How is austerity doing in Europe

[RKMBrown]

If you want the domestic private sector to be in surplus, then the government sector has to be in deficit.

The private sector has it's own assets. It does not need the US Government or it's bull shit deficit. We could burn the current government down tomorrow. Wipe out the deficit through bankruptcy court. Switch to a system where the new government is not allowed to have any deficit spending, where it can only spend what it draws in revenue. Deficits are not a necessary element of private sector assets. Your statement is asinine.

 

[RKMBrown]

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.

>>> 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 money is borrowed. You say borrowed money does not have to be repaid? Bullshit.

>>> Under a fiat system, the national government must spend in order for us to get our hands on the currency.

Again total bullshit. You continue to mix the fed and government. Why? You know this is a lie, why do you keep lying by calling the fed a part of our government?

>>> Taxes payments destroy money.
Bullshirt. Redistribution of money is not destruction of money. The money does not disappear it gets redistributed. Granted money taken out of the hands of the people to fund government programs is usually a waste of money but it's not destroyed money. It simply reduces future expansion of GDP due to the waste.

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

>>> 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.

I already told you what gives the dollar value. The value of the dollar is derived from the exchange of labor and assets. The motivation for using the currency is to exchange/obtain labor and assets. You are confusing the motivation of government to use dollars to obtain tax revenue with the motivation for dollars as a denomination to exchange labor and assets. Further you are confusing the act of taxing and spending by this government with some freakish extinguishing of dollars reference that makes absolutely no sense whatsoever. I'm sure in your mind there is justification for your terms chosen. Probably some accounting babel.

 

[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.



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.

Only a humbug government propagandists would claim there's something called "the foreign sector" that has a budget. What a real economists would say is that Americans buy products overseas and foreigners invest money in American companies. The number of dollars leaving the country has to balance the number of dollars coming into the country simply because Americans purchase foreign goods with dollars and if foreigners want to use their dollars they have to send them back to America, either by purchasing American goods or by investing them in American companies.

As for the "domestic private sector" running a "surplus." All that means is that the government borrowed money from the private sector. Of course that amount exactly equals the government's deficit. When the government spends more than it takes in, it has to borrow the difference.

How does this prove all private sector "investment" is the result of government debt? It doesn't. All it proves is that government debt is the result of government debt.

If Ford Motor Corporation issues a bond and private investors purchase those bonds, where does that show up on your "sectoral balances?" The answer is it doesn't. Apparently your "analysis" doesn't consider the bonds of Ford Motor Company to be an asset.

 

[bripat9643]

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.

The stream of personal attacks from you is the result of your inability to get over having someone call you on your statist bullshit.

 

[bripat9643]

If you want the domestic private sector to be in surplus, then the government sector has to be in deficit.

The private sector has it's own assets. It does not need the US Government or it's bull shit deficit. We could burn the current government down tomorrow. Wipe out the deficit through bankruptcy court. Switch to a system where the new government is not allowed to have any deficit spending, where it can only spend what it draws in revenue. Deficits are not a necessary element of private sector assets. Your statement is asinine.

this line of propaganda is designed to make Americans believe that the economy couldn't run without the government money making machine. However, it ran fabulously well for 150 years prior to the creation of the federal reserve. The idea that all private investment or financial "assets" wouldn't exist without government debt is absurd on its face. It takes a special kind of servility to believe this crap.

The working of the liberal mind is a truly nauseating spectacle.

 

[Kimura]

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



Pure horseshit.



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.

Only a humbug government propagandists would claim there's something called "the foreign sector" that has a budget.

The foreign sector, as in the rest of the world, which consists of foreign national governments, firms, and households.

What a real economists would say is that Americans buy products overseas and foreigners invest money in American companies. The number of dollars leaving the country has to balance the number of dollars coming into the country simply because Americans purchase foreign goods with dollars and if foreigners want to use their dollars they have to send them back to America, either by purchasing American goods or by investing them in American companies.

