National debt: $18T and counting

[saveliberty]

I think it is dangerous to consider government currency infusion as true economic growth.

 

[Dekster]

I think it is dangerous to consider government currency infusion as true economic growth.

Why?

 

[EdwardBaiamonte]

The economy will grow to match the debt services as money becomes gradually more worthless.

False supposition, as industrial expansion and two wage families made that possible in the past. You don't have either of those possibilities today.

Actually, Dekster is on something here. Reminder, we did grow out of debt from WWII, although we never paid it off. As of now, if we're talking just about numbers, US debt interest rate is lower than our yearly GDP growth, so theoretically we could grow out of our debt without having to actually pay it off. If we're talking how our GDP got higher, we will get different picture. As I said earlier, betting that we will grow our way out of debt as we did in the 50s is quite a risky gamble. If growth does not meet those expectations, the money will have to come from somewhere. QE, perhaps?

Obama created the Deficit Commission and they concluded that ever the most optimistic projections of GDP growth would not take care of even half our debt. The only solution is to cut spending and make more debt illegal.

 

[EdwardBaiamonte]

I think it is dangerous to consider government currency infusion as true economic growth.

Why?

too stupid!! because printing money hurts growth rather than helps it!!

 

[saveliberty]

I think it is dangerous to consider government currency infusion as true economic growth.

Why?

$85 billion a month in QE over four years or more with 350 million Americans. Just how much money could each of us had to stimulate the economy? Ever wonder why the government doesn't want you to have it?

 

[Ame®icano]

I think it is dangerous to consider government currency infusion as true economic growth.

It's not true growth, but they (government) presenting it like it is. In my opinion, the reason for that is debt to GDP ratio. Low(er) ratio means economy is doing good and that we're able to pay existing debts without adding new debt. With so much deficit spending, debt to GDP was increasing and only way to keep it low is to artificially increase the GDP until private sector catch up.

If interested, I can explain more about this.

 

[Dekster]

I think it is dangerous to consider government currency infusion as true economic growth.

Why?

too stupid!! because printing money hurts growth rather than helps it!!

They used the bulk of the money to buy bad paper to keep from having to pay off those mortgages. They required the banks to significantly up their reserves. Basically they took the mortgages and won't let the banks loan out that money, so it never flooded the market Saving the housing prices from collapsing even more was smart in my book. There would have been no reason to pay your mortgage. Just wait and buy your house back for pennies on the dollar market value post foreclosure.

 

[Dekster]

I think it is dangerous to consider government currency infusion as true economic growth.

Why?

$85 billion a month in QE over four years or more with 350 million Americans. Just how much money could each of us had to stimulate the economy? Ever wonder why the government doesn't want you to have it?

Because it doesn't really exist. It isn't like they really print the money. They just changed numbers in the computers.

 

[EdwardBaiamonte]

I think it is dangerous to consider government currency infusion as true economic growth.

Why?

$85 billion a month in QE over four years or more with 350 million Americans. Just how much money could each of us had to stimulate the economy? Ever wonder why the government doesn't want you to have it?

Because it doesn't really exist. It isn't like they really print the money. They just changed numbers in the computers.

they did print a lot, and used it to buy Treasuries for example, which the govt then used to pay for military, entitlements, etc.etc.,

giving the money directly to people would have caused huge inflation. since it all would have been dumped into the economy.

 

[Ame®icano]

They used the bulk of the money to buy bad paper to keep from having to pay off those mortgages.

In fractional banking, debt is money. If all those mortgages were gone, money would be gone too.

They required the banks to significantly up their reserves. Basically they took the mortgages and won't let the banks loan out that money, so it never flooded the market Saving the housing prices from collapsing even more was smart in my book. There would have been no reason to pay your mortgage. Just wait and buy your house back for pennies on the dollar market value post foreclosure.

Government didn't wanted for that to happen and that's why they got involved. The reason a free market works is because it doesn't rely on human judgement, in this case government judgment. In a free market, a company that makes bad decisions loses money will go out of business, and companies that play smart will make money and gain market share. Bankruptcy is a correction for bad judgement. Bailouts prevent that correction mechanism from taking place.

 

[Ame®icano]

Because it doesn't really exist. It isn't like they really print the money. They just changed numbers in the computers.

they did print a lot, and used it to buy Treasuries for example, which the govt then used to pay for military, entitlements, etc.etc.,

giving the money directly to people would have caused huge inflation. since it all would have been dumped into the economy.

Gov't can print as much money as they want - inflation will occur only when it enters the money supply. In the last five years, the Federal Reserve has "printed" unimaginable quantities of money, yet inflation remains at an all time low. This is because the government didn't let this money to enter the money supply. The printed money is held in reserves that allows banks to increase their balance sheets on paper, reducing their debt as a percentage of assets, but without the corresponding decrease in purchasing power of the US dollar.

 

[regent]

America began in debt and has only paid it off once; that was under a Democratic president. The result of the pay-off: it caused a depression.

