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

In the Clinton years the relaxation of regulations followed by the equity bubble burst, resulted in a recession where investors committed suicide. The elimination of regulations big time in the Trump administration so far has resulted a huge stock uptick, and it may come back to haunt us along with the huge debt increase that we are likely to see due to the 4 trillion dollar infrastructure and 30 billion
wall expense.

 

I fail to see that a reduction in the debt is coming. The 4 trillion infrastructure expense and the 30 billion for the wall will only increase the debt. Also, the huge expenditure on arms and other war preparations, the elimination of regulations big time by this administration will add to the possibility of a recession in my view.

 

Both Republicans and Democrats talk about "fiscal responsibility". That spending more than you take in is a problem.

 

I didn't say it was coming, I said that it was proposed. I realize that Presidents don't set the budget, Congress does what they want and they aren't going to do anything close to what Trump has proposed in his budget. I wanted to evaluate the desires of the President as outlined in his own budget which would cut spending by $33 billion.

 

He has to know that one trillion for infrastructure isn't nearly enough.

 

Doesn't change anything.
If the deficit is spent on me, it helps me, if it is not, it hurts me.

So if you spend the deficit in my shop that helps me.
If no deficit is being spent in your shop however, or the amount of deficit being spent in your shop is less than the amount you are being taxed to pay for it, then it hurts you.


If you tax me and then spend some of that tax on shopping with me, I am better off if you don't tax me and don't spend a portion of the money you taxed from me in my shop.

I don't see how giving you free money to spend in my shop makes me richer.
I give you money in exchange for nothing and you give me back my money in return for my goods.

Net result. You get my goods for free.
I lose my goods for nothing.

 

Growth in debt, is negative growth in the economy.


I can cut spending and grow the economy.
For every £ less I spend on ****, I have more money free to spend on smart stuff.

For every wasteful spending I eliminate from my economy, I have to work less to get the same reward.

Can the government be trusted to get into debt to invest?
No. It makes a consistent loss. It isn't an investment opportunity.

It returns less value than is paid in.

In a loss making relationship, the more you spend, the more you lose.

I can't afford a Porsche.
Buying a second Porsche, doesn't help that.

I must spend less. Buy a Ford.

Once my economy is profitable, it will grow.
As long as it is unprofitable, it will shrink.

As long as you spend more than you earn, you are getting poorer, not richer.
Destroying your investment capital.

You are getting growth in the economy, but it is negative growth. Growth in debt not growth in profit.

 

Few thoughts...

If the spending is not in your shop, the people who do attract that spending now has more money to spend in your shop. In other words, you have more potential customers when people have more $$.

Furthermore, people with greater economic means will be able to provide more services to themselves. That means less demand for public services supplied by state governments, that will save you state taxes.

Deficit spending doesn't come from taxes.

Repayment on debt does not come from taxes

Borrowing does not come from taxes.

Think about it like your bathtub....

The water coming into the tub is not supplied from the drain. If that's true does that mean you can add all the water you want? No, you are still limited by the size of the tub.

Same with federal government spending. The limitation isn't the collection of taxes (the drain) rather it's the size of the tub (productive capacity of the economy).

The drain makes room in the tub if you want to add more water than the tub will fit. For example, you fill the tub, but it's too cold. You open the drain let water out (taxes) and then you open the faucet again...

As long as the money created does not significantly impact your purchasing power via inflation, then having more money give you the means to purchase more real goods and services. The real limitation is REAL GOODS AND SERVICES.

 

It makes no matter how much of my own money other people spend in my shop.
The net result is always the same.
I get nothing, they get my goods.

Worse than this, every single person who takes a share of my money reduces the total amount of it which is available to be spent on me. Spends a bit on something other than my goods. It can never all trickle back down to me.

Because resources are finite. Once you have eaten food, it becomes valueless.
The money is spent the resource consumed. You can't give it back to me. It's gone forever. Once you have used the petrol in your tank, it's gone. It doesn't trickle back down to me. The value has been destroyed absolutely.

So I don't even get all the money I gave away back in trade. Not even that part is true.


All government spending is backed by taxation. All debts are repaid via taxation. All interest on debts is repaid by taxation.
In the case of deficit borrowing, it is future taxation as well as current taxation that the money is being borrowed against.