Meh. We're running a trade deficit. Foreigners simply desire to save in US financial assets at the end of the day. We have something called floating exchange rates, any perceived imbalances in the foreign exchange market are corrected through currency fluctuations. We utilize our domestic policy instruments, such as the FED and fiscal policy, to real are domestic policy goals since the exchange rate will correct any imbalances resulting from trade deficits, trade surpluses, etc.

I do agree with one of your statements, though. The only way for foreigners to shed their US dollar holdings is to spend them on real goods and services produced by Americans.

As for the "domestic private sector" running a "surplus." All that means is that the government borrowed money from the private sector. Of course that amount exactly equals the government's deficit. When the government spends more than it takes in, it has to borrow the difference.

The government doesn't borrow from the private sector. That doesn't make sense, I already explained it you. If the domestic private sector is surplus, those financial assets consist of liabilities of the domestic government sector.

How does this prove all private sector "investment" is the result of government debt? It doesn't. All it proves is that government debt is the result of government debt.

Deficits create net financial wealth. For example, let’s say a firm decides to spend more than its income (deficit), it can issue liabilities to finance purchases. The liabilities will accrue as net financial wealth another firm, household, or government that is accruing a budget surplus (net saving). In order for the accumulation of financial wealth to occur, we must have a firm or household will to deficit spend, and another government, household or firm willing to accrue financial wealth as liabilities of that deficit spender. It’s basically double-entry accounting at the end of the day. It’s critical to realize that the very act of deficit spending is creating net financial wealth. Unless someone is willing to deficit spend, one cannot accrue net financial wealth.

If Ford Motor Corporation issues a bond and private investors purchase those bonds, where does that show up on your "sectoral balances?" The answer is it doesn't. Apparently your "analysis" doesn't consider the bonds of Ford Motor Company to be an asset.

Well...that bond is a liability of Ford and an asset to private investors,

Sectoral balances can basically be used for macro accounting of any country. I kept it simple, since it can get more complicated, especially if a country has flows (accruing to stocks) in a foreign currency.

Within a country there can also be flows (accumulating to stocks) in a foreign currency, and there will be a macro balance equation in that currency, too. For example, firms, households, and governments can accrue financial assets denominated in multiple currencies. It can become even more tedious if one of these actors is running a deficit in one currency and a surplus in another. Either way, for every country and currency, there will be macro accounting.

 

[RKMBrown]

If you want the domestic private sector to be in surplus, then the government sector has to be in deficit.

The private sector has it's own assets. It does not need the US Government or it's bull shit deficit. We could burn the current government down tomorrow. Wipe out the deficit through bankruptcy court. Switch to a system where the new government is not allowed to have any deficit spending, where it can only spend what it draws in revenue. Deficits are not a necessary element of private sector assets. Your statement is asinine.

this line of propaganda is designed to make Americans believe that the economy couldn't run without the government money making machine. However, it ran fabulously well for 150 years prior to the creation of the federal reserve. The idea that all private investment or financial "assets" wouldn't exist without government debt is absurd on its face. It takes a special kind of servility to believe this crap.

The working of the liberal mind is a truly nauseating spectacle.

6years of college study and he still can't figure out that there were assets prior to government debt.

 

[Kimura]

That money is borrowed. You say borrowed money does not have to be repaid? Bullshit.

Borrowed from whom? The US has to borrow its own fiat. LOL.

Again total bullshit. You continue to mix the fed and government. Why? You know this is a lie, why do you keep lying by calling the fed a part of our government?

Do the Board of Governors execute monetary policy? Yes or No? They are publicly appointed and tell the member banks how to execute monetary policy. This FED conspiracy nonsense is has zero basis in reality.

Bullshirt. Redistribution of money is not destruction of money. The money does not disappear it gets redistributed. Granted money taken out of the hands of the people to fund government programs is usually a waste of money but it's not destroyed money. It simply reduces future expansion of GDP due to the waste.

