How is austerity doing in Europe

[RKMBrown]

Answer this, dumbass.

How does the U.S. government expand the money supply to meet the needs of an expanding economy?

It doesn't.

It authorizes the fed to "increase" the amount of fed bond money the fed cartel banks can sell by putting ones and zeroes in the accounts of the bank. Nothing backs this money it's funny money. It's supposed to represent real assets but it does not have to actually represent assets. Basically it's like the money grows on trees for the cartel. They can then lend that money out. Typically the amount "authorized" to the banks just goes up till the pyramid scheme crashes. The fed is not the government.

That's just a complete misunderstanding of monetary operations. And I'm being kind...

Well then, why don't you explain how the U.S. government expands the money supply to meet the needs of an expanding economy?

 

[RKMBrown]

Answer this, dumbass.

How does the U.S. government expand the money supply to meet the needs of an expanding economy?

It doesn't.

It authorizes the fed to "increase" the amount of fed bond money the fed cartel banks can sell by putting ones and zeroes in the accounts of the bank. Nothing backs this money it's funny money. It's supposed to represent real assets but it does not have to actually represent assets. Basically it's like the money grows on trees for the cartel. They can then lend that money out. Typically the amount "authorized" to the banks just goes up till the pyramid scheme crashes. The fed is not the government.

Er, no.

Er, yes.

 

[Kimura]

Some of our debt is held by private wealth, some is the fed and cartel banks using their funny money to buy US debt, and some is foreign government investment.

The US government doesn't purchase its own paper. The FED is precluded from buying directly from the Treasury by law. When the FED purchases US debt, it purchases said debt from the public. These are bonds, bills, and notes which the public has already purchased. This whole notion that the FED needs to purchase US Treasuries is completely false. US debt auctions are constantly oversubscribed.

In part yes. But most of it goes to the public sector.

No, dude, by accounting identity alone, those federal liabilities, such has bonds and currency, are assets to the non-government sector.

It's been good to be a public employee in this recession. Not so much to be a private sector employee.

It doesn’t matter; we all use the same national unit of account as a medium of exchange. When you buy something at Macy’s, do you think the cashier cares if you earned those dollars in the public sector or private sector?

And this is the nut of my disagreement. I don't believe "saving" government jobs by overspending helps the people outside of those government jobs that have to pay for the excess spending. To me, this is an argument that we are justified in spending our children's future income to make us comfortable. It makes me want to puke.

If you reduce deficits, it removes income from economy. Fiscally, a deficit reduction and tax increase are identical, since they both remove income from the economy. Nobody has to pay for what you define as “excess spending” – whatever that means.

In terms of basic accounting, the government’s deficit, for example, over a year, corresponds to a non-government sector surplus, which we can define as an increase in the non-government sector’s financial assets. There can be no aggregate net saving of financial assets in the non-government sector without a corresponding deficit as result of government spending. At the end of the day, the government is the only way to provide the non-government sector with net financial assets.

Lastly, we’re not spending our children’s future income. Our children and grandchildren will get to consume what they produce. There’s no reason why past government spending should prevent our children from producing the real goods and services they’re capable of producing. They'll be able to go to work just like we do and produce and consume the real output of real goods and services. The amount of US paper getting rolled over has zero bearing on this. In economics, this whole concept really doesn’t exist, whereby we sacrifice our real output for some nebulous date in the past and rolling it over to the previous generation. Our children won’t pay us back a dime even if they wanted to.

 

[Kimura]

It doesn't.

It authorizes the fed to "increase" the amount of fed bond money the fed cartel banks can sell by putting ones and zeroes in the accounts of the bank. Nothing backs this money it's funny money. It's supposed to represent real assets but it does not have to actually represent assets. Basically it's like the money grows on trees for the cartel. They can then lend that money out. Typically the amount "authorized" to the banks just goes up till the pyramid scheme crashes. The fed is not the government.

That's just a complete misunderstanding of monetary operations. And I'm being kind...

