[Steve_American]

*ALL* of the dollars in the US came from previous deficit spending, from the US buying gold or silver from mining comp., or from banks making loans.

When the US bought the gold and silver being mined in the US, it created dollars to do that. IIUC.

When the US Gov. deficit spent in the past, it was leaving dollars in the hands of the people. So, some of the so-called national debt dollars go all the way back to about 1846 and the Mexican War. The US paid off its Rev. War debt by selling land it was taking from the Native Americans. It did this by about 1837. By 1846 it was running deficits again.

When banks make loans since the Fed. Res. was created they create the dollars out of thin air. They don't make any changes to their books to move the dollars from an existing account to the borrower's acc.. The changes they make are -- to add to the borrower's acc. and to add to the bank's "asset" account. Note that, one is a liability of the bank and the other is an asset of the bank, so there is *no* net money created. [Banks are functionally licensed by the US Gov. to be able to do this.]

MMTer make the claim that all the dollars in the world have to have come from one of these sources. ALL of them. This claim seems self-evident to me.

Please show me MMTers are wrong by showing me another source for existing dollars. Counterfeiting doesn't count.

My point here is to wonder just why (after the US left the gold standard) do economists keep claiming the so-called national debt "must be paid off someday"? It has been there since 1846 or so (= about 175 years), why is this the generation that has to pay it off with tax dollars? I makes zero sense to me.
. . . All those dollars of the so-called national debt are now assets of someone, either in America or overseas. These assets have a real purpose in the current economy. The economy NEEDS them. Using taxes to have a surplus and therefore destroying those assets is just dumb. It is trading one US Gov. IOU for another IOU (which seems pointless) and destroying the economy in the process.
. . . IMO, the reason they are saying that NOW is to justify during this crisis *not* spending money that will go to help the mass of the people, and this is after about $2T has been spent to help the corps. and the super rich.

If you are part of the mass of the people, then why are you letting them do this? DO SOMETHING ABOUT IT.!!

[Unthinking Majority]

The only reason debt has to be managed is so that there's fiscal capacity in the future in case a big recession hits and deficits have to be used to prop up the economy, like now. If you have too much debt, you're paying more and more money on interest payments. If you keep adding to the debt without reduction it, it's not sustainable, and the interest payments could potentially ravage your economy if interest rates go sky high like the 70's and 80's.

This trend of keeping interest rates low and deficit spending can also create unforeseen economic bubbles.

[Steve_American]

The only reason debt has to be managed is so that there's fiscal capacity in the future in case a big recession hits and deficits have to be used to prop up the economy, like now. If you have too much debt, you're paying more and more money on interest payments. If you keep adding to the debt without reduction it, it's not sustainable, and the interest payments could potentially ravage your economy if interest rates go sky high like the 70's and 80's.

You are making assumptions that are not true.
Keeping the deficit low doesn't let the US Gov. have bigger deficits later. This has been proved since Pres. Reagan started the modern rate of deficit spending. [My claim here is that in 1982 the thought that there could be a $25T debt, and a $4T deficit with zero inflation would have been called OUTLANDISHLY RIDICULOUS. So, why were they not wrong?]
The US Gov. can and it should refuse to sell bonds at too high an interest rate. It doesn't need to sell bonds at all.
. . . [IMHO, in fact it should just spend dollars into the economy like Pres. Lincoln did in the ACW. If the Fed. wants to sell bonds later it can but only at low interest rates IMHO.]
The US has kept adding to the so-called national debt since about 1846. It has run very little in surpluses since then. Why can't it keep doing this is a measured way forever? Note, the "in a measured way" part.
The US has been rolling the co-called national debt over for 175 years now. Please explain why it can't keep doing that in a measured way forever.
In my OP, I wrote, "All those dollars of the so-called national debt are now assets of someone, either in America or overseas. These assets have a real purpose in the current economy. The economy NEEDS them. Using taxes to have a surplus and therefore destroying those assets is just dumb. It is trading one US Gov. IOU for another IOU (which seems pointless) and destroying the economy in the process."
. . . You just ignored this key point. Why?

You make (unstated) assumption to prove your statements but you don't prove or even show why the assumptions are true.

This trend of keeping interest rates low and deficit spending can also create unforeseen economic bubbles.

Yes, I agree with this. At least if QE payments are counted as part of the deficit.
And, IMHO the QE payments have *NOT* been made in a measured way.

[Unthinking Majority]

I think it's reasonable to assume that there will always be government debt, and it's not something that has to be paid off, it just has to remain in control and sustainable in the longterm. Remember also that if the economy is growing, which it generally is almost always doing, you can run deficits and the debt-to-GDP will shrink if GDP growth is outpacing debt growth.

So the question really is how much debt should a country aim to have at any given time, or generally? So that it is controllable, and sustainable? In the longterm, what is the best value for dollar, when you factor in paying the interest on debt? Deficits are an investment, but paying interest means it has a cost too.

And then you always have to prepare to have the fiscal capacity to take on some significant deficits in case of a deep recession, like now or 2008, and after that you have to be ready for the next recession, and the next. Again, sustainability.

MMT says a country that has its own currency can't default, which is true, but that doesn't mean it couldn't get into trouble either, and it's risky for a country to be the first to try something new and daring when it's just theories on paper with no real-world testable evidence on the scales that are being talked about.

[Steve_American]

I'll reply be inserting my replies in large font between your paragraphs.
I'll start by saying that Unthinking Majority is just saying what Neo-liberal economics teaches, this is the standard set of reasons. The problem with them is that Japan shows they are wrong and anyway the theory is based on some key assumptions that are obviously false. Any proof based on even 1 false premise is worthless.

