Myth:*national debt is a burden that will ruin our children’s futures

[bripat9643]

There’s really no such thing as “paying back” the national debt unless you think the government should be entirely eliminated (which I think most of us would agree is a pretty unrealistic view of the world).

Most of us, yes.

But many on the right in fact have an unrealistic view of the world.

Yeah, the theory that you can't have government that doesn't owe money is "unrealistic."

Libturds kill me.

 

[Kimura]

I think you get paid to spew this dangerous toxic nonsense

He's absolutely correct. We cannot eat future food or live in future houses. Everything that will be consumed in the future will be produced in the future.

This is an absolute physical fact.

You have no rational basis to argue otherwise.

In the future, when the government renigs on the bonds it issued, just explain to the owners of those bonds that they can't eat future food or live in future houses.

US Treasuries are nothing more than dollar deposits at the Federal Reserve similar to a savings account. The federal government rolls over trillions in bonds per year. Basically, from an operational standpoint, paying bond owners boils down to debiting securities accounts and crediting reserve accounts. It's all crediting and debiting of reserve accounts and securities accounts, day in and out day, shifting trillions back and forth on a yearly basis.

In other words, the US government cannot default, it's impossible. For the 8,546th time, we're no longer on a gold standard.

 

[westwall]

Spain: Myth:*national debt is a burden that will ruin our children’s futures

Argentina: Myth:*national debt is a burden that will ruin our children’s futures

Germany: Myth:*national debt is a burden that will ruin our children’s futures

Spain and Germany aren't currency issuers, they're currency users, which is a different ball game. This is one of the problems with being a member of the Eurozone. EU countries operate more like US states in this context. If these country could still issue their currencies, they could have spent in a counter-cyclical fashion in we wouldn't have the problems we now see in Spain, Portugal, Ireland, Greece and Italy.

Argentina pegged the peso to the dollar which was not a wise move.

Again, at the risk of sounding redundant, in economics such a concept doesn't exist, whereby we sacrifice today's output to some date in the past, and then roll it over to generations before us. Therefore, in real terms, no such burden or share of debt exists for individual Americans, our children or grandchildren. Our children and grandchildren, just like you and I, will be able to go to work and produce and consume their real output of real goods and services regardless of how many bonds need to be rolled over.

Soooooo, if Argentina pegging its peso to the dollar was a BAD IDEA.... What does that mean to our dollar now.....

 

[westwall]

He's absolutely correct. We cannot eat future food or live in future houses. Everything that will be consumed in the future will be produced in the future.

This is an absolute physical fact.

You have no rational basis to argue otherwise.

In the future, when the government renigs on the bonds it issued, just explain to the owners of those bonds that they can't eat future food or live in future houses.

US Treasuries are nothing more than dollar deposits at the Federal Reserve similar to a savings account. The federal government rolls over trillions in bonds per year. Basically, from an operational standpoint, paying bond owners boils down to debiting securities accounts and crediting reserve accounts. It's all crediting and debiting over reserve accounts and securities accounts, day in and out day, shifting trillions back and forth.

In other words, the US government cannot default, it's impossible.

Willful denial is still denial.

 

[Kimura]

There’s really no such thing as “paying back” the national debt unless you think the government should be entirely eliminated (which I think most of us would agree is a pretty unrealistic view of the world).

Most of us, yes.

But many on the right in fact have an unrealistic view of the world.

Yeah, the theory that you can't have government that doesn't owe money is "unrealistic."

Libturds kill me.

The US doesn't borrow its own fiat, genius. It doesn't borrow that which it freely issues.

 

[Toro]

Spain: Myth:*national debt is a burden that will ruin our children’s futures

Argentina: Myth:*national debt is a burden that will ruin our children’s futures

Germany: Myth:*national debt is a burden that will ruin our children’s futures

Spain and Germany aren't currency issuers, they're currency users, which is a different ball game. This is one of the problems with being a member of the Eurozone. EU countries operate more like US states in this context. If these country could still issue their currencies, they could have spent in a counter-cyclical fashion in we wouldn't have the problems we now see in Spain, Portugal, Ireland, Greece and Italy.

Argentina pegged the peso to the dollar which was not a wise move.

