Interesting Chart on US Debt history

[Kimura]

Every dollar spent by the government must be paid for either by taxes or by more borrowing with greater debt.

Not really, that's not how the monetary circuit operates. Under our fiat system, spending precedes taxation. The government spends the currency into existence and any "borrowing" and taxation that occurs is with money that is already spent.

The only way to make more tax cuts now is to have bigger and bigger deficits and to borrow more and more money. Either we or our children will have to bear the burden of this debt.

No such burden can exist for our children. Our children, the same as you and I, will go work to produce and consume their output of goods and services, which has no bearing on how many Treasuries Uncle Sam has to roll over.

 

[Kimura]

Nations with $17 trillion in debt aren't "investing", they're financial crack whores

You should think of it as national equity as opposed to debt in the traditional sense. That 17 trillion is sitting in US Treasuries which are basically savings' accounts at the FED. They're nothing more than dollar deposits at the FED.

 

[Toddsterpatriot]

Weird, Lowest tax burden under Bush in over 2 generations, how was the 'jobs, jobs, jobs' and economy under him again?


"Every dollar spent by the government must be paid for either by taxes or by more borrowing with greater debt.
The only way to make more tax cuts now is to have bigger and bigger deficits and to borrow more and more money. Either we or our children will have to bear the burden of this debt.
This is one kind of chicken that always comes home to roost. An unwise tax cutter, my fellow citizens, is no real friend of the taxpayer."
- Pres. Dwight D. Eisenhower” 1952 in his refusal to lower the top tax rate on the rich from 91%.

Weird, Lowest tax burden under Bush in over 2 generations

It's true, he really cut taxes on middle and low income earners.

The only way to make more tax cuts now is to have bigger and bigger deficits and to borrow more and more money. Either we or our children will have to bear the burden of this debt.

Or, cut the spending.

Right....cutting spending and removing income from the economy is the way to go. A deficit reduction is the fiscal equivalent of a tax increase since the both remove money from the economy. A deficit reduction would simply affect low and middle income folks as opposed to higher income folks.

By the way, the federal government isn't required to run a balanced budget. This type of nonsense is highly destructive when the economy isn't performing well. This means the federal government should spend more. If you don't like the federal government spending its own fiat for public purpose (single payer, infrastructure, R&D, feeding poor children, etc), the federal government can revenue share with the states. This is what that liberal Richard Nixon did, when he figured out the federal government could create revenues, as opposed to the states, but the states and local municipalities were more better with spending priorities.

Right....cutting spending and removing income from the economy is the way to go.

We can never cut government spending? Is that your claim?

By the way, the federal government isn't required to run a balanced budget.

We also aren't required to go ever deeper into a hole.

This type of nonsense is highly destructive when the economy isn't performing well.

Borrowing 4% of GDP, this deep into the recovery, with millions of Boomers getting ready to collect SS, is going to make it harder to respond when we do drop back into a recession. Don't you think?

This means the federal government should spend more.

Or we could stop doubling down on failure.

 

[Kimura]

We can never cut government spending? Is that your claim?

I'm trying to explain to you that deficits matter just not in the way most people think. It all depends on macroeconomic indicators. Our budget deficits acts like an artificial trade surplus.

We also aren't required to go ever deeper into a hole.

This type of nonsense is highly destructive when the economy isn't performing well.

Borrowing 4% of GDP, this deep into the recovery, with millions of Boomers getting ready to collect SS, is going to make it harder to respond when we do drop back into a recession. Don't you think?

From whom does the US government borrow? It's a cute term, but quite deceptive since we're on the fiat system. The US is monopoly issuer of the public fiat.

Please explain to what real resources are being exhausted by the federal government when they make an SS payment every month via direct deposit.

This means the federal government should spend more.

Or we could stop doubling down on failure.

Um....no. Money, both as Federal Reserve notes and reserves, are liabilities on the FED's balance sheet. These liabilities are retired when they are made as payments to the state. When currency or reserves return to the federal government, the liabilities of the federal government are decreased and base money is destroyed.

While M1 money stock is retired and we utilize demand deposits to make tax payments, the federal government's $$$$, base money, is retired as the funds are moved into the Treasury's account at the FED. You have to recognize that tax collection and bond sales really can't finance government spending.

