Why The National Debt Is Good For The Country

[Full-Auto]

A national surplus would be better for the country.

Can you imagine collecting real interest? Reducing burdens for everyone?

My savings could use a good interest rate increase.

 

[editec]

In a growing and dynamic society, assuming that one does not want inflation, new money has to come into the system to balance the equasion between everything that is and the money supply (often existing only on book balances) that exists.

When there's more new money (created by debt) than new real assets being created, inflation results.

When there's too little money circulating in comparison to the production of a society, then deflation occurs.

What just happened to this economy is that as investment bubbles burst and a lot of theoretical money (not actualy green backs, but presumed value that tied up in the value of real estate or as book values on debt insturments as two examples)) disappeared.

No money migrated from the losers to the winners, because there were no buyers or sellers.

The presumed VALUE of REAL THINGS (like trillions in real estate values and debt insturments) simply went down when the bubbles burst.

Now, even though those houses were NOT money, they reprsented the PERCEPTION of potential profits.

Hence Americans FEEL poorer, even if they keep their houses and really nothing changed for them except their EXPECTATION of cashing in at some future date.

Basically tyhe middle class's loses are mostly tied up in what they lost in terms of this PERCEPTION of money, rather than losing REAL cash.

But the depressing economic effect on this macro-economy is the same, anyway.

 

[Twofox]

2 words - Weimar Republic.

Hyperinflation of the Weimar Republic in 1923 Germany

Printing too much money causes inflation. It devalues the dollar and causes the price of everything to go up. Coincidentally, too much debt also devalues the dollar which causes the same effect, although it is en vogue to claim it's not really inflation.

 

[Google]

1. Debt enriches the private sector.

When the government issues debt, it spends the same amount of money as the amount it borrows. Money flows from the private sector through the government, and back into the private sector again. No money is lost or made in this process. The only net result is the creation of new treasury bonds, which enrich the private sector.

2. The debt need not be paid back.

So long as people want to hold government bonds, and the government can afford to pay the interest, there is no need for the government to pay back money it's borrowed in the past.

3. Paying interest does not make the country poorer.

When the interest is paid to Americans, there is no net result. When it's paid to foreigners, they can save the dollars or spend them on American goods and services. Either way it's good for us.

4. Debt is the basis of our financial system.

Dollars are backed by US debt. If the debt were paid off, it would result in the collapse of our economy.

5. We can't default on our debt, unless it's voluntary.

Our debt is denominated in dollars. We can create as many as we want. Therefore we can't run out of dollars to pay our debt.

6. We are not "borrowing from our grandchildren."

Should our grandchildren choose to pay down our debt (and there's no reason why they should), the payments will go to our grandchildren, not to us. (We'll be dead by then.)

It is official, the left is delusional. This mentality is demonstrates such ineptitude that it defies any rational explanation.

Can one liberal explain to me, if deficit spending and debt is so beneficial, why is it not working? Under this president deficit spending and debt has increased more than any other president, so why is economic growth stunted?

This is such a stupid, and there really isn't any other word to describe this thinking, that it is laughable if it weren't for the fact that we have a president that subscribes to this stupidity.

If national debt is beneficial what went wrong in Greece (http://www.guardian.co.uk/world/2011/aug/01/greece-panic-change), Spain (Equities ditched as eurozone fears bite - FT.com), Italy (Italy under fire in widening euro debt crisis - Yahoo! Finance), ect.

This is so easily demonstrated to be absurd, though absurdity usually is.

 

[saveliberty]

Oh they got an answer: Bush.

It is wrong and baseless, but they can only respond with talking points and hate.

 

[KissMy]

7. When the government issues debt, it enriches the private sector, which encourages people to spend and invest. When people spend and invest, they create jobs and improve the economy.

Yeah Right-- We see how well that's working with Obama's flood the basement economic policies--specifically his 1 trillion spent on an economic stimulus bill.

The Federal Government is currently borrowing .43 cents on every dollar it spends. Today there are 18,000 baby-boomers entering social security and medicare resulting in another 64 TRILLION in unfunded liabilities--resulting in $534,000.00 per household debt in America.

In 10 years--even after this debt ceiling bill passed we will be 21 TRILLION in debt.

View attachment 14475

1 billion dollars--$100.00 bills stacked on palets.

View attachment 14476

1 trillion dollars--$100.00 bills stacked on palets. NOTE--how small the man is in this chart.

