Why The National Debt Is Good For The Country

[StashMan]

1. Debt enriches the private sector.

When the government issues debt, it spends the same amount of money as the amount it borrows. Money flows from the private sector through the government, and back into the private sector again. No money is lost or made in this process. The only net result is the creation of new treasury bonds, which enrich the private sector.

2. The debt need not be paid back.

So long as people want to hold government bonds, and the government can afford to pay the interest, there is no need for the government to pay back money it's borrowed in the past.

3. Paying interest does not make the country poorer.

When the interest is paid to Americans, there is no net result. When it's paid to foreigners, they can save the dollars or spend them on American goods and services. Either way it's good for us.

4. Debt is the basis of our financial system.

Dollars are backed by US debt. If the debt were paid off, it would result in the collapse of our economy.

5. We can't default on our debt, unless it's voluntary.

Our debt is denominated in dollars. We can create as many as we want. Therefore we can't run out of dollars to pay our debt.

6. We are not "borrowing from our grandchildren."

Should our grandchildren choose to pay down our debt (and there's no reason why they should), the payments will go to our grandchildren, not to us. (We'll be dead by then.)

You are so wrong. Each time the Fed prints money out of thin air it devalues the money already in circulation. Right now are currency is so weak that the world community want to opt out of using the U.S. dollar as the world reserve currency.

Read about it here:

What If The U.S. Dollar Loses Reserve Currency Status?

 

[Sundial]

I am an Engineer, not an Economist so allow me to be wrong. I heard that the national debt equaled 100% of the Gross Domestic Product today. In the past I have read that when the debt gets to 90% of GDP, the nation is in serious trouble.

What say you?

I think it has to do with whether the country can afford to make the payments, not any particular ratio to GDP. Japan's ratio is over 200%, and their interest rate is lower than ours. Interest on the debt is something like 6% of the budget in the US. It's not that much.

The debt is not the problem right now; unemployment is.

The only part of the Republican argument about the debt that's right is that we can't run large deficits indefinitely or forever. But that's not what economists like Krugman are arguing. They're arguing for temporary deficits - larger than what we have now - until the recovery is secure.

 

[Sundial]

By your own "logic", that means the people who have had their houses foreclosed on over the past few years are wealthier than Bill Gates who is sitting on billions and who has no debt.

Wow. I mean, seriously, just wow.....

Description of Straw Man

The Straw Man fallacy is committed when a person simply ignores a person's actual position and substitutes a distorted, exaggerated or misrepresented version of that position. This sort of "reasoning" has the following pattern:

1. Person A has position X.
2. Person B presents position Y (which is a distorted version of X).
3. Person B attacks position Y.
4. Therefore X is false/incorrect/flawed.

This sort of "reasoning" is fallacious because attacking a distorted version of a position simply does not constitute an attack on the position itself. One might as well expect an attack on a poor drawing of a person to hurt the person.

Nice try. You said debt is great and having a balanced budget collapses economies. Therefore, by your own asinine logic, the people who have had their homes foreclosed on are in exponentially better shape than Bill Gates.

1. Person A (Sundial) in an attempt to push Communism, takes the asinine position that balancing our budget would collapse our economy while increasing our $14 trillion debt is somehow good

2. Person B (Me) simply illustrates how asinine that position is

3. Person B (Me) still simply illustrated how asinine your position was to push your Communist agenda

4. Therefore, I've proven that everything you said was asinine.

Ummm..... Nope. Try again.

 

[Sundial]

You are so wrong. Each time the Fed prints money out of thin air it devalues the money already in circulation. Right now are currency is so weak that the world community want to opt out of using the U.S. dollar as the world reserve currency.

No one forces foreigners to buy US Treasuries. That they do buy them, and pay top dollar (interest rates are at all time lows) means they want them. Again, we're talking about the Treasury issuing debt, not the Fed printin money.