In other words, there isn't a revenue constraint, only that of inflation, exchange rates, capacity utilization, etc. Given our anemic growth numbers and historically low capacity utilization, quite frankly, spending decreases should be the last thing on our minds. Your deficit reduction fetish would sink us in deep recession or even depression. I do agree we shouldn't have used monetary policy as a way out. There needs to a New Deal 2.0 based on FISCAL POLICY, not monetary policy. All it boils down to is policy decisions and how many resources we need to move from the private sector to the public sector. The economic indicators are improving, but the situation isn't going to magically improve, especially since we have structural problems in the US economy.

 

[CrusaderFrank]

Every dollar spent by the government must be paid for either by taxes or by more borrowing with greater debt.

Not really, that's not how the monetary circuit operates. Under our fiat system, spending precedes taxation. The government spends the currency into existence and any "borrowing" and taxation that occurs is with money that is already spent.

The only way to make more tax cuts now is to have bigger and bigger deficits and to borrow more and more money. Either we or our children will have to bear the burden of this debt.

No such burden can exist for our children. Our children, the same as you and I, will go work to produce and consume their output of goods and services, which has no bearing on how many Treasuries Uncle Sam has to roll over.

Are you just plain fucking nuts?

 

[CrusaderFrank]

Nations with $17 trillion in debt aren't "investing", they're financial crack whores

You should think of it as national equity as opposed to debt in the traditional sense. That 17 trillion is sitting in US Treasuries which are basically savings' accounts at the FED. They're nothing more than dollar deposits at the FED.

Freedom is Slavery

War is Peace

Debt is Equity

Got it

 

[Kimura]

Nations with $17 trillion in debt aren't "investing", they're financial crack whores

You should think of it as national equity as opposed to debt in the traditional sense. That 17 trillion is sitting in US Treasuries which are basically savings' accounts at the FED. They're nothing more than dollar deposits at the FED.

Freedom is Slavery

War is Peace

Debt is Equity

Got it

It's not debt in the traditional sense. A currency issuer, like the US, for example, doesn't operate like a household in any meaningful capacity.

 

[Kimura]

Every dollar spent by the government must be paid for either by taxes or by more borrowing with greater debt.

Not really, that's not how the monetary circuit operates. Under our fiat system, spending precedes taxation. The government spends the currency into existence and any "borrowing" and taxation that occurs is with money that is already spent.

The only way to make more tax cuts now is to have bigger and bigger deficits and to borrow more and more money. Either we or our children will have to bear the burden of this debt.

No such burden can exist for our children. Our children, the same as you and I, will go work to produce and consume their output of goods and services, which has no bearing on how many Treasuries Uncle Sam has to roll over.

Are you just plain fucking nuts?

What an erudite response! For the 890,567th time, we're no longer on a gold standard/convertible f/x. Operationally, as I've elaborated on many times, the national government must spend the currency into existence before we use it. For example, China owns 1.2 trillion in US Treasuries, where did they get the $$$$? Obviously, it was spent into existence by the monopoly issuer of the dollar (the US government) at some point. I can't believe we even need to debate this. The monetary circuit doesn't function like a recycling plant. The $$$$ supply is actually endogenous.

 

[Toddsterpatriot]

We can never cut government spending? Is that your claim?

I'm trying to explain to you that deficits matter just not in the way most people think. It all depends on macroeconomic indicators. Our budget deficits acts like an artificial trade surplus.

We also aren't required to go ever deeper into a hole.

This type of nonsense is highly destructive when the economy isn't performing well.

Borrowing 4% of GDP, this deep into the recovery, with millions of Boomers getting ready to collect SS, is going to make it harder to respond when we do drop back into a recession. Don't you think?

From whom does the US government borrow? It's a cute term, but quite deceptive since we're on the fiat system. The US is monopoly issuer of the public fiat.

Please explain to what real resources are being exhausted by the federal government when they make an SS payment every month via direct deposit.

This means the federal government should spend more.

Or we could stop doubling down on failure.

