I'll add numbers to your points so I can point the them when I reply to them.
Atlantis wrote:@Steve_American, 1] are we turning in circles? 2] After all that's been said it should be blindingly clear that the Japanese deficit doesn't prove anything, except that Japan is different. 3] It most certainly doesn't prove that a GDP/debt ratio of 200% is sustainable for any other country. 4] Argentina's debt burden resulted in a default before it even reached 100%. And once the IMF dictates your fiscal policy you are really screwed.
5] There is nothing wrong with a deficit as long as it is sustainable, in other words, as long as the debt service doesn't eat too much of you national budget. 6]Building infrastructure that will serve future generations on debt said future generations will have to pay back is only fair. 7] Now, blowing it on consumption is a different matter.
OK, I'll reply to each point.
1] Yes, we are. For example you didn't grok
my repeating of the 3 things a nation needs to do the have a full fiat currency
; and so missed the reason why, therefore, Argentina doesn't have a full fiat currency and so is not the sort of nation I'm giving advice to. My advice to Argentina, etc. is to get out of debt to the IMF and foreign banks.
2] Wrong, it proves that at least some nations will not automatically
have the bad things happen if their debt to GDP ratio gets "too" high. Because it is not automatic, the logic rules require that a proof that consists of == A leads to B is always true for any A, and in this case A is true==> then B will happen; doesn't follow because the assumption 'A leads to B is always true for any A' is not true.
3] Right. this is not proven just by the example of Japan.
4] As I said Argentina does not have a full fiat currency. So it has big problems.
And yes, every nation that owes the IMF $$ is screwed.
5] Wrong because the reason is the wrong reason. MMT says that deficits become a problem when "the deficit minus the 2 leakages (internal savings & external savings)" is sort of large AND all the resources in the nation (or that the nation can import) and/or all internal labor are already being fully utilized.
. . . Because the debt can never and will never be paid off or even down much, the payments on the debt are never made with tax dollars. Instead the payments incl. interest are made with new borrowing or with magic money tree free money. Note, only the interest payments add to the debt when it is rolled over. [All payments in these cases are made electronically, so no money is actually printed, ever to do this.]
6] Future generations will never pay down or payoff the debt. If the debt is paid down some it only means the the *limit* has been reached and all the available resources and labor are being fully utilized. Only in this situation would the *drastic* step of running a surplus be the proper thing for the Gov. to do.
. . . We hear this sort of thing all the time from Mainstream Economists. Well, since Reagan was elected there has been a massive deficit every yer (except for about 3 years late in Pres. Clinton's 2nd term). So, from 1981 to 2020(= 39 yr) the American people have not been paying the debt down; and MMT says Clinton's surplus was a huge mistake and led to the dot-com recession. That is was unnecessary and caused the recession, so it was misguided or stupid.
. . . Yes, the 39 years don't prove that MMTers are right. But, they don't need to prove they are right any more that Mainstream Economists (M.E.) were able to prove they were right. M.E. have almost never made a correct prediction, ever. MMTers have made several correct predictions. M.E. used false assumptions to 'prove' their theories. this is not allowed when proving something, it is only allowed when using an analogy. However, analogies *never* prove anything.
. . . I ask you and the lurkers to open your minds and choose wisely. The current Mainstream Economic theory has been used since 1981. Since then America has been in decline. List of evidence of this is == a] income inequality has skyrocketed, b] 'real' wages have been flat and the CPI has not been accurate so now 40% of American households can't come up with $400 to meet a sudden expense, c] America went from being a manufacturing powerhouse to being unable to make face masks in an emergency, d] the infrastructure has been allowed to deteriorate to the point that the bridge over the Mississippi R. fell in the river at St. Paul MN, and killed about 20 people and it is estimated that $4-T is needed to fix it up, e] American K-12 schools suck, f] the healthcare system has no excess capacity to meet an emergency like the covidvirus and experts have been predicting this for decades, and look at the damage this did (how many $trillions have we paid from the lockdown that resulted as soon as the virus appeared and we failed to contain it. Clearly it was a massive case of "pay me now or pay someone a huge amount more later".
. . . So, I think it is time to stop using that false theory and try MMT which has the advantage that it makes no false assumptions in its proof. The worst thing that can happen is a little inflation. All the M.E. predictions of disaster are not going to happen ever unless there is a food shortage. M.E. in pursuit of profit at any external cost have caused America to slip into a massive decline. It needs to stop and now is the time to stop it. Only the American people can do it.
A note to my European friends. The founding treaties of the EU are deeply flawed. The euro was a mistake because every currency needs a fiscal authority to go with it. I think that some group of people knew the power that a full fiat currency
gave to the Gov. of any nation and moved to forestall that power being put into effect before the people realized just what is possible with a full fiat currency.
. . . The EU did sort of fine until the GFC/2008 and then never recovered from it, just as all MMters predicted. This is because 'austerity' doesn't do what M.E. said or says it does.
Oops, I forgot 7] This is comparing the US Gov. to a household. This analogy is deeply flawed and just *not* useful. The Gov. issues the dollar, families can't do this, they must earn or borrow $$ from someone who already has them.
. . . This is not a trivial difference. It is a huge difference. Why can't people grok this?