How will the US pay back its debt? - Page 6 - Politics Forum.org | PoFo

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Everything from personal credit card debt to government borrowing debt.

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#15093853
Atlantis wrote:@Steve_American, @SueDeNîmes, it's a myth to believe that government can create money out of thin air.

No, it's a myth to believe it doesn't.
That never has been the case, not even in feudal times.

It wasn't the case in feudal times because money was specie. Now it is almost all electronic account entries that government can and does create out of thin air.
Working the printing press will increase the monetary amount and decrease the value.

If the increase in money is greater than the increase in what the money buys.
#15093885
@Steve_American, are we turning in circles? After all that's been said it should be blindingly clear that the Japanese deficit doesn't prove anything, except that Japan is different. It most certainly doesn't prove that a GDP/debt ratio of 200% is sustainable for any other country. Argentina's debt burden resulted in a default before it even reached 100%. And once the IMF dictates your fiscal policy you are really screwed.

There is nothing wrong with a deficit as long as it is sustainable, in other words, as long as the debt service doesn't eat too much of you national budget. Building infrastructure that will serve future generations on debt said future generations will have to pay back is only fair. Now, blowing it on consumption is a different matter.
#15093911
I'll add numbers to your points so I can point the them when I reply to them.
Atlantis wrote:@Steve_American, 1] are we turning in circles? 2] After all that's been said it should be blindingly clear that the Japanese deficit doesn't prove anything, except that Japan is different. 3] It most certainly doesn't prove that a GDP/debt ratio of 200% is sustainable for any other country. 4] Argentina's debt burden resulted in a default before it even reached 100%. And once the IMF dictates your fiscal policy you are really screwed.

5] There is nothing wrong with a deficit as long as it is sustainable, in other words, as long as the debt service doesn't eat too much of you national budget. 6]Building infrastructure that will serve future generations on debt said future generations will have to pay back is only fair. 7] Now, blowing it on consumption is a different matter.

OK, I'll reply to each point.
1] Yes, we are. For example you didn't grok my repeating of the 3 things a nation needs to do the have a full fiat currency; and so missed the reason why, therefore, Argentina doesn't have a full fiat currency and so is not the sort of nation I'm giving advice to. My advice to Argentina, etc. is to get out of debt to the IMF and foreign banks.
2] Wrong, it proves that at least some nations will not automatically have the bad things happen if their debt to GDP ratio gets "too" high. Because it is not automatic, the logic rules require that a proof that consists of == A leads to B is always true for any A, and in this case A is true==> then B will happen; doesn't follow because the assumption 'A leads to B is always true for any A' is not true.
3] Right. this is not proven just by the example of Japan.
4] As I said Argentina does not have a full fiat currency. So it has big problems.
And yes, every nation that owes the IMF $$ is screwed.
5] Wrong because the reason is the wrong reason. MMT says that deficits become a problem when "the deficit minus the 2 leakages (internal savings & external savings)" is sort of large AND all the resources in the nation (or that the nation can import) and/or all internal labor are already being fully utilized.
. . . Because the debt can never and will never be paid off or even down much, the payments on the debt are never made with tax dollars. Instead the payments incl. interest are made with new borrowing or with magic money tree free money. Note, only the interest payments add to the debt when it is rolled over. [All payments in these cases are made electronically, so no money is actually printed, ever to do this.]
6] Future generations will never pay down or payoff the debt. If the debt is paid down some it only means the the *limit* has been reached and all the available resources and labor are being fully utilized. Only in this situation would the *drastic* step of running a surplus be the proper thing for the Gov. to do.
. . . We hear this sort of thing all the time from Mainstream Economists. Well, since Reagan was elected there has been a massive deficit every yer (except for about 3 years late in Pres. Clinton's 2nd term). So, from 1981 to 2020(= 39 yr) the American people have not been paying the debt down; and MMT says Clinton's surplus was a huge mistake and led to the dot-com recession. That is was unnecessary and caused the recession, so it was misguided or stupid.
. . . Yes, the 39 years don't prove that MMTers are right. But, they don't need to prove they are right any more that Mainstream Economists (M.E.) were able to prove they were right. M.E. have almost never made a correct prediction, ever. MMTers have made several correct predictions. M.E. used false assumptions to 'prove' their theories. this is not allowed when proving something, it is only allowed when using an analogy. However, analogies *never* prove anything.
. . . I ask you and the lurkers to open your minds and choose wisely. The current Mainstream Economic theory has been used since 1981. Since then America has been in decline. List of evidence of this is == a] income inequality has skyrocketed, b] 'real' wages have been flat and the CPI has not been accurate so now 40% of American households can't come up with $400 to meet a sudden expense, c] America went from being a manufacturing powerhouse to being unable to make face masks in an emergency, d] the infrastructure has been allowed to deteriorate to the point that the bridge over the Mississippi R. fell in the river at St. Paul MN, and killed about 20 people and it is estimated that $4-T is needed to fix it up, e] American K-12 schools suck, f] the healthcare system has no excess capacity to meet an emergency like the covidvirus and experts have been predicting this for decades, and look at the damage this did (how many $trillions have we paid from the lockdown that resulted as soon as the virus appeared and we failed to contain it. Clearly it was a massive case of "pay me now or pay someone a huge amount more later".
. . . So, I think it is time to stop using that false theory and try MMT which has the advantage that it makes no false assumptions in its proof. The worst thing that can happen is a little inflation. All the M.E. predictions of disaster are not going to happen ever unless there is a food shortage. M.E. in pursuit of profit at any external cost have caused America to slip into a massive decline. It needs to stop and now is the time to stop it. Only the American people can do it.

