How will the US pay back its debt? - Page 5 - Politics Forum.org | PoFo

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#15093072
Politics_Observer wrote:How will the US pay back it's debt? WEELLL! By COMPLETELY doing away with ALL Social Security and Medicare FOR EVERYBODY! That means using that money that was supposed to be for Social Security and Medicare to pay on the national debt. OR declaring BANKRUPTCY. OR BOTH! The US government really ONLY represents RICH WHITE PEOPLE. And they DON'T GIVE A SHIT ABOUT ANYBODY EXCEPT ONLY THEMSELVES AND TO HELL WITH EVERYBODY ELSE.

All they have to do is pass subtle laws that prevent the poor and people of color from voting but allow racist whites to vote given they are easily conned and manipulated by those RICH WHITE PEOPLE. Moreover, because the US government ONLY represents RICH WHITE PEOPLE, taxes will NOT BE RAISED to pay the debt (OR IT MIGHT BE, BUT ON POOR PEOPLE WHO CAN'T VOTE and are least able to pay, it's the American way, it's the way we do business here). RICH WHITE PEOPLE SIMPLY DON'T WANT TO PAY FOR ANYTHING IN GOVERNMENT. They want EVERYBODY ELSE TO MAKE PAYMENTS and DON'T CARE about defaulting on the national debt.

So that leaves taking away social security and medicare from EVERYBODY to pay for it OR DEFAULTING ON THE DEBT and DECLARING BANKRUPTCY OR RAISING TAXES ON POOR PEOPLE WHO CAN'T VOTE. Maybe all those options! That's the plan the US government has from what I see. And when that happens, the rich will flee the US while everybody else is left in the shitter. They would have finished robbing and taking from the country without giving anything truly meaningful back. They don't give shit about anything larger than themselves. They only care about their money, their wallet and ONLY themselves. That's just the way it is in America. This whole fiasco of Trump getting elected and that Trump has never been held accountable is PROOF OF THAT.


Blacks somehow think their fate depends on electing black people for government. Meanwhile most cities with black majority have had all black local government )mayor, police, school board, etc) for decades with no results. The election of Obama did nothing for black America. Asians do well with virtually no one elected to public office.
#15093075
Atlantis wrote:Governments never pay back their debts. They just borrow new money to service their old debts. As long as the markets are confident that a government has the resources to keep on servicing it's debts, there is no problem. If the debt increases too much, lenders may ask for higher interests, which makes it harder to service the debt.

Trump's previous tax cuts together with the current spending spree to offset the pandemic-induced recession will substantially increase debts and I don't envy the next president who will have very little room for maneuver to fix the economy.

Any future president will have to fix relations with China because the Chinese are one of the most important buyers of government bonds. Most dollars are held by people outside the US. If the dollar were ever lose it's position as international reserve currency, for example due to a shift away from fossil fuels, they would start offloading dollars, which would lead to a devaluation.

All of this doesn't bode well for the future of the US economy. By the time the US reemerges from the recession/depression, China may have replaced the US as the most important economy. If it comes to the worst, the major economic powers may have to join to keep the US from going belly up, which would send shock waves across the globe.

Atlantis, you are also wrong.
The market can't make the US pay high interest rates.
If push comes to shove the US can just credit accounts to spend and not bother selling bonds. Or it can sell bonds directly to the Fed. Res.

But yes the next President will have a hard time. He may need a few laws changed.

Like I said above, the rich and super rich have more to lose than most Americans do if the US Gov. defaults. Therefore, the rich will blink.
. . . OTOH, it is totally possible that Biden will *choose* to surrender to the rich and will blink. But, this just costs money and the US has an infinite supply of new $$ to spend. That is, the next Pres. and Gov. can make the necessary changes to just spend.
. . . Remember a 10% inflation rate does 1% as much damage to the world's economies that a full default on all the US bonds would cause to the economies of the world's nations.

Also, most of the US bonds are not held by foreigners. The number is 39%.
I googled "% of US bonds foreigners hold" and found this.
In December 2018, foreigners held 39% of the publicly [US] held debt. Interest on the debt paid to foreigners in 2018 was $120.2 billion.Jul 26, 2019

Foreign Holdings of Federal Debt - FAS.org

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#15093079
@Steve_American, even Americans holding US bonds like to have a high return on investment. If the rating agencies downgrade US bonds, they will ask for higher interests or move their money elsewhere. Thus, both American and non-American purchasers of bonds act like international investors. They are not captive domestic lenders, like Japanese savers, who will put their money into government bonds even at zero interest.

