[late]

Did it ever occur to you that getting into debt was not a good idea in the first place?

Did it ever occur to you that you don't understand this??

During the Washington presidency, A Hamilton created a debt to bind the country together, and as preliminary to developing the economy.

Capitalism is a word that describes sophisticated financial instruments for managing... you're gonna love this.. drum roll, please.... DEBT.

That started centuries ago, it's still a cornerstone of how life in capitalism works.

[Puffer Fish]

Did it ever occur to you that you don't understand this??

During the Washington presidency, A Hamilton created a debt to bind the country together, and as preliminary to developing the economy.

Capitalism is a word that describes sophisticated financial instruments for managing... you're gonna love this.. drum roll, please.... DEBT.

That started centuries ago, it's still a cornerstone of how life in capitalism works.

Your argument is a poor one. It still doesn't mean it's a good idea for government to get into debt.

[Steve_American]

Your argument is a poor one. It still doesn't mean it's a good idea for government to get into debt.

I learned somewhere recently that, in England learned around 1694 that the rich would prefer to lend the Gov. money than to have it taxed away. Since the rich controlled the Gov. then. and mostly always, England started its continuous national debt.
I never said that it is a good idea. [I have said that now that we have fiat currencies, if bonds are not to be sold, then the Gov. just spends electronic cash to buy what it needs and make payments like Soc. Sec. with "deficit spending". PF would call this "printing money".]
However, we are where we are.
Since 1694 (for 329 years) England has had a national debt at the end of every fiscal year. It became the UK along the way. The graphs you see are of Debt/GDP to hide the massively increased amount of debt, and make it look like it was sometimes going down as the population increased and the economy grew.
Efforts were made from time to time to pay it down, but every time this was tried, they either stopped or it caused a recession or depression. After the Seven Years War, they tried this. The result was their American Colonies rebelled and became the USA. Hence the title of this thread. This is, AFAIK, my unique idea. I doubt you will find it in any book.

Anyway, now all nations are deep in debt. It is a little late to tut tut them for this.

The US has limited choices.
1] Write off the debt. Stupid beyond words.
2] Keep kicking the can down the road. Meaning continue to sell bonds to pay off the old ones as they come due and the interest each year. It would be very good if the Fed found a better way to control inflation, so interest rates on the bonds can be kept very low. Since we have been doing this for 183 years now, it is likely not going to be a problem before ACC aka GW changes everything.
3] Stop selling bonds. And pay the interest with newly created electronic dollars put into bank accounts, and do the same to pay off the old bonds as they come due. Do the same thing by selling bonds as before, and having the Fed buy them all right after they are sold. Eventually all bonds owned by the Fed are written off. This is very likely to cause some sort of problems in the economy.
4] Combine 2] and 3] to more slowly reduce the debt held by the public.

PF, can you add a 5th possibility?
Which one of the 4 (or maybe 5) choices is the best?
.

[late]

I never said that it is a good idea.

It's the way the world works.

You do realise the irony of a guy that claims to be a MMT saying debt isn't a good idea?

Debt is an instrument, a tool. You have to build the future you want to live in, or what's a mortgage...

It has been oft abused, but that's a different story.

[Steve_American]

It's the way the world works.

You do realise the irony of a guy that claims to be a MMT saying debt isn't a good idea?

Debt is an instrument, a tool. You have to build the future you want to live in, or what's a mortgage...

It has been oft abused, but that's a different story.

I think you missed the context. The statement I responded to was about Govs. not going into debt. I never said that Goc. should go into debt. This is because MMT says that bond sales are unnecessary in MMT. The Gov. can just spend more than it collects in taxes and leave some dollars in the economy, so the top 20$ can save them or they can be used to import stuff so the seller can save them. If the seller buys stuff with te dollars it isn't a trade deficit, the trade is "in/out equal". Savings are not spent and just sit in the bank doing nothing. This reduces the money supply and reduces the GDP; GDP= total of all incomes, by definition.

I agree that I can be confusing. MMT is rather extreme. So, more often than not, I'm meeting the public half way between what MMT says and what the people think.

So, here frankly, it doesn't matter at all whether or not all Gov. should have borrowed. They did borrow under the gold standard and entered the fiat era with an existing debt that then was thought to be large. The US's was between several $100B and many $100B, for example. When Reagan took office, it was very close to $1T.

So, now, the US still has laws on the books that require it to sell bonds to "finance" deficit spending, but not before to spends. It sells the bonds up to a week after it spends. I bet you didn't know that.
So, I often talk, taking those laws into account. MMT says they are obsolete.

[Puffer Fish]

The US has limited choices.
...
PF, can you add a 5th possibility?

I would start with not getting into more debt. Stop running budget deficits.

Maybe at least start paying off the debt incurred over the course of the coronavirus pandemic.

Increase taxes by 4% and cut government spending by 6%. Even doing that would take some serious political will and bravery, and would be seen as very painful to do.

The situation is only going to get worse with rising interest rates.

(Many stupid people confuse what is bad in the short-term with what is healthy over the long term. Dealing with the problem now is going to be painful, but it's better than pursuing policies that will only lead to bigger problems later. What I mean is the government needs to prepare for higher interest rates, and deal with spending and the debt accordingly, rather than viewing trying to lower interest rates as the solution. More inflation is just going to put lots more pressure on interest rates to rise)

[Steve_American]

I would start with not getting into more debt. Stop running budget deficits.

Maybe at least start paying off the debt incurred over the course of the coronavirus pandemic.

Increase taxes by 4% and cut government spending by 6%. Even doing that would take some serious political will and bravery, and would be seen as very painful to do.

The situation is only going to get worse with rising interest rates.

(Many stupid people confuse what is bad in the short-term with what is healthy over the long term. Dealing with the problem now is going to be painful, but it's better than pursuing policies that will only lead to bigger problems later. What I mean is the government needs to prepare for higher interest rates, and deal with spending and the debt accordingly, rather than viewing trying to lower interest rates as the solution. More inflation is just going to put lots more pressure on interest rates to rise)

Running a surplus to pay down any of the $32T debt is pointless. A drop in the ocean.

Meanwhile, the Gov. needs to deficit spend to fight ACC, aka GW now before it's too late.

Besides, the Repuds will never let anyone raise taxes on the top 20% of earners. So, that is a non-starter. And the Dems will not allow cuts that hurt the bottom 40%.

Lurkers, PF is making assertions again, that I have already shown him are wrong or unnecessary. He is proposing the equivalent of calling for a tax increase and spending cuts on Dec. 8, 1941, after the Japanese bombed Pearl Harbor. ACC is as big a threat as the Japan and Germany.

[A note to the lurkers. I call all Repubs after 1998, Repuds, because they call the Democratic Party the DemoRat Party. They've insulted me for 25 years and I've been insulting them for just 12 years.]