Fact: You should not include Intragovernmental Debt in the National Debt

No, he did not say that is how it works. And yes, we can continue to print money all we want as long as people are producing and people are consuming. Life is about productivity not about how much quantity of money there is. As long as people want iPhones and other American goods, people will want USD regardless of how much quantity there is.

 

but wont they want it less the more of it we print?

 

You're misinterpreting money being worth less and people demanding money less.

This is where productivity comes in to play.

If the Govt spends more money and it leads to more iPhones being bought (which leads to more iPhones being made, which leads to more jobs, etc) then the spending is productive.

If the Govt spends more money and Apple can not make more iPhones than inflation will occur.

That is a simple example of how quantity of money is not necessarily inflationary in respect to the previous year. If the velocity of money lowers, then the economy can withstand a much larger quantity. And right now our velocity is atrocious. We can take on trillions of more dollars before even getting near inflationary pressures that hurt the economy.

 

The government can't print goods and services in to existence. When it prints and spends it just redistributes where the resources go. It doesn't create them.

 

So when a military member purchases an iPhone, Apple doesn't have to create the phone?

 

You do understand what redistribute means, right?

 

I understand clearly, but how is Apple creating a new phone redistribution?

 

The purchasing power the government gets when it prints is not created by the printing, it is redistributed from all dollar holders.

 

Really, you know this for a fact? I know this very fact...

Only 1% of Treasury's auctioned off are purchased by the nonbank domestic public. As in you and I purchase 1%, so where do you think 99% of the money comes from? If our money is not being used to purchase the debt then how is our money being redistributed?

 

OP,

When SS/medicare expenditures are more than payroll revenues each year, by law the funds have to come from the general fund.

When this occurs, it is removed from intragovernmental debt to fiscal debt. Unfunded liabilities become real debt when paid, due to deficit spending.

 

Yes, I know. But the debt is incurred when real money is exchanged for debt. Intragovernmental debt is a representation of future debt allowance. We have not borrowed $14.5 trillion. We have borrowed $9.9 trillion and we have a $4.5 trillion allowance for future borrowing. It should not be included in any calculations of debt-to-GDP representations. And most economists do not include it, since it doesn't represent real debt.

 

tell that to the people of Zimbabwe

 

tell that to the people of Zimbabwe

 

You mean the $300 gdp per capita country of Zimbabwe?

Yes, we share so many similarities with that corrupt racist country.

 

the only thing the printing press creates is inflation!

 

Which is exactly what we need. Fire those printing presses up boys!!

 

20 dollar happy meal anybody?

 

Let's put this in terms that are easy to understand.

A familly has a $20,000 college fund for their 15 year old son. A family member has medical bills of $50,000. To pay for this bill the family takes the 20K from the college fund and borrows 30K. The family is not in debt 50K, they are in debt 30K.

That is roughly equivalent to what you are saying here, right?

I'm strangely not comforted by this senerio. Why are you comforted by the fact that the government has redistributed your retirement money to pay for.......(insert your favorite absurd government program here)?

Why does this make the debt situation better in your mind?

 

It's not really equivalent at all. It's more like, you make $20,000, create a college fund, loan yourself $20,000, then go off and spend $20,000 on your bills. It's really not a huge deal if you think about it logically. What else do you want them to do with that money? Store it in a bank vault and let it lose value over the years?

Because in a macroeconomic sense that money doesn't disappear. It's better to have it put to use, then to waste it. And in official government and economic equations you should refer to "net" debt instead of gross debt, since intragovernmental debt is an asset and a liability to the Government. Makes no sense and has no real money attached to it. I honestly have no clue why they have to confuse people so much by that.

But, in all honesty there is absolutely no solvency problem with SS. When they talk about there being "no" money they are talking about the mathematical equivalent of too many expenditures with too little receipts... it has nothing to do with them not being able to spend the $4.5 trillion they are allowed to spend. It has to do with when that $4.5 trillion is spent.

Current legislation prohibits the Government from using any other money to fund SS other than SS itself.

 

Even when you confuse the simple with more words the bottom line is this.

You can use the college fund to pay bills without creating any debt. No problem. What you can't do is use the college fund to pay the bills and use it to pay for little Johnie's college. That math doesn't work for a family and it doesn't work for the government.

There is a reason the Treasury department reports public debt and intragovernmental debt seperately, but add them together to show the total public debt. They are different, public debt is slightly worse than intragovernmental debt. But that doesn't change the fact that they are robbing the college fund to pay for current bills. BTW, SS isn't all they are robbing from. Government retirement funds are fair game as well.

 

They aren't robbing anybody. There is no solvency issue with intragovernmental debt. When they need it they will go out and borrow that money and intragovernmental debt will slowly transform in to public debt as needed. Your scenario doesn't work when it is applied to a Government that has control over the currency at hand.

This argument is meaningless because there is absolutely no issue with the Government paying off Social Security and other retirement benefits in regards to intragovernmental debt. The fear is only in your head, not on paper. Social Security and other Government programs have NEVER had money in them. The money is spent as soon as it comes in and replaced with "debt", because that's how Government financing works. It is a pay as you go system, and you will get paid as it goes... lol.