Anyways, you ignore my argument about the international standing of the dollar, which is likely to suffer due to future events, thus reducing the US's ability to attract FDI needed to offset the double deficit.
#15093113
Atlantis wrote:@Steve_American, even Americans holding US bonds like to have a high return on investment. If the rating agencies downgrade US bonds, they will ask for higher interests or move their money elsewhere. Thus, both American and non-American purchasers of bonds act like international investors. They are not captive domestic lenders, like Japanese savers, who will put their money into government bonds even at zero interest.

Anyways, you ignore my argument about the international standing of the dollar, which is likely to suffer due to future events, thus reducing the US's ability to attract FDI needed to offset the double deficit.

Atlantis,
What is FDI mean?
You're right I missed that paragraph. The US floats its dollar. It therefore can't have a "devaluation".
It seems like you don't grok that the US does not need to sell bonds (at least if the law is simply changed) to deficit spend.

As for foreigners not wanting dollars, or US bonds; historically the world wants US dollars. European euro bonds do have a risk of default. Germany has a surplus and isn't selling bonds. It may be rolling some over though. What other currency is there for them to go to?
. . . In other words, what makes you so sure that other nations will not look worse?

Anyway, MMTers say that Americans will be better off as a group, with larger deficit spending to help the mass of citizens, even if the dollar drops on the international market. It will make US exports cheaper for the buyers and cause Americans to make in America more of what they consume.

BTW, since I live off US Soc. Sec. dollars in Thailand, it would hurt me if the dollar was weaker.
#15093147
Atlantis wrote:If the rating agencies downgrade US bonds, they will ask for higher interests or move their money elsewhere. Thus, both American and non-American purchasers of bonds act like international investors. They are not captive domestic lenders, like Japanese savers, who will put their money into government bonds even at zero interest.


Some economics texts still say so, plus the odd "market analyst" on Fox. QE put that idea to bed. Absent the gold standard, wannabe bond vigilantes are powerless against central banks with infinitely deep pockets which stand ready to buy the bonds for public purpose.

If Japan weren't proof positive, UK govt bonds were downgraded by ratings agencies after the GFC (the same ratings agencies that graded the CDOs etc AAA). No one cared. UK govt bond yields continuously fell. The UK is now, in response to coronavirus, effectively bypassing the bond market altogether (the BoE is buying Treaury bonds directly). Has there been a bond market revolt..? No, the latest bond auction saw record demand. Despite unprecendented peacetime govt spending, the bond market is effectively paying the govt to borrow.

Because, as is now screamingly apparent, the govt doesn't really need to issue bonds at all. Even absent the "exorbitant privilege" of issuing the world's reserve currency, govt bond issuance is corporate welfare for the financial sector, not the other way round.
#15093160
@Steve_American, @SueDeNîmes, it's a myth to believe that government can create money out of thin air. That never has been the case, not even in feudal times. Working the printing press will increase the monetary amount and decrease the value. International investors will expect higher interests to compensate for the loss of value or move their money elsewhere.

Germany like all other EU countries do of course issue bonds, but it's true that the amount of Euro-denominated bonds has been limited, which has limited the role of the Euro as an international currency; however, that is likely to change with new Euro-denominated borrowing to offset the pandemic-induced recession. Following the weaponizing of the dollar there is also increased awareness in European capitals for the Euro to take a more prominent role so as not to be taken hostage by Washington.

FDI means foreign direct investment. Both the UK and the US need to attract a constant inflow of investment in order to offset the double deficit (budget, trade). That requires "business friendly" policies and limits the national policy choices.

Reducing the value of a currency is a gradual devaluation. Both the US and the UK have lost too much of their industrial base to be able to benefit from a devaluation by increasing exports. Despite all the hype, the jobs wont come back. Since Roman times, Empires have suffered from what is called the Dutch Disease in economics, which tends to penalize manufacturing. That's a structural features of empires that can't be changed by wishful thinking.
#15093203
Atlantis wrote:@Steve_American, @SueDeNîmes, it's a myth to believe that government can create money out of thin air. That never has been the case, not even in feudal times. Working the printing press will increase the monetary amount and decrease the value. International investors will expect higher interests to compensate for the loss of value or move their money elsewhere.

