How is austerity doing in Europe

[bripat9643]

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.

BWAHAHAHAHA!!!

I've never seen a more ignorant claim in my entire life. You've just unmasked yourself as an economic ignoramus.

 

[bripat9643]

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.

That's true. The FED simply prints money any time it wants to. No spending is required to make it money. It becomes money the minute it appears on the books of some bank.

 

[bripat9643]

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).

The private sector isn't permitted to engage in plunder and robbery. That's the only "service" that government provides.

 

[bripat9643]

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.

"Educate" must be a liberal euphemism meaning to prove that you're an ignorant fool.

 

[bripat9643]

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.

You are 100% correct, and no credible economist agrees with Kimura. He doesn't even know what an asset is.

 

[bripat9643]

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.

That's true. When private individuals undertake similar activity we call it "counterfeiting."

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.

He's right and you're full of shit. You know squat about money and economics. Actually, everything you know is pure statist propaganda.

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.

wrong again. Money has value because it is useful as a medium of exchange. Under a gold standard, it also has value as a commodity, however that doesn't allow government to plunder us all with its counterfeit operation.

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.

That's all true. The government can fund its operations purely by employing the printing press. However, that has dire economic consequences that not even the fools and rogues in Congress are willing to endure.

 

[bripat9643]

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....

That is pure idiocy and easily disproved.

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.

What does it even mean for the domestic private sector to be "in surplus?" There is no single account for the private sector that needs to balance.

The stuff you spout isn't just wrong. It's idiotic.

 

[bripat9643]

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.

BWAHAHAHAHA! You're serious?

You think the obligations of the Social Security Administration are an asset?

 

[AmazonTania]

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.

The only reason I know is because I made a graph for someone else bringing up the same point. Although if I go back farther, the average would probably be much lower.

Now that I look back at it, this graph was horribly constructed...

And actually going back to 1947, the historical average was 17% of GDP, instead of 15% GDP from the 1954 benchmark that I used. So I was wrong, going farther actually made the historical average of GDPI/GDP increase. Uncanny.

 

[Kimura]

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....

That is pure idiocy and easily disproved.

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.

What does it even mean for the domestic private sector to be "in surplus?" There is no single account for the private sector that needs to balance.

The stuff you spout isn't just wrong. It's idiotic.

Yes, net private financial wealth equals public debt down to the last penny.

The flows of income/spending accrue to stocks so to speak. The private sector’s ability to accrue net financial assets over a certain time period is only possible because it's spending is less than its income over that time period. Basically, the private sector has been saving, which has enabled it to accrue a stock of wealth as financial assets. In my example, we’re using the private sector and public sector, whereby financial assets are liabilities – both as bonds and currency. These government IOUs can only be accrued when the government spends more than it receives back in tax revenue. We call this a government deficit which is the flow of government spending less tax revenue over a given time period. This government accrues a stock of government debt which is equal to the private sector’s accumulation of financial wealth over the same time period. The net financial assets of the private sector are equal the net financial liabilities of the government sector.

For example, if the government ran a constant budget surplus, the private sector’s net financial wealth would go into negative territory. In point of fact, this is what happened under Clinton. The private sector was basically in debt to the public sector.

 

[Kimura]

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.

You are 100% correct, and no credible economist agrees with Kimura. He doesn't even know what an asset is.

LOL. I have MS in Economics.

By the way, there's many, many credible economists that agree with me.

 

[Kimura]

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.

BWAHAHAHAHA! You're serious?

You think the obligations of the Social Security Administration are an asset?

You have to realize that one’s financial asset is another’s financial liability. This is basic accounting, buddy. For every asset, we have an offsetting liability. For example, a savings account is a household’s financial asset, but liability for the bank. We can say the same thing about a corporate bond or government bond, etc. A household also has liabilities, such as a mortgage, car note, student loans, etc. These things are assets to the creditor.

The Social Security debate is the biggest scam ever in my estimation. There isn’t a nominal crisis with Social Security. The whole debate revolves around how this federal liability is an asset to the public. Nobody talks about the corresponding assets. The SS wealth of the American people is as real and tangible as the federal liabilities which support it.

Here’s some more basic accounting: the asset of the payroll tax revenue to the government is actually a liability for the public. This is the same as how any and all future liabilities of the federal government are assets to the public.

 

[TheGreatGatsby]

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.

Assets = Liability + Owners Equity

It's been about decade since my accounting classes. So, I'd have to give it some thought (Plus, I'm tired at the moment). But, I'm all but certain your reasoning is spurious. Were it not so, we'd want to borrow an infinite amount of money to allegedly increase our assets. Which, it would do in that very second (not accounting for depreciation). But, there's a sustainability factor in any amount of money being borrowed.

