxation) as opposed to a marginal change in monetary policy. Monetary policy should essentially be considered first with taxation/borrowing considered last.

You said you agreed with my analysis, and you still insist on saying borrowing. From whom is the government borrowing this fiat? Also, the government isn't run like a corporation, it exists to serve public purpose.

It's fiscally ignorant to follow a long-term deficit reduction agenda when we have output gaps and trade deficits. By accounting alone, such a plan would remove more $$$$ from our economy than would happen if such a plan wasn't pursued. If deficit reduction is pursued long enough, we'll see decreased financial assets, which will increase the output gap, decreasing aggregate demand, and this will result in capital and labor becoming atrophied. This will decrease the productive capacity of the US economy, and affect the federal government's ability to to maintain deficits which produce outputs of lasting and required social value without triggering inflationary events.

They still have to make the payments now and in the future. This will impact the cost benefit analysis in the present and the future.

I am not interested in semantic games about the word "borrowing." If you have a material point then make it.

I never said it was run like a corporation. Cost benefit analysis in the public sector is vastly different than the private but theoretically it should still take place. I assume you are not arguing against that.

I didn't say we should push deficit reduction now.

And? So we have to make payments in the future? There isn't any type of nominal crisis or real crisis, at all. There's no such thing as a future debt burden, or passing on debts to our children or grandchildren. In economics, this concept simply doesn't exist, whereby we must sacrifice today's output for some date in the past, and then rolling it over to generations before us. Just sayin'....

 

[Bombur]

By the way, I'm not saying government $$$$ is a free lunch. It might look that way, but this is NOT the case. The spending/money creation of the federal government is limited by REAL RESOURCES and LABOR. Basically, the government can buy anything for sale in US $$$$. If it attempts to purchase more than can possibly be supplied (outstripping demand) then prices will get bid up and we'll have inflation. However, with high unemployment rates, the government could create more $$$$ and hire people through a Job Guarantee with no inflationary risk. If the work served public purpose and was useful, it would increase national income and grow the economy, and these workers would have more $$$$ to spend and support businesses, etc.

I would be all for the government tweaking tax policy and health care benefit policy to try and help the weak labor markets. I would be all for it for both long term implications and short term adjustments to deal with unemployment and underemployment.

Ultimately trade policy can only do so much to react to capital inflows. I have no problem with taking advantage of inelastic demand for the USD.

 

[HimlerAspartame]

America owes money to the FEDERAL RESESERVE.
THEY CONTROL ALL YOUR MONEY.
IT IS OWNED BY THE ROCKEFELLAS.
The federal reserve has it's own laws,
And the American government cannot do nothing about it.

 

[Bombur]

And? The government will always be able to service its debts. This isn't even really debatable.

Besides taxing and "borrowing", the federal government has an unlimited capacity to issue $$$$. When it taxes and "borrows", $$$$ is removed from the private sector, and when it creates $$$$, it's added to the financial sector in the form of financial assets. Essentially, the deficit is the net amount of $$$$ minus the amount of $$$$ "unprinted" through taxation.



You said you agreed with my analysis, and you still insist on saying borrowing. From whom is the government borrowing this fiat? Also, the government isn't run like a corporation, it exists to serve public purpose.

It's fiscally ignorant to follow a long-term deficit reduction agenda when we have output gaps and trade deficits. By accounting alone, such a plan would remove more $$$$ from our economy than would happen if such a plan wasn't pursued. If deficit reduction is pursued long enough, we'll see decreased financial assets, which will increase the output gap, decreasing aggregate demand, and this will result in capital and labor becoming atrophied. This will decrease the productive capacity of the US economy, and affect the federal government's ability to to maintain deficits which produce outputs of lasting and required social value without triggering inflationary events.

They still have to make the payments now and in the future. This will impact the cost benefit analysis in the present and the future.

I am not interested in semantic games about the word "borrowing." If you have a material point then make it.

I never said it was run like a corporation. Cost benefit analysis in the public sector is vastly different than the private but theoretically it should still take place. I assume you are not arguing against that.

I didn't say we should push deficit reduction now.

And? So we have to make payments in the future? There isn't any type of nominal crisis or real crisis, at all. There's no such thing as a future debt burden, or passing on debts to our children or grandchildren. In economics, this concept simply doesn't exist, whereby we must sacrifice today's output for some date in the past, and then rolling it over to generations before us.

We are making debt payments now that impact consumption now.

 

[Rshermr]

And? The government will always be able to service its debts. This isn't even really debatable.

Besides taxing and "borrowing", the federal government has an unlimited capacity to issue $$$$. When it taxes and "borrows", $$$$ is removed from the private sector, and when it creates $$$$, it's added to the financial sector in the form of financial assets. Essentially, the deficit is the net amount of $$$$ minus the amount of $$$$ "unprinted" through taxation.



You said you agreed with my analysis, and you still insist on saying borrowing. From whom is the government borrowing this fiat? Also, the government isn't run like a corporation, it exists to serve public purpose.

It's fiscally ignorant to follow a long-term deficit reduction agenda when we have output gaps and trade deficits. By accounting alone, such a plan would remove more $$$$ from our economy than would happen if such a plan wasn't pursued. If deficit reduction is pursued long enough, we'll see decreased financial assets, which will increase the output gap, decreasing aggregate demand, and this will result in capital and labor becoming atrophied. This will decrease the productive capacity of the US economy, and affect the federal government's ability to to maintain deficits which produce outputs of lasting and required social value without triggering inflationary events.

They still have to make the payments now and in the future. This will impact the cost benefit analysis in the present and the future.

I am not interested in semantic games about the word "borrowing." If you have a material point then make it.

I never said it was run like a corporation. Cost benefit analysis in the public sector is vastly different than the private but theoretically it should still take place. I assume you are not arguing against that.

I didn't say we should push deficit reduction now.

And? So we have to make payments in the future? There isn't any type of nominal crisis or real crisis, at all. There's no such thing as a future debt burden, or passing on debts to our children or grandchildren. In economics, this concept simply doesn't exist, whereby we must sacrifice today's output for some date in the past, and then rolling it over to generations before us. Just sayin'....

I think that you are wasting your time trying to help Bombur. He is bound and determined to believe what he WANTS to believe. You can fill in small areas of truths, but never change his mind. And soon, he will have forgotten those small bits too. Waste of effort.

 

[Bombur]

They still have to make the payments now and in the future. This will impact the cost benefit analysis in the present and the future.

I am not interested in semantic games about the word "borrowing." If you have a material point then make it.

I never said it was run like a corporation. Cost benefit analysis in the public sector is vastly different than the private but theoretically it should still take place. I assume you are not arguing against that.

I didn't say we should push deficit reduction now.

And? So we have to make payments in the future? There isn't any type of nominal crisis or real crisis, at all. There's no such thing as a future debt burden, or passing on debts to our children or grandchildren. In economics, this concept simply doesn't exist, whereby we must sacrifice today's output for some date in the past, and then rolling it over to generations before us. Just sayin'....

I think that you are wasting your time trying to help Bombur. He is bound and determined to believe what he WANTS to believe. You can fill in small areas of truths, but never change his mind. And soon, he will have forgotten those small bits too. Waste of effort.