Debate Now Rational Discussion Thread - The National Debt Paradox

[task0778]

issuing gold backed securities at lower interest rates

First, I don't see that as a good idea, there was a reason why Nixon took us off the gold standard in the 1970s. Second, interest rates are market dependent, you can ask for a certain rate but if it's too low then buyers/investors will put their money somewhere else. As we increase our national debt substantially every year, there are many people who believe the risk of default grows substantially too. And that means interest rates will go up whether the US Gov't likes it or not.

So, what happens? Will the Fed buy up trillions and trillions of our debt? That action is basically monetizing the debt and debasing the dollar, and if done in excessively large amounts will lead to massive inflation just like it did in 2021-2022, except worse.

Will we just print more money? Same thing. The simple truth is that until the Congress stop spending more money than revenues bring in, the problem will not go away and in fact gets worse.

 

[Cassandro]

First, I don't see that as a good idea, there was a reason why Nixon took us off the gold standard in the 1970s. Second, interest rates are market dependent, you can ask for a certain rate but if it's too low then buyers/investors will put their money somewhere else. As we increase our national debt substantially every year, there are many people who believe the risk of default grows substantially too. And that means interest rates will go up whether the US Gov't likes it or not.

That is why gold backed US securities are currently being discussed. Investors will accept lower interest rates if their principal is linked to gold instead of dollars.

So, what happens? Will the Fed buy up trillions and trillions of our debt? That action is basically monetizing the debt and debasing the dollar, and if done in excessively large amounts will lead to massive inflation just like it did in 2021-2022, except worse.

Correct. That is why a gold backed currency will have to replace the dollar.

Will we just print more money? Same thing. The simple truth is that until the Congress stop spending more money than revenues bring in, the problem will not go away and in fact gets worse.

Yes, unless we change our monetary system. The simple truth is that Congress will not stop spending more money than revenues bring in unless that money is tied to some extrinsic standard. Even a Balanced Budget Amendment will not solve this problem, since budgets are essentially forecasts based on assumptions about future events which can be manipulated for desired results.

 

[Concerned American]

Instead, you merely called it "smoke and mirrors" and "currency manipulation."

The "solution" you presented is smoke and mirrors. It puts an undue future load on every taxpayer as the value of their currency is lowered. Currency manipulation. By attacking the messenger--as you did in posts # 12, 14 and 38. I'm sorry you don't agree with my take, but don't ask for a discussion if you really don't want one.

 

[Cassandro]

The "solution" you presented is smoke and mirrors. It puts an undue future load on every taxpayer as the value of their currency is lowered. Currency manipulation. By attacking the messenger--as you did in posts # 12, 14 and 38. I'm sorry you don't agree with my take, but don't ask for a discussion if you really don't want one.

Calling an idea "smoke and mirrors" and "currency manipulation" without further explanation is not rational discussion. Is that all you are able to contribute?

 

[Stryder50]

I'm not sure how this forum is supposed to work, but I am interested in creating a rational discussion thread in which government policies can be intelligently addressed without the usual petty and inane comments. This means that if you are unfamiliar with the subject matter or otherwise unable to express yourself in a comprehensible manner, you will refrain (or be excluded) from participating in the discussion. I hope this is possible. I will now start the following discussion topic:

The National Debt Paradox

I think the US National Debt has grown to unsustainable levels, both in servicing the existing debt and in obtaining new debt at reasonable interest rates. As a result, it will continue to grow even without existing budget deficits. Thus any attempt to alleviate this burden through a budgetary process is essentially impossible under the current system because Congress can replace any reductions with even more spending. The US is thereby faced with a debt paradox in need of an outside the box solution.

Two ideas that are now being discussed are revaluing the Treasury's gold reserves and issuing gold backed securities at lower interest rates. While neither will solve this problem alone, the may be necessary ingredients for a more lasting solution. What if they were both announced this year, followed by a (one-time) balanced budget announced at the end of the fiscal year (due to gold revaluation and tariff revenue)? In the mean time, a combination of increased money supply and lower interest rates would cause the dollar (and the nominal Debt) to lose value. This could provide the impetus for creating an alternative gold backed currency which would allow conversion of old currency and debt at a specified ratio. This would give a "haircut" to existing creditors, but would be attractive to new investors. If gold continues its preferred status, it might be a win-win situation in the long run.

I know that this scenario is somewhat sketchy, but is it even theoretically possible? Please provide your analysis of this and/or other proposals. Thanks.

A reminder that many "investors" are invested in entities that are creditors.

Robbing Peter to pay Paul isn't a solution. (It's part of how we got this problem/paradox.)

 

[Cassandro]

Robbing Peter to pay Paul isn't a solution.

Repeating slogans isn't rational discussion.

 

[Stryder50]

Repeating slogans isn't rational discussion.

Your concept of rational discussion (agree with me) isn't a solution either.

 

[Stryder50]

 

[Eman623]

Sounds like more smoke and mirrors---currency manipulation to me. It will never be the answer to excessive debt. The only answer is painful and it involves living within our means and paying off the debt.

