Rancid wrote:I already gave all of you the solution.
You don't need to pay off the debt, all you have to do is balance your budget. Inflation + modest economic growth will take care of the debt. The trick is to basically not increase the principle on the debt. That's it...
Also, @wat0n
If the US will never need to raise taxes to pay down its debt, then what is the problem with increasing it?
MMT has shown that =>
1] Banks don't loan savings, they create the deposits that they will need 1 week later to "match" their total loans, by making the loans. The loans increase the total on deposit in all banks less a small amount that is moved overseas and a much smaller amount that stays as cash.
. . . So, savings just sit there in banks and so are not adding to GDP in any way. The more anyone saves the more the GDP is reduced. MMT asserts that the Gov. needs to replace this with deficit spending.
. . . MMTers seem to assume that everyone will understand that all dollars used to buy stuff being imported will be saved outside the US. I think they need to be clear about this. And add the trade deficit or current account balance to the savings (getting the +/- sign right).
2] So, savings temporarily destroy money just like tax payments do. Some savings is used to invest by buying real estate or stocks. Then we have to look the see what the seller has done with the dollars. If she spends it, it returns to the economy. If she saves it it is just saved in a bank, sitting there, just in a different bank.
3] MMTers assert that therefore, the fiscal balance should be used to "balance" the economy, their wording. This means that when the Gov. & economic experts want to grow the GDP (GDP being equal to the total income of all players in the US economy), it is better to have the Gov. deficit spend than relying on the banks to make loans to increase the incomes (bank loans are always soon spent by someone, although those used to buy a home are more like invested, but still count toward to GDP as someone's income). Bank loans must be repaid (unlike deficit spending that is paid free and clear to someone); this means that they will be a drag on the economy in the next downturn, because loan repayments also destroy dollars, as they reduce the principal of the loan, AFAIK). This sucking of dollars as soon as a recession starts (when loans stop being made, but repayments continue) is a main driver for the downward spiral that makes the recession worse. So, letting the people have their incomes grow without the drag of repayments is better for the economy.
. . . Obviously, bankers, bankesters, and economic experts who are paid by them will tell you that the Gov. needs to balance its books, because then the people will
need to borrow more to keep their incomes growing in the boom times, thus increasing the bank's profits. Why should you believe them when we have seen how Trump and the Repuds have shown us how easy it is to lie and have no shame about it?
MMT asserts that all loans have 2 POV. From the POV of the borrower they are a liability that must be repaid. However, from the POV of the lender they are an asset, a sort of saving or investment.
. . . In the case of loans to the Gov. made by buying a Gov. bond, the Gov will never repay the principal. It will keep rolling over that bond and the interest forever. The bond holder always gets her money back so she doesn't care. The new bond holder doesn't care because he will always get his money back, too. Etc.
. . . They will always get paid because the US Gov. & the Fed (which is part of the Gov. with a little more independence) issue the currency, the dollars, so it can always make all its required payments by selling bonds to the Fed in a crazy emergency. It is impossible for bond vigilantes to punish the Gov. because the Gov/Fed issues the dollar. The Gov. can always avoid high interest rates on its bonds by selling to the Fed., if it changes the law which it can (just like the debt ceiling was raised a couple of years ago, because the rich were bluffing, so their lackeys in Congress were also bluffing).
Despite what you keep hearing from many economic experts who say the current inflation is being caused by a growth in the money supply; the current inflation has been blamed by the San Francisco Fed on shortages (caused by covid, covid lockdowns, and the war in Ukraine) and by nations and corps using their monopoly pricing power (OPEC, Exxon, Amazon, etc.) to increase their profits, because they can.
. . . If you believe the SF Fed then, all the massive deficit spending that started in 1981 under Pres. Reagan and has continued under every president since (except Clinton) has not yet caused inflation over 2%, yet. So, if 40 years and over $30 trillion of deficit spending has not yet caused inflation, then why think that it will someday? How long must we continue the real world experiment before you are willing to grok that Mainstream Economic Theory and all its experts are part of a scam to make the rich richer and the mass of Americans poorer (this includes all but the upper Middle class; all other Middle class and Lower class people have been squeezed for 40 years as real wages have been flat and all proceeds from productivity increases have gone to the top of the income spectrum.
. . . A few months ago I read about China around 1000AD started issuing paper money and deficit spending secure in the understanding I have provided above. Things went fine for hundreds of years. The Genghis Khan conquered northern China. He didn't understand all the above and over spent. The result was hyper inflation.** The bankesters' experts want you to learn from this history the lesson that sooner or later there will be high inflation. I lesson I learned from this is "Don't let barbarians or others who don't understand the above info get control of your Gov." But, the barbarian part is so obvious it doesn't need saying. For example, I point out the Islamic "Persian" Empire of about 1200AD, which was invaded by the same Mongols. Its ruler had pissed off Genghis Khan so he had his armies take every city and kill every man, woman, child, cat and dog in the city, as well as most in the villages. The lesson is don't let the barbarians conquer your nation, period.
In summary, I ask again, why is it a bad thing for the Gov. to keep providing assets free and clear to the people at a measured rate that doesn't cause inflation over 2%?. . . This doesn't change the fact that the bond from the POV of the buyer/holder is an asset.
. . .
So, why is it bad for the Gov. to keep increasing the net assets of the people at a measured rate that doesn't cause inflation over 2%?. ** . I keep pointing you to the Cato Institute (a thinktank of the Koch brothers) report about all hyperinflations in history. Strangely, this example is not included in it. It says all 57 (IIRC) happened after 1900. The report found that all 57 were caused by shortages, and not by money printing. This included the Weimar Republic inflation of 1922-23.
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- By Rugoz
- By Fasces
- By JohnRawls