Again, at the risk of sounding redundant, in economics such a concept doesn't exist, whereby we sacrifice today's output to some date in the past, and then roll it over to generations before us. Therefore, in real terms, no such burden or share of debt exists for individual Americans, our children or grandchildren. Our children and grandchildren, just like you and I, will be able to go to work and produce and consume their real output of real goods and services regardless of how many bonds need to be rolled over.

Argentina pegged its currency to the dollar to stop hyperinflation as high as 5000% a year, which was caused by Argentina running large fiscal deficits and printing money to pay their liabilities.

In retrospect, the currency board was an unwise move. But due to economic incompetence by inept interventionist governments over the previous decades, they felt they had to do something radical.

 

[bripat9643]

Most of us, yes.

But many on the right in fact have an unrealistic view of the world.

Yeah, the theory that you can't have government that doesn't owe money is "unrealistic."

Libturds kill me.

The US doesn't borrow its own fiat, genius. It doesn't borrow that which it freely issues.

So when the government sells a bond, it isn't borrowing money, but when General Motors sells a bond, it is borrowing money?

What you really mean is that government can always escape from under its obligations through the scheme of legal counterfeiting.

 

[Toro]

Most of us, yes.

But many on the right in fact have an unrealistic view of the world.

Yeah, the theory that you can't have government that doesn't owe money is "unrealistic."

Libturds kill me.

The US doesn't borrow its own fiat, genius. It doesn't borrow that which it freely issues.

The Treasury doesn't borrow from me when I buy T bonds?

 

[Kimura]

Spain: Myth:*national debt is a burden that will ruin our children’s futures

Argentina: Myth:*national debt is a burden that will ruin our children’s futures

Germany: Myth:*national debt is a burden that will ruin our children’s futures

Spain and Germany aren't currency issuers, they're currency users, which is a different ball game. This is one of the problems with being a member of the Eurozone. EU countries operate more like US states in this context. If these country could still issue their currencies, they could have spent in a counter-cyclical fashion in we wouldn't have the problems we now see in Spain, Portugal, Ireland, Greece and Italy.

Argentina pegged the peso to the dollar which was not a wise move.

Again, at the risk of sounding redundant, in economics such a concept doesn't exist, whereby we sacrifice today's output to some date in the past, and then roll it over to generations before us. Therefore, in real terms, no such burden or share of debt exists for individual Americans, our children or grandchildren. Our children and grandchildren, just like you and I, will be able to go to work and produce and consume their real output of real goods and services regardless of how many bonds need to be rolled over.

Argentina pegged its currency to the dollar to stop hyperinflation as high as 5000% a year, which was caused by Argentina running large fiscal deficits and printing money to pay their liabilities.

In retrospect, the currency board was an unwise move. But due to economic incompetence by inept interventionist governments over the previous decades, they felt they had to do something radical.

I'm glad you brought up the currency board. They were the epitome of neoliberal policies all through the 1990s. Over this time period GDP growth was anemic and unemployment increased. Suffice to say, the entire episode devolved into a political, economic and financial calamity. They eventually abandoned the currency board, defaulted on their debt, created a jobs program.

Interestingly, their current account was mostly in deficit hovering at around 10 billion per year. After their crisis it went into surplus to the tune of 10 billion and by 2011 it went to zero. The current account surplus enabled them to accrue international reserves peaking at 50 billion in 2010. Since then the government has been running large fiscal surpluses (again, it's all macro-accounting) to the tune of 3% of GDP. This allowed them to decrease government sector debt ratios. Also, they had public denominated in foreign currencies, with a total of around 130% at one point. Only around 50% of private debt is currently held by the private sector and corporate debt is around 20% of GDP. This what we end up with: a current account surplus bigger than the surplus of the private sector that has allowed Argentine to accrue savings and pay of its debt.

The US is a different animal. We run a persistent trade deficit with the rest of the world, so the accounting changes up.

 

[Kimura]

Yeah, the theory that you can't have government that doesn't owe money is "unrealistic."

Libturds kill me.

The US doesn't borrow its own fiat, genius. It doesn't borrow that which it freely issues.

The Treasury doesn't borrow from me when I buy T bonds?