The government has no other revenue stream but to print money, and printing money produces zero extra goods or services into the economy.
Does not grow it at all.
All printing money does is tax those people who have it and devalue the labour of those who provide services in exchange for it. (It acts as a nation wide wage cut by stealth).

By devaluing the price of the dollar, the economy neither shrinks nor grows.
All that happens is wealth is taken from one person and given to another.

Which is good for your economy if you are the person receiving it and bad for your economy if you are not.

Inflation and deflation affect the trade price of money. But money is a trade good only. It has little to no practical use or value outside of this.
It does not affect the total available resources in any way. Only who has ownership of them.


The economic argument can only ever be, does the government have a more productive use for my money than I do. Is it a better investment than I can otherwise make.
And the answer to this is no. Most assuredly not.
Hence very few people choose to invest in government bonds in preference to tools, houses, work clothes, education, transportation, stock market or starting their own business.
And tax far from being volunteered is collected under duress. By force, not by willing self interest.

Economics, is the study of human behaviour.
The market.

The government isn't a free market. It does not like economics.
It does not seek to study human behaviour at all. It seeks to control it.

 

So you believe a reduction in debt can grow the economy?

Think about what you're saying.

Reducing the amount of money spent is the best way to grow an economy.

That might be true if the amount of spending was directly related to taxes....But clearly, any cursory glance of taxes, which have declined dramatically over the last 60 years and spending, which has increased dramatically over the last 60 years sort of proves that tax levels don't increase when spending increases.

Um...For every £ less you spend in one place and spend in another does not grow the economy. Those two things cancel out.

Reducing waste doesn't increase or decrease the amount of spending in an economy. It changes how resources are allocated (more or less efficient).

Every £ the government "loses" the private sector gains.

Every £ the government gains the private sector loses.

With respect. You don't understand accounting, or at least you don't understand the government's accounting works opposite that of the private sector. You are part of the private sector but you are viewing things from the government's point-of-view.

If the government is taxing too much in order to justify spending (and there are spare capacity and labor), that's a problem of understanding of accounting.

If the government were to start fresh today. It used a fiat currency as it does now, but as of this moment there was no money in circulation, how could the government tax or borrow money it hasn't spent yet?

It can't because it is only once the government has spent £ into the economy that the government can tax or borrow it back. However, as I said, the government can create all the £'s it wants, so taxing and "borrowing" isn't about having £'s it's about preventing the number of £'s in the economy from creating more demand than the economy can supply.

 

Not true, while existing stored resources may indeed all be consumed in an over consumption scenario, new resource surpluses are always being created. Each day we earn enough surplus to our immediate needs to contribute to our pensions and insurance schemes, to save something.
And these savings for our futures are what is being borrowed.

To play the system in this climate one must borrow as much as one can, spend as much as one can and own nothing at all afterwards.
To get maximum value for your Pounds, spend it on drink, drugs and hookers.
Invest nothing. Save nothing.

 

Money supply, is not the same as the supply of goods or resources.
The important part of the economy, is not the total numerical score. Not the total amount of cents you can account for.
It is the goods and resources you can exchange them for.

Using the sliding scale of fiat money does not describe the size of the economy.
Indicates, yes, but describes, no.
Changing the values on the measuring stick does not change the size of that which is being measured.

100 Dollars buys one pig. Doubling the number of Dollars in circulation, does not create any more pigs. It does however double the Dollar price of a pig.
The pig is worth no more or less than before. The Dollar however is. It is now worth half as many Dollars as it was before.

Accountancy tricks are just that. Tricks. They add nothing to the economy except lies.


The amount of government spending is directly proportional to the amount of taxes they can generate.
The amount it can borrow is part of this relationship. It borrows against future taxation.
The money it borrows, it must repay. Or no more will be lent it.

All money gets spent.
Whether I spend it or you spend it, the total being spent is still the same.
For every £ less I spend on one thing, I spend one more on another. The only difference is who owns it.

Government accounting works differently to private sector accounting. Now there is an understatement.
It does indeed. And yes it does indeed have a very big problem with accounting. If that same problem was recreated in the private sector, many government employee's would face life imprisonment. So the key difference in accounting here, is that private sector accounting has to be honesty and legal. While government spending is inherently corrupt, and only legal because they make the laws in such a way as them not applying to they themselves. For example a Ponzi scheme is highly illegal, except when you are the government. Then it is perfectly acceptable accounting.
similarly taking money by force in the private sector is highly illegal, but is the mainstay of Government revenues. The legal norm.