Germany like all other EU countries do of course issue bonds, but it's true that the amount of Euro-denominated bonds has been limited, which has limited the role of the Euro as an international currency; however, that is likely to change with new Euro-denominated borrowing to offset the pandemic-induced recession. Following the weaponizing of the dollar there is also increased awareness in European capitals for the Euro to take a more prominent role so as not to be taken hostage by Washington.

FDI means foreign direct investment. Both the UK and the US need to attract a constant inflow of investment in order to offset the double deficit (budget, trade). That requires "business friendly" policies and limits the national policy choices.

Reducing the value of a currency is a gradual devaluation. Both the US and the UK have lost too much of their industrial base to be able to benefit from a devaluation by increasing exports. Despite all the hype, the jobs wont come back. Since Roman times, Empires have suffered from what is called the Dutch Disease in economics, which tends to penalize manufacturing. That's a structural features of empires that can't be changed by wishful thinking.

Obviously, you are so deep in de Nile that there is a grave danger a Nile croc will eat you.

With all the magic money being created because of the corona-19 crisis, it is surprising that you can deny it is possible. Also, the $27 T that the Fed. Res. owned up to as a result of the FOIA request.

With all the money that is in the US and with its banks being able to create money by making loans, I doubt the US needs any FDI. Besides which the US Gov. could with some laws just make the DI itself.

I looked at the Dutch Disease article in Wikipedia and found this ---
Volatility
Exclamation mark with arrows pointing at each other
This article or section appears to contradict itself.
Please see the talk page for more information. (November 2018)
The article didn't convince me.

You seem to think that Japan has capital control laws that keep the Japanese people from buying US bonds and make them buy Japanese Gov. bonds. I'm 99.9% sure that it doesn't.

You seem like a professional economist. If so please come to my thread in Political Circus and try to refute my 8 claims there.

Got to go for now.
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#15093209
US federal debt is 25 trillion. US had 130 million full-time workers before COVID. That's $192,000 of debt per full-time worker in the US.
#15093217
Steve_American wrote:
I looked at the Dutch Disease article in Wikipedia and found this ---
The article didn't convince me.




The contradiction is about how we would explain the Dutch Disease.

This stuff gets really complicated really fast. Our status as the reserve currency plays a role.

I'm pretty sure he has a point, we have the Curse of Oil, (resource curse) and you can see it in the way energy companies are getting seriously preferential treatment in the bailout. Which is nuts.

I started a thread about what Stiglitz has to say, and that's worth looking at.
#15093241
Unthinking Majority wrote:US federal debt is 25 trillion. US had 130 million full-time workers before COVID. That's $192,000 of debt per full-time worker in the US.

So what is your point?
. . . When a bank makes a loan it gets something like a bond (a promise to repay the loan in a certain way). The bank sees these as assets. The US Gov. also sees them as the banks assets. The FDIC sees them as the bank's assets. Therefore they are the bank's assets. At the same time the borrowers sees these bond like contracts as their liabilities.
. . . When the US Gov. borrows it gives a bond to the lender. The lender sees the bond as his asset. If the lender is an insurance comp., then it and the relevant regulating authority sees the bond as an asset of the ins. comp.. Therefore it is an asset of the ins. comp., right?

Therefore, all the bonds and T-Bills that are the US national debt are also at the exact time the assets of the people and comps. or banks that hold them.

So, that $192,000 of (US) debt per full-time worker in the US is also at the same time the assets of the people, comps. and banks of the US & the world.

As Sue said, it makes no sense to confiscate (with taxes or whatever) those assets to pay them back to the holders.

So, the larger the national debt the more assets the American people (and others) have. Why do you think this is a bad thing?
. . . [I can sort of see it being bad back before 1971 when the world was on the gold standard, however now that it is *not* on the gold standard, why is this a bad thing? If you can't give a good reason, then I'll stick with it being a good thing.]