 

[EdwardBaiamonte]

This is because the government didn't let this money to enter the money supply.

not actually. they govt wanted the money to enter the money supply to stimulate the economy but there was little demand for loans so it didn't happen. Then, the Fed printed more money to drive interest rates down further hoping this would make for even lower interest rate loans that would encourage people to buy, cars, homes etc etc. but even that has not worked so the money has piled up at the banks. This is called a liquidity trap.

 

[peach174]

Here's a thought...If all countries operate in debt, debt is the new currency!

Srsly...I need to do a bit of research and find out what countries don't have debt.

They all are in debt except for, Singapore , Macau ,British Virgin Islands ,Brunei, Liechtenstein ,Taiwan, Palau.

The next big world wide economic crash will do away with paper money and then it will be digital money.

 

[EdwardBaiamonte]

The printed money is held in reserves that allows banks to increase their balance sheets on paper, reducing their debt as a percentage of assets, .

not actually, as primary dealers the banks buy treasuries from the govt which in turn are sold to the Fed's open market committee. The banks' balance sheets are not affected since they buy and sell and come out even. But, balance sheets are improved by the profits the banks make as primary dealers.

 

[EdwardBaiamonte]

America began in debt and has only paid it off once; that was under a Democratic president. The result of the pay-off: it caused a depression.

only a total liberal illiterate idiot would say paying off debt caused a depression. See why we are 100% positive that liberalism is based in pure Nazi-like ignorance and arrogance.

 

[Ame®icano]

This is because the government didn't let this money to enter the money supply.

not actually. they govt wanted the money to enter the money supply to stimulate the economy but there was little demand for loans so it didn't happen. Then, the Fed printed more money to drive interest rates down further hoping this would make for even lower interest rate loans that would encourage people to buy, cars, homes etc etc. but even that has not worked so the money has piled up at the banks. This is called a liquidity trap.

You can print all money you want and give it to banks, but you can't force people to take loans. It's not that banks were not giving loans, people are simply refusing to take them.
Printed money did not entered money supply, check the chart I provided earlier. If it did, we would have much higher inflation. Liquidity trap occurs when injections of cash into banking system fail to decrease interest rates. Lowering interest rates does not cause liquidity trap, what cause it is ineffectiveness of lowering rates. Our interest rates are close to zero.

 

[ScienceRocks]

If you were really serious about this, you'd support cutting the military by 200 billion more/year.

-Close 90% of bases outside of our country
-Stop acting like we can help the world

-Cut welfare to only people that really need it.

Cutting science, infrastructure and r&d will reduce the economic strength of this country...Which would harm our ability to pay down the debt.

The losertrian belief that we can have a "vietnam" like system of slave labor that has little education is just dumb. China and other countries that invest in their own countries are starting to pull ahead of us.

Did you know that we spent far more on science and infrastructure in the 50's, 60's and 70s than we do today? How could anyone logically paint those areas as the bad guy in the debate of debt. How stupid would one have to be to wish to cut them in a time when we need them to compete with the rest of the world.

 

[Ame®icano]

The printed money is held in reserves that allows banks to increase their balance sheets on paper, reducing their debt as a percentage of assets, .

not actually, as primary dealers the banks buy treasuries from the govt which in turn are sold to the Fed's open market committee. The banks' balance sheets are not affected since they buy and sell and come out even. But, balance sheets are improved by the profits the banks make as primary dealers.

True, by law, Fed may buy and sell Treasury securities only in the open market. That's not what I was referring to. Fed's controlling our money supply and that is amount of physical cash in circulation, something they call M0. Well, more accurate measure would be M1, that includes monetary base and demand deposits, such as private deposits in bank accounts.

To be short, banks do not have all the money that depositors think they have, because of the fractional reserve system. Their balance sheet can show $100 million, while they only have $10 million in deposits and because of that they are subject to liquidity crisis. If for some reason, people make run on a bank, and bank don't have enough money to pay out, it can collapse. Thats where Fed steps in and act as a lender to the bank. That part of landing is not inflatory because it only increase monetary base M0, while does not increase M1. In other words, the money that Fed loan to banks does not give people access to more money, it just allows people access to money they already have.

Where that money that Fed loans to bank is coming from? The answer is in the link I provided earlier.

 

[Ame®icano]

If you were really serious about this, you'd support cutting the military by 200 billion more/year.

-Close 90% of bases outside of our country
-Stop acting like we can help the world

-Cut welfare to only people that really need it.

Cutting science, infrastructure and r&d will reduce the economic strength of this country...Which would harm our ability to pay down the debt.

The losertrian belief that we can have a "vietnam" like system of slave labor that has little education is just dumb. China and other countries that invest in their own countries are starting to pull ahead of us.

Did you know that we spent far more on science and infrastructure in the 50's, 60's and 70s than we do today? How could anyone logically paint those areas as the bad guy in the debate of debt. How stupid would one have to be to wish to cut them in a time when we need them to compete with the rest of the world.

There you are again trying to politicize this thread. Why don't you fuck off and stick to derailing threads in political forum, since it seems that's only thing you're capable of doing.