Why Conservatives, Libertarians, and Republicans are so confused about our Debt

Absolutely none of this will happen

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Why would interest ever exceed tax revenues? Lol.

 

The only government spending that's really stimulative is the spending of new dollars, not taxed dollars. Taxed dollars just recycle as you mentioned, but new dollars can spur economic activity if spent properly for that purpose, such as roads and other infrastructure.

 

You're spot on.

But you're dealing with some people who have a sixth grade level understanding of how the world works.

For instance, that think that a grandstanding opportunist who nearly crashes the economy all for nothing is a hero, for leading a disaster.

 

How is it growth? No wealth was created, you simply transferred wealth from some people to others.

 

Those new dollars may "spur" it short in terms of jobs and long term with use I suppose. Yet there is still the creation of dollars which inflates the current money supply which devalues it all for everyone who uses that currency. It economically helpful to those in those jobs and/or own the companies that can serve the Government but, it doesn't support for the majority of cases the general public.

 

So... "none" of this will happen when the conclusion is that it will. Considering the value of dollar will decrease overtime when the amount of supply is increased. Eventually the the debt will go beyond the GDP and banks will refuse to loan out money they will never see a return from. It will end up with the FED printing dollars to cover for the Government's inability to deal with the debt and ramp into hyperinflation, the country proposes harsh measures/cut backs that will cut the deficit significantly or the Government clears the debt like they've done in the past.

Because the amount of loans is increasing and so is the debt... The interest on those loans will exceed the income of the nation via their taxation and will cause insufferable damage economically.

 

I posted something like this is the politics section of the last forum I came from. I was laughed at.

Basically, people don't understand the difference between a monetary sovereign nation and someone that is non-monetary sovereign. You, your county, your state, your friend, and your parents are all monetary non-sovereign. Your pay is in United States dollars.

We left the gold standard in 1971. The United States, Canada, Japan, the United Kingdom, and Australia all work this way. European countries that use the Euro do NOT. They do not control their currency.

Here is a detailed article on it.

Politicians know exactly what monetary sovereignty is. They are bribed to remain ignorant and relay this ignorant knowledge of you. Our national debt is a statistic that is only relevant to prevent hyperinflation. The United States government cannot live beyond its means. It has no means to live beyond! All the debt is in United States government denominated assets. Bankruptcy and default is impossible unless the United States does so for political reasons (i.e. the self imposed debt limit). The United States can declare bankruptcy and it would be completely irrelevant to its ability to issue United States dollars.

 

Unless you own a house, have assets, invest, own a business, have debt, or increase your wages. I guess most people don't benefit from these things.

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Welcome to the forum. Prepare to be laughed at again, lol. These people simply will never understand this.

 

Lmao! What? Why would banks refuse to loan out money just because the debt goes beyond GDP? You guys just make stuff up.

 

#1 we have a fighter jet
#2 people had to be employed to build the fighter jet and now have income
#3 resources and equipment are needed which gives income to other companies
#4 those companies pay their employees who now have income
#5 all those individuals with income now can go out and purchase goods and services that they want.

What libertarians and conservatives will try to do is twist the logic by throwing out all kinds of crap about opportunity costs or broken window crap, etc. That is only true if you have the assumption that those materials and laborers would be used elsewhere.

 

This should simplify things:

It isn't any clearer than that. The U.S. is the sole printer of U.S. dollars. Cutting spending is cutting the total money supply.

 

You're taking money from people either through taxation and/or inflation then providing work for people with that money... You're making an over glorified example of "protection money" seem as though it's a helpful thing when the services aren't being put to good/smart use. You drain money from the masses in put it into select businesses/contractors and government activities you're only preventing the economic growth of country when you choose building bombs over allowing the common man keep more of his money to at some point create a business.

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When a nation has no intention of paying their debts what is the point consistently loaning them money?

X owes a dollar and pays interest of 10% to Y.

X never intends to pay the dollar back and nor the interest.