Unfortunately, this is a demand-side problem. Americans like getting $1.25 worth of government for every $1.00 they pay in taxes.

Government used to be about what got built and how the public's money got spent on public projects. Now it's about direct payments to individuals - who gets what and most importantly how much! Government has always paid for your K-12 school, but increasingly pays for your college education, your healthcare, your retirement, your utilities, and your food and housing. The list is endless and growing.

We need to move away from this attitude, or at least dial back expectations. Gen-Z has already started doing this. About half of Gen-Zers don't expect to ever receive any social security benefits when they retire. They probably aren't wrong.

 

[Cassandro]

Your concept of rational discussion (agree with me) isn't a solution either.

Did you even read my OP?

Please provide your analysis of this and/or other proposals. Thanks.

How does this translate into "agree with me?"

 

[Concerned American]

Unfortunately, this is a demand-side problem. Americans like getting $1.25 worth of government for every $1.00 they pay in taxes.

Government used to be about what got built and how the public's money got spent on public projects. Now it's about direct payments to individuals - who gets what and most importantly how much! Government has always paid for your K-12 school, but increasingly pays for your college education, your healthcare, your retirement, your utilities, and your food and housing. The list is endless and growing.

We need to move away from this attitude, or at least dial back expectations. Gen-Z has already started doing this. About half of Gen-Zers don't expect to ever receive any social security benefits when they retire. They probably aren't wrong.

Truer words have never been spoken and thank you. That is the point I have been trying to be make. We cannot promote the idea that people can get more than they offer and EARN. Debt can be leveraged to help advance your situation, but it shoudl NEVER BE LOOKED AT AS PERMANENT. Your point re: direct payments to individuals is exactly contrary to the historical points in our nation's docs when they infer "for the common good" Additionally, the smoke and mirrors/currency manipulation is looking for an underhanded way of avoiding debt that we incurred. It is no different than Biden's student loan forgiveness. It is nothing more than wealth redistribution. People/governments need to start taking THEIR own words to heart and when they make agreements, LIVE UP TO THEM.

 

[candycorn]

Sounds like it is either a question of cutting spending and raising revenues. We need to do both.

Start in 2030

We need to raise taxes. 3 years where nobody gets a refund. So 2030-2033; there is no tax refund. That money is used to pay down the national debt. And do that again between 2040-2043; 2050-2053.

Match that with a fundamental change to how Congress appropriates money every 10 years. Start at zero. Put the limit at $10M or $20M; whatever. Congress must appropriate money on a department by department basis. Each program must be approved. The commerical I just saw for visiting the national forest....the advertising budget for the NFS must be approved by Congress. No “million here, million there” philosophy. And definitely no carryover-budgeting. I mean, do we really need to tell people to buckle up at the federal level when states are doing it too? If so, maybe every other year?

It took 50 years or so to get into this jam. It will take a while to get out.

 

[Cassandro]

We need to raise taxes. 3 years where nobody gets a refund. So 2030-2033; there is no tax refund.

Don't you think that people would adjust their withholding and/or estimated tax payments to avoid this forfeiture?

 

[task0778]

Sounds like it is either a question of cutting spending and raising revenues. We need to do both.

Start in 2030

We need to raise taxes. 3 years where nobody gets a refund. So 2030-2033; there is no tax refund. That money is used to pay down the national debt. And do that again between 2040-2043; 2050-2053.

Match that with a fundamental change to how Congress appropriates money every 10 years. Start at zero. Put the limit at $10M or $20M; whatever. Congress must appropriate money on a department by department basis. Each program must be approved. The commerical I just saw for visiting the national forest....the advertising budget for the NFS must be approved by Congress. No “million here, million there” philosophy. And definitely no carryover-budgeting. I mean, do we really need to tell people to buckle up at the federal level when states are doing it too? If so, maybe every other year?

It took 50 years or so to get into this jam. It will take a while to get out.

FYI:

The average tax refund for all of 2024 was $3,138, based on IRS data through Dec. 27, 2024. Interestingly, that’s a full $269 higher than the average of $2,869 through early May 2024. It remains to be seen whether the average refund for 2025 similarly increases between now and the end of the year.

In all, about 105 million tax refunds were processed by the end of December 2024, totaling more than $329 billion.

A majority of taxpayers do end up with a tax refund: About two-thirds of returns (64 percent) filed in 2024 resulted in tax refunds, according to IRS data.

The Average Tax Refund Each Year, And How Refunds Work | Bankrate

The average tax refund so far this year is $2,939, up $70 from the average tax refund at this time last year. Here's what you need to know.

www.bankrate.com

Yeah, it's gonna take a long time to get out of the debt hole we're in. But I gotta say that raising taxes isn't going to solve the problem until we can control spending, right? You can raise more tax revenue over 3 years, but what good does it do if Congress spends more than they take in over the other 7 years? And right now, nobody is interested in spending limits. Can Congress pass a balanced budget amendment and control spending? I'll believe that when I see it.