Um....no. Money, both as Federal Reserve notes and reserves, are liabilities on the FED's balance sheet. These liabilities are retired when they are made as payments to the state. When currency or reserves return to the federal government, the liabilities of the federal government are decreased and base money is destroyed.

While M1 money stock is retired and we utilize demand deposits to make tax payments, the federal government's $$$$, base money, is retired as the funds are moved into the Treasury's account at the FED. You have to recognize that tax collection and bond sales really can't finance government spending.

In other words, there isn't a revenue constraint, only that of inflation, exchange rates, capacity utilization, etc. Given our anemic growth numbers and historically low capacity utilization, quite frankly, spending decreases should be the last thing on our minds. Your deficit reduction fetish would sink us in deep recession or even depression. I do agree we shouldn't have used monetary policy as way out. There needs to a New Deal 2.0 based on FISCAL POLICY, not monetary policy. All it boils down to policy decisions and how many resources we need to move from the public sector to the private sector. The economic indicators are improving, but the situation isn't going to magically improve, especially since we structural problems in the US economy.

From whom does the US government borrow?

Bond buyers.

When currency or reserves return to the federal government, the liabilities of the federal government are decreased and base money is destroyed.

Okay, so what?

You have to recognize that tax collection and bond sales really can't finance government spending.

Why would I have to recognize that?

Given our anemic growth numbers and historically low capacity utilization, quite frankly, spending decreases should be the last thing on our minds.

How about just holding spending steady?

Your deficit reduction fetish would sink us in deep recession or even depression.

Fetish? LOL!
The recent addition of over $7 trillion to the debt hasn't given us awesome growth.

 

[emilynghiem]

What I find telling is where we see the largest increases and it seems to contradict certain long held arguments regarding spending.

National debt by U.S. presidential terms - Wikipedia, the free encyclopedia

Dear [MENTION=49555]TheJedi[/MENTION]
What I find more amazing is the AGREEMENT among political leaders how to solve economic problems.

1. Obama supports microlending, his own mother worked to set up one of the largest successful microlending programs in the world, but his only mention of microloans
was in his Cairo address, one word.

2. Ben Carson promotes microeconomics and helping people out of poverty without handouts using business training approaches

In particular these are BOTH prominent Black leaders, wanting to address one of the most affected communities when you compare rates of incarceration vs. college education.

Now LOOK at what is separating these men and their followers from working together?

Which side is more responsible for blaming ___ group for keeping ___ group in poverty?
THAT is what is keeping people in poverty, that division between rich and poor,
blamed by ___ party on the other ____ party.

Fill in the Blanks.

 

[Dad2three]

Democrats don't believe in economics.

They think taxing money out of the private sector never hurts.

Weird, Lowest tax burden under Bush in over 2 generations, how was the 'jobs, jobs, jobs' and economy under him again?


"Every dollar spent by the government must be paid for either by taxes or by more borrowing with greater debt.
The only way to make more tax cuts now is to have bigger and bigger deficits and to borrow more and more money. Either we or our children will have to bear the burden of this debt.
This is one kind of chicken that always comes home to roost. An unwise tax cutter, my fellow citizens, is no real friend of the taxpayer."
- Pres. Dwight D. Eisenhower” 1952 in his refusal to lower the top tax rate on the rich from 91%.

Weird, Lowest tax burden under Bush in over 2 generations

It's true, he really cut taxes on middle and low income earners.

The only way to make more tax cuts now is to have bigger and bigger deficits and to borrow more and more money. Either we or our children will have to bear the burden of this debt.

Or, cut the spending.

To bad Bush/GOP didn't do that right? lol

 

[Dad2three]

Weird, Lowest tax burden under Bush in over 2 generations, how was the 'jobs, jobs, jobs' and economy under him again?


"Every dollar spent by the government must be paid for either by taxes or by more borrowing with greater debt.
The only way to make more tax cuts now is to have bigger and bigger deficits and to borrow more and more money. Either we or our children will have to bear the burden of this debt.
This is one kind of chicken that always comes home to roost. An unwise tax cutter, my fellow citizens, is no real friend of the taxpayer."
- Pres. Dwight D. Eisenhower” 1952 in his refusal to lower the top tax rate on the rich from 91%.