Well then, why don't you explain how the U.S. government expands the money supply to meet the needs of an expanding economy?

Think of it this way: the Treasury spends base money into existence and the FED loans base money into existence. For the purposes of our conversion, it’s not necessary to separate the Treasury and FED. The Treasury doesn’t borrow from the FED in any real capacity. The FED basically provides a monetary basis for the Treasury’s fiscal policy.

Ultimately, the federal government creates/spends money by crediting private bank accounts. This is money creation which ends up as reserves in the banking system. We then sell bonds to drain any excess reserves from the banking system. This reserve drain gives us a positive interest rate which the FED can then use to reach its targeted funds rate.

In terms of the supply of money, as long as there is an increase in real goods and services in tandem with the money supply, there isn't a risk for inflation if that's what you're concerned out.

 

[RKMBrown]

Some of our debt is held by private wealth, some is the fed and cartel banks using their funny money to buy US debt, and some is foreign government investment.

The US government doesn't purchase its own paper. The FED is precluded from buying directly from the Treasury by law. When the FED purchases US debt, it purchases said debt from the public. These are bonds, bills, and notes which the public has already purchased. This whole notion that the FED needs to purchase US Treasuries is completely false. US debt auctions are constantly oversubscribed it legally do so.

In part yes. But most of it goes to the public sector.

No, dude, by accounting identity alone, those federal liabilities, such has bonds and currency, are assets to the non-government.

It's been good to be a public employee in this recession. Not so much to be a private sector employee.

It doesn’t matter; we all use the same national unit of account as a medium of exchange. When you buy something at Macy’s, do you think the cashier cares if you earned those dollars in the public sector or private sector?

And this is the nut of my disagreement. I don't believe "saving" government jobs by overspending helps the people outside of those government jobs that have to pay for the excess spending. To me, this is an argument that we are justified in spending our children's future income to make us comfortable. It makes me want to puke.

If you reduce deficits, it removes income from economy. Fiscally, a deficit reduction and tax increase are identical, since they both remove income from the economy. Nobody has to pay for what you define as “excess spending” – whatever that means.

In terms of basic accounting, the government’s deficit, for example, over a year, corresponds to a non-government sector surplus, which we can define as an increase in the non-government sector’s financial assets. There can be no aggregate net saving of financial assets in the non-government sector without a corresponding deficit as result of government spending. At the end of the day, the government is the only way to provide the non-government sector with net financial assets.

Lastly, we’re not spending our children’s future income. Our children and grandchildren will get to consume what they produce. There’s no reason why past government spending should prevent our children from producing the real goods and services they’re capable of producing. They'll be able to go to work just like we do and produce and consume the real output of real goods and services. The amount of US paper getting rolled over has zero bearing on this. In economics, this whole concept really doesn’t exist, whereby we sacrifice our real output for some nebulous date in the past and rolling it over to the previous generation. Our children won’t pay us back a dime even if they wanted to.

Wrong.

First. The fed is NOT the US Government. You can say it till you are BLUE. But saying the fed is the government won't make that true.

Second. Here is a fed purchase of 600b
New York Fed 101: The Federal Reserve’s Asset Purchases (Called by some QE or QE2) - Federal Reserve Bank of New York

Buying fed debt from people while the private people are buying fed debt from the treasury is the SAME DAMN THING. If you can't see the shell game you are blind.

...

I said, in part yes. But most of it goes to the public sector. Then you said "no, dude, by accounting identity alone, those federal liabilities, such has bonds and currency, are assets to the non-government.

WTF is wrong with you? Do you really not understand the difference between spending and borrowing? WTF?


I said, "It's been good to be a public employee in this recession. Not so much to be a private sector employee." Then you said "It doesn’t matter; we all use the same national unit of account as a medium of exchange. When you buy something at Macy’s, do you think the cashier cares if you earned those dollars in the public sector or private sector?"

Epic fail. WTF? Do you really not understand the difference between government employees who work for the private sector using labor and assets from the private sector? WTF is wrong with you?