A note to my European friends. The founding treaties of the EU are deeply flawed. The euro was a mistake because every currency needs a fiscal authority to go with it. I think that some group of people knew the power that a full fiat currency gave to the Gov. of any nation and moved to forestall that power being put into effect before the people realized just what is possible with a full fiat currency.
. . . The EU did sort of fine until the GFC/2008 and then never recovered from it, just as all MMters predicted. This is because 'austerity' doesn't do what M.E. said or says it does.

Oops, I forgot 7] This is comparing the US Gov. to a household. This analogy is deeply flawed and just *not* useful. The Gov. issues the dollar, families can't do this, they must earn or borrow $$ from someone who already has them.
. . . This is not a trivial difference. It is a huge difference. Why can't people grok this?
#15094301
@Atlantis,
You said a few relies back that Japan is different because the Japanese people love to save and they think they have a duty to do it *inside* Japan. So, they buy Japanese Gov. bonds with a negative yield.

I had this thought to reply.

Currently, the people of the world are trapped on the world. They must park their savings somewhere in the world.
Currently, the people of the world like US bonds more than any other place to park their savings.
What other nation's bonds look better?
German? Yes, but Germany now is only rolling over old bonds, it has a surplus because of a trade surplus. So, people can't buy Ger. bonds.
Other EU nations? Basically no.
China? Nobody trusts China, especially now.
Russia? Don't make me laugh.

So, currently the US is doing the world a favor by selling bonds that no one else is selling in such amounts.

You say you're worried that this may change and then the US will suffer somehow.
I'll ask for details. So, far you have not replied to my claims that the world has many trillions of dollars and so they must do something with them. Burning them is stupid, so what else can they do? Obviously, their only choices are to sell them to someone else or redeem them at maturity for cash. Because the US issues the dollar, it can {one way or another} always get dollars to redeem its bonds as they come due. But, this doesn't solve the problem for the world's people who don't want dollars, does it?
. . . The only thing those people can do is to buy things in the US, like land and buildings or corp. stock. But, if they don't trust America why would they want land in the US? And, if all this is a problem for the people of the US it is quite Constitutional for the US to freeze the foreign assets and take them away from the trouble makers.
. . . So, I ask again, why would foreign rich people rock the boat? What do they gain by destroying the value of the dollars which they are holding?

Did you know that nowadays the dollars never actually leave the US proper {except for cash}. Payments made with checks stay in the US banking system as deposits in US banks or as reserve $$ in electronic memory at the Fed. Res. Bk. IIRC, the US Gov. can easily seize those 'bonds' held by China for example.