AUGUST 4, 2011, 4:17 P.M. ET
Yields Plunge As Investors Hide Out In US Treasurys

NEW YORK (Dow Jones)--A gloomy global economic outlook sent investors on a mass exodus out of risky markets Thursday and into the refuge of U.S. government debt, sending yields to yet another round of new 2011 lows.

 

[Contumacious]

Why The National Debt Is Good For The Country

1- Debt enriches the parasitic sector

2- Debt enriches the Federal Reserve bankers

3- debt will eventually cause the nation's finance system to collapse; giving the socialists the pretext to centralize even more power in DC

4- We are not "borrowing from our grandchildren, we are merely destroying their future, hopes and aspirations;;


.

 

[Sundial]

1. There is some truth in that. The rich own a disproportionate amount of government bonds. Which means they get a disproportionate share of the interest that is paid on them. However, it's easy enough to tax them to get it back.

2. Is false. Fed bankers are paid a salary, and its profits are turned over to the government. The Fed is not a for-profit organization, and it's not run for the purpose of making money.

3. The US has had debt since it was founded. There's no reason to think the debt will destroy the country, and you've provided none.

4. Whatever debt is paid in the future will be paid to people who are living, not people who are dead. If our grandchildren pay anyone for the debt it will be other grandchildren, not us.

 

[editec]

1. Debt enriches the private sector.

When the government issues debt, it spends the same amount of money as the amount it borrows. Money flows from the private sector through the government, and back into the private sector again. No money is lost or made in this process. The only net result is the creation of new treasury bonds, which enrich the private sector.

2. The debt need not be paid back.

So long as people want to hold government bonds, and the government can afford to pay the interest, there is no need for the government to pay back money it's borrowed in the past.

3. Paying interest does not make the country poorer.

When the interest is paid to Americans, there is no net result. When it's paid to foreigners, they can save the dollars or spend them on American goods and services. Either way it's good for us.

4. Debt is the basis of our financial system.

Dollars are backed by US debt. If the debt were paid off, it would result in the collapse of our economy.

5. We can't default on our debt, unless it's voluntary.

Our debt is denominated in dollars. We can create as many as we want. Therefore we can't run out of dollars to pay our debt.

6. We are not "borrowing from our grandchildren."

Should our grandchildren choose to pay down our debt (and there's no reason why they should), the payments will go to our grandchildren, not to us. (We'll be dead by then.)

You are so wrong. Each time the Fed prints money out of thin air it devalues the money already in circulation. Right now are currency is so weak that the world community want to opt out of using the U.S. dollar as the world reserve currency.

Read about it here:

What If The U.S. Dollar Loses Reserve Currency Status?

That's ONLY part of the story.

If the FED increases the money supply and there is no commensurate increase in goods and services to offset that new money, then of course that will be inflationary.

But look at it the other way...

Suppose that henceforth no new money was EVER generated but the economy's production continued to climb.

What would happen to the prices of good in that circumstance?

We'd have DEFLATION would we not?

The money supply has to bear some realtionship to the valuye of goods and services SOLD.

GEEEEEEEEEEEEEEEEEZEus is that so hard to figure out?

 

[FA_Q2]

Save liberty: you're right, some of the money came from TARP. Everything else you said is still wrong.

Rott: Nothing I said has anything to do with raping women, or the Holocaust, or Reaganomics.

Other than that, I can only say that you don't understand the difference between micro- and macro- economics.

Comparing the finances of an individual person, or a family, to the economy as a whole, will mislead you every time.

Answer this question: if foreigners have US dollars, what, if anything, can they do with them?

It’s not a matter of comparing it at any level. The fact is that debt is not healthy in any way shape or form. There are times when debt is NEEDED and at those times the government may need to create that debt but the ONLY way to keep such a situation healthy is for that debt to have a horizon for it to be paid off. Tell us ONE positive to caring a permanent debt that one has no intention of paying off. In reality, it is not the debt or even the massive size of that debt that is sinking our country but rather the deficit that ensures our debt grows both exponentially and indefinitely. THAT is what makes this an untenable situation. We need to face that fact as soon as possible or face the possible collapse of this nation.

