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#14917519
Crantag wrote:The fashionable view on this forum is that it is a perfectly healthy and normal arrangement that the US has devolved into a society based on monopoly money.

Steve American, you are flat wrong. Taxes are used to service the national debt.

A picture speaks a thousand words.
Image


http://money.cnn.com/2016/04/18/pf/taxe ... index.html


That is neither here nor there.
Even if you are right, after it paid the interest with the taxes as you claim, it turned around and borrowed the money back to put it back where it could be spent on something else.
The deficit is more than the interest on the debt.

Even for a household, if it will *always* be able to borrow it back after it pays its interest bill with its wages; it means it isn't really paying it with wages. Note the 'always'.

You might as well claim that the bonds that come due on any given day are paid off with tax revenue and then new bonds are sold to pay for all the other stuff the Gov. spends on. But, then abortions could not be paid with tax money they would have be paid for with newly borrowed money.

To me it makes more sense to say the bonds are just rolled over and/or reborrowed.
#14917536
I'll again recite Paul Sweezy's stance on the defecit, writing in the 1980s. He said the main risk was that it could become so overblown that debt service payments would divert spending from more necessary alternatives.

When he wrote that he wasn't alarmed by the contemporary circumstances, but his words now appear prophetic.

The shifting mainstream arguments in the way of acquiescence to ever more overblown debt is merely a result of the function of economics as apologetics for the prevailing status quot and nothing else. It is based on an acceptance of shifting norms and not principled analysis. It is also in the service of Haut Finance, which is okay with easy liquidity, the better to gamble with.
#14917553
Crantag wrote:I'll again recite Paul Sweezy's stance on the defecit, writing in the 1980s. He said the main risk was that it could become so overblown that debt service payments would divert spending from more necessary alternatives.

When he wrote that he wasn't alarmed by the contemporary circumstances, but his words now appear prophetic.

The shifting mainstream arguments in the way of acquiescence to ever more overblown debt is merely a result of the function of economics as apologetics for the prevailing status quot and nothing else. It is based on an acceptance of shifting norms and not principled analysis. It is also in the service of Haut Finance, which is okay with easy liquidity, the better to gamble with.

Sweezy was writing before MMT had been developed. [Who is he anyway?]
MMT does start from 1st principals and goes from there.
If you were talking about "mainstream" economists' arguments then surely you know that I don't believe anything they say any more.
Sweezy was still using gold standard thinking and so he was most likely totally wrong.

But even then, I have a thread here where I argue that borrowing during wartime and then taxing the people to pay off the loans is not a good idea even on the gold standard. It worked for the UK back in 1800 or so because they had a huge *positive* balance of payments. So, the people were not paying down the loans. Instead it was the Pounds of profit that came from world trade that there being taxed away to pay off the loans. Any nation with a *negative* balance of payments must not run a surplus because this will always soon result in a recession or a Great Depression.

Also. Surely you know that according to MMT it is not possible for the US Gov. to pay any bill [incl. interest on the debt] with tax revenues, because all those dollars are destroyed as soon as they are returned to their issuer, the US Government. MMT asserts that all Gov. spending is done with newly issued dollars. I say that this is not a necessary part of the theory and so should be put off until the very last thing. Bringing it up early just confuses people.
#14917566
The US can always pay off its debts just by printing more money. The only potential problem with that is the risk of inflation, which can be offset by raising taxes to remove money from circulation. Even government spending is not funded through taxation; as the sole currency issuer, they can just print more money to pay for stuff. Taxes are used merely to keep inflation under control.
#14917585
Steve_American wrote:Sweezy was writing before MMT had been developed. [Who is he anyway?]
MMT does start from 1st principals and goes from there.
If you were talking about "mainstream" economists' arguments then surely you know that I don't believe anything they say any more.
Sweezy was still using gold standard thinking and so he was most likely totally wrong.

That wasn't any rebuttal at all.

I don't give a fuck about MMT.

And Sweezy was not using gold standard thinking.

Sweezy was the founding editor of Monthly Review. He is the founder of American Marxism.

His magnum opus is Monopoly Capital, coauthored with Paul Baron.