OTOH, did you know or remember that one reason that people don't want EU bonds is that the ECB seized bank deposits in banks in Cyprus many years ago. And the ECB is talking about negative interest rates on all deposits in an EU bank. This amounts to a tax on money assets. MMters would tell you this idea is stupid and counterproductive.
#15094365
@Steve_American, the following article basically states what I have been trying to explain:

“Vaccine or no vaccine, we’re back,” President Donald Trump said last week as governors nationwide began relaxing the restrictions prompted by Covid-19. Trump has been the nation’s most ardent advocate for restarting the economy, even as most states have so far failed to meet his own administration’s metrics for a safe reopening. And little wonder: Trump is desperate to regain even a vestige of the pre-pandemic economy’s strength in time for the election this fall.

But for all his cheerleading, Trump is unlikely to get the kind of robust rebound he’s hoping for—in large part due to sabotage inflicted by his own policies. Thanks to his administration’s early and ongoing failures to address the coronavirus outbreak, much of the nation still lacks the testing and contact tracing infrastructure necessary to control the virus’s inevitable resurgence. Mixed messaging from federal and state officials and patchwork guidance from location to location have also heightened the anxiety for Americans, most of whom remain reluctant to leave their homes.

Another handicap will be the fragility of the American economy, brought upon by the Trump’s pre-pandemic fiscal recklessness. When the president assumed office in an emerging recovery from the Great Recession, he had a golden opportunity to shore up the nation’s fiscal reserves and invest in its economic resilience. Instead, he pushed through one of the largest corporate tax cuts in history, padding the bank balances of billionaires while miring the rest of the nation in eye-watering levels of debt. As a consequence, America entered the Covid-19 pandemic already financially crippled. Now, in the face of the greatest economic crisis since the Great Depression, it is ill-positioned to aid its citizens, let alone rebuild for the future.

The 2017 tax bill that Trump signed into law permanently slashed the corporate income tax rate from 35 percent to 21 percent—the largest one-time corporate rate reduction ever—and cut individual tax rates as well. Its projected price tag was a whopping $1.5 trillion over 10 years.

At the time, Republicans touted the measure as a bonanza for job growth and worker wages. Predictably, however, companies didn’t respond to the tax cuts by creating more jobs. Instead, they engaged in a record-breaking number of stock buybacks to pump up share prices, while most of the individual tax breaks benefited the nation’s wealthiest families. Corporations bought up as much as $1 trillion of their own shares, according to a Congressional Research Service (CRS) analysis, while roughly a quarter of the package’s tax benefits were enjoyed by the top one percent of households, according to the Tax Policy Center. Though shareholders and CEOs prospered, few corporations used their windfalls to pay their workers bonuses, despite some highly-publicized pledges to do so.

The only thing the legislation really accomplished was to blow a crater-sized hole in the federal budget, which until then had seen six straight years of declining deficits under President Barack Obama. By 2019, the federal budget deficit had ballooned to nearly $1 trillion, double the level in 2015.

Countries with strong balance sheets have more room to borrow in a crisis and more ability to pump huge infusions of stimulus into their economies. They can worry less about the burden of debt on future generations, and the politics of more spending are less fraught. Trump’s imprudent stewardship, however, has wholly robbed America of that flexibility.

Now, the nation is plunging into an even vaster chasm of debt to finance its recovery. Since the passage of the first tranche of coronavirus relief bills, including the CARES Act, the federal budget deficit is projected to reach a whopping 17.9 percent of GDP this year, according to the Congressional Budget Office (CBO), a level unmatched since World War II. Public debt, meanwhile, will exceed the size of the entire economy, according to the Committee for a Responsible Federal Budget (CRFB).

Debts and deficits of this size will hobble the economy in a number of significant ways. First, interest payments alone, which were already burdensome before the pandemic, will consume a growing share of the nation’s capacity for investment and recovery. As it is, the government spent 8.4 percent of the federal budget ($376 billion) on interest payments in fiscal 2019, the CBO says. It’s an amount roughly equal to the federal government’s contribution to the Medicaid program that year. Post-pandemic, interest on the debt will be an even bigger line-item expense.