Further to this a public company must produce it's accounts for all interests to inspect and a government does not.



Reducing waste increases the amount of productive spending in the economy.
Spending is not intrinsically good. There is such a thing as bad spending. Or counter productivity.
I'll give a ridiculous example to demonstrate my point.

If I pay someone fifty quid to burn my house down, the net effect on the economy is not +£50. It is not even -50 +50 = 0.
It is -1 house.

So if I spend money on counter productivity or consumables, after I have spent it, the economy shrinks by that amount.

If I have a butter mountain created by incorrectly assigned subsidies to farming, the butter goes off. It goes to waste. So my spending is the same, but what I got in return for that spending is anything but the same. I could have bought a tractor or a Ferrari which I have use and want for, and not a butter mountain that I do not.
That serves only as an extra inconvenience for me. Only as a giant mess that I must clean up.


Money did not begin by government edict.
Money came first.
And in older yet times before coinage or written scripts or tally sticks, money took the form of trade goods.
A chicken to barter for some apples.
I don't need government approved money to trade. I can trade in unapproved currency too. Or barter.
I don't have to use UK money, I can trade in US money or Euro money.
Or Bitcoins.
Local currency is typically the most convenient trade medium. But it is by no means the only one we can use.

What the government has done is take control of the supply of money. They did this here, to fund a war.
It was way of getting more money from the populace.
And so the Bank of England and centralised banking was born.


Every Pound the government spends the private sector loses. Correct.
Every Pound the government does not spend the private gains. Incorrect.

If the government taxes me less, I don't work as hard. I don't earn the same number of Pounds at all. Because I need less to survive. So when I have enough, I relax. I simply don't earn those extra Pounds in the first place.

Your loss is not my gain. It's just your loss.
I am not being forced to gain for someone else. That is all. They must do their own productive labour.
The private sector are not their slaves.
We are free human beings. And you will respect this or ultimately, we will kill you.

 

Trump is not reducing any deficit. He is all talk. He has not filled many state department jobs, which are necessary.
His 30 billion dollar wall, his defense spending, his wars that are on the way, his infrastructure spending at a cost of 4 trillion dollars--the debt will increase dramatically.

 

I wasn't arguing the reality. I was asking about his budget proposal.

 

Cutting deficit spending is painful in the short-term. There is a price to pay for living off debt. And yes, as you cut spending, that affects other people as well, so there is a ripple effect. Not denying this. There is no pain-free way to get out of debt. The deeper the debt the more painful the recovery (and the more time it takes). Basically, it's like withdrawal symptoms from some drug you're addicted to. You can keep withdrawal at bay by continuing to take some drug you're addicted to (live off debt, keeping paying interest). However, it's better for your overall health to suck it up, go through a time of hell, and experience true recovery.

If you never get in debt in the first place, then money that is being spent on interest (which produces nothing) could be spent on other things. Just as businesses compete with other businesses, nations do compete with other nations. If much of our money is being tied up in unproductive sorts of things, that doesn't really benefit us as a nation. Like if we are just paying each other to do each other's laundry we're not really producing anything that benefits anyone or that can be traded to other nations. Making interest payments is not really a productive use of wealth, hence why people generally like to get out of debt if they can. Then they will have even more money and will be able to purchase more, stimulating the economy.

Regarding your you use of "20 years following the largest deficit spending in history" tidbit, Sorry but that's post hoc fallacy. Lot of things happened in the 30's, and you ASSUME only one thing caused the prosperity that came later simply because it happened right before the time of prosperity. That is an assumption, one that is convenient to what you're trying to prove here. But it's not much different from me saying, "My great uncle Bob picked his nose for twenty minutes in the late 30's and we had the best years economically right after that incident, so obviously his nose picking is what caused the time of prosperity."

 

This discussion has nothing to do with Trump.

 

I agree.

Productivity is key. Agreed.

Nope, but there is a productive capacity that the economy can produce, right now, today, given the factories, trucks, machinery, etc (wealth) that exist right now. If some of them aren't being used then the nation is operating at less than 100% of its potential productive capacity.