Just multiply the trillion dollar chart by 21 to get a real good look at our debt in 10 years--

 

[saveliberty]

Sundial's school of economics has been proven wrong on many occasions, but does stop the myth from continuing.

 

[Jarhead]

You can't keep creating something from nothing.
Before long, something will come calling on nothing.
And if nothing never asks anything of something, then something eventually becomes nothing.

And thus why the dot com bubble burst.

 

[Ame®icano]

Except for the fact one of the biggest problems with running such a high debt is the US dollar gets devalued. When that happens the rest of the economy takes a major hit. People buy less since their money doesn't go as far anymore, that means less demand and less jobs, and the economy spirals from there. Even in a business running a debt isn't good, because if the economy takes even a little hit then you're screwed. But run your business on cash and you can make a killing during that type of economy, buying up all of the failing businesses dirt cheap.

Spin it any way you want, debt is never good in any situation.

Debt is good only in heads of those who are not intending to return it.

 

[Sundial]

It is official, the left is delusional. This mentality is demonstrates such ineptitude that it defies any rational explanation.

Name calling is not a substantive response. If you think I've said something delusional, you should say what it is.

If name-calling is just your knee-jerk reaction to reading something you don't understand, you should try to understand it so you can make an intelligent response.

Can one liberal explain to me, if deficit spending and debt is so beneficial, why is it not working? Under this president deficit spending and debt has increased more than any other president, so why is economic growth stunted?

Any number of liberals - or just plain economists - could explain it to you, if you read what they had to say.

Here's Paul Krugman, yesterday:

Given a crisis that should have been relatively easy to solve — and, more than that, a crisis that anyone who knew macroeconomics 101 should have been well-prepared to deal with — what we actually got was an obsession with problems we didn’t have. We’ve obsessed over the deficit in the face of near-record low interest rates, obsessed over inflation in the face of stagnant wages, and counted on the confidence fairy to make job-destroying policies somehow job-creating.

This is such a stupid, and there really isn't any other word to describe this thinking, that it is laughable if it weren't for the fact that we have a president that subscribes to this stupidity.

Whether Obama subscribes or not - and I don't doubt that he does - the fact remains that the deal he signed off on does the opposite of what's needed. It may be the best he could do, politically, but it's not what's best for the economy.

If national debt is beneficial what went wrong in Greece

This is so easily demonstrated to be absurd, though absurdity usually is.

The Greek and US situations are vastly different. For one, people are perfectly willing to lend the US money. Treasury rates are at historic lows. For another, our debts are denominated in our own currency.

 

[KissMy]

7. When the government issues debt, it enriches the private sector, which encourages people to spend and invest. When people spend and invest, they create jobs and improve the economy.

You left out all the important reasons & made your argument completely one sided.

8. Increasing debt = Inflation. This is bad for most especially fixed income & savers. It is earnings & savings theft. A cruel tax. If the USG is going to print money then they should pay it to the people who they stole the value from. The savers. All that newly created currency should not go to government cronies first. They are getting to spend it first before inflation sets in. That is criminal in so many ways.

9. China is artificially devaluing their currency creating a de-facto export subsidy & import tariff. They have found a way around the WTO policy on protectionism.

 

[Sundial]

7. When the government issues debt, it enriches the private sector, which encourages people to spend and invest. When people spend and invest, they create jobs and improve the economy.

You left out all the important reasons & made your argument completely one sided.

8. Increasing debt = Inflation. This is bad for most especially fixed income & savers. It is earnings & savings theft. A cruel tax. If the USG is going to print money then they should pay it to the people who they stole the value from. The savers. All that newly created currency should not go to government cronies first. They are getting to spend it first before inflation sets in. That is criminal in so many ways.

9. China is artificially devaluing their currency creating a de-facto export subsidy & import tariff. They have found a way around the WTO policy on protectionism.

A. Nobody's printing any money. Issuing Treasury bonds does not increase the money supply.

B. When corporations issue debt, does that also, in your mind, equal theft?

C. What does China have to do with anything?

 

[Google]

Name calling is not a substantive response. If you think I've said something delusional, you should say what it is.

If name-calling is just your knee-jerk reaction to reading something you don't understand, you should try to understand it so you can make an intelligent response.

Any number of liberals - or just plain economists - could explain it to you, if you read what they had to say.