America’s shaky fiscal position also puts it at a disadvantage compared to other more prudent nations. That could pose real risks in the post-pandemic global order. Pre-pandemic, government borrowing was a smaller share of the economy in countries like Germany, France, the United Kingdom and China than in the United States, according to International Monetary Fund (IMF) data, In China, for instance, the government’s budget deficit in 2018 was just 4.8 percent of GDP, compared to 80 percent for the United States. Given their stronger financial reserves, these nations will have more ability to invest in their citizens and in their economies than the U.S., putting them first out of the gate toward recovery.

America’s inevitable reliance on more debt will further mean more reliance on the largesse of other nations, such as China, to extend us credit. As much as Trump eschews America’s dependence on China, the country has been a primary financier of his fiscal policies and is the second-largest holder of U.S. public debt (after Japan). Its role as one of America’s biggest creditors will only grow, potentially creating yet another leverage point to China’s advantage in the post-pandemic world.

Perhaps the most tragic consequence of Trump’s profligacy is the squandering of what could have been. True, no one could have predicted the emergence of COVID-19 and the havoc it would wreak on the world. Still, America could have been much better prepared.

Rather than tax cuts for corporations and the very rich, Trump could have pumped more resources into the nation’s workforce development and adjustment programs. That would have been beneficial no matter what, but it would have cushioned the blow of disruption for the more than 36 million Americans now unemployed since mid-March. He could have restored our infrastructure for public health, so that the nation could in fact have “the best testing in the world,” not just his empty boast to that effect. He could also have continued to pay down the national debt and built a rainy-day reserve for crises precisely like the one we’re facing now.

Instead, Trump and his GOP allies in Congress are currently balking at more relief for the millions of Americans who desperately need it. Worse yet, their excuse for a “pause” are the soaring deficits that they themselves created. And because he hasn’t made the kind of investments that could save American lives, Trump is now willing to sacrifice them to restart the economy, resorting to the callous, long-shot strategy of “herd immunity” with its potential for thousands – perhaps even millions – of avoidable deaths.

As badly bungled as his pandemic response has been, Trump’s pre-pandemic policies and priorities will prove equally destructive. The result: Whenever the pandemic ends, America’s convalescence will be long and slow.


@Steve_American, I really can't get my head around abstract theories about why debts don't matter, since the concrete facts demonstrate that this is obviously not true.

In short, the concrete facts are:

- While inflating the national debt, Trump's fiscal cuts benefited the rich more than the real economy, which would have been helped more by spending on improved living conditions for the average American and on infrastructure.

- This puts the US at a disadvantage as compared to more fiscally prudent nations.

- Even though the enormous stimulus package to counteract the pandemic blew yet another gigantic hole into the budget, it didn't prevent almost 40 million Americans from becoming unemployed within a couple of months. By contrast, unemployment in Germany only increased a little during the same time. Instead of stimulating the economy with helicopter money during the lockdown, the German government spent heavily on preserving jobs and on maintaining cash flow in companies. Having reduced sovereign debt to below 60%, the German government still has the reserves to stimulate the economy after the lockdown to get the economy going with companies that have kept most of their qualified employees.

- While the US won't overcome the recession for years because it has used up its ammunition before and during the pandemic, other economies will recover.

- At the same time, an increasing amount of the US budget will be eaten up by debt service instead of investment in the economy.

Stimulating the economy is like flooring the gas pedal of your car with one foot while slamming down the breaks with your other foot due to the lockdown. :knife:

Even the almighty US will in the end be harmed by the foolish measures of a foolish president.
#15094370
@Steve_American, investors put their money wherever they get the best deal in terms of interest/risk balance. That can be everywhere on the planet.

Investors like Euro-denominated bonds so much that they are prepared to accept negative interest rates for some Euro countries. The pandemic-induced recession will increase the amount of Euro-denominated borrowing. Even the fiscally prudent German finance minister has said that the government is going to go on a spending spree. Euro finance minister have already decided to drop the fiscal pact limiting debt spending for the duration of the pandemic.