Because the US Gov. issues the dollars, it can always pay off all the bonds as they come due (with free magic dollars if necessary). The damage to the economy if it doesn't (and therefore, defaults) is far more than the damage if it does use free $$. The only damage of the use of free $$ is some inflation which can always be controlled when it happens.
. . . [Note, I'm not saying that it *will be controlled*. OTOH, we have no choice now. We can't pay the debt with tax dollars, only with free magic tree dollars. If you can think of some other idea, I'll listen. We have no choice means we might as well see what MMT can do because all those bad things *could* already happen in the future and we can't pay the debt off (properly with tax dollars) no matter what.]
Last edited by Steve_American on 21 May 2020 07:01, edited 1 time in total.
#15093247
Talking about where Atlantis brought up the Dutch Disease --
late wrote:
The contradiction is about how we would explain the Dutch Disease.

This stuff gets really complicated really fast. Our status as the reserve currency plays a role.

I'm pretty sure he has a point, we have the Curse of Oil, (resource curse) and you can see it in the way energy companies are getting seriously preferential treatment in the bailout. Which is nuts.

I started a thread about what Stiglitz has to say, and that's worth looking at.

Late, Atlantis said,
Reducing the value of a currency is a gradual devaluation. Both the US and the UK have lost too much of their industrial base to be able to benefit from a devaluation by increasing exports. Despite all the hype, the jobs wont come back. Since Roman times, Empires have suffered from what is called the Dutch Disease in economics, which tends to penalize manufacturing. That's a structural features of empires that can't be changed by wishful thinking.

So what Atlantis is saying is If the US dollar is decreased in value on the international market then we might get the Dutch Disease.
In order to avoid devaluing the dollar the US must have a balanced budget.
Well, so far the US dollar doesn't seem to have been devalued for 40 years of Repuds running up the debt from $1-T to $23-T.
Yes, in the future it might, however we have no idea the probability of it happening. He and the "experts" just say "it may happen",
So Atlantis is calling for the US to make Americans suffer when it could help them using free magic tree $$, because someday maybe there might be a 3% chance the US will get the Dutch Disease. [Is there a response to this 'disease' that mitigates the future damage?]
Late, let me ask you this, OK? Would you personally give up $100K free money now to spend to help you family now, because someday somehow someway you *might* get a little sick with a bad cold or mild flu. Because this is very close to what Atlantis is saying there.
. . . Atlantis should be saying the US WILL get some specific bad effect later for sure, for sure. Then we should listen to him and not before. I don't know about al the many lurkers, but I'm sick of all these warnings of what might happen if --- with no probability info at all given.

Also, Late, you said the argument gets very complicated very fast. Well, I reject complicated arguments and I embrace the simple MMT argument that the US can solve such problems later. And now it gets to have the huge benefits of deficit spending for the mass of the people. And in any case, "someday" may never come.
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#15093275
Atlantis wrote:@Steve_American, @SueDeNîmes, it's a myth to believe that government can create money out of thin air. That never has been the case, not even in feudal times. Working the printing press will increase the monetary amount

If it can "increase the monetary amount", it can "create money out of thin air". Make yer mind up.

and decrease the value.

Then it must be careful not to "increase the monetary amount" too much. No one's saying otherwise.

International investors will expect higher interests to compensate for the loss of value or move their money elsewhere.

Then govt deficit spending doesn't necessarily cause this to happen. Any theory that says so is patently wrong. Govts of most advanced economies have borrowed substantially since the GFC while yields on their bonds have continuously fallen. For example, Britain's debt rose from 40% to over 80% of GDP while bond yields fell from 4.5% to less than 0.5%.
#15093288
Steve_American wrote:
Late, Atlantis said,

So what Atlantis is saying is If the US dollar is decreased in value on the international market then we might get the Dutch Disease.
In order to avoid devaluing the dollar the US must have a balanced budget.
Well, so far the US dollar doesn't seem to have been devalued for 40 years of Repuds running up the debt from $1-T to $23-T.
Yes, in the future it might, however we have no idea the probability of it happening. He and the "experts" just say "it may happen",



If no one else comes up with a good response, I'll try and do one later. I just got up, and that is going to take some work.