Here's Paul Krugman, yesterday:

Given a crisis that should have been relatively easy to solve — and, more than that, a crisis that anyone who knew macroeconomics 101 should have been well-prepared to deal with — what we actually got was an obsession with problems we didn’t have. We’ve obsessed over the deficit in the face of near-record low interest rates, obsessed over inflation in the face of stagnant wages, and counted on the confidence fairy to make job-destroying policies somehow job-creating.


The Greek and US situations are vastly different. For one, people are perfectly willing to lend the US money. Treasury rates are at historic lows. For another, our debts are denominated in our own currency.

My knee-jerk reaction to reading something that has no basis in reality is to say that it is delusional. What you have stated in the OP is absurd, and stating so is a substantive response.

If national debt is beneficial to economic growth, why isn't it working? The democrats had a decisive majority in Congress and held the presidency for two years, during which time they increased the national debt more than any other administration in history. Where are the benefits?

If national debt is beneficial, why is it cited every single time as the reason for possible for loss of America's AAA credit rating?

Paul Krugman is in the minority of economists who believe that borrowing 40 cents on every dollar spent is something that can be sustained indefinitely. When it comes to global warming I'm sure you would shout consensus, well a clear consensus of economists believe the current situation is going to lead to inevitable default, credit rating downgrade, ect.

Maybe they are debt deniers?

 

[Sundial]

When the economy collapsed at the end of Bush's second term, a lot of Tea Party types were out buying shot guns shells and Kruggerands. The reason it didn't get to that point was because of government intervention.

The government could bring the unemployment rate down even more. But it would require even bigger deficits than the ones you're complaining about now.

You remember when the Dow was dumping a thousand points a day? When Lehman disappeared? When AIG said it was bankrupt?

Remember when Congress refused to fund TARP? Remember when the stock market cratered, and Congress reversed course the next day?

The deficit spending you're now complaining about is what kept the banking system from getting sucked down the drain - and your savings and checking accounts with it.

The US is slowly recovering. But your Tea Party Congress is threatening that recovery. Threatening to bankrupt the country may be good politics, but it terrible for the economy. And whatever spending cuts they won, or will win, hurt the economy still more.

And by the way, President Obama did not increase the debt "more than any other president in history."

 

[saveliberty]

Were you asleep the entire housing crisis? Democrats were in charge of Congress at the time and wanted home ownership expanded to the poor. This created artifical demand and higher housing prices. Then that all fell apart, we had the result you should have been paying bettter attention to.

Then they tried to fix it by bailing banks out instead of home owners and banks. The result? Massive foreclosures. I wouldn't consider that a fix. Housing prices back up yet? No

TARP gave $500B to GM to prevent bankruptcy. How did that work? Oh yeah, they went bankrupt several months later. The concessions won through that led to a reorganized and profitable company.

Government did not bring down unemployment. The number is still higher than the time these measures were passed. Private sector jobs has risen, but actually, government related jobs, particularly at the local level, are INCREASING.

Go peddle crap at the dump.

 

[Sundial]

The mortgage crisis had nothing to do with Democrats or low-income housing. It had everything to do with fraud and wishful thinking on the part of private companies like Lehman, Goldman, AIG, and Ameriquest.

The money the US lent GM was not from TARP, it was not a gift, and it was not $500 billion. It was not meant to prevent GM's bankruptcy. It's what allowed GM to be able to reorganize.

Government jobs are not increasing, they're decreasing. And they're decreasing because state governments are slashing their budgets, not because they're hiring more And unemployment is going down, not up, though it's going down slower than it should.

100% of what you said was wrong.

 

[saveliberty]

The mortgage crisis had nothing to do with Democrats or low-income housing. It had everything to do with fraud and wishful thinking on the part of private companies like Lehman, Goldman, AIG, and Ameriquest.

The money the US lent GM was not from TARP, it was not a gift, and it was not $500 billion. It was not meant to prevent GM's bankruptcy. It's what allowed GM to be able to reorganize.

Government jobs are not increasing, they're decreasing. And they're decreasing because state governments are slashing their budgets, not because they're hiring more And unemployment is going down, not up, though it's going down slower than it should.

100% of what you said was wrong.

But the focus on subprimes ignores the widely available industry facts (reported by the Mortgage Bankers Association) that 51% of all foreclosed homes had prime loans, not subprime, and that the foreclosure rate for prime loans grew by 488% compared to a growth rate of 200% for subprime foreclosures.