If you threaten investors with devaluation and/or seizure of property in the US, I'm confident that a good many of them will find a new home for their money across big pond in the old continent. :p

Anyways, with the shift to renewable energy, the collapse of the petrodollar is just a matter of time. The Empire may never fully recover from the pandemic.
#15094380
Atlantis wrote:@Steve_American, the following article basically states what I have been trying to explain:

[The system here snipped your entire article out.]

@Steve_American, I really can't get my head around abstract theories about why debts don't matter, since the concrete facts demonstrate that this is obviously not true.

In short, the concrete facts are:

- 1] While inflating the national debt, Trump's fiscal cuts benefited the rich more than the real economy, which would have been helped more by spending on improved living conditions for the average American and on infrastructure.

- 2] This puts the US at a disadvantage as compared to more fiscally prudent nations.

- 3] Even though the enormous stimulus package to counteract the pandemic blew yet another gigantic hole into the budget, it didn't prevent almost 40 million Americans from becoming unemployed within a couple of months. By contrast, unemployment in Germany only increased a little during the same time. Instead of stimulating the economy with helicopter money during the lockdown, the German government spent heavily on preserving jobs and on maintaining cash flow in companies. Having reduced sovereign debt to below 60%, the German government still has the reserves to stimulate the economy after the lockdown to get the economy going with companies that have kept most of their qualified employees.

- 4] While the US won't overcome the recession for years because it has used up its ammunition before and during the pandemic, other economies will recover.

- 5] At the same time, an increasing amount of the US budget will be eaten up by debt service instead of investment in the economy.

Stimulating the economy is like flooring the gas pedal of your car with one foot while slamming down the breaks with your other foot due to the lockdown. :knife:

Even the almighty US will in the end be harmed by the foolish measures of a foolish president.

OK, Atlantis, A few quick points ---
1] You forgot to state the source of the article you quoted at length.
2] I totally agree with one point of the article. That Trump's tax cuts and other policies are just typical GOP policies, and as such are totally the wrong policies. It gave, yes gave, the rich and super rich money they didn't need and would not use to help the mass of Americans.
3] You don't seem to grok the Germany can have a trade surplus BECAUSE America has a huge Gov. deficit and trade deficit. By definition not every nation can have a trade surplus at the same time.
4] Your article said, "... countries like Germany, France, the United Kingdom and China than in the United States, according to International Monetary Fund (IMF) data, In China, for instance, the government’s budget deficit in 2018 was just 4.8 percent of GDP, compared to 80 percent for the United States. ..."
You also don't grok the fact that Germany and France don't have fiat currencies, they use the euro. Also, the UK has recently left the EU and had not yet followed the US's example of profligate Gov. borrowing. And who trusts the financial figures put out by China? I don't.
. . . The 2nd sentence I quoted says the the US Gov. deficit is 89% of the US's GDP.
Some facts are
Economy of the United States
Statistics
GDP $21.428 trillion (2019) Source google.
and
The annual budget deficit [was] $984 billion (4.7% GDP) in 2019.
. . . OK, $21.4 T x 80% == $17.1 trillion. This is just not the actual US Gov. deficit in 2019. The US deficit in 2019 was $984 billion (4.7% GDP) in 2019.

This undermines my faith in all the other 'facts' given by that article.

Moving on to what you wrote yourself.

You wrote, "I really can't get my head around abstract theories about why debts don't matter, since the concrete facts demonstrate that this is obviously not true."
. . . So, to provide evidence for that statement you need to provide some 'concrete facts' that show this is obviously *not* true. You then provide 5 bullet points which I have numbered. So, ---
1] Speaks only about how Trump's tax cuts were a total waste, it did not show that the debt created does matter.
2] This point is just an opinion and is not a fact.
3] I don't see that this point shows the the US debt does matter.
4] This is a prediction about the future and no prediction is a 'fact'.
5] This point misses the MMT point that interest payments on the Gov. debt are all made with borrowed dollars and that these dollars were 1st given to the economy with deficit spending before the linked bonds were sold. Bonds sales don't crowdout other investments because the deficit-spent-dollars are put into the banking system before the bonds are sold. So, I think your #5 fact is false.