What is the reason for Y to continue to give X money?

 

They can by all means keep printing dollars but, the value will drop and the amount of lenders will reach zero once they understand there is no hope of a return.

 

This is what the OP addresses. The money "owed" by the U.S. government is the US dollar. That is the sole purpose of the dollar and keeping track of the debt. We can "owe" $100 trillion and pay it at any time. Our dollar is not pegged to any precious metal. It is a free floating currency.

To put it in the simplest terms, it is like playing monopoly with your own personal I.O.U. as acceptable payment. When foreign investors purchase U.S. debt, they are investing in our economy. It is nothing more than them placing value on our future assets. Our "debt" is not a credit card. It has no due date. Think of a dollar as a loan document.

There is hope of return because the U.S. will always produce dollars. The only constraint in a monetary sovereign currency system is inflation. However, we have averaged 2% inflation over the last 5 years.. which is deflation. We are far, far away from hyperinflation. The Obama administration is being bribed by the corporate goons to cut spending.

The only significance to government spending is what the dollars are spent on. Infrastructure and R&D > entitlements and welfare

 

I understand that but, it's still an owed amount to other banks across the world. Continual printing of the dollar will lead to further devaluation and eventually when the only way to finance the state is through printing dollars the country will experience hyperinflation because no one will want US dollars when there are too many in supply. In the past having a million dollars was considered a billionaire of today... what can we expect in several decades? Trillionaires and a man saving up for retirement can easily make several million because inflation is devaluing the currency. Buying milk for $100 isn't exactly ridiculous considering a can of soup in the past was roughly 4cents.

 

Now, I'm not going to deny you need jet fighters, you do, but what's important here is the principle:

You're taking other people's money, which would have been spent on what those people wanted, and spending it on something else that the government wants.

And we know that a central government cannot supply goods and services effectively, thus why we have private industry in the first place.

So why does the government need to take our money and spend it on something that benefits only some people who wouldn't have gotten that benefit otherwise?

 

Yup, you are exactly right. Hence, the only constraint in this kind of banking system is inflation.

Inflation is harder to do than you think. Taxes are the #1 means of deflation.

What the OP is point out (and it should be obvious) is how the fundamental workings of sovereign currency is hidden from the public. It is hidden from the public because once people find out, they will demand more of the goons in Washington.

Look at the party platforms:

Democrats - Big spending on social programs, education, etc. with big taxes
Republicans - Low spending with low taxes

They both strive to achieve the same result in different ways. Ever notice how the democrats never talk about the federal debt?? It is just a statistic. Debt / GDP ratio is a measure of how efficient our society is relative to government spending. It has shot up to pre-WW2 levels after the 2008 recession. As soon as the economy resumes growth, it will naturally decrease. The proof is that our Debt / GDP has decreased most years in despite deficit spending.

Just remember: no debt is too much for the U.S. government. It will have the ability to service any debt until we move to a new currency system.

 

I think you're part right, but what liberals don't get is that credit is only good so long as you're able to pay it off. This is where credit ratings and credit scores come from. We're AA right now, but the thing is that if you don't pay off the debt and don't pay down on the principle, after a while the creditor figures you out and then it becomes very difficult to barrow more. Your loan rates go way up, you get turned down for loans stuff like that. In the case of countries, you could also lose the purchasing power of your currency. Right now, a lot of world commerce is based in the dollar, but that could change if the rest of the world loses confidence in the US dollar.

There are also BAD debts you can get into. For example, taking out a loan that far outstrips your ability to pay, or taking out a loan, even one you can afford for things that don't pay off long term. You wouldn't have much to show for a loan for a vacation, however a loan for a house is a good debt.

As it stands, we're making a lot of stupid decisions about money. We're not taking out these loans to get an asset, like building a national highway system, we're taking the loans for welfare payments. We're barely keeping up with interest payments, let alone paying down the principle on the debt, which is eventually going to run down the confidence that America will ever be able to pay off the debt. Which makes it far more likely that other countries will dump the dollar in favor of Euros or Yen or Yuan. If that happens, we really could face heavy inflation.