>>> If you reduce deficits, it removes income from economy.

WTF is wrong with you? You appear to believe the money not held by the government or government debt is money withheld from the economy. You are one sick puppy.

 

[RKMBrown]

That's just a complete misunderstanding of monetary operations. And I'm being kind...

Well then, why don't you explain how the U.S. government expands the money supply to meet the needs of an expanding economy?

Think of it this way: the Treasury spends base money into existence and the FED loans base money into existence. For the purposes of our conversion, it’s not necessary to separate the Treasury and FED. The Treasury doesn’t borrow from the FED in any real capacity. The FED basically provides a monetary basis for the Treasury’s fiscal policy.

Ultimately, the federal government creates/spends money by crediting private bank accounts. This is money creation which ends up as reserves in the banking system. We then sell bonds to drain any excess reserves from the banking system. This reserve drain gives us a positive interest rate which the FED can then use to reach its targeted funds rate.

In terms of the supply of money, as long as there is an increase in real goods and services in tandem with the money supply, there isn't a risk for inflation if that's what you're concerned out.

OMFG No NO NO NO NO

The government taxes the people the income from the taxes is called tax revenue. The government spends that revenue. The government did not create shit. It taxed the people. WTF is wrong with you?

You are grossly confusing the monetary system with Government spending. Again WTF?

 

[RKMBrown]

Spends money into existence. Dude that's just fairy dust.

 

[Kimura]

Well then, why don't you explain how the U.S. government expands the money supply to meet the needs of an expanding economy?

Think of it this way: the Treasury spends base money into existence and the FED loans base money into existence. For the purposes of our conversion, it’s not necessary to separate the Treasury and FED. The Treasury doesn’t borrow from the FED in any real capacity. The FED basically provides a monetary basis for the Treasury’s fiscal policy.

Ultimately, the federal government creates/spends money by crediting private bank accounts. This is money creation which ends up as reserves in the banking system. We then sell bonds to drain any excess reserves from the banking system. This reserve drain gives us a positive interest rate which the FED can then use to reach its targeted funds rate.

In terms of the supply of money, as long as there is an increase in real goods and services in tandem with the money supply, there isn't a risk for inflation if that's what you're concerned out.

OMFG No NO NO NO NO

The government taxes the people the income from the taxes is called tax revenue. The government spends that revenue. The government did not create shit. It taxed the people. WTF is wrong with you?

You are grossly confusing the monetary system with Government spending. Again WTF?

I'm not the one that's confused here. The government taxes to create demand for the national unit of account and to regulate aggregate demand. As you pointed out in a previous post, fiat money has no intrinsic value. I agree. The value is of the dollar is derived from the fact that we have to use it to pay our tax obligations. The government doesn't need to collect back in taxes that which is freely issues.

You asked me to explain to how monetary operations work. I explained it to you in a fairly simple and concise manner in my previous post. Money creation is a balance sheet operation, nothing more, nothing less.

 

[Kimura]

Spends money into existence. Dude that's just fairy dust.

That's how we operate under fiat monetary system. There's isn't some fixed amount of dollars in a vault at the FED.

 

[AmazonTania]

Note that in 1980-81--prior to the onset of Reagan's "supply side economics" strategy and tax cuts--the economy had already started to recover from a long and painful recessionary environment, although growth was still slow. Reagan's tax cuts had the effect of immediately reducing tax revenue for the next two years. Tax revenue increased again from 1985 on because of ECONOMIC RECOVERY.

If you bothered to look into history, you would find that tax revenues always increase rather briskly during the periods after recession--IOW, during economic recoveries. It's actually happening right now.

You should also recall that many Reagan "cuts" were restored later--although the greater effect of Reagan tax cuts was to shift tax assessments downward to city/county/state levels that tended to be more regressive.

IOW, it's a big complex subject that cannot be readly described through a simple picture graph.