[quote="Unthinking Majority"][/quote]
"I think it's reasonable to assume that there will always be government debt, and it's not something that has to be paid off, it just has to remain in control and sustainable in the longterm. Remember also that if the economy is growing, which it generally is almost always doing, you can run deficits and the debt-to-GDP will shrink if GDP growth is outpacing debt growth."

OK, fine. You agree the debt doesn't need to be paid-off.
However, you still think that Japan has not shown that a debt/GDP ratio of 239% is just fine.

"So the question really is how much debt should a country aim to have at any given time, or generally? So that it is controllable, and sustainable? In the longterm, what is the best value for dollar, when you factor in paying the interest on debt? Deficits are an investment, but paying interest means it has a cost too."

OK, how much is sustainable? Japan shows that 239% of GDP is sustainable.
And, Japans shows that it can control interest rates on its debt at close to 0.1%.

"And then you always have to prepare to have the fiscal capacity to take on some significant deficits in case of a deep recession, like now or 2008, and after that you have to be ready for the next recession, and the next. Again, sustainability."

Yes, you need to prepare the economy to have the capacity to weather a crisis.
However, the proper way to have prepared the US for the corona crisis would have been to deficit spend to buy mace masks, PPE, train contact tracers, etc.
The way to fail to prepare the nation was to cut public health workers back to the bone, and not stock pile proper equipment.
Did Japan have a problem upping its deficit in this covid crisis? I think the answer is, NO. So, where is your evidence that (before a crisis) having large deficits and a very high DEBT/GDP ratio will cause problems in the crisis when it comes? Show us one case where this happened.

"MMT says a country that has its own currency can't default, which is true, but that doesn't mean it couldn't get into trouble either, and it's risky for a country to be the first to try something new and daring when it's just theories on paper with no real-world testable evidence on the scales that are being talked about."

Are you a guy who worries about the possible trouble in the possible future while letting people die in the NOW?
Or in the general case, I think you are not one of the young college graduates of 2019 who didn't get a job because the economy didn't need their labor. That is, the economy is only providing so many jobs. Only that many can have jobs as a result.
If the US Gov. was deficit spending in the right way at a measured rate, there would be more jobs. I think this is a fact.
MMTers call for the Gov. to find a public service job for every adult who wants one and pay them about $15/hr. to give you an idea of what these jobs would pay. MMTers have run the numbers and it really isn't that much. Especially compared to what Aust. is doing now to prop up the economy and failing to boot. Spend less and get a better outcome.
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[Unthinking Majority]

OK, fine. You agree the debt doesn't need to be paid-off.
However, you still think that Japan has not shown that a debt/GDP ratio of 239% is just fine.

OK, how much is sustainable? Japan shows that 239% of GDP is sustainable.
And, Japans shows that it can control interest rates on its debt at close to 0.1%.

First, I'm not against MMT. It's an interesting theory. I'm just a healthy skeptic to untried theories with massive global repercussions. It can be tried, but carefully and cautiously.

Japan hasn't imploded yet, that's good. Japan has gone into crazy debt territory for what, 12 years now, post-2008? That doesn't prove longterm sustainability yet. It is evidence that it could work, but i think more data is needed.

Yes, you need to prepare the economy to have the capacity to weather a crisis.
However, the proper way to have prepared the US for the corona crisis would have been to deficit spend to buy mace masks, PPE, train contact tracers, etc.
The way to fail to prepare the nation was to cut public health workers back to the bone, and not stock pile proper equipment.
Did Japan have a problem upping its deficit in this covid crisis? I think the answer is, NO. So, where is your evidence that (before a crisis) having large deficits and a very high DEBT/GDP ratio will cause problems in the crisis when it comes?

I guess we'll see. Japan is a good case study. Ask me in 20 or 30 years how Japan is doing.

The US is a much more delicate case. If Japan encounters economic problems its a problem for Japan. If the US has problems it's a problem for the entire world.

[Steve_American]

Steve_American wrote:
"Yes, you need to prepare the economy to have the capacity to weather a crisis.
However, the proper way to have prepared the US for the corona crisis would have been to deficit spend to buy mace masks, PPE, train contact tracers, etc.
The way to fail to prepare the nation was to cut public health workers back to the bone, and not stock pile proper equipment.
Did Japan have a problem upping its deficit in this covid crisis? I think the answer is, NO. So, where is your evidence that (before a crisis) having large deficits and a very high DEBT/GDP ratio will cause problems in the crisis when it comes?"

Unthinking Majority wrote:
"I guess we'll see. Japan is a good case study. Ask me in 20 or 30 years how Japan is doing.
The US is a much more delicate case. If Japan encounters economic problems its a problem for Japan. If the US has problems it's a problem for the entire world."


OK, so your answer to the question "Are you a guy who will let people die *now* to avoid a *possible* problem in 10 - 30 years?" --- is, Yes, I'm that guy.

Like I said, you personally are not one of the people who will be thrown out of their apartment with no money to move their furniture. Nor are you going to lose your house when you just owe one more year of payments. Nor are you unable to feed your kids.
. . . If you are one of those people you would very likely not be worrying about a possible problem in 10 years. Especially when a group of a dozen PhD Prof. of economics (with many, many peer reviewed papers published) are telling you that the problem some are worrying about is NOT going to be a problem. And some are explaining that those other economists are being paid-off by the rich to say that to keep the mass of the people poor and desperate so they will work for piss poor wages. When TINA doesn't apply because there is (and always has been) an alternative.
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