Why the national debt of the USA grew. - Page 2 - Politics Forum.org | PoFo

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#15017471
Hindsite wrote:In case you did not know it, the USA was the first nuclear power. That is part of what Trump means by his "Make America Great Again" slogan.


I know it. But it was in 1945. Now is 2019... and this does not change the fact that in the field of nuclear weapons we remain far from other countries.
#15017693
Tintin Storm wrote:Well, in short, debt is debt because it must be returned.. So I`m just curious what other arguments do you need? Your mom did not tell you that if you borrow money, then you need to return the debt? And I am tired of reading the "poem" you wrote

I didn't learn macroeconomics from my mom.

In any event, the US pays the interest on its debt from wholly new dollars created by fiat -- they aren't "returning" anything to holders of treasuries. This is the same way that the US government spends money via appropriations -- it doesn't take tax dollars from you that it in turn spends. It just spends them into existence.

Until the distinction between a currency issuer and a currency user is understood, confusion will remain.
#15017705
eg1 wrote:I didn't learn macroeconomics from my mom.

In any event, the US pays the interest on its debt from wholly new dollars created by fiat -- they aren't "returning" anything to holders of treasuries. This is the same way that the US government spends money via appropriations -- it doesn't take tax dollars from you that it in turn spends. It just spends them into existence.

Until the distinction between a currency issuer and a currency user is understood, confusion will remain.


I concur with your description, what the U.S.A is doing is virtually the same as the Bank of England, it raises debt electronically, then it artificially(read-Dishonestly)sets interest rates for savers at levels far below the market level demanded by market forces for that money, in order that the cost to the U.S.A Treasury or the B of E are effectively borrowing that money at zero or negative rates.

To compound the felony, any nominal returns to savers are nullified by fiscal policy.

My advice to people who have liquidity is, do not leave it in any bank.

Go buy gold bullion, then hide it, in years or decades to come, take it out & reap the rewards of it.

The inflation that the electronically raised money is creating is to be taken into account, alongside interest rates & fiscal policy's on savings returns.

The thing about gold is, it's value cannot be debased by government's or central banks, money goes out of fashion, gold never will, unlike material assets that require additional assets to maintain them & for which market demand can wax or wain at will.

Western government's are themselves debasing their currencies because they are worse than consumers in their insatiable appetite for spending, then debasing our money & converting it into Fiat money.

In the U.K, when Labour were kicked out of office in 2010, the national debt was a mere £500 BILLION, since then under a Tory government, elected to cut government spending, the national debt currently(March 2019) stands at £1.8 TRILLION, nearly four times than when it was elected to government, while the U.S.A debt pile stands at some $22 TRILLION.

Debt is debt, it is the legacy that we are bestowing on to our future generations of children & sooner or later our economies will have to repay that debt without the option of engaging in an external war.

In the U.K, the interest on that debt is abt £2 BILLION a week, which is owed to foreign investors or pension funds, each year the U'K budget forgoes £40 BILLION in taxes which are given as Additional Pensions Contribution Relief that benefits the Rich & better-off.

That money should be collected directly at source from those incomes of those above, partly used to increase the pensions of those born before 1953, as they receive a £40 per week less Basic State Pension than those born after that date, the balance should then be used to reduce the national debt or it's cost.
#15017724
Japan's government debt to GDP ratio sits at 236%, more than triple that of the U.S., which stands at 78%. In comparison, the UK's debt to GDP ratio is 87.4% and the American economy is much healthier than other advanced economies for now. However, U.S. federal debt is on track to balloon to a staggering 144% of GDP over the next 30 years. Social Security and health care programs may need to be cut back considerably, which was the case with Britain, or the retirement age should be raised. Last year, Putin signed into law an unpopular bill raising the retirement age by five years, resulting in nationwide protests.



U.S. federal debt is on track to balloon to a staggering 144% of GDP, according to a recent report by the Congressional Budget Office (CBO).

“Large budget deficits over the next 30 years are projected to drive federal debt held by the public to unprecedented levels… from 78 percent of gross domestic product (GDP) in 2019 to 144 percent by 2049,” the report stated.