The analysis indicates that, by far, the most important factor related to foreclosures is the extent to which the homeowner now has or ever had positive equity in a home.

This would point to Freddie Mac and Fannie May dipwad.

New Evidence on the Foreclosure Crisis - WSJ.com

On December 19, 2008, the U.S. government agreed to give Chrysler and General Motors an emergency loan to help the financially strapped companies stave off bankruptcy. The plan, announced by President Bush, requires the companies to undergo aggressive restructuring.Bloomberg.com: GM and Chrysler Will Get $13.4 Billion in U.S. Loans The funds were taken from the $700 billion Troubled Asset Relief Program (TARP). Since the passing of the bailout package, both Chrysler and GM have asked the government for billions more in aid.

Oh look TARP and meant to stave off bankruptcy dumbass. Yes, the amount was much smaller.

Automaker Bailout

I said the unemployment went up after the programs started and have not gone below the levels we had before the programs. You took liberties with that you should not have taken.

Lying piece of crap.

 

[P@triot]

1. Debt enriches the private sector.

When the government issues debt, it spends the same amount of money as the amount it borrows. Money flows from the private sector through the government, and back into the private sector again. No money is lost or made in this process. The only net result is the creation of new treasury bonds, which enrich the private sector. - That's funny, that is "Trickle Down" Economics, which your party swears on their very life doesn't work. It's the reason you people have attacked Reagan for 30 years. Suddenly you're claiming it does work? Well I'll be damned....

2. The debt need not be paid back.

So long as people want to hold government bonds, and the government can afford to pay the interest, there is no need for the government to pay back money it's borrowed in the past. - And so long as German's were turning their head, nobody cared that Jews were being exterminated by the millions. The point is - the debt is deadly, debt like this collapsed the U.S.S.R. and just collapsed Greece, people are not going to "hold" the bonds, and the bill is now due.

3. Paying interest does not make the country poorer.

When the interest is paid to Americans, there is no net result. When it's paid to foreigners, they can save the dollars or spend them on American goods and services. Either way it's good for us. - Right, and eating 73lbs of fast food 3x's a day does not make you any fatter. There is no need to respond to a statement this asinine. If you believe China is going to spend $1 on American "goods and services", I have thousands of brindges in China I'd like to sell you.

4. Debt is the basis of our financial system.

Dollars are backed by US debt. If the debt were paid off, it would result in the collapse of our economy. - Right, and women love being raped. They just don't know it yet. We just need to rape them so they will realize how much they enjoy it. Again, a comment this asinine doesn't even need a response. Our economy is collapsing because of the debt. Our economy would flourish if the debt were paid off and the nations budget balanced each fiscal year.

5. We can't default on our debt, unless it's voluntary.

Our debt is denominated in dollars. We can create as many as we want. Therefore we can't run out of dollars to pay our debt. - That's what Mexico thought. Now the Peso is worth about as much as a grain of sand. What you Marxist/Socialist/Communist don't understand is that something is only valuable if it is rare. If we just print off trillions of dollars tomorrow, those dollars cease to be rare and thus are not worth the paper and the ink used to print them.

6. We are not "borrowing from our grandchildren."

Should our grandchildren choose to pay down our debt (and there's no reason why they should), the payments will go to our grandchildren, not to us. (We'll be dead by then.)

- Our grandchildren didn't loan the money, so why would it go to them? The money was loaned from China, it will go to China. You are absolutely STEALING from your grandchildren.

Seriously man, why would you post something this ignorant and this asinine?

 

[saveliberty]

He would have to admit to listening to failing political leaders Rottweiler.

 

[P@triot]

I don't know I would say debt is good but there's a lot of truth in what you say. Running a business or the government of a cash basis means you bypass a lot a lot of good things, like the putting a man on moon and the interstate highway system. However, when you consistently grow debt faster than GDP growth, you will have problem. Interest will become such a large expense that it threatens your ability to continue borrowing and your credit standing with your lenders.

There is a point where debt becomes a problem. But we're not there. Japan has twice the debt that we do, as a ratio to GDP, and interest rates even lower than ours. Our interest rates are at historic lows, and the amount of interest we're paying is manageable.

Reducing unemployment, on the other hand, would improve the governments situation, because it would bring in more income in the long run.

Except we can't reduce unemployment because you people, in typical Communist fashion, want to punish those that are successful.