The government sector expenditures are net financial assets to the domestic private sector. This is all accomplished by crediting bank accounts. Taxation removes financial assets which were created by government sector spending by transferring money out of bank accounts. Government spending adds account entries to bank accounts and they are removed through taxation. Government spending creates money while taxation destroys said money. Modern currency sort of functions as a tax credit if you think about it.

Again, operationally, your federal taxes don't fund any government programs. And government spending is a component of GDP.

I already told you what gives the dollar value. The value of the dollar is derived from the exchange of labor and assets. The motivation for using the currency is to exchange/obtain labor and assets. You are confusing the motivation of government to use dollars to obtain tax revenue with the motivation for dollars as a denomination to exchange labor and assets. Further you are confusing the act of taxing and spending by this government with some freakish extinguishing of dollars reference that makes absolutely no sense whatsoever. I'm sure in your mind there is justification for your terms chosen. Probably some accounting babel.

Taxes drive money so to speak. The federal government creates the national unit of account and then it implements taxes obligations in said national unit of account. The is good enough to guarantee that all prices, assets, and debts will also be denominated in the the national unit of account. Basically, the government imposes a liability on us so we will accept these government IOUs.

I'm going to give you an example.

The US dollar is a sovereign currency. What does this mean? It means it's a keystroke which marks up an electronic entry on the bank’s balance sheet. And yes, it can be coins and paper. To be precise, it’s two entries: one entry in the deposit account of a defense contractor and a reserve credit at the FED for the defense contractor’s bank.

In terms of fiat currency, what does Uncle Sam promise? To redeem their currency for tax payments so to speak. When the defense contractor pays taxes, the debits are reversed: the deposit is debited and so is the bank’s reserves at the Federal Reserve. It’s magic! The sovereign currency goes into the great void!

The products from the defense contractor end up with the US government. This was the whole reason for the debits.

 

[Kimura]

this line of propaganda is designed to make Americans believe that the economy couldn't run without the government money making machine. However, it ran fabulously well for 150 years prior to the creation of the federal reserve. The idea that all private investment or financial "assets" wouldn't exist without government debt is absurd on its face. It takes a special kind of servility to believe this crap.

The working of the liberal mind is a truly nauseating spectacle.

LOL. The financial system was a MESS before we established the FED, unless you define fabulous as having a banking panic and depression every ten years or so.

Our current fiat system has done orders of magnitude better than when we were on a gold standard.

Let's take a look at the "fabulous" time period you talk about. The gold standard gave us the Panic of 1819, 1825, 1837, 1847, 1857, 1866, 1873, 1884, 1890, 1893, 1907, and the Great Depression. Basically, out of the ten panics of the 19th century, five were followed by steep recession and/or depression.

Yeah, dude, this time period was absolutely fabulous.

 

[Kimura]

The private sector has it's own assets. It does not need the US Government or it's bull shit deficit. We could burn the current government down tomorrow. Wipe out the deficit through bankruptcy court. Switch to a system where the new government is not allowed to have any deficit spending, where it can only spend what it draws in revenue. Deficits are not a necessary element of private sector assets. Your statement is asinine.

this line of propaganda is designed to make Americans believe that the economy couldn't run without the government money making machine. However, it ran fabulously well for 150 years prior to the creation of the federal reserve. The idea that all private investment or financial "assets" wouldn't exist without government debt is absurd on its face. It takes a special kind of servility to believe this crap.

The working of the liberal mind is a truly nauseating spectacle.

6years of college study and he still can't figure out that there were assets prior to government debt.

I'm not the one that's confused. You seem to be confusing real assets and financial assets. Seriously.....

 

[RKMBrown]

this line of propaganda is designed to make Americans believe that the economy couldn't run without the government money making machine. However, it ran fabulously well for 150 years prior to the creation of the federal reserve. The idea that all private investment or financial "assets" wouldn't exist without government debt is absurd on its face. It takes a special kind of servility to believe this crap.