 

[FA_Q2]

Where does it remove it to?

Poor people who are unproductive. Military hardware that sits in inventory. Waste and fraud.

Poor people are part of the private sector. Even if they weren't, they spend their money on things like groceries and rent, which are also part of the private sector.

Military hardware is built by private companies, which are paid for their work. They use that money to (among other things) pay their workers. Those workers, and the companies they work for, are all part of the private sector.

Waste and fraud means that some money has been transferred from the government to some person, who either didn't deserve it, or didn't do what he was supposed to do to get it. Either way, it's a transfer of money from the government to the private sector.

None of those are examples of the government removing money from the economy.

You fail to understand wealth. This may be true of MONEY but money never goes anywhere at all. It is just shuffled around. The real point is that government removes WEALTH from society. The military hardware takes a workers productivity that could have created an object like a car where the economy would have generated not only his spending power through his wages but also a car. Instead, that productivity is moved to a bomb that serves no tenable purpose in the economy and therefore removed that wealth from the market. The private sector can do this as well though most of that occurs because of laws or regulations that the government has set up. Lawyers and tax consultants are a good example of this. The government at large creates almost no wealth where the privates sector wastes little wealth. About the only thing that the government truly does that adds to the wealth of the nation is in infrastructure which is a minute portion of expenditures. Some of that wealth destruction is required. Though police and fire create nothing and are removing wealth from the system they are required to maintain an environment to foster other people in creating wealth. Again, that also represents a fraction of the government’s expenditures. The problems are in many of the other things the government is doing that destroys wealth with little to no real gains.

 

[gslack]

1. Debt enriches the private sector.

When the government issues debt, it spends the same amount of money as the amount it borrows. Money flows from the private sector through the government, and back into the private sector again. No money is lost or made in this process. The only net result is the creation of new treasury bonds, which enrich the private sector.

2. The debt need not be paid back.

So long as people want to hold government bonds, and the government can afford to pay the interest, there is no need for the government to pay back money it's borrowed in the past.

3. Paying interest does not make the country poorer.

When the interest is paid to Americans, there is no net result. When it's paid to foreigners, they can save the dollars or spend them on American goods and services. Either way it's good for us.

4. Debt is the basis of our financial system.

Dollars are backed by US debt. If the debt were paid off, it would result in the collapse of our economy.

5. We can't default on our debt, unless it's voluntary.

Our debt is denominated in dollars. We can create as many as we want. Therefore we can't run out of dollars to pay our debt.

6. We are not "borrowing from our grandchildren."

Should our grandchildren choose to pay down our debt (and there's no reason why they should), the payments will go to our grandchildren, not to us. (We'll be dead by then.)

Sorry I didn't see this thread sooner... All I can say is WOW, thats a lot of BS with no substance or basis in reality.

First the government doesn't "issue debt" it aquires debt. Debt is what you owe someone or something. LOL jesus dude...

On to the list now...

1. The government itself does not make or print money. That is done by the Federal Reserve Banks which are NOT a government controlled agency. They have their own investors. To make more money they buy US Treasury Securities from the US treasury Dept, and to decrease money supply they sell those Treasury Securities. The Government pays the FED for this service and pays interest on the money itself.

2. Paying debt voluntarily is paying for something you don't have to pay for. For the life of me I can't understand the logic you just tried to use in that one... You have a dollar and you decide you would like to pay someone else 10 percent of it forever when you could have the full dollar? Are you insane?

3. That is the most ignorant and asinine thing I have read in a serious post in a long time.. OMG man did you even look into how money and finance works? PAying money to someone else that you do not need to pay for is ridiculous. And pretending its somehow a good thing is just lunacy.

4. BINGO! Showing the inherent flaw in the system of banking created by bankers. Its the scam of the millennium. The fact is a economic system run on debt and based on debt will inevitably lead to more and more debt. More debt = more interest paid to banks which =Banks become more and more powerful and investors more wealthy.