 

[bripat9643]

This government accrues a stock of government debt which is equal to the private sector’s accumulation of financial wealth over the same time period.

That's where you go wrong. You have provided no support for this claim.

The net financial assets of the private sector are equal the net financial liabilities of the government sector.

Pure horseshit.

For example, if the government ran a constant budget surplus, the private sector’s net financial wealth would go into negative territory. In point of fact, this is what happened under Clinton. The private sector was basically in debt to the public sector.

Another claim with no factual basis of support.

 

[Rshermr]

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.

"Educate" must be a liberal euphemism meaning to prove that you're an ignorant fool.

But the thing is, dipshit, you prove yourself to be an ignorant fool by simply posting something. Did you think anyone actually paid any attention to you. But hell, lets be fair. You are a simple congenital idiot. Not your fault. Just plain bad luck. And we all understand your unrealistic desire to be taken seriously. Just not your fault.

 

[bripat9643]

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.

You are 100% correct, and no credible economist agrees with Kimura. He doesn't even know what an asset is.

LOL. I have MS in Economics.

By the way, there's many, many credible economists that agree with me.

You have an MS in government propaganda, and only other demagogues of your ilk agree with you.

 

[Rshermr]

You are 100% correct, and no credible economist agrees with Kimura. He doesn't even know what an asset is.

LOL. I have MS in Economics.

By the way, there's many, many credible economists that agree with me.

You have an MS in government propaganda, and only other demagogues of your ilk agree with you.

Really, me boy. It is ok. We all understand you are a congenital idiot. It is simply not your fault. So, you can not be expected to understand anything about economics. And therefor, you do not really disappoint anyone. We all understand your ailment.
And, even though your posts have no trace of validity, they do serve a purpose. We all need someone to laugh at. And you, magnanimously, have decided to serve that purpose. Good job, and keep up the humor. It is nice to see that the mentally challenged (and boy, are you ever mentally challenged), are able to contribute something to society.

 

[Kimura]

This government accrues a stock of government debt which is equal to the private sector’s accumulation of financial wealth over the same time period.

That's where you go wrong. You have provided no support for this claim.

The net financial assets of the private sector are equal the net financial liabilities of the government sector.

Pure horseshit.

For example, if the government ran a constant budget surplus, the private sector’s net financial wealth would go into negative territory. In point of fact, this is what happened under Clinton. The private sector was basically in debt to the public sector.

Another claim with no factual basis of support.

Example time....


Domestic Private Sector + Domestic Government Sector + Foreign Sector = 0

For example, let’s say that the foreign sector (rest of the world) runs a balanced budget. In my example, for the sake of argument, it equals zero for obvious reasons. Let’s also assume the domestic private sector’s income is $200 billion while its spending is $180 billion, which give us a budget surplus of $20 billion dollars over the course of the year. By accounting identity alone, the domestic government sector will have a budget deficit equal to $20 billion dollars. The domestic private sector will accrue $20 billion in net financial wealth during the year, which will consist of $20 billion of domestic government sector liabilities.

Using another example, let’s say that the foreign sector spends less then it income, with a budget surplus of $40 billion. Simultaneously, the domestic government sector also spends less than its surplus by running a budget surplus of $20 billion. Again, by accounting identity alone, we know that the domestic private sector will have a budget deficit of $60 billion ($40 billion plus $20 billion). Its net financial wealth will have decreased by $60 billion as it issued debt and sold assets. The domestic private sector will have increased its net financial wealth by $20 billion, and the foreign sector will have increased its net financial wealth by $40 billion.

This is all very basic sectoral balances and macroaccounting. It should be abundantly clear that if one sector is going to run a suplus then another must run a defict. If we look at this in terms of stock variables, in order for one sector to accrue net financial wealth, one other sector must be in deficit by an equal amount. It’s impossible for all sectors to accrue net financial wealth by simultaneously running budget surpluses.


In actual reality, the government’s red ink is our black ink.


See here:

 

[Kimura]

You are 100% correct, and no credible economist agrees with Kimura. He doesn't even know what an asset is.

LOL. I have MS in Economics.

By the way, there's many, many credible economists that agree with me.

You have an MS in government propaganda, and only other demagogues of your ilk agree with you.

 

[Rshermr]

Here is the thing. What you just laid out may seem really, really, really simple. But it did nave more than two components. Now, Bripat is STRAINING at any argument with as many as 2 components. That, and his inability to concentrate for as long as gnat, seems to me to rather obviously indicate there is NO chance he will understand what you tried to help him with.

So, maybe we should just refer Bripat to efci.com. You know, economicsforcongenitalidiots.com.