You promised 5 facts. I see 1 prediction which by definition is not a fact and 4 other non-facts.
#15094386
Atlantis wrote:@Steve_American, investors put their money wherever they get the best deal in terms of interest/risk balance. That can be everywhere on the planet.

Investors like Euro-denominated bonds so much that they are prepared to accept negative interest rates for some Euro countries. The pandemic-induced recession will increase the amount of Euro-denominated borrowing. Even the fiscally prudent German finance minister has said that the government is going to go on a spending spree. Euro finance minister have already decided to drop the fiscal pact limiting debt spending for the duration of the pandemic.

If you threaten investors with devaluation and/or seizure of property in the US, I'm confident that a good many of them will find a new home for their money across big pond in the old continent. :p

Anyways, with the shift to renewable energy, the collapse of the petrodollar is just a matter of time. The Empire may never fully recover from the pandemic.

Sir, how can investors move their dollar assets "across big pond in the old continent."? Those assets are in dollars or are land in the US or corp. stock. They would have to sell them. If nobody wants to buy them [which is a part of your assumption that the world doesn't want dollars any more] then who is going to buy them? At least who is going to pay full price for them? Selling them at a large discount is like burning them, right?

I totally agree that the US would have to do a good job of proving the bad faith of China to freeze and confiscate its US Gov. bonds. If it didn't provide strong proof that this is a one time extreme case of massive wrong doing by China the many investors would flee US bonds. And this would be a bad thing for America.

I'm still seeing reports that in the current covid crisis investors wanted US bonds more than EU nation bonds.

And I don't think you realize the magnitude of the problem investors would have if they all fled the dollar. The rest of the world holds about 40% of US bonds. The total US debt is about $24 T, so $24 T X .4 == $9.6 T. That is a lot of value to flee. Are they going to just burn their bonds? If not, who is going to buy them? You do know that the Fed. Res. Bk would only give them dollars for them, right?
#15094569
@Steve_American, you have an all or nothing mindset. That's not how it works. Life happens in between.

At this point there is nobody who would not welcome an alternative to the dollar because the US is dysfunctional.

You robbed investors with the Lehman scam and plunged the world into a global recession. Instead of putting in place the safeguards to prevent a repeat, Trump has removed restrictions on banks and inflated the debt to lay the groundwork for the next crash.

The independence of the central bank is the guarantor for sound monetary policy to prevent politicians from using the printing presses for their own political agenda. By pressuring the FED to keep interest rates down so as to stimulate the economy ahead of the election, Trump has reduced the US to the level of a banana republic with a tinpot dictator.

The EU could puncture the dollar economy any time it wanted to, but nobody wants the economic turmoil that would entail. Therefore, the phasing out of the dollar will happen in a gradual and controlled manner so as to minimize damages. In Europe we don't play Russian roulette with the economy.
#15094570
Atlantis wrote:At this point there is nobody who would not welcome an alternative to the dollar because the US is dysfunctional.


I would not welcome it, and the US is not as dysfunctional as some of its enemies.
Last edited by Patrickov on 27 May 2020 10:52, edited 1 time in total.
#15094577
Atlantis wrote:@Steve_American, you have an all or nothing mindset. That's not how it works. Life happens in between.

At this point there is nobody who would not welcome an alternative to the dollar because the US is dysfunctional.

You robbed investors with the Lehman scam and plunged the world into a global recession. Instead of putting in place the safeguards to prevent a repeat, Trump has removed restrictions on banks and inflated the debt to lay the groundwork for the next crash.

The independence of the central bank is the guarantor for sound monetary policy to prevent politicians from using the printing presses for their own political agenda. By pressuring the FED to keep interest rates down so as to stimulate the economy ahead of the election, Trump has reduced the US to the level of a banana republic with a tinpot dictator.

The EU could puncture the dollar economy any time it wanted to, but nobody wants the economic turmoil that would entail. Therefore, the phasing out of the dollar will happen in a gradual and controlled manner so as to minimize damages. In Europe we don't play Russian roulette with the economy.