Now, we shouldn't ever expect that it operates at 100%, even during WWII when just about every possible ounce of productivity was being used, we were using somewhere around 95-98% of our capacity.

So let's look at some facts about production, as we both agree that's what really matters.

This is a graph showing the productive capacity of the US economy. The red line is manufacturing and the grey line is the total. Anything above the line is unused capacity.



Here are the historical totals....


We can see that the average capacity utilization between 1972 and 2016 was just about 80%, today we are 3.2% below that. The high was in 88-89 at 85% productive capacity. We are 10% below that.

So let's say a good economy (without a major war) can expect 85% of its capacity to be utilized (as 100% is near impossible).....That means there are lots of businesses across the US with capital (machines, buildings, electronics, ovens, warehouses, whatever) that aren't being used.

Not changing the values.

So you're telling me that if you ran a pig breeder and you were breading 50 baby pigs a month, that if you received a larger order, that you couldn't breed more pigs?

That depends on your farms productive capacity vs its utilization.

If your farms capacity was in line with the nations capacity utilization (76.7%), you'd be able to increase your output by 23.3% without having to make major new purchases to meet demand because there would be unused capital resources available to you.

So it wouldn't double the cost of your pigs because you set your prices based on your ability to meet demand, not on the quantity of money in circulation.

Even if your capacity was near 100%, if the industry average was 76.3%, you still couldn't raise your price because if you did, other breeders with spare capacity would undercut your pricing because they have spare capacity.

Sellers don't set prices based on the supply of dollars. Remember, we agreed that production is what matters, not dollars.

Thus prices are a reflection of the market to meet the demand for goods and services.

If there is spare capacity (and there is), then the market will use up that capacity before prices start to rise. Again, remembering that 85-90% is the realistic peak and where inflation would begin to accelerate.

Only people that don't understand the function of accounting say that.

Let me ask you a question, is the following true?

spending=income

That my friend is accounting.

When you spend $100, someone else earns $100. No tricks, no lies.

That is an accounting fact. When the government spends, someone else earns.

Throwing a football must comply with the laws of physics. Quarterbacks don't have to be able to explain the arc of a football in terms of the forces that its under to be a good quarterback, but no matter what, quarterbacks and the footballs they throw must comply to the laws of physics.

Similarly, you may believe you understand the economy, but all transactions are subject to the rules of accounting. You don't have to understand mathematics to understand the economy, but you can't violate the rules of accounting. Period.

Can people fudge their books? Sure, but that's lying, fraud, not accounting. If I cheat in poker, I'm not actually playing poker. The trick is to convince others that you are.

No, it doesn't. The proof is in the fact that taxes over the last 70 years have fallen while spending has risen.

Find me a line item in the US federal budget that says, "payments on the debt", or show me any line item, no matter what it's called that makes payments on the debt over the last 75 years.

Sure, the government pays interest on the debt. But that interest is paid as an income to people, companies, organizations, states, cities, the government itself and foreign interests as income. It's that pesky thing called accounting.

When the government pays $315 billion in interest, statistically, $100 billion goes right back to the federal government (thus canceling that portion of the payment out), $100 billion goes to interests within the US and earned as income (people like me that hold bonds as part of their retirement) and the last 100 or so billion goes to foreign interests.

You believe that China, for instance, could stop purchasing our debt?

You don't even know how the Chinese government came to hold $4.5 trillion US dollars when the Chinese government doesn't sell anything to US consumers.

Chinese businesses sell to US consumers. So how did the government come to hold so much US money?

Understand that, and you figure out why the Chinese can't stop purchasing US debt.

What does that even mean? If that's true, what is savings?

No, it's not the same. If savings increases, the amount of spending is, by accounting necessity decreasing (all other things being equal).

Unless you save it and decide not to spend it.

Or maybe you purchase an import with it and the person that earns it is outside the British economy and is less likely to purchase something else in the British economy.

That's like saying that Christians and atheists have their own physics.

No, physics is physics and accounting are accounting.

If waste is unproductive spending, then yes, I totally agree, but it doesn't change the overall amount of spending.

I would agree that spending isn't intrinsically good, but here's where we have to separate how the economy works from what we should spend money on.

One is true or false, the other is a political decision.

That is, regardless of where you believe we should or should not spend money, that does not change the facts about how the economy works.