I lived through the Carter years, the Reagan years, ... there is no comparison. Reagan's revolution brought America back from the brink of destruction. It plugged the holes in the boat and set it moving again. The Bush's and Obama took the plugs out and have sunk the ship. We are on the bottom. There is no chance for recovery. We are now living in a quasi facist / socialist state. I'd just as soon burn my bank account as let this government get ahold of a red cent from me.

If we look at the Reagan era (supply-side), it was completely and utterly distorted. It’s overall effects were badly filtered through the economy, because it was connected to other idiotic polices which negatively affected wage earners. As a matter of fact, real income for wage earners decreased in the 1980s, and they continue to decrease, or fail to keep up with our distorted policies. If these wretched supply-side policies actually worked, then the individuals making said supply, the workers, should have seen an increase in real incomes. It never happened.

Let’s look at some numbers: business investments in the 1980s averaged around 10% of GDP.This included the Reagan tax cuts. If we look at the 1970s, business investments went from 4% of GDP to 8% of GDP in the 1970s. We’re looking at a 100% increase in business investment. This happened even with those satanic and demonic unions. Business investment under Obama makes up 15% of GDP, even after we had that paltry stimulus.

I don't know which numbers you are using. Are you referring to Gross Domestic Private Investment? That's generally averaged 15% from 1954 to 2013. Are you talking about Net Domestic Investment? That's never been higher than 6% GDP.

I can only assume that you are referring to GDPI This component of GDP is up to 15% under Obama; however, this was coming from all time lows of 12.5% of GDP. Under Obama, business investment averaged 14.3%. Under Reagan it averaged 18.5%.

But yes, Business Investment is generally up mostly due to the target tax cuts for which were meant to courage job creation, but instead ended up as discriminatory job screening measures. Most of this money has not gone to create jobs. Well, not any meaningful ones anyway.

 

[RKMBrown]

Spends money into existence. Dude that's just fairy dust.

That's how we operate under fiat monetary system. There's isn't some fixed amount of dollars in a vault at the FED.

Yeah no shit. It's fairy dust. What a great way to manage a monetary system... fairy dust.

 

[RKMBrown]

Think of it this way: the Treasury spends base money into existence and the FED loans base money into existence. For the purposes of our conversion, it’s not necessary to separate the Treasury and FED. The Treasury doesn’t borrow from the FED in any real capacity. The FED basically provides a monetary basis for the Treasury’s fiscal policy.

Ultimately, the federal government creates/spends money by crediting private bank accounts. This is money creation which ends up as reserves in the banking system. We then sell bonds to drain any excess reserves from the banking system. This reserve drain gives us a positive interest rate which the FED can then use to reach its targeted funds rate.

In terms of the supply of money, as long as there is an increase in real goods and services in tandem with the money supply, there isn't a risk for inflation if that's what you're concerned out.

OMFG No NO NO NO NO

The government taxes the people the income from the taxes is called tax revenue. The government spends that revenue. The government did not create shit. It taxed the people. WTF is wrong with you?

You are grossly confusing the monetary system with Government spending. Again WTF?

I'm not the one that's confused here. The government taxes to create demand for the national unit of account and to regulate aggregate demand. As you pointed out in a previous post, fiat money has no intrinsic value. I agree. The value is of the dollar is derived from the fact that we have to use it to pay our tax obligations. The government doesn't need to collect back in taxes that which is freely issues.

You asked me to explain to how monetary operations work. I explained it to you in a fairly simple and concise manner in my previous post. Money creation is a balance sheet operation, nothing more, nothing less.

>> The government taxes to create demand for the national unit of account and to regulate aggregate demand.

No. The government does not tax to create demand. The government taxes to fund spending. I'll be nice. Respectfully, IMO your perspective is whack.

>> The value is of the dollar is derived from the fact that we have to use it to pay our tax obligations.

No. The value of the dollar is derived from the exchange of labor and assets. Yes, that includes services rendered by our Government employees.