 

[candycorn]

Don't you think that people would adjust their withholding and/or estimated tax payments to avoid this forfeiture?

Many will; most won't. I know that there is only so much you can do to limit your tax burden; otherwise the government would have zero income.

 

[candycorn]

Yeah, it's gonna take a long time to get out of the debt hole we're in. But I gotta say that raising taxes isn't going to solve the problem until we can control spending, right?

Yep. As I said, you have to do both. Increase income and limit spending. One area where I think we can eliminate spending in a bi-partisan area is by limiting the number of ambassadors.

List of Current U.S. Ambassadors

afsa.org

Many, if not most, are vacant...thank goodness. Each one makes about $200K but of course has a staff of probably at least a dozen. Many have an embassy or consulate (or both); residences, etc... Its a drop in the bucket but I would say that the Ambassador to Zambia could probably also cover Zimbabwe--the capitol cities are like 19 hours apart by car. Find areas of largess like this and pick away at them. Shutter one of the embassies, eliminate the position and their staff, and see where the move takes us. We really need to spend more on foreign aid. We produce more than we can ever consume and the only logical (and economic) solution is trade. Nobody on the right wants to hear that--globalization--hiss!!!!--but its there and it's not going anywhere as we're seeing with our farmers just now realizing they need the Chinese more than the Chinese need them.

Another area is to address the NEA--National Endowment for the Arts. I know...I know....I'm supposedly a flaming liberal. That isn't quite the case. In terms of politics, I guess I am a liberal but overall, I'd call me an institutionalist. I believe in government and think that government should be more than just national defense and making buses run on time. It should promote our culture as well and the NEA is supposed to do that. All of that being said...the NEA has been pared down so much that rather than continuing to have this pathetic appendix on the colon of the government...just cut it off. Impose a $0.50 Arts tax on each movie ticket, each concert ticket, each stage show, each exhibit, etc... All of that money goes into an endowment that is privately managed (think of the TVA...something organized like that; government adjacent but not government related). And then take the public restraints off the artists who have to jump through these ridiculous hoops to get funding and let them go hog wild. Maplethorpe and Remington can exist side-by-side. I like both works by the way.

The point is to grow the **** up and stop kidding ourselves about what we need and what we don't need.

 

[Woodznutz]

Maybe the people can help. Consumer debt is at $18Trillion. If people reduced their borrowing interest rates would fall reducing the cost of federal debt service. People with cash could spend a bit more to keep the economy afloat. I'm doing my part as I have no debts and lots of cash in the banks. If interest rates do fall it won't bother me much as we just went through a long period of low interest rates on savings and lived through it.

Everyone needs to tighten their belts and give the devil his due until this gets straightened out.

 

[Cassandro]

Everyone needs to tighten their belts and give the devil his due until this gets straightened out.

Good luck with that!

 

[Captain Caveman]

Why not invoice everyone over 18 a pro rata amount of the national debt based on their wealth.

 

[sealybobo]

I'm not sure how this forum is supposed to work, but I am interested in creating a rational discussion thread in which government policies can be intelligently addressed without the usual petty and inane comments. This means that if you are unfamiliar with the subject matter or otherwise unable to express yourself in a comprehensible manner, you will refrain (or be excluded) from participating in the discussion. I hope this is possible. I will now start the following discussion topic:

The National Debt Paradox

I think the US National Debt has grown to unsustainable levels, both in servicing the existing debt and in obtaining new debt at reasonable interest rates. As a result, it will continue to grow even without existing budget deficits. Thus any attempt to alleviate this burden through a budgetary process is essentially impossible under the current system because Congress can replace any reductions with even more spending. The US is thereby faced with a debt paradox in need of an outside the box solution.

Two ideas that are now being discussed are revaluing the Treasury's gold reserves and issuing gold backed securities at lower interest rates. While neither will solve this problem alone, the may be necessary ingredients for a more lasting solution. What if they were both announced this year, followed by a (one-time) balanced budget announced at the end of the fiscal year (due to gold revaluation and tariff revenue)? In the mean time, a combination of increased money supply and lower interest rates would cause the dollar (and the nominal Debt) to lose value. This could provide the impetus for creating an alternative gold backed currency which would allow conversion of old currency and debt at a specified ratio. This would give a "haircut" to existing creditors, but would be attractive to new investors. If gold continues its preferred status, it might be a win-win situation in the long run.

I know that this scenario is somewhat sketchy, but is it even theoretically possible? Please provide your analysis of this and/or other proposals. Thanks.

I just saw on Facebook, so it's probably a lie, that Trump is going to use the tariffs to pay off the debt. I said before I would have supported tariffs if that's what it was going towards. I'll stand by that.

It took him losing the elections last week to change course. Republicans, you are welcome. If we didn't spank Donald he would be giving that money away to his billionaire buddies ONLY.

I also heard we were also getting $2000 checks back. Everyone who works.

So which is it?