The working of the liberal mind is a truly nauseating spectacle.

6years of college study and he still can't figure out that there were assets prior to government debt.

I'm not the one that's confused. You seem to be confusing real assets and financial assets. Seriously.....

WOW yeah cause I can't own a share of a real asset.

 

[RKMBrown]

I'm going to give you an example.

The US dollar is a sovereign currency. What does this mean? It means it's a keystroke which marks up an electronic entry on the bank’s balance sheet. And yes, it can be coins and paper. To be precise, it’s two entries: one entry in the deposit account of a defense contractor and a reserve credit at the FED for the defense contractor’s bank.

In terms of fiat currency, what does Uncle Sam promise? To redeem their currency for tax payments so to speak. When the defense contractor pays taxes, the debits are reversed: the deposit is debited and so is the bank’s reserves at the Federal Reserve. It’s magic! The sovereign currency goes into the great void!

The products from the defense contractor end up with the US government. This was the whole reason for the debits.

You have yet again proven you don't know what the fed is. The US government would have to end the fed to do what you claim.

>>> The US dollar is a sovereign currency. What does this mean?
That is not an example. You did not learn English in college?

>>> In terms of fiat currency, what does Uncle Sam promise? To redeem their currency for tax payments so to speak.

Yes. Currency is redeemable for the face amount.

>>> When the defense contractor pays taxes, the debits are reversed: the deposit is debited and so is the bank’s reserves at the Federal Reserve. It’s magic! The sovereign currency goes into the great void!

It's not magic. Someone had to earn that currency. You are however, correct in saying that the fed does not earn it's account. That part as we agreed, is fairy dust. They don't have to do anything. Fairy dust. So yes if your point is that fiat currency is complete bull shit. Then I agree. The alternative to the fed is people actually trade real assets instead of the fed counterfeiting currency. For example, the government can actually provide work. When the defense contractor pays his taxes that money goes to the work provided by the government worker. Not just the fed loans.

 

[AmazonTania]

Toro probably would have found this interesting before his unexpected 'ejection.' The post revisions in GDP versus the pre revisions in GDP chained in 2009 dollars. While we both certainly disagreed with these revisions, we both disagreed with the strength of the economy.

According to the new revision, the economy is $1.8 larger; however data trends do not support the new structural size of the economy. If you follow the new revision, it means that the economy is weaker than portrayed, not stronger.

 

[Rshermr]

this line of propaganda is designed to make Americans believe that the economy couldn't run without the government money making machine. However, it ran fabulously well for 150 years prior to the creation of the federal reserve. The idea that all private investment or financial "assets" wouldn't exist without government debt is absurd on its face. It takes a special kind of servility to believe this crap.

The working of the liberal mind is a truly nauseating spectacle.

6years of college study and he still can't figure out that there were assets prior to government debt.

I'm not the one that's confused. You seem to be confusing real assets and financial assets. Seriously.....

You are a brave brave man, Kimura. Trying to educate two economic wastelands at the same time is more than anyone should have to do. My bet is that they leave as ignorant as they started. But it is funny watching these dolts make really, really stupid statements. But, you have to remember, it is what they want to believe. It is what they are told to believe. They are, of course, completely uninterested in truth.

 

[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.

The stream of personal attacks from you is the result of your inability to get over having someone call you on your statist bullshit.

Look out. Bripat is about to start spitting pablum. But again, it is ok. I am fully supportive of you, my poor ignorant clown. It is not your fault that you are completely ignorant. You have a true medical problem. Being a congenital idiot makes life tough for you. Just your own bad luck.

 

[RKMBrown]

6years of college study and he still can't figure out that there were assets prior to government debt.

I'm not the one that's confused. You seem to be confusing real assets and financial assets. Seriously.....