Sweezy was perhaps the first to identify and systematically analyze the explosive growth of finance, with his writings on it most concentrated in the 1980s, though going back to the 1970s.

But that's okay. You are, afterall, just a layman.
#14917843
Crantag wrote:That wasn't any rebuttal at all.

I don't give a fuck about MMT.

And Sweezy was not using gold standard thinking.

Sweezy was the founding editor of Monthly Review. He is the founder of American Marxism.

His magnum opus is Monopoly Capital, coauthored with Paul Baron.

Sweezy was perhaps the first to identify and systematically analyze the explosive growth of finance, with his writings on it most concentrated in the 1980s, though going back to the 1970s.

But that's okay. You are, afterall, just a layman.

Well Lurkers, there you have it in a nut shell. Crantag doesn't give a shit about MMT and I don't give a shit about the standard economic schools of thought.

Crantag just asserted that Sweezy was not using 'gold standard thinking'. How does he know that? Is he claiming that Marxists would never use gold standard thinking? To me that is just making an assumption that doesn't match the facts. Or. did Sweezy write that he had abandoned the gold standard in this thinking?

Crantag and I will never agree until one of us changes a lot.
I hope you [the lurkers] can learn something from our discussions, though.
#14917844
Steve_American wrote:Well Lurkers, there you have it in a nut shell. Crantag doesn't give a shit about MMT and I don't give a shit about the standard economic schools of thought.

Crantag just asserted that Sweezy was not using 'gold standard thinking'. How does he know that? Is he claiming that Marxists would never use gold standard thinking? To me that is just making an assumption that doesn't match the facts. Or. did Sweezy write that he had abandoned the gold standard in this thinking?

Crantag and I will never agree until one of us changes a lot.
I hope you [the lurkers] can learn something from our discussions, though.

Why should I give a fuck about MMT?

You just tiresomely mention it over and over and over and over. But you do not have a valid approach. It is not a valid approach to focus on a single narrow school of thought while excluding any others.

On Sweezy, it was already in my last post. Sweezy was one of the most perceptive analysts of the prevailing system of American capitalism. As I said, he was one of the earliest (or possibly the earliest) to identify and systematically analyze the momentous shift in the way of the preeminence of finance within the economic system. His book, "Stagnation and the Financial Explosion" is a bit of a classic in this respect. His analysis is based on prevailing norms of a dynamic economic system, and his finger was always on the pulse.

MMT is not some great revolutionary force in economics that has uncovered some great truths. From what I have seen, it is just a bunch of pompous individuals who are intent on perpetuating myths. They seem Fukuyama-esque (The End of History). These sorts of people are always wrong.
#14917851
Potemkin wrote:The US can always pay off its debts just by printing more money.

Steve_American wrote the same thing. But printing money to finance yearly deficits went out of style in the 70s because of the Basel Committee on Bankster rules.

Before 1974 and the Basel Committee's activities, Canada used to pay off its yearly deficits by printing money, which caused inflation, which punished the rich.

Starting in 1975, Pierre Elliot Trudeau starts borrowing from private banks with interest for all of Canada. The national debt has spiked upwards every since. And why wouldn't they. Banksters have a lot of power and they have every interest in getting people as in debt as possible so that they can live off the interest.

The only potential problem with that is the risk of inflation, which can be offset by raising taxes to remove money from circulation. Even government spending is not funded through taxation; as the sole currency issuer, they can just print more money to pay for stuff. Taxes are used merely to keep inflation under control.

The latest trend is to cut taxes to the rich and put everyone in deeper debt to private banks (with all their lobbyists). This won't change without a revolution and about 20 more wars.

Banksters call the shots, and they have decided that everyone needed to be deep in debt to them.
#14917872
QatzelOk wrote:Steve_American wrote the same thing. But printing money to finance yearly deficits went out of style in the 70s because of the Basel Committee on Bankster rules.

Before 1974 and the Basel Committee's activities, Canada used to pay off its yearly deficits by printing money, which caused inflation, which punished the rich.