Weird, Lowest tax burden under Bush in over 2 generations

It's true, he really cut taxes on middle and low income earners.

The only way to make more tax cuts now is to have bigger and bigger deficits and to borrow more and more money. Either we or our children will have to bear the burden of this debt.

Or, cut the spending.

Yep! Spending has put us in the red to the tune of trillions of dollars.

National Debt in Real Time: $17,557,573,000,000.00, U. S. National Debt Clock: Real Time

A few months ago:

"Starving the beast" is a political strategy employed by American conservatives in order to limit government spending] by cutting taxes in order to deprive the government of revenue in a deliberate effort to force the federal government to reduce spending.



Before his election as President, then-candidate Ronald Reagan foreshadowed the strategy during the 1980 US Presidential debates, saying "John Anderson tells us that first we've got to reduce spending before we can reduce taxes. Well, if you've got a kid that's extravagant, you can lecture him all you want to about his extravagance. Or you can cut his allowance and achieve the same end much quicker."





We already know what economic policies work best for our country. Clinton knew that we had to cut spending and increase revenues. We had revenues of 20.6% of GDP and a surplus in 2000. Then something terrible happened, the Republicans gained complete control in 2001 and instead of sticking with what was working they decided that their ideology was more important. The debt has gone up $12 trillion since then.

 

[Toddsterpatriot]

Weird, Lowest tax burden under Bush in over 2 generations, how was the 'jobs, jobs, jobs' and economy under him again?


"Every dollar spent by the government must be paid for either by taxes or by more borrowing with greater debt.
The only way to make more tax cuts now is to have bigger and bigger deficits and to borrow more and more money. Either we or our children will have to bear the burden of this debt.
This is one kind of chicken that always comes home to roost. An unwise tax cutter, my fellow citizens, is no real friend of the taxpayer."
- Pres. Dwight D. Eisenhower” 1952 in his refusal to lower the top tax rate on the rich from 91%.

Weird, Lowest tax burden under Bush in over 2 generations

It's true, he really cut taxes on middle and low income earners.

The only way to make more tax cuts now is to have bigger and bigger deficits and to borrow more and more money. Either we or our children will have to bear the burden of this debt.

Or, cut the spending.

To bad Bush/GOP didn't do that right? lol

Yes.

 

[Toddsterpatriot]

Weird, Lowest tax burden under Bush in over 2 generations

It's true, he really cut taxes on middle and low income earners.

The only way to make more tax cuts now is to have bigger and bigger deficits and to borrow more and more money. Either we or our children will have to bear the burden of this debt.

Or, cut the spending.

Yep! Spending has put us in the red to the tune of trillions of dollars.

National Debt in Real Time: $17,557,573,000,000.00, U. S. National Debt Clock: Real Time

A few months ago:

"Starving the beast" is a political strategy employed by American conservatives in order to limit government spending] by cutting taxes in order to deprive the government of revenue in a deliberate effort to force the federal government to reduce spending.



Before his election as President, then-candidate Ronald Reagan foreshadowed the strategy during the 1980 US Presidential debates, saying "John Anderson tells us that first we've got to reduce spending before we can reduce taxes. Well, if you've got a kid that's extravagant, you can lecture him all you want to about his extravagance. Or you can cut his allowance and achieve the same end much quicker."





We already know what economic policies work best for our country. Clinton knew that we had to cut spending and increase revenues. We had revenues of 20.6% of GDP and a surplus in 2000. Then something terrible happened, the Republicans gained complete control in 2001 and instead of sticking with what was working they decided that their ideology was more important. The debt has gone up $12 trillion since then.

"Starving the beast" is a political strategy employed by American conservatives in order to limit government spending] by cutting taxes in order to deprive the government of revenue in a deliberate effort to force the federal government to reduce spending.

Which tax cuts deprived the government of revenue?

Clinton knew that we had to cut spending and increase revenues.

Besides his "peace dividend" defense cuts, where did he cut spending?

 

[CrusaderFrank]

You should think of it as national equity as opposed to debt in the traditional sense. That 17 trillion is sitting in US Treasuries which are basically savings' accounts at the FED. They're nothing more than dollar deposits at the FED.