Spending, good or bad does not change what I'm telling you.

Spending=income

The Federal Government's spending is the private sector's income.

Deficits add money to the private sector, taxes remove money

The amount of deficit is in NO WAY linked to taxation.

Last year, by September, the government repaid the debt 5 times over. It also sold just a bit more debt than it repaid.

This will be fun

No, money isn't wealth and wealth isn't money. You are jumping between the two and trying to draw a comparison.

50 Quid is money and your house is wealth.

Paying anyone 50 Quid for anything doesn't change the amount of money in the economy, but it does increase the national GDP (assuming it's above board).

But burning your house down means there is less wealth to purchase with the money that still remains in the economy.

To see this better we need to use a more drastic example. Let's say I paid you $10 million Quid to burn down 3/4ths the houses in England (just run with me here).

The economy would increase in GDP (only assuming this transaction was done as part of a legal business transaction, but let's just pretend for the moment), but the value of the money in the economy would decline because there was less wealth in the economy to back the value of the money still in existence (as it would have remained the same). The buying power of each quid would decline. It would cause inflation because the demand for houses would be high and the supply would be low.

Inflation happens is when there isn't enough supply to meet demand. Your pay stays the same, but costs go up.

See how that works?

But, if on the another hand if the government created $10 million brand new quid (paid for via deficit spending) to build 1000 brand new houses, as long as the demand existed for the new housing and the raw materials (wealth) and labor existed and the increased spending didn't create shortages in raw materials and labor, then the value of the quid would stay the same. If anything, the increase in housing would cause the supply to rising relative to demand (forcing prices down) and the quid would actually go farther than it did before the 1000 new houses were built even though the money were created out of thin air. Not to mention that the $10 million quid would increase the amount of money in the economy and the house builders could then spend their money for wealth.

The only issue of money creation is, does the creation of money inspire people to create the wealth that backs it? That requires that the economy be able to supply the real wealth (raw materials) without causing demand to exceed supply.

Destruction of wealth causing the value of the dollars in the economy to decrease. However, creating Chia Pets, while they are useless isn't counter-productive as long as someone somewhere values them, that is, there is demand for them.

Again, it really all depends on the circumstances in the economy at the time to determine the consequences of what you're talking about.

Ok, but it exists that way today.

Oh boy.....Here's where we get into the discussion about "what is money".

Sure, but you can only pay your taxes in Pounds. The Bank of England owes it's debt ONLY in Pounds. The government can create all the pounds it pleases and can therefore never go bankrupt (unless it chooses).
Does that mean that the government should create all the money it wants? No of course not, I've already explained to you the real limitation of government spending, but that doesn't make what I've said untrue.

Ok, but I'm not sure what this has to do with the conversation.

Yes, the government has monopoly power over the creation of money. But so what, you said yourself you don't have to trade in the government's money. Now either it matters or it doesn't, you can't have it both ways.

Ok so let's say you have 1 pig to sell.

So the government creates 1 Pound and buys a pig from you, You have zero pigs and +1 Pound.
The government goes -1 pound and +1 pig.

The positive Pound and negative Pound cancel out and all that's left is the pig.

See how that works?

So you don't subscribe to the idea that wants are infinite but goods and services are finite. You think that as people have more money they stop working? Have you seen the Forbes top 400 lately?

Depends the form that the loss takes.

No idea what this means.

Whose slaves?

Ok, this just got weird...

 

After the governed creates £100, the value of £'s decreases, and the government can no longer afford to buy my £100 pig as the £ price of that pig rises to compensate for the governments attempt to change it's price.

The value of the pig is a constant, and the value of a Pound is variable.
No matter how many £'s the government prints the value of a pig to the economy is the same. It feeds the same amount of people.


If I do the old government favourite and add a zero to every note manually. A £5 note becomes a £50 pound note. a £10 note becomes a one £100 note.

No more goods are produced. No more labours are undertaken. We simply exchange the very same note for the very same goods, But it has an extra zero penned onto it.

Issuing more money, changes the price of everything, but the value of nothing,

So we don't measure the economy in £. And the reason is, because the £ cannot be trusted.
So we inflation adjust it and so on, to measure the economy better.



Slaves are people who are forced to Labour for others.
If the government needs more resources, the private sector is forced to produce them for it.

