What Everyone Should Know About Budget Deficits and Public Debt

[oldfart]

Yup, meant surplus, obviously. Thanks for the catch. Sometimes I loose concentration on this board. Not a good thing to do when you have sharks swimming around you. And yes, I did mean to say that you need to consider the national debt as a percent of GDP. Again, obviously.
OK. I promise. I will actually read what I type from here on out.

Jesus, I hope this is not an age thing.

The whole 70s were that way for me.

 

[Rshermr]

an incredibly long winded piece. It boils down to: 'we can always print more money, so it is ok to borrow more'.

Which is 'ok' in the sense that living in the weimar republic was kind of 'ok'.

weimar republic - wikipedia, the free encyclopedia

the weimar republic is a terrible example. Hyperinflation is much more than a monetary event. Weimar germany had its debt denominated in sterling, and its industrial capacity was wiped out by war, so its industrial capacity was pretty much useless. Its output was effectively controlled by other countries.the more they printed, it wasn't being off-put by real goods and services, which is what caused the hyperinflation. This can't happen in the united states. Sorry to burst your bubble.

using your comparison, where are the goods and services backing the fed purchases? They will have to unwind the position eventually.

The comparison with weimar is fair. The us does not have war reparations, but we have obligations without the means to pay them short of inflating our way out of the problem. Weimar had to pay back the industrialists, and we will have to pay back the bankers. We have retiring baby boomers, interest on the debt, and the debt itself. Watch what happens when either the fed or china unwind their positions. The government is allowing the fed to print money, but for now, it is still on their books. It wont stay that way forever, and the payments will be with cheaper dollars because it is the only way out of the problem given the current state of politics in washington.

jesus!!!!!!

 

[Rshermr]

This again is a schemantic issue and not an issue of what you really think of the economy.

Person 1 thinks that since he has burrowed money to the government, well then, obviously the government DOES burrow it's own fiat!
Person 2, a renagade government employee at the printing presses thinks that, we are not burrowing anything since we are the issuers of the currency! We either take it in, or take it out and that's it. There are no other functions.

It's like watching two stubborn engineers arguing whether sound is made out of frequencies or waves. Or like two economists (one being an accountant and the other a traditional economist) arguing whether economy is zero sum game or not. Or an american and a chinese person debating whether a table is a table or "表".

MMT seems more like a language structure to base your theory on than a real theory to me, half of the proponents are commies and half of them anarchists it seems. But everytime you discuss with them they think you are wrong just for using the wrong language! And then they have the nerve to tell you that "you are entitled to your own definitions" (after ignoring every possible wordbook definition).


Kimura summed it up very well. "What are you talking about?" is the issue here.

Damn, norman, you were offered education FREE OF CHARGE and then you refuse to thank the educator. No wonder you are so completely ignorant. If I were you, I would stay with supply side economics. Now, those supply side folks are about as popular as a fart in church among actual economic minds, but it is where you are comfortable.
Funny. Study after study shows that con tools like you simply want to be told what to believe. How true that is. And they show how stupid cons are. For instance, you mentioned a few times "burrow, and burrowing". Here is the definition of burrow:

bur·row
noun
1. a hole or tunnel dug by a small animal, esp. a rabbit, as a dwelling.
synonyms: hole, tunnel, warren, dugout; More

verb: burrow; 3rd person present: burrows; past tense: burrowed; past participle: burrowed; gerund or present participle: burrowing
1. make a hole or tunnel, esp. to use as a dwelling.
"moles burrowing away underground"
Now, apparently you believe that there are small animals burrowing in our economy, me poor ignorant con. Is that a supply side theory???

I hate to say it but... I told you so.

See this is exactly what I meant, MMTers only criticize your grammar and schematics but nothing of actual substance. Of course, with plenty of insults included.

But that is the problem. You have SAID NOTHING OF SUBSTANCE.

 

[Kimura]

An incredibly long winded piece. It boils down to: 'We can always print more money, so it is OK to borrow more'.

Which is 'OK' in the sense that living in the Weimar Republic was kind of 'OK'.

Weimar Republic - Wikipedia, the free encyclopedia

The Weimar Republic is a terrible example. Hyperinflation is MUCH more than a monetary event. Weimar Germany had its debt denominated in Sterling, and its industrial capacity was wiped out by war, so its industrial capacity was pretty much useless. Its output was effectively controlled by other countries.The more they printed, it wasn't being off-put by real goods and services, which is what caused the hyperinflation. This can't happen in the United States. Sorry to burst your bubble.

Using your comparison, where are the goods and services backing the Fed purchases? They will have to unwind the position eventually.

The comparison with Weimar is fair. The US does not have war reparations, but we have obligations without the means to pay them short of inflating our way out of the problem. Weimar had to pay back the industrialists, and we will have to pay back the bankers. We have retiring baby boomers, interest on the debt, and the debt itself. Watch what happens when either the Fed or China unwind their positions. The government is allowing the Fed to print money, but for now, it is still on their books. It wont stay that way forever, and the payments will be with cheaper dollars because it is the only way out of the problem given the current state of politics in Washington.

The FED basically engages in asset swaps when it engages in QE. There's no new creation of net financial assets.

The government can never face a financing constraint. It can always service its debt. The public debt of a currency issuer isn't debt in the conventional sense. It's should be viewed as a form of national equity since it represents the total savings of the US economy.