>> You asked me to explain to how monetary operations work. I explained it to you in a fairly simple and concise manner in my previous post. Money creation is a balance sheet operation, nothing more, nothing less.

I'm fully aware of how those operations work. My issue was with the terms you chose to use. You did not like my terms. I did not like your terms, that and the straw man of saying the fed is for all intents and purposes the dept. of the Treasury. You and I both know this is not even remotely true. You were purposefully? mixing.

 

[TheGreatGatsby]

Austerity doesn't = investment into a economy. That's all you need to know.

Investment can equal (more) return if done right. This is why most intelligent corporations invest into new technology within their r@d departments and why we as a nation invest into education for our children.

The government is not ran like a business (thought it certainly is big business) and we should not pretend that it is. It is supposed to take our taxes and use them on needed services that the private sector will not do or aruably on matters that the people do not trust the private sector to do (like the military).

 

[TheGreatGatsby]

There are many things which can contribute to economic growth. The issue is whether or not it is indeed economic growth, but whether or not it always the best indicator no matter what. If it's used right, it can be, but often times it's used as a bogus metric.

Actually, the issue very much is whether GDP is indeed economic growth. During the Obama years, GDP has crawled upward while debt has skyrocketed and now for the first time ever, the debt has surpassed GDP. The question is not can the US sustain this trend; but for how long. I would say that the last four years have been severely negative in many ways for the US economy. Yet, if we were to take Toro's simple minded approach of only looking at GDP, we could only deduce that everything is roses.

Debt-to-GDP ratios don’t affect growth. If the US didn’t have a non-convertible currency, or had its debts denominated in another currency, then it would be a problem. The Reinhart and Rogoff data – besides omitting these variables – had coding errors and omitted certain time periods. In Eurozone countries we find that government budget constraints create a negative relationship between debt-to-GDP ratios and growth.

In monetarily sovereign nations, such as the US, UK, Japan, Canada, and Australia, etc we could see an indirect relationship between debt-to-GDP ratios and growth as a direct result of reactionary policies by the political class who worship austerity in a cult-like devotion, even though the data presents a different story, such as deficit reductions having a negative impact on growth. It’s all basic macroaccounting at the end of the day.

There really isn’t national debt in the traditional sense of the word. All we’re doing is swapping out one government sector financial instrument (US Treasuries) for another type of financial instrument (bank deposits). We’re simply dealing with changing the composition of assets between the government sector and private sector, since net private financial wealth is equal to public debt down to the last penny. Any and all financial assets in the private sector are liabilities of the federal government - both as currency and bonds. The exchange of these assets cannot pose any strain on the US financial system in any capacity any more than transferring money between your checking account and savings account.

You're crazy if you think that the debt can be referred to as a literal asset.

 

[Rshermr]

Some of our debt is held by private wealth, some is the fed and cartel banks using their funny money to buy US debt, and some is foreign government investment.

The US government doesn't purchase its own paper. The FED is precluded from buying directly from the Treasury by law. When the FED purchases US debt, it purchases said debt from the public. These are bonds, bills, and notes which the public has already purchased. This whole notion that the FED needs to purchase US Treasuries is completely false. US debt auctions are constantly oversubscribed it legally do so.



No, dude, by accounting identity alone, those federal liabilities, such has bonds and currency, are assets to the non-government.



It doesn’t matter; we all use the same national unit of account as a medium of exchange. When you buy something at Macy’s, do you think the cashier cares if you earned those dollars in the public sector or private sector?

And this is the nut of my disagreement. I don't believe "saving" government jobs by overspending helps the people outside of those government jobs that have to pay for the excess spending. To me, this is an argument that we are justified in spending our children's future income to make us comfortable. It makes me want to puke.

If you reduce deficits, it removes income from economy. Fiscally, a deficit reduction and tax increase are identical, since they both remove income from the economy. Nobody has to pay for what you define as “excess spending” – whatever that means.

