Trump's desire to reduce the deficit. Can someone explain to me how this is a good thing?

This article may be helpful to you in the future......

http://www.newswithviews.com/Coffman/mike118.htm

GEORGE SOROS AND HIS PROGRESSIVE WAR ON AMERICA



By Dr. Michael S. Coffman Ph. D.
February 15, 2011

......

For the record... I don't completely agree with the author of this article but.....
he is getting into a topic that helps us to understand the psychology of the people
who affect government policies and Federal Reserve rates.

 

Making silly an unrealistic methaphors does not advance an argument. I've never argued that the debt should be repaid, however, IMO it should be reduced as a percentage of GDP.

Your argument is based on the fallacy that the amount of US Govt debt affects the money supply. The US Govt borrowing money or repaying debt does not affect the money supply.

Prices and salaries are both affect by inflation or deflation, if that is what you mean.

The percentage of GDP has actually decreased in recent years because of low interest rates.

 

You could well be correct about that.....
personally... I think that President Obama and his team deserve some credit for doing a reasonably good job of handling the 2009 debt crisis......
it could have worked out much, much, much worse!

 

I'm pretty sure that Soros did not support the massive tax cuts under the Bush administration that were responsible for a large portion of that additional debt.

 

I actually give Bush and his administration some credit for it as well.

 

The government does not create money.
The FED creates it, and even then does not give it directly to the gov. Intermediate bond dealers , being a handful of large private investment banks, broker bond sales for the government, and collect tidy fees for their efforts. Of course the bond buyers are themselves the same large investment banks, who then turn over the bonds to the FED and the FED in turn credits their books with freshly created digits. The investment banks then run up several hundred trillion dollars worth of interest rate swaps to create the synthetic market for these government bonds, keeping interest rates low.

Of course as long as we can muscle the rest of the world into trading dollars for oil, and are willing to protect the Saudi's so they will continue selling in dollars, we can keep the party rolling

 

On this I completely agree with you.....
the USA dollar is backed up by the productivity of Americans.......

and Americans are more productive than ever before......
so the USA dollar has very high real value.

A boom in real estate valuation for land within a hundred miles of major cities is
one possible way to get the idea across to Americans that our real financial situation is not actually as bad as it has been made to sound.

http://www.politicalforum.com/index...-fed-policy-pay-off-usa-national-debt.489825/

Could a real estate boom plus better Fed policy pay off USA national debt?

 

The US will not default, unless our leaders cause it. But the potential of a inflationary reaction (caused by the Fed buying more US Govt debt to support the government) is ultimately a possibility.

 

LOL! I bet you do!

 

The Fed holds only a small portion of o/s US debt, around 15% last I checked.

 

The US dollar has a high value because people trust our central bank will not rapidly devalue the dollar, and because other nations are devaluing their currency faster.

Housing prices are already nearing levels they were in 2006 and are again getting ahead of long term trends (though not nearly so much as in 2006).



I don't believe a significant increase in housing prices can be sustained now any more than it could in 2004.

But we don't need to pay of the public debt. We need to decrease it as a percentage of GDP. We need to get deficits below the level where debt is rising faster than GDP.

 

thank you for your irrelevant post. There is no other way by which the gov can create currency, which of course was what was being addressed

 

Fair enough. I misread you post.

 

This is such a bizarre analogy that I don't really know what to say. Paying your debts is like committing suicide? It seems to me that the question would then be, why in the hell would you let things get to the point where paying your debts would kill you? And you were the one who basically suggested hyperinflation as the means to pay the debt back in virtually worthless currency. Meanwhile, people in the US would need $10 million dollars to buy a loaf of bread.

Printing up money, as you suggested, to pay a debt obviously decreases the value of the dollar and increases the quantity. But, you say, the money is leaving the country, so it won't cause dollar devaluation here, but in the countries we are paying back. Okaay, but that of course would disrupt your entire "borrow from Peter to pay Paul" Ponzi scheme. I mean, who is going to buy a bond that, when it matures, will have less purchasing power than the money that was used to buy it because the flood of printed up dollars has made them ever less valuable?

But you ignored the greater point, which is that this scheme relies on perpetual growth to keep the interest on the debt from consuming the entire GDP. Forever growth is a strange unicorn to build an economic model upon.

 

Yes, simply assure yourself, and try to convince others around you ...
"It'll never happen" ... $20 Trillion. It's happening.

 

I never claimed that a proportionally increasing debt does not have consequences. Shoot, I've been complaining about the debt since Bush blew out the surplus with his tax cuts.

But default isn't one of them, again, unless our leaders do it.

 

Democrats are threating to block raising the debt ceiling. Moody's will will move to revoke AAA rating. Interest payments will soar. It's just the sort of scorched earth tactics the Dems are displaying. Be afraid. Trump isn't anyone Dems should play "chicken" with.

 

Link to the source of this claim please?

Uh, isn't that exactly what the Republicans did multiple times during the Obama administration?

 

[delete]

 

Well they threatened to, and $10 trillion ago could have possibly afforded to ... but did not.

 

So when you wrote "Democrats are threatening to block raising the debt ceiling" you were talking about something that happened 10 years ago?

If so, why did you misleadingly use the present tense?

 

First, I'm inclined

Ok, let's straighten up a few things.

Cutting the deficit does not take money out of the economy, per-se, that already exists, rather it cuts spending that is already slated to be spent. To run a surplus in an economy like that of the US is to reduce perineal deficits to the point that taxes exceed spending.

Historically, in the recent past, when deficit spending falls below 2.9% of GDP, the economy goes into recession



Government deficit spending, by definition, does not come from someone in the private sector. The order of spending and revenue is spending first revenue second. The government creates the money it spends by crediting accounts in the non-government (private) sector. The sale of a bond, does not take money from someone in the private sector the way taxes do. When a bond is sold it creates both an asset and a liability that nets to zero.

Now, let's say the government spends 120 and taxes are 100, then private saving is 20 dollars (the private sector gains a net $20) which can accumulate as financial assets. The corresponding 20 dollar notes have been issued by the government to cover its additional expenses. The government may decide to issue an interest-bearing bond to encourage saving but operationally it does not have to do this to finance its deficit. The government deficit of 20 is exactly the private savings of 20.

 

I'd need to see the underlying numbers that were used to create this chart.

People often make terrible assumptions which is why these numbers never come to fruition.

 

http://thehill.com/homenews/house/324111-dems-vow-to-reject-any-debt-limit-hike-with-poison-riders

 

OK, they are not threatening to hold vote against a bill to increase the debt ceiling, only if the Republicans pack it full of legislation.