Freedom is Slavery

War is Peace

Debt is Equity

Got it

It's not debt in the traditional sense. A currency issuer, like the US, for example, doesn't operate like a household in any meaningful capacity.

So debt is now Currency...and equity. That's amazing! Can it lower my car insurance 15% too?

Reminds me of the old SNL Skit: Shimmer is a floor wax AND a dessert topping.

 

[Dad2three]

Yep! Spending has put us in the red to the tune of trillions of dollars.

National Debt in Real Time: $17,557,573,000,000.00, U. S. National Debt Clock: Real Time

A few months ago:

"Starving the beast" is a political strategy employed by American conservatives in order to limit government spending] by cutting taxes in order to deprive the government of revenue in a deliberate effort to force the federal government to reduce spending.



Before his election as President, then-candidate Ronald Reagan foreshadowed the strategy during the 1980 US Presidential debates, saying "John Anderson tells us that first we've got to reduce spending before we can reduce taxes. Well, if you've got a kid that's extravagant, you can lecture him all you want to about his extravagance. Or you can cut his allowance and achieve the same end much quicker."





We already know what economic policies work best for our country. Clinton knew that we had to cut spending and increase revenues. We had revenues of 20.6% of GDP and a surplus in 2000. Then something terrible happened, the Republicans gained complete control in 2001 and instead of sticking with what was working they decided that their ideology was more important. The debt has gone up $12 trillion since then.

"Starving the beast" is a political strategy employed by American conservatives in order to limit government spending] by cutting taxes in order to deprive the government of revenue in a deliberate effort to force the federal government to reduce spending.

Which tax cuts deprived the government of revenue?

Clinton knew that we had to cut spending and increase revenues.

Besides his "peace dividend" defense cuts, where did he cut spending?

Tax cuts do NOT pay for themselves. -Alan Greenspan Former Federal Reserve Chairman



Bush CEA Chair Mankiw: Claim That Broad-Based Income Tax Cuts Increase Revenue Is Not "Credible," Capital Income Tax Cuts Also Don't Pay For Themselves

Bush-Appointed Federal Reserve Chair Bernanke: "I Don't Think That As A General Rule Tax Cuts Pay For Themselves."


Bush Treasury Secretary Paulson: "As A General Rule, I Don't Believe That Tax Cuts Pay For Themselves."

Bush OMB Director Nussle: "Some Say That [The Tax Cut] Was A Total Loss. Some Say They Totally Pay For Themselves. It's Neither Extreme."


Bush CEA Chairman Lazear: "As A General Rule, We Do Not Think Tax Cuts Pay For Themselves."


Bush Economic Adviser Viard: "Federal Revenue Is Lower Today Than It Would Have Been Without The Tax Cuts."


Bush Treasury Official Carroll: "We Do Not Think Tax Cuts Pay For Themselves."


Reagan Chief Economist Feldstein: "It's Not That You Get More Revenue By Lowering Tax Rates, It Is That You Don't Lose As Much."

Feldstein In 1986: "Hyperbole" That Reagan Tax Cut "Would Actually Increase Tax Revenue."

Conservative Economist Holtz-Eakin: "No Serious Research Evidence" Suggests Tax Cuts Pay For Themselves."

Tax Foundation's Prante: "A Stretch" To Claim "Cutting Capital Gains Taxes Raises Tax Revenues."




The fact is that the only metric that really matters is revenues as a share of the gross domestic product. By this measure, total federal revenues fell from 19.6 percent of GDP in 1981 to 18.4 percent of GDP by 1989. This suggests that revenues were $66 billion lower in 1989 as a result of Reagan’s policies.

No, Gov. Pawlenty, Tax Cuts Don't Pay for Themselves | Stan Collender's Capital Gains and Games

 

[Kimura]

Bond buyers.

Bond sales provide an interest bearing alternative to bank reserves. Whether they are sold by the FED through open market operations or by the Treasury as new issues, the effect is identical. We have swapped reserves for Treasuries. This enables the FED to hit its overnight rate target. Either way, whether these bond sales come from the FED or Treasury, it's still falls under the purview of monetary operations.

