Can you pay down the debt WITHOUT growing the "economy"?

[Toro]

I am sure that you are confused about what you read..

If I was you would be able to post the CBO reports that contradict me, wouldn't you?

So, you don't actually have anything where the CBO says that.

The CBO doesn't read your posts, so it is kind of hard for them to contradict them.

Surely you realize that we would have to post everything the CBO has written to show that they never said what you claim.

Actually, I've never heard that either. I've never heard the CBO say that.

I think we all agree that there is a level of debt that is too high and starts to become a drag on growth. But that's different than saying we have to start paying down debt.

R&R postulated that 90% of GDP was too high, but that's been discredited.

Also, its important to note that what matter isn't the absolute level of debt but the ratio of debt to GDP and other such metrics. So if nominal GDP is rising 6% and debt is rising 3%, even though the absolute debt is rising, the financial condition is improving.

 

[daveman]

Between Quantum Windbag and Daveman, we have the following two rules.

a) we must reduce the debt to grow the economy and
b) reducing the debt reduces the money supply.

Can anyone tell us how these two statements are inconguent.

HINT: See Hume, Essay, "On Money".

I feel no obligation to defend an argument I haven't made.

 

[daveman]

Not necessarily, not simply.

The amount of money circulating in the economy is primarily the direct result of private sector borrowing. That is the primary function of the Fed, to manage that money supply.

Government revenues either recirculate to investors in paying balance and interest on t-bills, by purchases from contractors, or by direct paymenr of wages to govt employees. All of that recirculates the money's back into the flow.

Investors, lacking T-bill for investment can simply invest elsewhere, such as in consumer credit or the stock market. That is still in the economy.

As well, prices are based on the total amount of money being spent, not on the amount of income before taxes. So, regardless, real dollars doesn't change due to taxes.

The only way it would reduce the money supply is if a) the money supply had no other method for growth and b) the moneys did not circulate through other channels. Even then, aggregate prices are due to the money supply in circulation.

The government debt is a bit of an illusion, having very little meaning and no direct impact on the economy. The only real inpact is the rate of change of that debt which is, of course, the deficit. The deficit is the government moving monies from private sector savings into private sector consumption and production. That or into interest payments on the debt.

The government can increase taxes and reduce outlays, as well as recuce the deficit and pay down the debt, without impacting the money supply that accounts for consumption and the prices of goods as long as it does so slowly. As long as it is done slowly, the economy has time to react to the change.

Surely the free market private sector economy is capable of functioning without the government involved to the tune of $17T.

Do you suppose that the free market, private sector economy cannot function without the government constantly borrowing money?

Look, I'm the first to admit I don't know much about economics. Bores the ass off me; never was interested in learning much about it.

I do have a pretty good handle on common sense, though.

Yeah, that is the thing. "Common sense" doesn't work in economics. Macro economics isn't home economics.

Common sense works everywhere...except academia and government.

 

[Quantum Windbag]

If I was you would be able to post the CBO reports that contradict me, wouldn't you?

So, you don't actually have anything where the CBO says that.

The CBO doesn't read your posts, so it is kind of hard for them to contradict them.

Surely you realize that we would have to post everything the CBO has written to show that they never said what you claim.

Actually, I've never heard that either. I've never heard the CBO say that.

I think we all agree that there is a level of debt that is too high and starts to become a drag on growth. But that's different than saying we have to start paying down debt.

R&R postulated that 90% of GDP was too high, but that's been discredited.

Also, its important to note that what matter isn't the absolute level of debt but the ratio of debt to GDP and other such metrics. So if nominal GDP is rising 6% and debt is rising 3%, even though the absolute debt is rising, the financial condition is improving.

Does anybody ever read the CBO reports anymore, or do they just listen to MSNBC? The second link is the critical one for all the ignoramuses to read, the smart people can extrapolate it from the first one.

http://www.cbo.gov/sites/default/files/cbofiles/attachments/44521-LTBO2013.pdf

http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/119xx/doc11998/12-10-costwaitingbrief.pdf

 

[Toro]

So, you don't actually have anything where the CBO says that.

The CBO doesn't read your posts, so it is kind of hard for them to contradict them.

Surely you realize that we would have to post everything the CBO has written to show that they never said what you claim.

Actually, I've never heard that either. I've never heard the CBO say that.