So, Atlantis, you live in the EU.
No wonder you are a Neo-liberal apologist.
. . I save a youtube conversation with Mark Blyth and Adam Tooze where they agreed the the Fed. Res. Bk was acting in the covid crisis as the central bank of the "whole world". This is necessary because the ECB is limited by the treaties that are the constitution of the EU. The CB is trying to do what it must do, but nations like Germany that usually get its way in the EU are trying to stop/block the ECB.
. . Yes, you are right the US is disfunctional. However, the GFC/2008 didn't hurt the rich and super rich of the world that much. IMO, they saw it as an opportunity to buy up some stuff on the cheap. That is, they came out just fine. Yes, the GFC triggered the austerity in the EU and this was horrible for most Europeans. However, it was bound to happen sometime soon anyway. And MMTers predicted in 1998 that the EU could *not*, under its rules, recover from any recession. And, who says that the super rich in the EU don't like it just the way it is now? Do you converse with any super rich people?

So, we will see as time goes on if the US gets its shit together like it did with Pres. Teddy Roosevelt. Or if it all goes to hell. Frankly, right now I'd bed that ACC aka AGW will reduce the world's total population by 90% by 2070. And maybe by 100.00% by 2120. I say this because of people like you (IIRC, and my apologies if IIRC wrong) who oppose doing anything until it is much too late.
#15094923
Atlantis wrote:After all that's been said it should be blindingly clear that the Japanese deficit doesn't prove anything, except that Japan is different. It most certainly doesn't prove that a GDP/debt ratio of 200% is sustainable for any other country. Argentina's debt burden resulted in a default before it even reached 100%.

Argentina owed US$, not its own pesos.
#15094956
Truth To Power wrote:Argentina owed US$, not its own pesos.


Borrowing in your own currency rather than in a foreign currency can make a difference if you want to devalue your currency to make the debt go away. Investors usually make you pay for it by asking higher interest rates to compensate for the currency risk.
#15095016
Atlantis wrote:
Borrowing in your own currency rather than in a foreign currency can make a difference if you want to devalue your currency to make the debt go away. Investors usually make you pay for it by asking higher interest rates to compensate for the currency risk.

You know, when friends are talking, it is considered polite to 1st agree that your friend made a good point and that you were just wrong, and then make your rationalization.
. . . It seems on the internet that nobody who disagrees with you on the point that you 2 are then talking about is your friend.

I had said repeatedly that nations that owe money in a foreign currency do NOT have a full fiat currency, and that I was talking only about nations that do have a full fiat currency. Your comment about Argentina just ignored one of my main points.
. . . But then, you live in the EU and maybe the EZ, so in order to avoid being sick to your stomach you need to be in denial about the power that a full fiat currency would give to the nation you live in.

A true Christian businessman would be open to the argument and evidence for the idea that raising the minimum wage actually increases many businesses profits and does not impact youth employment because it causes there to be more income in the city and this increases economic activity, which creates more jobs. More national deficit spending does the same things and less national deficit spending (i.e. austerity) does the opposite things.
Mainstream economists teach their students that *all* economic actors are what Christ would call selfish bastards, if He used such harsh words. I suspect that you think everyone must be a selfish bastard, without realizing that thinking that, almost certainly effects your actions.

MMTers have a large body of peer reviewed papers and articles about how small "undeveloped" nations can still use their full fiat currency, if they have one. I have not read any of it though.
. . . IMHO, the world would be a much better place if economic actors didn't act like selfish bastards and some authority somehow used a fiat currency to pay off the banks to eliminate *all* foreign debt owed by "undeveloped" nations.
_________________________________________________________-____________

Atlantis, Germany and a few others refuse to allow that which has been happening in the US for many, many decades. Namely that states like NY and Calif. pay much more in taxes to the Fed. Gov. than there is US Gov. spending in their states AND states like Mississippi and Alabama see much more money spent by the US Gov. in them than the taxes they send the the US Gov.. This is because of the way the US Senate is elected. And, it has kept those states from becoming dirt poor backwater states for over 100 years (they are just poor not dirt poor).
#15095030
Who cares about youth unemployment anyway. They should be in school or doing chores at home. If they have joined the job market they are workers and their age does not matter at all.

Youth unemployment is fake news.

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