Testifying to the House Financial Services Committee on Wednesday, Federal Reserve Chair Jerome Powell highlighted the national debt.

Based on the CBO’s projections — which factored in productivity growth and interest rates on federal debt — if current laws “generally remained unchanged,” they expect debt to reach 92% of GDP by the end of the next decade and 144% by 2049.
#15018326
blackjack21 wrote:It's more likely that they will drop rates to zero, borrow a ton of money and retire all previous debt yielding higher coupons--forcing investors back into the market for risk-based returns.


The FED sets the (short-term) interest rate according to its monetary policy objectives, which include price stability and employment. Funding the government isn't part of it. The two can coincide if the government isn't stupid though.

eg1 wrote:In any event, the US pays the interest on its debt from wholly new dollars created by fiat -- they aren't "returning" anything to holders of treasuries. This is the same way that the US government spends money via appropriations -- it doesn't take tax dollars from you that it in turn spends. It just spends them into existence.


That is nonsense. The seigniorage is small, almost everything is paid with tax dollars.

Nonsense wrote:My advice to people who have liquidity is, do not leave it in any bank.


Which is the whole point of low interest rate, to make you invest or consume instead of holding cash.
#15018336
Rugoz wrote:The FED sets the (short-term) interest rate according to its monetary policy objectives, which include price stability and employment. Funding the government isn't part of it.

The Fed buys government debt. In effect, they lend money into circulation. They can do that with both short-term and long-term debt. If you've noticed, since 2008 they also did this with private corporate debt. The Fed's charter is to serve as a mechanism for re-discounting commercial paper.

Rugoz wrote:That is nonsense. The seigniorage is small, almost everything is paid with tax dollars.

Then why does the national debt always grow?
#15018374
Rugoz wrote:The FED sets the (short-term) interest rate according to its monetary policy objectives, which include price stability and employment. Funding the government isn't part of it. The two can coincide if the government isn't stupid though.



That is nonsense. The seigniorage is small, almost everything is paid with tax dollars.

Which is the whole point of low interest rate, to make you invest or consume instead of holding cash.


No, that's not the whole point, from the savers point of view, as I suggest, buy gold to 'invest'-yes-, from any government's point of view, their appetite for spending other people's money knows no bounds.

A government wants you to consume, because it increases it's revenues(yummy,yummy, more-spending-money),net result means consumers spend more money which is borrowed.
This allows the central bank to raise more money electronically, to feed that consumer spending, which increases inflation by raising demand in the economy, which allows government to increase it's revenues.
It then steals money from those who depend on that revenue spending , by producing fake inflation statistics, which allows a government to reduce it's spending on those dependents, like pensioners, benefit recpients et'c, by uprating the annual increases below the real inflation rate, as opposed to the real higher rate.
The increased demand for spending, increases overall debt levels in the economy, add increasing government debt into the equation & you have the perfect recipe for increasing inflation.

Your wealth, even though you have more cash to spend, is not real wealth adjusted for inflation, it's inherent value is always decreasing if the GDP rate of increase is not increasing in excess of real inflation each year.

For most people, their incomes increase only nominally each year & not in real terms at all.

People are lulled into a false sense of financial security when their incomes rise, against that is the inflation when they spend, plus the increase in taxes they pay as a result of inflation when they do spend that money.

Just a simple price increase, also includes more sales tax going to the government when you spend money on any item whose price increases each year.

The only power that a 'consumer' has, is a choice on whether to buy or not, if you spend your money, not only have you paid income taxes, when you spend your disposable income, you pay even more taxes, taxes are theft, because they are levied, with nothing for the consumer to show in return for it.

It's why it's better not to spend, as it's counter-inflationary, invest for the long term in precious metals instead.
#15018573
Rugoz wrote:Which is the whole point of low interest rate, to make you invest or consume instead of holding cash.

No, the main point of low interest rates is to encourage borrowing from banks, because that increases the money supply, stimulating the economy.
Nonsense wrote:The only power that a 'consumer' has, is a choice on whether to buy or not, if you spend your money, not only have you paid income taxes, when you spend your disposable income, you pay even more taxes, taxes are theft, because they are levied, with nothing for the consumer to show in return for it.