I think we all agree that there is a level of debt that is too high and starts to become a drag on growth. But that's different than saying we have to start paying down debt.

R&R postulated that 90% of GDP was too high, but that's been discredited.

Also, its important to note that what matter isn't the absolute level of debt but the ratio of debt to GDP and other such metrics. So if nominal GDP is rising 6% and debt is rising 3%, even though the absolute debt is rising, the financial condition is improving.

Does anybody ever read the CBO reports anymore, or do they just listen to MSNBC? The second link is the critical one for all the ignoramuses to read, the smart people can extrapolate it from the first one.

http://www.cbo.gov/sites/default/files/cbofiles/attachments/44521-LTBO2013.pdf

http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/119xx/doc11998/12-10-costwaitingbrief.pdf

I skimmed the second link but not the first since I'm not going through 120 pages on a Sunday afternoon.

In the second link, where does it say we need to "pay down" debt? What it says is that the debt to GDP is rising and we need to get it down. That's what I said above. That's different from "paying down" debt. Paying down debt means reducing the absolute level of debt. Nominal debt rising by 6% and debt growth by 3% causes debt to GDP to fall. For the CBO, that is a solution. Paying down debt also reduces debt to GDP but it's not the only solution.

So, if I'm wrong, can you please show me in your link where it says the CBO says we should pay down debt?

 

[Quantum Windbag]

Actually, I've never heard that either. I've never heard the CBO say that.

I think we all agree that there is a level of debt that is too high and starts to become a drag on growth. But that's different than saying we have to start paying down debt.

R&R postulated that 90% of GDP was too high, but that's been discredited.

Also, its important to note that what matter isn't the absolute level of debt but the ratio of debt to GDP and other such metrics. So if nominal GDP is rising 6% and debt is rising 3%, even though the absolute debt is rising, the financial condition is improving.

Does anybody ever read the CBO reports anymore, or do they just listen to MSNBC? The second link is the critical one for all the ignoramuses to read, the smart people can extrapolate it from the first one.

http://www.cbo.gov/sites/default/files/cbofiles/attachments/44521-LTBO2013.pdf

http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/119xx/doc11998/12-10-costwaitingbrief.pdf

I skimmed the second link but not the first since I'm not going through 120 pages on a Sunday afternoon.

In the second link, where does it say we need to "pay down" debt? What it says is that the debt to GDP is rising and we need to get it down. That's what I said above. That's different from "paying down" debt. Paying down debt means reducing the absolute level of debt. Nominal debt rising by 6% and debt growth by 3% causes debt to GDP to fall. For the CBO, that is a solution. Paying down debt also reduces debt to GDP but it's not the only solution.

So, if I'm wrong, can you please show me in your link where it says the CBO says we should pay down debt?

Let me get this straight, even though the CBO is flat out stating that the debt is going to eventually crash the economy if it isn't dealt with, you want them to say the exact words "pay down the debt" before you will admit that we have to pay down the debt.

I guess that makes me crazy.

 

[expat_panama]

...Government revenues either recirculate to investors in paying balance and interest on t-bills, by purchases from contractors, or by direct paymenr of wages to govt employees. All of that recirculates the money's back into the flow...

That's the argument, so tax rates are up and gov't borrowing's at an all time high.

However, when we look at the actual measure of circulation (called money velocity) we find out it hasn't worked and our resulting money circulation has--

--collapsed to an all time low and is still falling. We can't keep going on like this. A lot of economists now argue that we'd see more money in "the flow" if it simply stayed where it was in private hands and never wasted its time frozen in gov't holdings.

 

[Toro]

Does anybody ever read the CBO reports anymore, or do they just listen to MSNBC? The second link is the critical one for all the ignoramuses to read, the smart people can extrapolate it from the first one.

http://www.cbo.gov/sites/default/files/cbofiles/attachments/44521-LTBO2013.pdf

http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/119xx/doc11998/12-10-costwaitingbrief.pdf

I skimmed the second link but not the first since I'm not going through 120 pages on a Sunday afternoon.

In the second link, where does it say we need to "pay down" debt? What it says is that the debt to GDP is rising and we need to get it down. That's what I said above. That's different from "paying down" debt. Paying down debt means reducing the absolute level of debt. Nominal debt rising by 6% and debt growth by 3% causes debt to GDP to fall. For the CBO, that is a solution. Paying down debt also reduces debt to GDP but it's not the only solution.