In terms of basic accounting, the government’s deficit, for example, over a year, corresponds to a non-government sector surplus, which we can define as an increase in the non-government sector’s financial assets. There can be no aggregate net saving of financial assets in the non-government sector without a corresponding deficit as result of government spending. At the end of the day, the government is the only way to provide the non-government sector with net financial assets.

Lastly, we’re not spending our children’s future income. Our children and grandchildren will get to consume what they produce. There’s no reason why past government spending should prevent our children from producing the real goods and services they’re capable of producing. They'll be able to go to work just like we do and produce and consume the real output of real goods and services. The amount of US paper getting rolled over has zero bearing on this. In economics, this whole concept really doesn’t exist, whereby we sacrifice our real output for some nebulous date in the past and rolling it over to the previous generation. Our children won’t pay us back a dime even if they wanted to.

Wrong.

First. The fed is NOT the US Government. You can say it till you are BLUE. But saying the fed is the government won't make that true.

Second. Here is a fed purchase of 600b
New York Fed 101: The Federal Reserve’s Asset Purchases (Called by some QE or QE2) - Federal Reserve Bank of New York

Buying fed debt from people while the private people are buying fed debt from the treasury is the SAME DAMN THING. If you can't see the shell game you are blind.

...

I said, in part yes. But most of it goes to the public sector. Then you said "no, dude, by accounting identity alone, those federal liabilities, such has bonds and currency, are assets to the non-government.

WTF is wrong with you? Do you really not understand the difference between spending and borrowing? WTF?


I said, "It's been good to be a public employee in this recession. Not so much to be a private sector employee." Then you said "It doesn’t matter; we all use the same national unit of account as a medium of exchange. When you buy something at Macy’s, do you think the cashier cares if you earned those dollars in the public sector or private sector?"

Epic fail. WTF? Do you really not understand the difference between government employees who work for the private sector using labor and assets from the private sector? WTF is wrong with you?

>>> If you reduce deficits, it removes income from economy.

WTF is wrong with you? You appear to believe the money not held by the government or government debt is money withheld from the economy. You are one sick puppy.

I was watching this exchange, in which kimura is trying to educate you. It was amusing for a while. but it has become way too embarrassing. And, me boy, you are the joke. If you would try to understand what Kimura is saying, you would actually learn something.

 

[RKMBrown]

The US government doesn't purchase its own paper. The FED is precluded from buying directly from the Treasury by law. When the FED purchases US debt, it purchases said debt from the public. These are bonds, bills, and notes which the public has already purchased. This whole notion that the FED needs to purchase US Treasuries is completely false. US debt auctions are constantly oversubscribed it legally do so.



No, dude, by accounting identity alone, those federal liabilities, such has bonds and currency, are assets to the non-government.



It doesn’t matter; we all use the same national unit of account as a medium of exchange. When you buy something at Macy’s, do you think the cashier cares if you earned those dollars in the public sector or private sector?



If you reduce deficits, it removes income from economy. Fiscally, a deficit reduction and tax increase are identical, since they both remove income from the economy. Nobody has to pay for what you define as “excess spending” – whatever that means.

In terms of basic accounting, the government’s deficit, for example, over a year, corresponds to a non-government sector surplus, which we can define as an increase in the non-government sector’s financial assets. There can be no aggregate net saving of financial assets in the non-government sector without a corresponding deficit as result of government spending. At the end of the day, the government is the only way to provide the non-government sector with net financial assets.

Lastly, we’re not spending our children’s future income. Our children and grandchildren will get to consume what they produce. There’s no reason why past government spending should prevent our children from producing the real goods and services they’re capable of producing. They'll be able to go to work just like we do and produce and consume the real output of real goods and services. The amount of US paper getting rolled over has zero bearing on this. In economics, this whole concept really doesn’t exist, whereby we sacrifice our real output for some nebulous date in the past and rolling it over to the previous generation. Our children won’t pay us back a dime even if they wanted to.

Wrong.

First. The fed is NOT the US Government. You can say it till you are BLUE. But saying the fed is the government won't make that true.