You are a brave brave man, Kimura. Trying to educate two economic wastelands at the same time is more than anyone should have to do. My bet is that they leave as ignorant as they started. But it is funny watching these dolts make really, really stupid statements. But, you have to remember, it is what they want to believe. It is what they are told to believe. They are, of course, completely uninterested in truth.

Maybe if you two learned English, you'd be able to talk to folks outside of your liberal arts circle.

 

[Rshermr]

The private sector has it's own assets. It does not need the US Government or it's bull shit deficit. We could burn the current government down tomorrow. Wipe out the deficit through bankruptcy court. Switch to a system where the new government is not allowed to have any deficit spending, where it can only spend what it draws in revenue. Deficits are not a necessary element of private sector assets. Your statement is asinine.

this line of propaganda is designed to make Americans believe that the economy couldn't run without the government money making machine. However, it ran fabulously well for 150 years prior to the creation of the federal reserve. The idea that all private investment or financial "assets" wouldn't exist without government debt is absurd on its face. It takes a special kind of servility to believe this crap.

The working of the liberal mind is a truly nauseating spectacle.

6years of college study and he still can't figure out that there were assets prior to government debt.

Perhaps, between yourself and bripat you can muster an IQ of 100. Cumulative, of course. You need serious help. Because you are incapable of understanding what you are being told. People try to help you, and you just get angry. Oh. Yeah. I forgot. You are a con tool. And con tools LIKE being angry. Con tool and angry is redundant.

 

[RKMBrown]

this line of propaganda is designed to make Americans believe that the economy couldn't run without the government money making machine. However, it ran fabulously well for 150 years prior to the creation of the federal reserve. The idea that all private investment or financial "assets" wouldn't exist without government debt is absurd on its face. It takes a special kind of servility to believe this crap.

The working of the liberal mind is a truly nauseating spectacle.

6years of college study and he still can't figure out that there were assets prior to government debt.

Perhaps, between yourself and bripat you can muster an IQ of 100. Cumulative, of course. You need serious help. Because you are incapable of understanding what you are being told. People try to help you, and you just get angry. Oh. Yeah. I forgot. You are a con tool. And con tools LIKE being angry. Con tool and angry is redundant.

What's your IQ score? Care to put up a bet?

 

[Rshermr]

6years of college study and he still can't figure out that there were assets prior to government debt.

Perhaps, between yourself and bripat you can muster an IQ of 100. Cumulative, of course. You need serious help. Because you are incapable of understanding what you are being told. People try to help you, and you just get angry. Oh. Yeah. I forgot. You are a con tool. And con tools LIKE being angry. Con tool and angry is redundant.

What's your IQ score? Care to put up a bet?

That is the thing. If you would just read the articles I have linked you to, then you could understand that cons are stupid. And that they believe they are smart. But, look, it is not your fault. You are a congenital idiot, nothing you can do to help yourself there. But it is fun to watch you prove it. And you do so over and over and over. And, me boy, I was just trying to help you. You should be angry at those who got you to believe the drivel you do, not those trying to help you understand the truth.

 

[RKMBrown]

Perhaps, between yourself and bripat you can muster an IQ of 100. Cumulative, of course. You need serious help. Because you are incapable of understanding what you are being told. People try to help you, and you just get angry. Oh. Yeah. I forgot. You are a con tool. And con tools LIKE being angry. Con tool and angry is redundant.

What's your IQ score? Care to put up a bet?

That is the thing. If you would just read the articles I have linked you to, then you could understand that cons are stupid. And that they believe they are smart. But, look, it is not your fault. You are a congenital idiot, nothing you can do to help yourself there. But it is fun to watch you prove it. And you do so over and over and over. And, me boy, I was just trying to help you. You should be angry at those who got you to believe the drivel you do, not those trying to help you understand the truth.

What do cons have to do with your asinine assumption that we'd have no assets without public debt?