Not really, you desire to save in government sector securities. The $$$$ you use to purchase those T bonds had to be spent into existence by the federal government at some point.

 

[CrusaderFrank]

Spain and Germany aren't currency issuers, they're currency users, which is a different ball game. This is one of the problems with being a member of the Eurozone. EU countries operate more like US states in this context. If these country could still issue their currencies, they could have spent in a counter-cyclical fashion in we wouldn't have the problems we now see in Spain, Portugal, Ireland, Greece and Italy.

Argentina pegged the peso to the dollar which was not a wise move.

Again, at the risk of sounding redundant, in economics such a concept doesn't exist, whereby we sacrifice today's output to some date in the past, and then roll it over to generations before us. Therefore, in real terms, no such burden or share of debt exists for individual Americans, our children or grandchildren. Our children and grandchildren, just like you and I, will be able to go to work and produce and consume their real output of real goods and services regardless of how many bonds need to be rolled over.

Argentina pegged its currency to the dollar to stop hyperinflation as high as 5000% a year, which was caused by Argentina running large fiscal deficits and printing money to pay their liabilities.

In retrospect, the currency board was an unwise move. But due to economic incompetence by inept interventionist governments over the previous decades, they felt they had to do something radical.

I'm glad you brought up the currency board. They were the epitome of neoliberal policies all through the 1990s. Over this time period GDP growth was anemic and unemployment increased. Suffice to say, the entire episode devolved into a political, economic and financial calamity. They eventually abandoned the currency board, defaulted on their debt, created a jobs program.

Interestingly their current was mostly in deficit hovering at around 10 billion per year. After their crisis it went into surplus to the tune of 10 billion and by 2011 it went to zero. The current account surplus enabled them to accrue international reserves peaking at 50 billion in 2010. Since that government has been running large fiscal surpluses (again, it's all macro-accounting) to the tune of 3% of GDP. This allowed them to decrease government sector debt ratios. Also, they had public denominated in foreign currencies, with a of 133% at one point. Only around 50% of private debt is currently held by the private sector and corporate debt is around 20% of GDP. This what we end up with: a current account surplus bigger than the surplus of the private sector that has allowed Argentine to accrue savings and pay of its debt.

The US is a different animal. We run a persistent trade deficit with the rest of the world, so the accounting changes up

So decreasing government debt was good for Argentina? I though that was either: A. Irrelevant or B. financial kiss of death?

 

[Kimura]

Yeah, the theory that you can't have government that doesn't owe money is "unrealistic."

Libturds kill me.

The US doesn't borrow its own fiat, genius. It doesn't borrow that which it freely issues.

So when the government sells a bond, it isn't borrowing money, but when General Motors sells a bond, it is borrowing money?

What you really mean is that government can always escape from under its obligations through the scheme of legal counterfeiting.

Um....no.

US Treasuries are nothing more than interest-bearing dollar deposits at the FED. Like I said, Treasuries ares similar to savings' accounts and reserve accounts are the same as checking accounts. All those dollars, whether in reserve accounts at the FED, or even at your local credit union, were spent into existence by the federal government at some point.

General Motors is a currency user, not a currency issuer like the federal government. For the 10,675 time, the monetary circuit doesn't operate like a recycling plant, money is largely endogenous.

 

[CrusaderFrank]

The US doesn't borrow its own fiat, genius. It doesn't borrow that which it freely issues.

The Treasury doesn't borrow from me when I buy T bonds?

Not really, you desire to save in government sector securities. The $$$$ you use to purchase those T bonds had to be spent into existence by the federal government at some point.

What do they pay you to post this crap?

 

[Kimura]

Argentina pegged its currency to the dollar to stop hyperinflation as high as 5000% a year, which was caused by Argentina running large fiscal deficits and printing money to pay their liabilities.

In retrospect, the currency board was an unwise move. But due to economic incompetence by inept interventionist governments over the previous decades, they felt they had to do something radical.

I'm glad you brought up the currency board. They were the epitome of neoliberal policies all through the 1990s. Over this time period GDP growth was anemic and unemployment increased. Suffice to say, the entire episode devolved into a political, economic and financial calamity. They eventually abandoned the currency board, defaulted on their debt, created a jobs program.