Second. Here is a fed purchase of 600b
New York Fed 101: The Federal Reserve’s Asset Purchases (Called by some QE or QE2) - Federal Reserve Bank of New York

Buying fed debt from people while the private people are buying fed debt from the treasury is the SAME DAMN THING. If you can't see the shell game you are blind.

...

I said, in part yes. But most of it goes to the public sector. Then you said "no, dude, by accounting identity alone, those federal liabilities, such has bonds and currency, are assets to the non-government.

WTF is wrong with you? Do you really not understand the difference between spending and borrowing? WTF?


I said, "It's been good to be a public employee in this recession. Not so much to be a private sector employee." Then you said "It doesn’t matter; we all use the same national unit of account as a medium of exchange. When you buy something at Macy’s, do you think the cashier cares if you earned those dollars in the public sector or private sector?"

Epic fail. WTF? Do you really not understand the difference between government employees who work for the private sector using labor and assets from the private sector? WTF is wrong with you?

>>> If you reduce deficits, it removes income from economy.

WTF is wrong with you? You appear to believe the money not held by the government or government debt is money withheld from the economy. You are one sick puppy.

I was watching this exchange, in which kimura is trying to educate you. It was amusing for a while. but it has become way too embarrassing. And, me boy, you are the joke. If you would try to understand what Kimura is saying, you would actually learn something.

I understand Kimura's perspective. And I understand the poor use of terms that were carefully chosen to give credit to the Government where it is not due. I refuse to agree with the perspective that without public debt we would have no private assets, it is complete bull shit.

 

[Kimura]

OMFG No NO NO NO NO

The government taxes the people the income from the taxes is called tax revenue. The government spends that revenue. The government did not create shit. It taxed the people. WTF is wrong with you?

You are grossly confusing the monetary system with Government spending. Again WTF?

The government create/issues the national unit of account. It doesn't need to receive back in taxes that which is freely issues as the monopoly issuer of the dollar.

The government taxes to create demand for the national unit of account and to regulate aggregate demand.

No. The government does not tax to create demand. The government taxes to fund spending. I'll be nice. Respectfully, IMO your perspective is whack.

No, it doesn't. I explained to you how it works on an operational level more than once. Under a fiat system, the national government must spend in order for us to get our hands on the currency. Taxes payments destroy money.

The value is of the dollar is derived from the fact that we have to use it to pay our tax obligations.

No. The value of the dollar is derived from the exchange of labor and assets. Yes, that includes services rendered by our Government employees.

Do you have to pay the IRS in dollars? Yes or No?

What gives the dollar value, what motivates us to use the currency, is that all of our tax obligations are denominated in dollars and must be extinguished in dollars.

You asked me to explain to how monetary operations work. I explained it to you in a fairly simple and concise manner in my previous post. Money creation is a balance sheet operation, nothing more, nothing less.

I'm fully aware of how those operations work. My issue was with the terms you chose to use. You did not like my terms. I did not like your terms, that and the straw man of saying the fed is for all intents and purposes the dept. of the Treasury. You and I both know this is not even remotely true. You were purposefully? mixing.

With all due respect, you have no idea about monetary operations. If you did, you'd realize that the federal government doesn't need or require tax revenue to fund expenditures. The federal government can never be short of dollars, nor does it need you or I to pay taxes to get more money.

 

[Kimura]

Wrong.

First. The fed is NOT the US Government. You can say it till you are BLUE. But saying the fed is the government won't make that true.

Second. Here is a fed purchase of 600b
New York Fed 101: The Federal Reserve’s Asset Purchases (Called by some QE or QE2) - Federal Reserve Bank of New York

Buying fed debt from people while the private people are buying fed debt from the treasury is the SAME DAMN THING. If you can't see the shell game you are blind.

...

I said, in part yes. But most of it goes to the public sector. Then you said "no, dude, by accounting identity alone, those federal liabilities, such has bonds and currency, are assets to the non-government.