5. Now you know thats not true... Fact is the FED decides the amount of cash in our economy at any given time. They are a bank and WILL do what it has to do to keep the dollar value at a reasonable level if it can. More money in the system makes each dollar worth less. And before the dollar gets to the point they cannot meet demand either by inability to print enough or by inability to buy Treasury securities, or by endangering their own investors, they will STOP feeding money into the system of banks. Meaning banks will close, etc etc and so on down the line. THEY WILL NOT JUST KEEP PRINTING MORE. And to think so is to be blind of finance.

6. That one was just stupid... You first said "We are not "borrowing from our grandchildren.""... Then you said, "... the payments will go to our grandchildren, not to us. "..... Dude you just contradicted your own statement... Are you drunk?

 

[saveliberty]

Save liberty: you're right, some of the money came from TARP. Everything else you said is still wrong.

No sundial, the Wall Street Journal article and second article clearly confirm everything I said. Read.

 

[StashMan]

1. Debt enriches the private sector.

When the government issues debt, it spends the same amount of money as the amount it borrows. Money flows from the private sector through the government, and back into the private sector again. No money is lost or made in this process. The only net result is the creation of new treasury bonds, which enrich the private sector.

2. The debt need not be paid back.

So long as people want to hold government bonds, and the government can afford to pay the interest, there is no need for the government to pay back money it's borrowed in the past.

3. Paying interest does not make the country poorer.

When the interest is paid to Americans, there is no net result. When it's paid to foreigners, they can save the dollars or spend them on American goods and services. Either way it's good for us.

4. Debt is the basis of our financial system.

Dollars are backed by US debt. If the debt were paid off, it would result in the collapse of our economy.

5. We can't default on our debt, unless it's voluntary.

Our debt is denominated in dollars. We can create as many as we want. Therefore we can't run out of dollars to pay our debt.

6. We are not "borrowing from our grandchildren."

Should our grandchildren choose to pay down our debt (and there's no reason why they should), the payments will go to our grandchildren, not to us. (We'll be dead by then.)

You are so wrong. Each time the Fed prints money out of thin air it devalues the money already in circulation. Right now are currency is so weak that the world community want to opt out of using the U.S. dollar as the world reserve currency.

Read about it here:

What If The U.S. Dollar Loses Reserve Currency Status?

That's ONLY part of the story.

If the FED increases the money supply and there is no commensurate increase in goods and services to offset that new money, then of course that will be inflationary.

But look at it the other way...

Suppose that henceforth no new money was EVER generated but the economy's production continued to climb.

What would happen to the prices of good in that circumstance?

We'd have DEFLATION would we not?

The money supply has to bear some realtionship to the valuye of goods and services SOLD.

GEEEEEEEEEEEEEEEEEZEus is that so hard to figure out?

The Fed will NEVER stop printing money out of thin air. To do so would put it out of business. The Fed is a Ponzi scheme and to keep a ponzi scheme going you have to keep money going into it. The Fed is privately owned and operated, when its prints money its stockholders make money. All at the cost of the American people. The Treasury has very little to do with anything economically and it's been that way since 1913 and the Federal Reserve Act.

Our money is not backed by anything. Not gold, not silver, or anything else. We use a fiat system of currency which is the act of printing money out of thin air. NO country in history has ever once used this system and survived. The Fed has been printing money form nothing for so long that now we can't keep up with the debt at all, and have to borrow more money from the Fed to pay to our nations debt. So we will always be behind.

Had we not of gone into the Federal Reserve System than our dollar today would have the purchasing power of $22.00, instead it is worth 4 cents as compared to its value in 1913. It doesn't take a scholar to figure this out. The Fed is the elephant in the room, and there is NOTHING hurting our nations economically as bad as it is.

Every bank loans out more money than it has. That's how the system works. The banks go to the Fed for a loan, the Fed prints the money, loans it to the banks which loan it to us. All with interest. That Interest gets kicked back to the Fed. All for doing nothing but running a printing press. Wouldn't it be better for that money to go back into our economy?