Starting in 1975, Pierre Elliot Trudeau starts borrowing from private banks with interest for all of Canada. The national debt has spiked upwards every since. And why wouldn't they. Banksters have a lot of power and they have every interest in getting people as in debt as possible so that they can live off the interest.


The latest trend is to cut taxes to the rich and put everyone in deeper debt to private banks (with all their lobbyists). This won't change without a revolution and about 20 more wars.

Banksters call the shots, and they have decided that everyone needed to be deep in debt to them.

Qatz, there is not enough dollars in the whole world for ordinary Americans to pay back the debt you think they owe.
The only way is or Americans to elect Reps. in Congress who are willing to just pay off all the bonds with newly created [from thin air] fiat dollars. But, this would surely be worse than the current situation.

So, I assert that your analysis is wrong.
#14917874
On the most basic level and not considering the complex monetary circumstances, some amount of debt allows for greater production. This is basically a function of the enabling of greater economies of scale. This is a basic tenet.

It's not an 'either or' preposition.

The debt situation now amounts to a self-perpetuating cancer, however.
#14917884
I quote Crantag's reply and my reply to him again to point out that [see below for the rest]

Crantag wrote:The fashionable view on this forum is that it is a perfectly healthy and normal arrangement that the US has devolved into a society based on monopoly money.

Steve American, you are flat wrong. Taxes are used to service the national debt.

A picture speaks a thousand words.
Image


http://money.cnn.com/2016/04/18/pf/taxe ... index.html

Steve_American wrote:Crantag said I am "flat wrong."

That is neither here nor there.
Even if you are right, after it paid the interest with the taxes as you claim, it turned around and borrowed the money back to put it back where it could be spent on something else.
The deficit is more than the interest on the debt.

Even for a household, if it will *always* be able to borrow it back after it pays its interest bill with its wages; it means it isn't really paying it with wages. Note the 'always'.

You might as well claim that the bonds that come due on any given day are paid off with tax revenue and then new bonds are sold to pay for all the other stuff the Gov. spends on. But, then abortions could not be paid with tax money they would have be paid for with newly borrowed money.

To me it makes more sense to say the bonds are just rolled over and/or reborrowed.


His reply did not respond to my reply why his claim that I am flat wrong is NOT wrong.

Money is fungible. That means it can be placed in any place on your spreadsheet that isn't a violation of the rules.

So, the US Gov. can pay any bill from one of 2 sorts of dollars [3 if you add newly created or "printed" dollars]. #1 They can pay with borrowed dollars or #2 they can pay with tax revenue dollars. {For completeness I could add paying from some of both (the % of each being the % of the total that it is.) }

It seems to me that paying the interest with borrowed dollars makes more sense than tax dollars because it is painless that way. Nobody's taxes are being raised year after year as the amount of interest being paid grows year after year. It looks more like the amount being borrowed year after year is increased as the amount of interest being paid grows year after year.

But, like I said, Crantag just ignored my argument and replied to some other point.
#14917897
You said to someone else they were flat wrong. I threw it back at you and included a source. You seem to have been offended by having your alternative facts refuted.

Your last post is not entirely logical. But I'm not beholden to you. I'm not interested in combing through every bit. I will say your fallacies have already been addressed by others. If you are genuinely interested (which I doubt), go reread the last couple pages.
#14917916
Crantag wrote:You said to someone else they were flat wrong. I threw it back at you and included a source. You seem to have been offended by having your alternative facts refuted.

Your last post is not entirely logical. But I'm not beholden to you. I'm not interested in combing through every bit. I will say your fallacies have already been addressed by others. If you are genuinely interested (which I doubt), go reread the last couple pages.

I am not offended by your claim that "I'm flat wrong."

One source does not necessarily prove anything. In this case it shows that there are 2 ways of looking at this, but it doesn't prove which is the better way. Who says that source is not biased? I'll leave it to the lurkers to decide for themselves.
#14917920
Steve_American wrote:I am not offended by your claim that "I'm flat wrong."

One source does not necessarily prove anything. In this case it shows that there are 2 ways of looking at this, but it doesn't prove which is the better way. Who says that source is not biased? I'll leave it to the lurkers to decide for themselves.

There are many sources. CNN Money is fairly legitimate and the information was concise. If you search on Google, one of the first results will be the Congressional Budget Office.