The government realizes that reserves are non-discretionary. When the banking system has excess reserves, this causes the overnight rate to drop under the target, which triggers the bond sales. OTOH, if the banking system is constrained, and the rate goes over target, this will trigger bond purchases. The overall effect is identical.

This entire thing is a legal requirement left over from the days of the gold standard. The FED spends by crediting private bank accounts, this triggering mechanism for bond auctions is after the fact.

Again, the government doesn't borrow its own fiat. Government "borrowing" only functions to support interest rates.

Okay, so what?

see above

Why would I have to recognize that?

Taxes regulate aggregate demand and guarantee all prices, assets and debts are priced in dollars. When we pay taxes, a demand deposit account is debited and the money is basically shredded.

How about just holding spending steady?

#1 Deficits are directly related to private sector profits.

#2 In terms of accounting logic, it's equal to the surplus of the non-government.

#3 Deficits add net financial assets to the non-government.

#4 We run a trade deficit, this would result in the private sector accumulating large debts.

A balanced budget doesn't make any sense, from an economic and accounting standpoint. It’s based on some alleged minimum a government should spend. This means we’re dealing with an accounting identity. For example, if all people and firms want to hold cash, that $$$ must be the difference after tax payments. All $$$ being held by the public must exceed the $$$$ being given out by the federal government which must be in excess of the requirement to make tax payments (deficits). The same can be said of all USD being held at the Federal Reserve by foreign central banks. As I've tried to outline, and for other structural reasons, a balanced budget will result in serious deflation.

The federal debt is simply a representation of all the $$$ spent which hasn't been taxed. The borrowing occurred after the fact so any holders of said $$$ might earn some interest. The federal government pays interest depending on how much we want to earn. Have you ever heard a holder of US Treasuries complain that they want the government to stop selling securities so they can get their $$$ back?

Fetish? LOL!
The recent addition of over $7 trillion to the debt hasn't given us awesome growth.

That's the problem, our policy makers went the monetary policy route. We need to boost aggregate demand and grow GDP through fiscal policy.

Why not let the market decide how large the deficit should be? The government could offer a job to anyone ready, willing and able to work. The pay would be set to a certain wage and we could let the deficit float. This would promote price stability (employment and not unemployment would be the stabilizer). We could also stabilize the price of labor and wages in the private sector would be directly tied to the job guarantee of government employment. If the government labor force become too large, taxes could be reduced, which would mean less government workers and decreased government spending as the private sector hired these workers. The idea being to create a national buffer stock.

Food for thought....

 

[Kimura]

Freedom is Slavery

War is Peace

Debt is Equity

Got it

It's not debt in the traditional sense. A currency issuer, like the US, for example, doesn't operate like a household in any meaningful capacity.

So debt is now Currency...and equity. That's amazing! Can it lower my car insurance 15% too?

Reminds me of the old SNL Skit: Shimmer is a floor wax AND a dessert topping.

US Treasuries are nothing more than dollar deposits at the FED unless you know something I don't.

 

[CrusaderFrank]

It's not debt in the traditional sense. A currency issuer, like the US, for example, doesn't operate like a household in any meaningful capacity.

So debt is now Currency...and equity. That's amazing! Can it lower my car insurance 15% too?

Reminds me of the old SNL Skit: Shimmer is a floor wax AND a dessert topping.

US Treasuries are nothing more than dollar deposits at the FED unless you know something I don't.

So US Treasuries are private profits and currency and equity.

Is there anything they're not?

 

[Kimura]

So debt is now Currency...and equity. That's amazing! Can it lower my car insurance 15% too?

Reminds me of the old SNL Skit: Shimmer is a floor wax AND a dessert topping.

US Treasuries are nothing more than dollar deposits at the FED unless you know something I don't.

So US Treasuries are private profits and currency and equity.

Is there anything they're not?

You have to think in terms of accounting. The 17 trillion of US public debt consists of liabilities of the federal government. These liabilities are assets to the non-government sector. For every liability, there's a corresponding asset.

We can think of it another way: US public debt represents the total dollar savings of the US economy. It's made up of private wealth and any and all interest payments are considered private income. It boils down to double-entry bookkeeping at the Federal Reserve.