So, if I'm wrong, can you please show me in your link where it says the CBO says we should pay down debt?

Let me get this straight, even though the CBO is flat out stating that the debt is going to eventually crash the economy if it isn't dealt with, you want them to say the exact words "pay down the debt" before you will admit that we have to pay down the debt.

I guess that makes me crazy.

So the CBO didn't say we need to pay down the debt? Got it.

There is a big difference between paying down the debt and lowering the debt to GDP ratio.

 

[Quantum Windbag]

I skimmed the second link but not the first since I'm not going through 120 pages on a Sunday afternoon.

In the second link, where does it say we need to "pay down" debt? What it says is that the debt to GDP is rising and we need to get it down. That's what I said above. That's different from "paying down" debt. Paying down debt means reducing the absolute level of debt. Nominal debt rising by 6% and debt growth by 3% causes debt to GDP to fall. For the CBO, that is a solution. Paying down debt also reduces debt to GDP but it's not the only solution.

So, if I'm wrong, can you please show me in your link where it says the CBO says we should pay down debt?

Let me get this straight, even though the CBO is flat out stating that the debt is going to eventually crash the economy if it isn't dealt with, you want them to say the exact words "pay down the debt" before you will admit that we have to pay down the debt.

I guess that makes me crazy.

So the CBO didn't say we need to pay down the debt? Got it.

There is a big difference between paying down the debt and lowering the debt to GDP ratio.

The CBO's best case projections say that the debt to GDP ratio will increase unless we take steps to correct it. Tell me how to do that without paying it down and I will admit they didn't say it needs to be paid down.

 

[Toro]

Let me get this straight, even though the CBO is flat out stating that the debt is going to eventually crash the economy if it isn't dealt with, you want them to say the exact words "pay down the debt" before you will admit that we have to pay down the debt.

I guess that makes me crazy.

So the CBO didn't say we need to pay down the debt? Got it.

There is a big difference between paying down the debt and lowering the debt to GDP ratio.

The CBO's best case projections say that the debt to GDP ratio will increase unless we take steps to correct it. Tell me how to do that without paying it down and I will admit they didn't say it needs to be paid down.

Sure. In that link, it says we should reform a number of programs. It also says we should look at revenue sources. However, the priority should be on reducing the growth rate in spending.

I agree with that. We will have problems eventually if we don't curtail spending. But that doesn't mean we need to reduce the absolute amount of debt.

Personally, when the economy is better, I would prefer we run surpluses so we can pay down the absolute level of debt. But the financial condition of the nation will improve if debt levels grow at a slower rate than nominal GDP.

 

[Quantum Windbag]

So the CBO didn't say we need to pay down the debt? Got it.

There is a big difference between paying down the debt and lowering the debt to GDP ratio.

The CBO's best case projections say that the debt to GDP ratio will increase unless we take steps to correct it. Tell me how to do that without paying it down and I will admit they didn't say it needs to be paid down.

Sure. In that link, it says we should reform a number of programs. It also says we should look at revenue sources. However, the priority should be on reducing the growth rate in spending.

I agree with that. We will have problems eventually if we don't curtail spending. But that doesn't mean we need to reduce the absolute amount of debt.

Personally, when the economy is better, I would prefer we run surpluses so we can pay down the absolute level of debt. But the financial condition of the nation will improve if debt levels grow at a slower rate than nominal GDP.

Which is not actually paying down the debt because you refuse to admit that paying down the debt is necessary because you like the idea that the US dollar is the reserve currency, despite the negative effect that has on the nations economy.

 

[Toro]

The CBO's best case projections say that the debt to GDP ratio will increase unless we take steps to correct it. Tell me how to do that without paying it down and I will admit they didn't say it needs to be paid down.

Sure. In that link, it says we should reform a number of programs. It also says we should look at revenue sources. However, the priority should be on reducing the growth rate in spending.

I agree with that. We will have problems eventually if we don't curtail spending. But that doesn't mean we need to reduce the absolute amount of debt.

Personally, when the economy is better, I would prefer we run surpluses so we can pay down the absolute level of debt. But the financial condition of the nation will improve if debt levels grow at a slower rate than nominal GDP.