Most taxes are effectively theft, as you described. The main exceptions are taxes that bear on land rent, as land rent is a benefit the landowner is taking from the community and should rightly be paying for. They are merely accustomed to taking it without paying for it.
It's why it's better not to spend, as it's counter-inflationary, invest for the long term in precious metals instead.

Precious metals are not an investment, just speculation, as they do not yield an income return. The three principal classes of investment are debt instruments, stocks (equities) and real estate, which yield interest, dividend, and rent income, respectively.
#15018616
Truth To Power wrote:No, the main point of low interest rates is to encourage borrowing from banks, because that increases the money supply, stimulating the economy.

Most taxes are effectively theft, as you described. The main exceptions are taxes that bear on land rent, as land rent is a benefit the landowner is taking from the community and should rightly be paying for. They are merely accustomed to taking it without paying for it.

Precious metals are not an investment, just speculation, as they do not yield an income return. The three principal classes of investment are debt instruments, stocks (equities) and real estate, which yield interest, dividend, and rent income, respectively.



I agree with your point's in the main, with respect to precious metals, mainly gold or platinum, the holding, of which, for investment purposes, is, as you say, speculative, the point that I was really making is that monetary value as a currency, loses value each year, if there is no real growth, that is above inflation.

In those terms, against the value of precious metals,although not a revenue stream as a form of income, the value increases according, because the value of those metals increases each year.

As a choice of 'investment', compared to equities for instance, they too, are speculative, the income(dividends)may, or may not equal general inflation post dividend, cum taxability, that is to say it's net gain or loss,which, if the latter, not only are dividends non-existent, the shares themselves also lose value.

In fact, equities are only as good as the 'assets' behind them & with creative accountancy being what it is, I would not place too much faith in corporate financial reports were I to consider dipping my toes in the equity markets.

Your point on rental is perhaps the most pertinent one when we consider wealth & income streams.

I think that everyone who works hard, as a general rule, should aspire to home ownership, otherwise they will never improve their lot in a lifetime.

As a form of investment,m the yields are higher than equities or gilts, that is mainly for two reasons, high rates of migration, creating a larger population, hence more demand for homes that were once built by councils to satisfy that want, but no more & increasing debt that is satisfied by cheap money that increases the prices of houses.

If I ran government, I would freeze rents, then 'neutralise' the yields that buy-to-let landlords extract from taxpayers through the Housing Benefit System & bring in a capital gains tax on their assets.
You can have too much of a good thing,either the supply of money must be controlled, or price escalation will curb demand, mainly for first time buyers.
#15019126
blackjack21 wrote:The Fed buys government debt. In effect, they lend money into circulation. They can do that with both short-term and long-term debt. If you've noticed, since 2008 they also did this with private corporate debt. The Fed's charter is to serve as a mechanism for re-discounting commercial paper.


The FED buys bonds through open market operations, not with the goal of funding the government, but in order to bring the interest rate to the target. Naturally the government as a major issuer of debt benefits from this, as do other market participants. Also, something often forgotten, the interest paid on FED assets will go back to the treasury. Seigniorage in the current system is interest seigniorage. In times of inflationary pressure, the FED has to reduce its balance sheet (sell its assets, such as bonds etc.), and the government is well advised to reduce its deficit at that time.

blackjack21 wrote:Then why does the national debt always grow?


The level of debt doesn't matter, what matters is this:
https://fred.stlouisfed.org/series/FYOIGDA188S
It has to be paid for with tax income. Compared to total government expenditures, 1.5% of GDP is little. Once it raises to 3%, politicians might start to care again. Or not.

Nonsense wrote:As a choice of 'investment', compared to equities for instance, they too, are speculative, the income(dividends)may, or may not equal general inflation post dividend, cum taxability, that is to say it's net gain or loss,which, if the latter, not only are dividends non-existent, the shares themselves also lose value.