Interestingly their current was mostly in deficit hovering at around 10 billion per year. After their crisis it went into surplus to the tune of 10 billion and by 2011 it went to zero. The current account surplus enabled them to accrue international reserves peaking at 50 billion in 2010. Since that government has been running large fiscal surpluses (again, it's all macro-accounting) to the tune of 3% of GDP. This allowed them to decrease government sector debt ratios. Also, they had public denominated in foreign currencies, with a of 133% at one point. Only around 50% of private debt is currently held by the private sector and corporate debt is around 20% of GDP. This what we end up with: a current account surplus bigger than the surplus of the private sector that has allowed Argentine to accrue savings and pay of its debt.

The US is a different animal. We run a persistent trade deficit with the rest of the world, so the accounting changes up

So decreasing government debt was good for Argentina? I though that was either: A. Irrelevant or B. financial kiss of death?

Argentina adopted a currency peg to the dollar which guaranteed convertibility within the hard peg from their central bank. It was a bad decision and not structured for Argentina's trade policy or production environment. It's sort of similar to how EU countries shouldn't be in the same bloc since they don't share any economic similarities which would suggest a common currency (think Greece vs Germany or Italy in terms of GDP, labor force participation, etc). Argentina should have never been part of the dollar system.

The types of external shocks their economy suffered cannot happen to the US economy. The US trades with countries whose currencies change all time on the exchange. Since we have a pretty big non-traded goods and services sector, our economy can benefit from exchange fluctuations and we use them to equalize the prices of goods and services, etc.

 

[Delta4Embassy]

Another myth is that we can reduce the national debt and/or ever pay it back. It's too big to reduce or pay back. It's going to be the direct cause of the collapse of the USA when it happens. And it will, only a matter of time.

 

[Delta4Embassy]

Even if the world's top 10 billionaires all donated every cent they had to pay down the national debt, the amount they could donate wouldn't exceed about half a trillion dollars. The national debt is over 17 trillion. It's a number so large no one on Earth can appreciuate how big or how much is really is. It's like asking people to understand how far away the closet star is. Proxima Centauri is 4.2 light-years away. We understand the value of 4, but when you put this value into miles there's nothing in our experience that let's us understand how far away 22 trillion miles is. Around the equator the Earth is only about 25,000 miles.

The national debt is literally an astronomically large number. And cutting spending, sequestration, more taxes isn't going to come anywhere close to doing anything about it. And it's not Obama's fault, Bush's fault or Clinton's fault, but everyone's fault for allowing us to first go off the gold standard which our money was backed up by (now it's backed up only by positive thinking and sacrificing goats behind closed doors heh.) And then not screaming bloody murder after we hit that first trillion.

 

[Toro]

The US doesn't borrow its own fiat, genius. It doesn't borrow that which it freely issues.

The Treasury doesn't borrow from me when I buy T bonds?

Not really, you desire to save in government sector securities. The $$$$ you use to purchase those T bonds had to be spent into existence by the federal government at some point.

I own a liability that says the US Treasury is to pay me the principal and interest payments.

 

[Toro]

Spain and Germany aren't currency issuers, they're currency users, which is a different ball game. This is one of the problems with being a member of the Eurozone. EU countries operate more like US states in this context. If these country could still issue their currencies, they could have spent in a counter-cyclical fashion in we wouldn't have the problems we now see in Spain, Portugal, Ireland, Greece and Italy.

Argentina pegged the peso to the dollar which was not a wise move.

Again, at the risk of sounding redundant, in economics such a concept doesn't exist, whereby we sacrifice today's output to some date in the past, and then roll it over to generations before us. Therefore, in real terms, no such burden or share of debt exists for individual Americans, our children or grandchildren. Our children and grandchildren, just like you and I, will be able to go to work and produce and consume their real output of real goods and services regardless of how many bonds need to be rolled over.

Argentina pegged its currency to the dollar to stop hyperinflation as high as 5000% a year, which was caused by Argentina running large fiscal deficits and printing money to pay their liabilities.

In retrospect, the currency board was an unwise move. But due to economic incompetence by inept interventionist governments over the previous decades, they felt they had to do something radical.