Which is not actually paying down the debt because you refuse to admit that paying down the debt is necessary because you like the idea that the US dollar is the reserve currency, despite the negative effect that has on the nations economy.

Whatever you say.

 

[rdean]

Government can't grow the economy, no matter what lies progressives tell each other.

Well, now that is simply not true, dave. The tax and spending multipliers are established as factual. It is simply a matter of the reality of the economy being a closed loop system. How much effect depends on the specific circumstances of the economy.

I believe that calculation leaves something out:

The cost of government itself. Every dollar taxed and redistributed has some portion of it offset by the cost of taxing it and redistributing it.

Government doesn't operate for nothing. And it adds nothing of value to the transaction.

Tell that to the military and to disaster victims you fucking moron.

 

[oldfart]

Sure. In that link, it says we should reform a number of programs. It also says we should look at revenue sources. However, the priority should be on reducing the growth rate in spending.

I agree with that. We will have problems eventually if we don't curtail spending. But that doesn't mean we need to reduce the absolute amount of debt.

Personally, when the economy is better, I would prefer we run surpluses so we can pay down the absolute level of debt. But the financial condition of the nation will improve if debt levels grow at a slower rate than nominal GDP.

Which is not actually paying down the debt because you refuse to admit that paying down the debt is necessary because you like the idea that the US dollar is the reserve currency, despite the negative effect that has on the nations economy.

Whatever you say.

For Toro: Thanks for fighting the good fight.

This exchange at least has the virtue of clarity. Some like QW will not be satisfied with anything less than a decrease in the absolute amount of the public debt, although I have never heard a target level except zero, and I have never heard a coherent economic argument justifying such a level. If QW or anyone else would care to state a target to reduce the public debt to and the reason for that target I certainly would like to hear it.

You stated that you favored a reduction of the real debt-to-GDP ratio, to which I generally agree given present conditions. As you noted, this requires only that the public debt grow more slowly than GDP. That would set a nominal deficit for the next two or three years of under $200--250 billion or so. I would like to hear an argument from QW or anyone else about what the objection would be to such a target. Personally my objection to it is that it is too small; it guarantees depression on the installment plan for the next 5-10 years. But again, I haven't heard a cogent economic argument why such a deficit is too high and I would be interested in seeing one if it exists. The last two attempts were the A & A paper and the R & R paper, and look at how well they turned out!

 

[daveman]

Well, now that is simply not true, dave. The tax and spending multipliers are established as factual. It is simply a matter of the reality of the economy being a closed loop system. How much effect depends on the specific circumstances of the economy.

I believe that calculation leaves something out:

The cost of government itself. Every dollar taxed and redistributed has some portion of it offset by the cost of taxing it and redistributing it.

Government doesn't operate for nothing. And it adds nothing of value to the transaction.

Tell that to the military and to disaster victims you fucking moron.

Same thing holds true, you fucking moron. Government adds NOTHING of value. Government ALWAYS operates at a loss.

Put one dollar in, get less than one dollar out -- because you have to pay the people collecting, counting, and disbursing the dollars.

 

[itfitzme]

Between Quantum Windbag and Daveman, we have the following two rules.

a) we must reduce the debt to grow the economy and
b) reducing the debt reduces the money supply.

Can anyone tell us how these two statements are inconguent.

HINT: See Hume, Essay, "On Money".

Did I say that reducing the debt reduces the money supply?

No.

Did Daveman?

No.

I guess that means here is that we have a lying sack of shit that cannot do simple math, so he is reduced to making stuff up in order to fool himself into thinking he is smart.

Yeah, that is exactly what daveman said, In response to my comment on increasing taxes, daveman said that it reduces the money supply. You have said the other.

 

[itfitzme]

I believe that calculation leaves something out:

The cost of government itself. Every dollar taxed and redistributed has some portion of it offset by the cost of taxing it and redistributing it.

Government doesn't operate for nothing. And it adds nothing of value to the transaction.

Tell that to the military and to disaster victims you fucking moron.

Same thing holds true, you fucking moron. Government adds NOTHING of value. Government ALWAYS operates at a loss.

Put one dollar in, get less than one dollar out -- because you have to pay the people collecting, counting, and disbursing the dollars.

Then, by your accounting, every company operates at a loss because it costs to produce.