And ultimately politically, this doesn't wash.
If the people think they are being enslaved by their leaders, they kill them.
All politics is ultimately backed by violence.

It is not the case that by talking bollocks about economics, you get to indefinitely steal from people. Sooner or later they will stop you.

 

Can you point to any specific consequences of running a debt for the virtual entirety of the existence of our nation?

Are you aware of a single nation in the world, that operates on a fiat based economy that isn't running a massive surplus, that has paid off its debt?

With sincere respect, where do you believe the money we use comes from?

First, you are conflating the effect of paying interest in the private sector with the payment of interest by the government.

When you and I pay interest, we have less money to spend on other things. I agree that payment on interest, rent on money, can be extremely unproductive, but it also provides the incentive to lend. When the government pays interest, it doesn't have less money like you and I. The government creates money, it doesn't have to collect it in order to have it.

Think about it like this.
Imagine a person who's alive whose autograph would almost certainly be worth money to most people. Tom Brady, Beyonce, Will Smith?

I'll use Will since it's easy to type and he is both a musician and an actor and he quit Scientology almost two years ago (you go Will)....

I hope we can agree that he has but to write his name on a piece of paper and he could auction it off and someone would buy it? That's not too far out of the realm of possibility for me to make my point. Can we agree that lots of people would like to have his autograph? Let's say, for the sake of argument, that he writes up 100 autographs and posts them on eBay and people buy them for an average $100 each (or whatever amount, it's not really important the amount, just that they would have widespread value).

Why does his autograph have value?

Because lots of people would like to have it and there is a limited number of them in existence. This makes them desired and scarce, a pretty good combination for value (kind of like gold?).

If you had collected 5 of his autographs, you could auction them off just like Will does and expect other people to pay you the average value for them, about $500 in total.

Now let's say for some reason you find yourself in debt to Will Smith for $500 What do you suppose would happen if you handed him 5 of his own autographs? You tried to convince him he has but to put them on eBay and he can earn $500

Do you believe that Will Smith's autograph has any value to him whatsoever? No. Because with almost no effort he creates them. They have no value to him, he is the issuer, they only have potential value to everyone else, the holders, the users, those that trade them. The only reason that Will Smith would have any desire at all to collect his own autographs is to maintain the scarcity and by extension the value of his autographs in circulation and so he could create more without diluting the value of the autographs in existence. The problem is, Will Smith has no way to command the return of his autographs (like the government can command the return of dollars via taxes).

It is the same for government. The government creates dollars. Dollars have as much value to the government that creates dollars as Will Smiths autographs have to Will Smith, that is to say, none.

Dollars do have value to everyone else, not to the government.

Let's say that Will Smith had the authority to declare paper, with his signature on it, were money and he told people they had to pay him a tax of 20 autographs a month to him or they would suffer some punishment. If Will Smith had the power to enforce his decree, then EVERYONE would be unemployed with respect to the need to avoid punishment by collecting Will's autograph. If Will offered his autographs in trade for work that he wanted to be done, then people could earn the autographs they need to avoid the punishment that Will can impose.

The value of Will Smiths autograph would be in proportion to your desire to avoid punishment and your belief that Will could enforce that punishment. Now, in this case, I chose Will Smith because I hope we can agree that his celebrity is the root of the value of his autograph. But if he could enforce the return of his autograph, would it really matter anymore what the (perceived) value of his autograph was to the people that held them? I mean, if I could enforce the return of my autograph, it wouldn't make any difference anymore if people intrinsically valued my autograph or not.

This is exactly what fiat currency is. It has value because the government can enforce a tax regime and then spend its currency into the private sector that needs it to repay the tax. Eventually, the government's money takes hold has value because of all the things that it can purchase. It because of a practical means of exchange. People accept it because of the sheer utility that comes from the sheer number of people that accept it.

Can money be wasted? No. Can the resources it purchases be put to unproductive use? Absolutely.

It's better to build a bridge between two points that need it, than it is to build a bridge into the middle of a lake. But the issue isn't the availability of money, it's the political decisions in involved in using money as a way to allocate scarce resources (not scarce money).

LOL, I don't know exactly what quote you are addressing, though usually when I bring that up, I usually ask it in the form of a question, not as an expression of fact. It makes a good conversation starter where I can share my ideas as part of a longer conversation rather than a dissertation that few are likely to read never mind believe.