I'm glad you brought up the currency board. They were the epitome of neoliberal policies all through the 1990s. Over this time period GDP growth was anemic and unemployment increased. Suffice to say, the entire episode devolved into a political, economic and financial calamity. They eventually abandoned the currency board, defaulted on their debt, created a jobs program.

Interestingly, their current account was mostly in deficit hovering at around 10 billion per year. After their crisis it went into surplus to the tune of 10 billion and by 2011 it went to zero. The current account surplus enabled them to accrue international reserves peaking at 50 billion in 2010. Since that government has been running large fiscal surpluses (again, it's all macro-accounting) to the tune of 3% of GDP. This allowed them to decrease government sector debt ratios. Also, they had public denominated in foreign currencies, with a total of around 130% at one point. Only around 50% of private debt is currently held by the private sector and corporate debt is around 20% of GDP. This what we end up with: a current account surplus bigger than the surplus of the private sector that has allowed Argentine to accrue savings and pay of its debt.

The US is a different animal. We run a persistent trade deficit with the rest of the world, so the accounting changes up

Today, inflation in Argentina is 40% and economists can go to jail if they publish inflation numbers that are different from the government's. Argentina has their own currency, is monetizing the pensions, and can't borrow in international markets. Yet inflation is - once again - pernicious in that country.

Inflation was also about 3000% when the currency board was instituted. It was something like 4% a few years later.

 

[Kimura]

The Treasury doesn't borrow from me when I buy T bonds?

Not really, you desire to save in government sector securities. The $$$$ you use to purchase those T bonds had to be spent into existence by the federal government at some point.

I own a liability that says the US Treasury is to pay me the principal and interest payments.

It helps to think of Treasuries as another form of $$$$. It's simply a less liquid version of cash. It's still an asset of the non-government and liability to the federal government.

 

[Kimura]

Argentina pegged its currency to the dollar to stop hyperinflation as high as 5000% a year, which was caused by Argentina running large fiscal deficits and printing money to pay their liabilities.

In retrospect, the currency board was an unwise move. But due to economic incompetence by inept interventionist governments over the previous decades, they felt they had to do something radical.

I'm glad you brought up the currency board. They were the epitome of neoliberal policies all through the 1990s. Over this time period GDP growth was anemic and unemployment increased. Suffice to say, the entire episode devolved into a political, economic and financial calamity. They eventually abandoned the currency board, defaulted on their debt, created a jobs program.

Interestingly, their current account was mostly in deficit hovering at around 10 billion per year. After their crisis it went into surplus to the tune of 10 billion and by 2011 it went to zero. The current account surplus enabled them to accrue international reserves peaking at 50 billion in 2010. Since that government has been running large fiscal surpluses (again, it's all macro-accounting) to the tune of 3% of GDP. This allowed them to decrease government sector debt ratios. Also, they had public denominated in foreign currencies, with a total of around 130% at one point. Only around 50% of private debt is currently held by the private sector and corporate debt is around 20% of GDP. This what we end up with: a current account surplus bigger than the surplus of the private sector that has allowed Argentine to accrue savings and pay of its debt.

The US is a different animal. We run a persistent trade deficit with the rest of the world, so the accounting changes up

Today, inflation in Argentina is 40% and economists can go to jail if they publish inflation numbers that are different from the government's. Argentina has their own currency, is monetizing the pensions, and can't borrow in international markets. Yet inflation is - once again - pernicious in that country.

Inflation was also about 3000% when the currency board was instituted. It was something like 4% a few years later.

I know.

The currency board scheme put a straight jacket on their monetary and fiscal policy arrangements. Think about it: the Argentinian central bank could only issue pesos only if they were backed by dollars. There was a some slack allowed but WTF with such a terrible policy. Basically, US dollars had to be acquired by net exports which would allow domestic policy to increase.

The right wing douches then went into overdrive with massive privatization schemes, cuts to pensions, deregulation, etc ad nauseum you know the playbook. The loss of monetary sovereignty handed the country over to foreigners for pennies on the dollar. What a total fucking shit show down there. This is what occurs when ideology becomes a pathology.