The reality of economics and accounting is that the governmemt is simply another company with a mandatory subscription price. It collects revenue, pays for labor and materials, and provides a product. Numerous products.

Honestly, daveman, the more I read your posts, the more I recognize that your concepts of economics, accounting, and government...your common sense, is off in la la land.

You should simply throw out everything you think you know and start over from the correct foundation. This foundation is that economics is about the production and redistribution of goods and services. It is not about money. Money is a social tool that we use to account for the redistribution of goods and services.

 

[itfitzme]

The only problem with the debt and deficit is that eventually.... Well, nothing.

Eventually, revenues must be increased to continue forward.

And, as long as the tax is increased slowly and across the board, there is no deterious effect.

The real effect is a reduction in labor utilization. Labor, until we tap out on resources, is everything. People work to produce product and services valued by others. In doing so, they get some pieces of paper that allow them to obtain some of those goods and services. As long as those pieces of paper, or electronic digits, are passes out in some economically appropiate proportions, then they take on the value that is appropriate to the amount of goods and services produced.

It really is just that simple.

And, if everyone is paying some tax rate of, say 50%, then the prices adjust to the amount of money available to be spent.

It really is, just that simple.

The problems with the economy has nothing to do with the govenment unless they a) crowd out some production or investment or b) fail to stabilize the economy.

Even then, crowding out really isn't an issue if the govt happens to be acting in a manner that the private sector otherwise would.

 

[Toro]

Tell that to the military and to disaster victims you fucking moron.

Same thing holds true, you fucking moron. Government adds NOTHING of value. Government ALWAYS operates at a loss.

Put one dollar in, get less than one dollar out -- because you have to pay the people collecting, counting, and disbursing the dollars.

Then, by your accounting, every company operates at a loss because it costs to produce.

The reality of economics and accounting is that the governmemt is simply another company with a mandatory subscription price. It collects revenue, pays for labor and materials, and provides a product. Numerous products.

Honestly, daveman, the more I read your posts, the more I recognize that your concepts of economics, accounting, and government...your common sense, is off in la la land.

You should simply throw out everything you think you know and start over from the correct foundation. This foundation is that economics is about the production and redistribution of goods and services. It is not about money. Money is a social tool that we use to account for the redistribution of goods and services.

The government is merely another entity through which economic activity flows. It's no different in this sense than a household or a corporation, etc.

It is fair to debate the efficacy of government spending, and whether or not it is more or less efficient than other entities. On aggregate, I don't believe it is. However, that doesn't mean everything the government does destroys value.

 

[itfitzme]

Same thing holds true, you fucking moron. Government adds NOTHING of value. Government ALWAYS operates at a loss.

Put one dollar in, get less than one dollar out -- because you have to pay the people collecting, counting, and disbursing the dollars.

Then, by your accounting, every company operates at a loss because it costs to produce.

The reality of economics and accounting is that the governmemt is simply another company with a mandatory subscription price. It collects revenue, pays for labor and materials, and provides a product. Numerous products.

Honestly, daveman, the more I read your posts, the more I recognize that your concepts of economics, accounting, and government...your common sense, is off in la la land. (This doesn't make you dumb or anything. It is just that starting with the wrong foundation leads to faulty conclusions, no matter how good the reasoning. It is easy to start with the $ and try to do home econ.)

You should simply throw out everything you think you know and start over from the correct foundation. This foundation is that economics is about the production and redistribution of goods and services. It is not about money. Money is a social tool that we use to account for the redistribution of goods and services.

The government is merely another entity through which economic activity flows. It's no different in this sense than a household or a corporation, etc.

It is fair to debate the efficacy of government spending, and whether or not it is more or less efficient than other entities. On aggregate, I don't believe it is. However, that doesn't mean everything the government does destroys value.

Well put. This approach means delving into the details of specific programs to determine their value. Sweeping generalities just won't suffice.

As a matter of example, we might consider the section of the ACA that incentivises education in the medical sector by allocating funds towards paying off student loans for Drs, nurses, and the like contingent upon them serving in geographic areas that are deficient in medical workers.

Also, in the ACA, is a section dedicated to rural communities which can be underserved due to simply lower geographic demand density.

These are investment programs that take the long term into account, an investment strategy that isn't as well served by the private markets.