No doubt stock value does often not reflect fundamentals, but if you get a dividend on, say, an Apple stock, it's a return on real economic activity.
#15019138
Rugoz wrote:The FED buys bonds through open market operations, not with the goal of funding the government, but in order to bring the interest rate to the target. Naturally the government as a major issuer of debt benefits from this, as do other market participants. Also, something often forgotten, the interest paid on FED assets will go back to the treasury. Seigniorage in the current system is interest seigniorage. In times of inflationary pressure, the FED has to reduce its balance sheet (sell its assets, such as bonds etc.), and the government is well advised to reduce its deficit at that time.



The level of debt doesn't matter, what matters is this:
https://fred.stlouisfed.org/series/FYOIGDA188S
It has to be paid for with tax income. Compared to total government expenditures, 1.5% of GDP is little. Once it raises to 3%, politicians might start to care again. Or not.



No doubt stock value does often not reflect fundamentals, but if you get a dividend on, say, an Apple stock, it's a return on real economic activity.



The bottom line, as always, is, what is the return on capital?

A company may welcome capital from ordinary shareholders, as opposed to preferential shareholders, the former though, may lose by share price drop according to market &(double whammy)by that comapany passing dividend.

In a market, everything that is tradeable has value, relatively speaking,in spite of the global financial conspiracy against personal financial assets', 'usuary' is important in the control of inflation, because the price(interest)paid, determines the demand, the artificial absense of any price on money demand, is a sure recipe for inflation, rising total debt, a fiat currency, eventual lower living standards nationally, political instability & national ruin.

In short, if the circle is not squared by the reverse flow of that money back into the central bank's balance sheet, much of the above will happen eventually, because any growth brought about by that increased flow of electronically generated debt, the repayments will exceed the growth, which, any fiscally prudent government, intent on 'protecting' it's currency would wish to address.

Unless, of course, any government, that has 'appointed' central bank governor's, may well(politically)determine that political cowardice, by not reacting to the potential debt repayment crisis, will expedite discretion by monetary or fiscal(deficit)laxity as a measure of the price to be paid for their period in office.

On the principle of there being, 'no such thing as a free lunch', such policies are ruinous to any nation & a political price has to be paid, by which time the political cowards are history & the mess is left as a legacy to ordinary people to burden themselves with.

With gold, being untarnished by the above, is the standard measure of the hedge against currency depreciation, all one needs is to bury it in a carefully chosen place away from anywhere that human activity or natural occurances would disturb the location, which should be GPS recorded for when fate intervenes, as it must & sit on it in the meantime so to speak.

It will always return a dividend in times of inflation through capital appreciation,compared to the market vagaries of equities or other risk taking 'investment' portals.
#15019474
Rugoz wrote:


That is nonsense. The seigniorage is small, almost everything is paid with tax dollars.




Federal taxation in US dollars represents destruction of the "tax credit" the dollar represents at creation (issue).

Of course, if it pleases you not to understand this process you can go right along believing it to be nonsense. Your opinion won't change the operational reality.
#15028601
SSDR wrote:Under a capitalist, or a economically family oriented economy, elites want people to think that so that the rich can stay rich.

You altered my words to change their meaning, then falsely attributed the altered text to me. I explained why most taxes are effectively theft, and why one specific tax is not. Elites want to push the idea that all taxes are theft in order to recruit the support of those who pay unjust taxes in the elite's resistance to just taxes.

See how that works?
Currency is theft.

Nonsense.
#15029729
Truth To Power wrote:Who is stealing them, and how?

Currency is stealing labour. When currency exists, people can only do what currency limits them doing.
I have no idea what you incorrectly imagine that could mean.

Currency makes people corrupt and immoral.
#15029736
SSDR wrote:Currency is stealing labour.

That is nonsensical. Currency is not a person or group that could possibly steal. It's just a medium of exchange.
When currency exists, people can only do what currency limits them doing.

Nonsense again. How could the mere existence of currency stop anyone from doing anything they wanted to do?
Currency makes people corrupt and immoral.

It can have no such effect. However, if you substituted the word, "privilege" for "currency" in the above statements, they would all make sense.
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