As to some of your weirder contrentions. Sure, on paper, we never run out of money at the fed. That's because the government can print money. But the issue is not running out of dollars. The issue is the value represented by each dollar. The Weimar Republic had plenty of Deutch Marks, they could get DMs by the basketfull. Which was great for the Germans, because they needed a basketfull of DMs to buy bread. The DM was worth so little that kids used bundles of DMs as blocks to play with. The other thing is that we've already played this game. It was called the housing bubble. Banks traded bits of mortgage with other banks, chopped them up, bought them and sold them. It didn't prevent the failure of the housing markets, nor did it mean that the banks always made money. In short, money doesn't have value just because it exists, it's more like a stock in the country that trades them -- stocks go up and down with the fortunes of the company, stocks lose value when the company issues more stocks. And just because I trade penny stocks between buddies doesn't mean anything. If the stocks themselves have no value, you're trading paper for paper, and it doesn't mean anything.

As for the notion that things that have lasted a long time will last forever -- Rome was the Eternal City. The Roman Empire lasted for over 2000 years. They aren't so eternal now.

 

When the dollar is so inflated no one will want it.... there are plenty of cases in history in which the paper money printed by a government eventually reached hyperinflation and became useless globally. How do you assume that an increase of inflation equates to deflation? That's absurd. Unless you're comparing the available money in the hands of the masses... They're still acquiring devalued currency every time the printing press rolls out with more dollars or the government adds more zeroes and ones.

 

You are taking other peoples money that came from other peoples money that came from other peoples money. It's not that big of a deal. You are an ideologue. If no one paid taxes, if everyone kept every dollar they made, they would simply print more dollars and we would be taxed through inflation instead. You are one of those crazy ideologues that just have this irrational fear of government.

 

Your speaking of government debt like personal debt. Since our "rating" was lowered, interest rates have never been lower. Obviously our credit rating is not really that important since we can pay off our debt with our own money whenever we want. The only reason it was downgraded is our crazy politicians almost chose to not pay our bills..

You are still pretending the government is either a business or a person. They do not live by those rules. And we are not the Roman Empire or the Weimar Republic.

 

There really is no point in trying to explain it to people. As much as people NEED to understand that the 99% of people who fail to grasp this concept are being boned by the 1% that do (because they control government), they just can't wrap their head around the government being a higher power than them. I don't know if it is arrogance or what.

The only way people will understand it is if they stop calling it "debt." However, since it plays into their strategy they have no incentive to. Every time I watch a conservative politician they spew "why should the government spend any money we have $17 trillion worth of debt? This is so unsustainable!!!!" We are an ignorant society being manipulated by a bunch of robber barons.

You guys can argue if you want but it is futile. Government debt stopped functioning the way house debt works in 1971 when gold was no longer required to back the currency. The entire U.S. monetary system (and Canada, Japan, Australia, UK) is based on the government issuing I.O.U.s.

Inflation is controlled by more things than just currency circulation. As I said before, taxes are the biggest way to suppress inflation. It is the only reason taxes currently exist. The government doesn't need taxes to print or spend U.S. dollars. The quicker you understand these concepts, the better our society will be.

 

perhaps one day you'll understand why people accept this particular form of debt as payment, allowing this "banking" to exist.

 

I already understand it. You just have no clue what you are talking about.

 

I don't think no one should pay taxes. Things like the military, police, courts, a legislature - I'm not a bloody anarchist.

But it is not fair that someone obtains wealth because the government forces everyone else to cough up money to pay them with (a subsidy). Because they didn't earn it, whereas the taxpayers did. We should be deciding what businesses get our money and when, not someone (the government) else telling us what they think we should.

Why do you trust the government, who we can't even trust not to bomb you (look up Operation Northwoods) with picking what we should spend our money on?