WTF is wrong with you? Do you really not understand the difference between spending and borrowing? WTF?


I said, "It's been good to be a public employee in this recession. Not so much to be a private sector employee." Then you said "It doesn’t matter; we all use the same national unit of account as a medium of exchange. When you buy something at Macy’s, do you think the cashier cares if you earned those dollars in the public sector or private sector?"

Epic fail. WTF? Do you really not understand the difference between government employees who work for the private sector using labor and assets from the private sector? WTF is wrong with you?

>>> If you reduce deficits, it removes income from economy.

WTF is wrong with you? You appear to believe the money not held by the government or government debt is money withheld from the economy. You are one sick puppy.

I was watching this exchange, in which kimura is trying to educate you. It was amusing for a while. but it has become way too embarrassing. And, me boy, you are the joke. If you would try to understand what Kimura is saying, you would actually learn something.

I understand Kimura's perspective. And I understand the poor use of terms that were carefully chosen to give credit to the Government where it is not due. I refuse to agree with the perspective that without public debt we would have no private assets, it is complete bull shit.

The government creates net financial assets through deficit spending. Net private financial wealth equals public debt down to the last penny. Get over it already....

This is all basic sectoral accounting. If you want the domestic private sector to be in surplus, then the government sector has to be in deficit.

 

[Kimura]

Actually, the issue very much is whether GDP is indeed economic growth. During the Obama years, GDP has crawled upward while debt has skyrocketed and now for the first time ever, the debt has surpassed GDP. The question is not can the US sustain this trend; but for how long. I would say that the last four years have been severely negative in many ways for the US economy. Yet, if we were to take Toro's simple minded approach of only looking at GDP, we could only deduce that everything is roses.

Debt-to-GDP ratios don’t affect growth. If the US didn’t have a non-convertible currency, or had its debts denominated in another currency, then it would be a problem. The Reinhart and Rogoff data – besides omitting these variables – had coding errors and omitted certain time periods. In Eurozone countries we find that government budget constraints create a negative relationship between debt-to-GDP ratios and growth.

In monetarily sovereign nations, such as the US, UK, Japan, Canada, and Australia, etc we could see an indirect relationship between debt-to-GDP ratios and growth as a direct result of reactionary policies by the political class who worship austerity in a cult-like devotion, even though the data presents a different story, such as deficit reductions having a negative impact on growth. It’s all basic macroaccounting at the end of the day.

There really isn’t national debt in the traditional sense of the word. All we’re doing is swapping out one government sector financial instrument (US Treasuries) for another type of financial instrument (bank deposits). We’re simply dealing with changing the composition of assets between the government sector and private sector, since net private financial wealth is equal to public debt down to the last penny. Any and all financial assets in the private sector are liabilities of the federal government - both as currency and bonds. The exchange of these assets cannot pose any strain on the US financial system in any capacity any more than transferring money between your checking account and savings account.

You're crazy if you think that the debt can be referred to as a literal asset.

For every liability, there is a corresponding asset. Those liabilities of the federal government, such as bonds and currency, are assets to the public. This is all very basic accounting, there's two sides of a ledger.

 

[Kimura]

I don't know which numbers you are using. Are you referring to Gross Domestic Private Investment? That's generally averaged 15% from 1954 to 2013. Are you talking about Net Domestic Investment? That's never been higher than 6% GDP.

I can only assume that you are referring to GDPI This component of GDP is up to 15% under Obama; however, this was coming from all time lows of 12.5% of GDP. Under Obama, business investment averaged 14.3%. Under Reagan it averaged 18.5%.

But yes, Business Investment is generally up mostly due to the target tax cuts for which were meant to courage job creation, but instead ended up as discriminatory job screening measures. Most of this money has not gone to create jobs. Well, not any meaningful ones anyway.

No, I wasn't using Net Domestic Investment, although I'd like to see those numbers. I was using Gross Private Domestic Investment. I can look it the data up again, but I'm too lazy at times, unless I'm motivated.