I would like to point out some comments from Thomas Jefferson about a nation in debt:

There does not exist an engine so corruptive of the government and so demoralizing of the nation as a public debt. It will bring on us more ruin at home than all the enemies from abroad against whom this army and navy are to protect us. (Letter to Nathaniel Macon, 1821)

We are ruined if we do not overrule the principles that “the more we owe, the more prosperous we shall be”; “that a public debt furnishes the means of enterprise”; “that if ours should be once paid off, we should incur another by any means however extravagant.” (Letter to James Monroe, 1791)

To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude. (Letter to Samuel Kerchival, 1816)

Allowing a private entity to control our money supply is letting it control our Government.
Our founding fathers fought against a debt based financial system because they saw how it ruined the European nations they and their fathers came from.

You can do as you please, but I'll stick to the Constitution.

 

[P@triot]

If the US Government was a family, their current financial status would look like this:

They make $58,000 per year, but spend $75,000 per year, and they have $327,000 in credit card debt.

Now liberals, please twist this to some how explain this is "good". This should be fun to watch them trip over themselves trying to explain how this kind of irresponsible, reckless spending is "good".

 

[KissMy]

7. When the government issues debt, it enriches the private sector, which encourages people to spend and invest. When people spend and invest, they create jobs and improve the economy.

You left out all the important reasons & made your argument completely one sided.

8. Increasing debt = Inflation. This is bad for most especially fixed income & savers. It is earnings & savings theft. A cruel tax. If the USG is going to print money then they should pay it to the people who they stole the value from. The savers. All that newly created currency should not go to government cronies first. They are getting to spend it first before inflation sets in. That is criminal in so many ways.

9. China is artificially devaluing their currency creating a de-facto export subsidy & import tariff. They have found a way around the WTO policy on protectionism.

A. Nobody's printing any money. Issuing Treasury bonds does not increase the money supply.

B. When corporations issue debt, does that also, in your mind, equal theft?

C. What does China have to do with anything?

A. Issuing debt is exactly the same as printing money when it is never getting paid off. That is what the Fed is doing. It is a stealth monetization of debt.

B. When corporations issue debt they expect to be paid back with interest. Corporations usually were limited by credit ratings, interest rates & leverage. The money supply remain constrained by those limits stabilizing prices. That was removed when Clinton signed S.900 into law creating the "Shadow Banking System". This law allowed risk to be spread bad risk & incredible leverage ratios. Couple that with the Fed's low interest rates & we had the largest theft in history.

Anyone who barrows money with out intending to pay it back is theft.

Anyone who devalues currency is stealing from savers. You knew that but choose to act retarded.

C. Needs no explanation for competent people.

 

[saveliberty]

This is what happens when the last high inflation period was over 25 years ago. You get debt impaired people like sundial.

 

[Contumacious]

Why The National Debt Is Good For The Country

1- Debt enriches the parasitic sector

2- Debt enriches the Federal Reserve bankers

3- debt will eventually cause the nation's finance system to collapse; giving the socialists the pretext to centralize even more power in DC

4- We are not "borrowing from our grandchildren, we are merely destroying their future, hopes and aspirations;;

1. There is some truth in that. The rich own a disproportionate amount of government bonds. Which means they get a disproportionate share of the interest that is paid on them. However, it's easy enough to tax them to get it back.

2. Is false. Fed bankers are paid a salary, and its profits are turned over to the government. The Fed is not a for-profit organization, and it's not run for the purpose of making money.

3. The US has had debt since it was founded. There's no reason to think the debt will destroy the country, and you've provided none.

4. Whatever debt is paid in the future will be paid to people who are living, not people who are dead. If our grandchildren pay anyone for the debt it will be other grandchildren, not us.

1- I see , so in Orwellian double speak the rich are parasites?

2-So if fed bankers are paid a salary why are they claiming the US owes them $1.6 trillion dollars?