But, my understanding is we already have Dutch Disease. Our reserve status, size of the economy and maybe some other stuff is keeping that from hitting us. But, just like the British empire, when the bottom falls out, the industrial base goes with it.
#15093434
Steve_American wrote:

Steve wrote,
"Late, Atlantis said,

So what Atlantis is saying is If the US dollar is decreased in value on the international market then we might get the Dutch Disease.
In order to avoid devaluing the dollar the US must have a balanced budget.
Well, so far the US dollar doesn't seem to have been devalued for 40 years of Repuds running up the debt from $1-T to $23-T.
Yes, in the future it might, however we have no idea the probability of it happening. He and the "experts" just say "it may happen", ..."


late wrote:
If no one else comes up with a good response, I'll try and do one later. I just got up, and that is going to take some work.

But, my understanding is we already have Dutch Disease. Our reserve status, size of the economy and maybe some other stuff is keeping that from hitting us. But, just like the British empire, when the bottom falls out, the industrial base goes with it.

OK, US manufacturing left America in the 1990s. This was seen as a good thing by the Gov. and the top 10% to 20% in income earners.
Now, you say it is a disease. And this disease had been discovered in the late 1980s. So, why did the top 20% want this to happen?

Also, I always said it was just stupid. All through the 1990s and 2000s I thought and said that. Nobody listened to me. Are you saying I was right.

As for UK/England, I read once that in 1939 it discovered that it could not make "high" Tech things like altimeters for its Spitfire Fighters. This would have been a very big problem if the US had left them high and dry, or twisting in the wind.

In the current covid-19 crisis we see the same sort of thing now in many nations. Germany refused to let masks be sent to Austria, etc. The US could not make masks. The US stole masks being shipped to some states, etc.

In a post above, I asked if there is a response possible to reduce the damage from the "Dutch Disease". I got no response.
IMHO, clearly there are responses we can use. Like tariffs on stuff entering the many nations. Some things should be made at home (in the nation). [Among many others, all the parts to make all the weapons your Army uses in a war. Buying parts for weapons from likely enemy nations is stupid. Small reductions in price be damned.]
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#15093465
Steve_American wrote:Obviously, you are so deep in de Nile that there is a grave danger a Nile croc will eat you.


Why didn't you tell me that you are a troll? I could have saved myself a lot of trouble.

You can increase the monetary amount, but that doesn't mean you get more value for your money.

You seem to think that Japan has capital control laws that keep the Japanese people from buying US bonds and make them buy Japanese Gov. bonds. I'm 99.9% sure that it doesn't.


I'm speaking from my experience and why my savings in Japan don't increase. Call it patriotism, call it national economic doctrine, call it industrial policy, or call it whatever you want, or more importantly reflect on why the US plutocracy needs to propagate a shallow and aggressive nationalism to cover for its lack of patriotism.

You seem like a professional economist.


I don't take lightly to this sort of insult.

I'm talking about my experience of industry and commerce in Europe, Asia and the US. I'm not talking about this or that theory.

Regarding the effects of the Dutch Disease, the Roman Senate had to restrict the import of Chinese silk to prevent the outflow of gold and silver from the empire. The British used opium grown in India to prevent the outflow of Sterling to pay for all the tea from China.

You acknowledge the destruction of the industrial base in the US and the UK, yet you deny the effect of the Dutch Disease. Are we talking of a split personality here?

The destruction of the industrial base has fueled the populism that's about to destroy the empire from the inside. The beauty of it is beyond comparison.
#15093468
@Atlantis,
The fact that I could learn and do a 180 deg. turn, and go from denying Dutch Disease to agreeing it exists shows I'm not a troll.

Much else of your post requires no reply.
Partly because you didn't reply to my points.

OK, so you agree that the Japanese people could park their savings somewhere else.
So, they are choosing to accept the low returns on Japanese bonds.

But, you have not wondered or explained just why when the debt to GDP ratio of Japan is about double the next worst nation and something like 3 times America's ratio that in Japan there is still no inflation, no high interest rates, plenty of money for the banks to loan to comp. to invest, the yen is one of the world's strongest currencies, etc. And therefore, none of the threatened bad things from deficit spending have materialized for about 30 years now in Japan.

My apologies. You are not an economist, just like me. However, unlike me you still swim in the neo-liberal sea. You still refuse to see that reality and neo-liberal ideas are opposites.
#15093476
Steve_American wrote:

OK, US manufacturing left America in the 1990s. This was seen as a good thing by the Gov. and the top 10% to 20% in income earners.
Now, you say it is a disease. And this disease had been discovered in the late 1980s. So, why did the top 20% want this to happen?