Why not stop the trafficking in alternative facts.

Seemingly to me at least, the function of paying out of taxes is to introduce constraint. With no constraints hyperinflation could well be the result.

None of this is amendable to the narrative you are pushing. Thus, it mustn't be acknowledged. In my view what you have is an invalid framework.
#14917977
Crantag wrote:There are many sources. CNN Money is fairly legitimate and the information was concise. If you search on Google, one of the first results will be the Congressional Budget Office.

Why not stop the trafficking in alternative facts.

Seemingly to me at least, the function of paying out of taxes is to introduce constraint. With no constraints hyperinflation could well be the result.

None of this is amendable to the narrative you are pushing. Thus, it mustn't be acknowledged. In my view what you have is an invalid framework.

OK, I am man enough to admit I was wrong.

I will now stipulate that almost all mainstream economists will assert that the interest on the national debt is being paid out of tax revenues.
However, I still assert that bills can be paid out of either income or money borrowed. Assuming there is borrowing going on anyway.
I also assert that the US is just like a family that is allowed by the Secret Service to print $100 dollar bills with their color copier on the special paper provided to them by the Treasury Dept. This is not your ordinary family, though.

For example (forgetting that last point above), take an ordinary family that has a very good income but wants to splurge on a vacation for their 25th anniversary. They borrow against their house with a 2nd mortgage. They put the money into a special account and use it to pay all their bills for a month or 2. While doing that they put their income checks into their normal account, which grows since there is no outflow. When they go on the vacation, they only use their normal account making payments with a debit card.
. . Now, did they *really* use the borrowed money for their vacation?
. . Does it make a difference if they were going to get the 2nd mortgage anyway to buy a vacation house in mountains?

The US is in fact not like an ordinary family. It can and does (for the last many decades almost always spend more than its income), selling bonds and T-bills to borrow. So, it is always borrowing. Yet, in the case above the difference doesn't matter.

- - - - - -
You suggest that 'constraint' is necessary. I agree, it is necessary. However, it sounds to me like you are agreeing that economists have a choice here. They can say that the interest on the debt is being paid from tax revenues or they can equally say the the interest is being paid with newly borrowed dollars. So, given the choice they choose to say it is being paid with tax revenues, because this puts more of a brake on spending. That the people will be fooled into not demanding more spending because they worry about how they can pay the interest.

- - -- - -

You suggest I stop trafficking in alternative facts. MMT is an actual Macroeconomic theory, with peer reviewed articles published. It is being presented by actual economics professors. I agree it is not the standard economic theory.
. . However, as I have said, Macroeconomics is not a science and has never presented a proof of its conclusions that is valid. Their proofs are all not valid because they all have several false premises. {As you and all the lurkers know, it is easily possible to prove anything if you are allowed to use false premises to do it.} This statement goes for MMT also. Crantag, you may or may not have studied the proofs provided by MMTers. To me their assumptions are *more true* than the ones being used by mainstream economists.
Let me list a few of MMT's assumptions:
1] Dollars are issued only by the US Gov. [Maybe by the Fed. Res. B]
2] The Fed. Res. Bank was created by a law of Congress and that law can be changed at any time by Congress and the Pres.
3] Currently, when the US Treasury Dept. announces an intention to sell $X in bonds, the Fed. Res. immediately credits its account with $X. It does *not* wait until the bonds are sold.
4] Dollars are a fiat currency. The Gov. promises to give you $1 for every $1 you give them. The Gov. also accepts only dollars when you pay your taxes. And, the Gov. promises to always erase $1 of your tax obligation for every $1 you pay it.
5] The US economy can be divided into 3 Sectors that include all the economy. That these 3 sectors must total to equal the total US economy. That these 3 Sectors are: 1) the Public Sector (Fed. +State +local), 2) the Private Sector (all persons and companies), and 3) the foreign trade sector. That if the foreign trade Sector is always negative, that when the Gov. Sector is in surplus the Private Sector must have a larger deficit. Larger because it must be the total of the surplus and the foreign trade Sector's net total.
6) Etc. etc. etc.

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