-Cheers

 

Only if the new dollars created demand that created a shortage in supply.

Producers don't set prices based on the quantity of money, they set prices based on the capacity of the industry they are in to meet the demand of customers. If demand runs short, only then will producers begin to raise prices as scarcity increases.

Creating new money and spending it does not, as a rule, create scarcity if the industry in question has spare capacity/ inventory. If that were true prices would vary each day as businesses don't sell the exact same amounts each day or season. Many prices actually fall during the holiday as spending increases. That totally negates your claim.

Prices don't rise and often fall during Christmas because producers ramp up production and create large inventories.

No, the value of the pig changes based on the supply and demand of them That is scarcity. If The government increases the number of Pounds, the cost of pigs will only rise if farmers cannot increase the number of pigs being demanded without spending money to expand.

Not true at all. If the government creates Pounds and buys more pigs. If farms have the capacity and labor to create more pigs, they will do it. In some industries, the price will fall as economies of scale kick in. This is because the more you buy, the lower the price to the producer. If the number of pigs demanded doubles, Pig farmer needs twice as much food. The increase in food for pigs can result in lower prices.

That is a bizarre claim.

When demand shifts to the positive for a good or a services, you don't believee that producers looking to grow their businesses will see new potential customers as an opportunity to increase market share and respond by increasing output?

This is completely wrong and goes against virtually all schools of economics understanding.

You don't understand the cause of inflation. You think that the creation of money causes inflation, it does not. It is the demand for goods relative to supply.

Increasing the capacity to purchase goods can cause inflation in an economy that is at its productive limit. But the reduction of production (if labor decreases or industry is destroyed) can also cause inflation without creating a single dollar.

No one is "forced". You don't have to work if you don't want to be a productive member of society. You have a choice, slaves don't have choices.

I agree there is an element of coercion. It just so happens that people are much more efficient and work better as a group when an element of coercion exists. This is because when people are free to not contribute, they tend to try to gain an advantage over others by not contributing. Humans have an innate sense of fairness selfish behavior, despite what Ayand Rand says, is deleterious to society, even if it's best for the individual.

The reality is that a group of individuals cannot defend themselves against a cohesive group even if that group cohesion is attained through coercion.

 

$102 BILLION reduction of actual debt in just 7 months.


https://www.treasurydirect.gov/NP/debt/current
Date Debt Held by the Public Intragovernmental Holdings Total Public Debt Outstanding

01/20/2017 14,403,704,176,388.94 5,543,600,378,823.55 19,947,304,555,212.49
08/18/2017 14,394,276,377,882.40 5,450,855,569,155.67 19,845,131,947,038.07

 

LOL, even if Trump or his administration were responsible for the reduction of debt. Historically this is a pattern. The debt ALWAYS falls right before the debt ceiling is increased.



See here

 

You gave us a DAILY TREASURY STATEMENT that shows an increase in debt of $1.5M and try to claim this isn't a big deal?

 

Here is the same time period under Obama in 2016. $500 BILLION increase compared to a $105 billion decrease. I suspect, a decrease of such a magnitude that it has never before occurred in our nations history. Revealing that you've convinced yourself its actually a pattern.

01/20/2016 13,605,230,659,952.67 5,336,176,239,299.48 18,941,406,899,252.15
08/18/2016 14,047,674,908,173.97 5,397,425,725,346.21 19,445,100,633,520.18

 

OMG, this is so much worse than you thought. That's not $1.5 million, that's $1.5 trillion. The numbers are in millions of dollars.

No, it's not a problem. The $94 trillion dollars in redemptions (what we owed) was paid for with $95.5 trillion dollars in new issues (what we sold).

It's called debt rollover.

Here it is in a neat illustration:



Now before you're tempted to ask me, what happens when (insert name of country/ies here) refuses to buy our debt, you have to convince me that you understand the full ramifications of what would happen if a foreign nation decided not to purchase US Treasuries. You also have to convince me that you know how the vast majority of the nearly $10 trillion dollars in circulation outside the US ended up in the hands of foreign governments who, themselves, don't sell US consumers trillions of dollars in goods and services. In other words, how did the government of China come to possess $4.5 trillion dollars?