Also, I always said it was just stupid. All through the 1990s and 2000s I thought and said that. Nobody listened to me. Are you saying I was right.

As for UK/England, I read once that in 1939 it discovered that it could not make "high" Tech things like altimeters for its Spitfire Fighters. This would have been a very big problem if the US had left them high and dry, or twisting in the wind.

damage...




Greed, tax cheating..

I don't remember what economists were saying back then.

England gave us a ton of technology. If you take the long view, they gave near as good as they got.

Education, health care, infrastructure, we still need a Progressive era.
#15093496
@Steve_American, for almost 10 years I have explained why the high Japanese GDP/debt ratio doesn't increase Japanese interest rates. It doesn't matter why the Japanese let the government have their savings at a very low interest rate no matter how high the debt/GDP ratio. The fact is that they do and that most others don't. They don't get exorbitant returns on their savings, but in the international comparison they gain due to the strong currency. The government could also reduce the debt by increasing VAT - taking from the people with the one hand what it gives with the other.

According to your theory, the government wouldn't need to borrow or increase taxes because it can just print money. That is demonstrably not what is happening. Are the Japanese too stupid to understand your theory or is your theory wrong?

Admittedly, the US is in a different position because most dollars are held by non-Americans. That dilutes any devaluation. And that's perhaps what gives you the illusion of an unlimited money supply that can be inflated at will to make the debt go away. That's an advantage, but it is also a disadvantage, which is more felt by the Brits. The head of the BoE put it like this "we live by the kindness of strangers." Obviously, the current empire has greater means to bully others into submission than the former empire, but there is a limit to it.

Irrespective of political declarations, the US's financial empire will continue to export manufacturing because it's geared to maximize profits. 90% of technological innovation is in manufacturing (devices and processes). Thus, the US is draining its ability to create value by manufacturing and, at the same time, is loosing innovation, which is the sole guarantor for future prosperity. While the US will be able to go on for a while due to the clout of its financial empire, innovation and capital will gradually shift to the places where it is created.

That's the dilemma faced by the US. Strangling China wont work. The "West" no longer has the monopoly on the state of the art technology it did during the cold war. The US hasn't come up with a strategy to defend its position by winning the competition against China (the Trump administration's assertion that it'll ruin Russia and China by an arms race is as delusional as Trump's Covid-19 response).

On the contrary, the end-of-empire resurgence of populism has isolated the US and estranged it from its allies to hasten the US's decline.
#15093512
Atlantis wrote:Irrespective of political declarations, the US's financial empire will continue to export manufacturing because it's geared to maximize profits. 90% of technological innovation is in manufacturing (devices and processes). Thus, the US is draining its ability to create value by manufacturing and, at the same time, is loosing innovation, which is the sole guarantor for future prosperity. While the US will be able to go on for a while due to the clout of its financial empire, innovation and capital will gradually shift to the places where it is created.

That's the dilemma faced by the US. Strangling China wont work. The "West" no longer has the monopoly on the state of the art technology it did during the cold war. The US hasn't come up with a strategy to defend its position by winning the competition against China (the Trump administration's assertion that it'll ruin Russia and China by an arms race is as delusional as Trump's Covid-19 response).

On the contrary, the end-of-empire resurgence of populism has isolated the US and estranged it from its allies to hasten the US's decline.


This statement blatantly ignores the fact that the ones running China, or even many of those being run by them, have no fucking regard of personal freedom and respect of others who do. This will cause many of those who knows better to flee to better places, most likely the Five Eyes countries, the ones the above quote's author most fucking hates.

In fact, this does not only happen in China, but also most of Asia, including India and the Muslim World, and to a lesser extent Russia.