3- So why did FDR abandoned capitalism in favor of fascism in 1935? Why did the US default then on its obligations for the 1st time ?

4- I see , so the 17 TTTTTTTTTTTTTTTTrillion debt will be paid in our lifetime? So, what do you smoke.....mexican sinsemilla?

.

 

[saveliberty]

The part I like the most is sundial's assumption that the debt never need be paid back.

"If our grandchildren pay anyone for the debt it will be other grandchildren, not us." - sundial

By definition, not paying your debt back is a default.

 

[Charles_Main]

1. Debt enriches the private sector.

When the government issues debt, it spends the same amount of money as the amount it borrows. Money flows from the private sector through the government, and back into the private sector again. No money is lost or made in this process. The only net result is the creation of new treasury bonds, which enrich the private sector.

2. The debt need not be paid back.

So long as people want to hold government bonds, and the government can afford to pay the interest, there is no need for the government to pay back money it's borrowed in the past.

3. Paying interest does not make the country poorer.

When the interest is paid to Americans, there is no net result. When it's paid to foreigners, they can save the dollars or spend them on American goods and services. Either way it's good for us.

4. Debt is the basis of our financial system.

Dollars are backed by US debt. If the debt were paid off, it would result in the collapse of our economy.

5. We can't default on our debt, unless it's voluntary.

Our debt is denominated in dollars. We can create as many as we want. Therefore we can't run out of dollars to pay our debt.

6. We are not "borrowing from our grandchildren."

Should our grandchildren choose to pay down our debt (and there's no reason why they should), the payments will go to our grandchildren, not to us. (We'll be dead by then.)

You are perhaps the stupidest person in History.

Anyone that thinks holding a debt nearly = to our GDP and running Deficits as large as we are. Is a good thing. Is either a ******* retard, or a Democrat Partisan hack trying to make excuses for the failure of their party.

 

[P@triot]

1. Debt enriches the private sector.

When the government issues debt, it spends the same amount of money as the amount it borrows. Money flows from the private sector through the government, and back into the private sector again. No money is lost or made in this process. The only net result is the creation of new treasury bonds, which enrich the private sector.

2. The debt need not be paid back.

So long as people want to hold government bonds, and the government can afford to pay the interest, there is no need for the government to pay back money it's borrowed in the past.

3. Paying interest does not make the country poorer.

When the interest is paid to Americans, there is no net result. When it's paid to foreigners, they can save the dollars or spend them on American goods and services. Either way it's good for us.

4. Debt is the basis of our financial system.

Dollars are backed by US debt. If the debt were paid off, it would result in the collapse of our economy.

5. We can't default on our debt, unless it's voluntary.

Our debt is denominated in dollars. We can create as many as we want. Therefore we can't run out of dollars to pay our debt.

6. We are not "borrowing from our grandchildren."

Should our grandchildren choose to pay down our debt (and there's no reason why they should), the payments will go to our grandchildren, not to us. (We'll be dead by then.)

You are perhaps the stupidest person in History.

Anyone that thinks holding a debt nearly = to our GDP and running Deficits as large as we are. Is a good thing. Is either a ******* retard, or a Democrat Partisan hack trying to make excuses for the failure of their party.

You hit it CM! Nobody is that stupid. Nobody. Not Barack Hussein. Not Sundial. Not even Nancy Pelosi. Ok, maybe Nancy Pelosi is that stupid, but nobody else.

At the end of the day, this is just another desperate attempt by another soldier of the fascist party, trying to make excuse for the complete failure of his party.

 

[saveliberty]

Hey, the debt is good for the country folks? How do like the wonderful improvement to the debt we got from Standard and Poors? Lower credit rating, which means higher interest rates. Yep, you spend like drunken sailors long enough and this is what happnes. Warned you for about a month now and all I got was silence from some and denial from the rest. Wake up and start listening before its too late. We MUST cut spending. BIG cuts. We need a balanced budget and not one that shows a possible balance ten years from now, but now. You may be willing to risk losing everythiing, but I'm not.