As long as these countries do not wake up and start to respect human rights, the Five Eyes countries will continue, and deserve to, rule.
#15093676
@Atlantis,
I don't think the Japanese Gov. leaders are stupid and I don't think the MMT theory is wrong.
This is a false dichotomy. I don't see *all* the people who don't understand MMT or use MMT as stupid. Some are, but most are stuck in group think.
So, you have spent 10 years explaining why Japan can run up its debt to GDP ratio. Are you sure your reasons are sound or are they just rationalizations?
And anyway, MMTers use Japan as an example that huge deficit spending for almost 3 decades does not automatically cause high inflation, high interest rates, a crowding out of money for lending, a weak currency, or Gov. insolvency. If it is not automatic, then the nay sayers have to explain why it will happen if the US Gov. does it. They don't think they need to do this, but how many cases are there of nations with a full fiat currency** (all after 1971) using continuous deficit spending to replace both of the leakages of money? The answer is none. And no nation has tried an MMT type JGP either. And, all the cases of hyperinflation MS economists point to happened while the world was on the gold standard (so by definition no nation had a full fiat currency) or were caused by a crisis of food shortages. Printing money was just the gov. response to the food crisis, and it didn't help much did it? See the Cato Institute study of hyperinflation for proof of this claim.
. . . Therefore, MS economists do not have a body of examples to point to. In fact they have none. Without examples, they only have their theory.

MMT says that any gov. with the attributes of a full fiat currency** can spend without borrowing. MMT GOES WAY OUT OF ITS WAY to explain that there is a limit on this.
MMT also explains the new purposes of taxes and why taxes are still necessary.

As I understand it, there is a big one time benefit when the Gov. starts to deficit spend more.
Then there is a somewhat smaller on going benefit that comes from deficit spending to replace both of the leakages of money (net money leaving the nation (from a trade deficit for example), and money being saved in the nation), and also adding to the money supply to maintain full employment by (among other things) funding the special MMT Job Guarantee Program (JGP).
. . . If you have not learned enough about the JGP to understand it then you really should not be commenting that MMT will not work as promised.

Just yesterday I posted here that Wikipedia says that just 39% of US bonds are held by foreigners. So, it is not "most" like you keep claiming.
. . . OTOH, I suppose it is possible. Why? Because we know what $$ amount of bonds are held by foreigners, BUT what the total $$ amount of the bonds is is debatable. So, for example, are the bonds in the Soc. Sec. TF really a liability since they are the Gov. owing itself money? And the same thing can be said about US bonds held by the Fed. Res. Bk, again the Fed. is part of the Gov. (according to MMT and me), so again these bonds are the Gov. owing itself money. So, 39% is close enough to 50% that if we removed all the bonds that are just the Gov. owing itself money, then it might be 50% owned by foreigners.
. . . But, MMTrs say, so what if foreigners hold 50% of US bonds? If they try to harm the US by dumping them, the US can just sell bonds to the Fed. Res. Bk or just spend and not borrow. Etc. So, no big lasting harm comes to the American people and the bond sellers are shooting themselves in their feet.

AGAIN, MMTers *all* point out that the limit on deficit spending is the real resources that are for sale in the nation, including labor. Now, I know that Mainstream economists ignore any and all constraints of reality. So, MS econ. can't see that this is a limit. So what? It just shows the most economics is not a science, because all sciences must be grounded in reality and experiments to even be a 'science'. So, if economists ignore reality then it is not a science.

Atlantis, and everyone reading this, do you see, grok, and therefore, grant that when the world went off the gold standard in 1971 that the rules of economics were fundamentally changed?
. . . If you don't grok this then it is really useless to argue with you, because this is the starting point of MMT.
. . . If you don't grok it, I'll try one more time to explain it.
When the world was on the gold standard, there was a limit on how much money could be created. All nations had to act in a way to keep it so people could not drain the nation's supply of gold by demanding gold for the currency they held. If the nation got to the point that its gold supply could be drained then it was thought its paper money would literally be without any value at all, like Confederate money after the ACW. Now, some nations have a full fiat currency** and so they can create their currency up to the limit of the real resources, incl. labor in the nation.
. ** . I'll repeat another time the 3 things a nation needs to have to have a full fiat currency.
1] It must not owe any debts in a foreign currency. Maybe a little is OK.
2] It must float its currency on the international market and not have a peg to any thing (gold) or any foreign currency.
3] It must issue its own fiat currency. It helps if it has a central bank that is functionally part of the gov., like the US Fed. Res. Bk, the BoJ, and the BoE are.

Notice that all the nations in the eurozone fail this test. As do all the other nations in the EU which have treaty limits on deficit spending. Also, most 3rd world nations owe foreign banks and/or the IMF foreign money so they fail the test.
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