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

Great question.....
as you know I have read quite a bit of your material and I believe that
your understanding of this subject is in the top one percent...... of ECONOMISTS!

Several years ago I was listening to Sun News Network, I am almost certain it was Economist Steve Keen who was being interviewed.......
Mr. Keen was giving Prime Minister Stephen Harper credit for what he had done correctly over the previous year.

He stated that P. M. Harper, by keeping the Canadian central bank rate low.....
had SAVED Canadian taxpayers THIRTY BILLION DOLLARS for every one point of interest that the prime rate had been lower...... than what it could have been if P. M. Harper had initiated different policies.

If..... in the previous year P. M. Harper had had policies that would have resulted in a two percent higher prime rate.... that would have meant that Canadian taxpayers would have owed SIXTY BILLION dollars more in interest payments.

If..... in the previous year P. M. Harper had initiated policies that would have led to the prime rate being three percentage points higher than what it had been..... that would have meant a NINETY BILLION Canadian dollar bill for taxpayers.

Yes..... that extra interest would have been income to somebody......
largely Canadian private banks.... so that would have led to the banking sector having even greater earnings but........

..... the people who run the TSE and Wall Street get spooked easily.....
and they were happy with the way that P. M. Harper was managing the economy......
so making people at North American stock exchanges happy was a relatively wise approach.... and President Trump and his team deserve at least some credit for following a somewhat similar example to what P. M. Harper did...... I believe the year in question might have been 2010 or 2011.

 

So how is President Trump's desire to reduce the deficit a good thing.......?

He is a bright guy willing to think outside the box.....
and explain what he is doing to ordinary Americans..... so
when he finds a way to save USA taxpayers billions and billions of dollars in interest payments...... (perhaps by charging zero or at most one percent interest through the Fed for loans for infrastructure projects).....

he will be able to boost the economy at the same time that
costs are kept to a minimum.....
so this will turn out to be a good thing......

Zero percent interest..... or at most one percent interest to be paid for the financing of
an Alternative Wall.....
is one option.......
but updating USA roads, airports, hospitals, bridges, and sidewalks would be
an even more practical way to begin to use better Federal Reserve policy......


http://www.politicalforum.com/index...u-think-of-my-alternative-wall-theory.483090/

What do you think of my Alternative Wall Theory?

 

Let's put aside the dubious proposition that Trump will be cutting deficits, given he proposes massive cuts in revenue, and massive increases in spending on the military and infrastructure.

Your concern is based on a fallacy. Cutting the deficit does not remove money from the economy. The government spending goes to someone in the private sector, but comes from someone in the private sector. No money is removed from the economy as a whole.

Cutting government spending can arguably decrease spending in the economy as a whole, depending upon the source of the funds the government spends.

 

Post #124 here gets to the very heart of why President Donald Trump even
decided to campaign for the office of President.......


http://www.politicalforum.com/index...an-be-a-great-president-because.437467/page-7

Donald Trump can be a GREAT President because.......

 

Your position is based on a false premise. The total amount spent on imports was $2.7 trillion last year in a $18.8 billion economy. So about 85% of the money spent here is on domestic goods and services.

 

This is not accurate at all:

Year - Debt: GDP
1940 41.8%
1941 37.9%
1942 43.4%
1943 67.0%
1944 89.5%
1945 113.1%
1946 118.1%
1947 103.2%
1948 91.7%
1949 92.7%
1950 85.6%
1951 73.4%
1952 70.4%
1953 68.3%
1954 71.3%
1955 65.9%
1956 61.5%
1957 57.9%
1958 58.5%
1959 55.5%
1960 53.4%
1961 52.5%
1962 50.1%
1963 48.4%
1964 46.2%
1965 43.2%
1966 40.4%
1967 40.0%
1968 38.0%
1969 36.1%
1970 36.2%
1971 36.3%
1972 35.0%
1973 32.9%
1974 31.8%
1975 34.2%
1976 34.8%
1977 34.5%
1978 33.5%
1979 32.1%
1980 32.5%
1981 32.0%
1982 35.8%
1983 38.8%
1984 41.2%
1985 44.8%
1986 46.3%
1987 48.3%
1988 49.5%
1989 50.5%
1990 54.1%
1991 59.4%
1992 62.2%
1993 64.1%
1994 64.2%
1995 64.9%
1996 64.5%
1997 62.9%
1998 60.8%
1999 58.5%
2000 55.2%
2001 54.7%
2002 56.7%
2003 58.9%
2004 60.1%
2005 60.6%
2006 61.4%
2007 62.2%
2008 68.1%
2009 82.6%
2010 90.6%
2011 95.3%
2012 99.4%
2013 100.3%
2014 102.3%
2015 100.6%
2016 105.4%

source: BEA.gov, US Treasury.

 

President Abraham Lincoln was given one possible response to a situation a bit like this.... except the numbers he was dealing with were tiny in comparison but......


http://www.michaeljournal.org/lincolnkennedy.htm

Melvin Sickler:

.....

For the record.....
President Lincoln's advisor who suggested this
method knew the history of the USA around 1750 in comparison to
1774.

http://www.politicalforum.com/index...cy-was-central-to-american-revolution.384573/

Is it historically accurate that monetary policy was central to American Revolution?

 

The debt was not reduced in 2004-08, quite the contrary, it grew rapidly. In the late 90s, the deficit was wiped out (started decreasing in 1993) but the total debt decreased only a fraction (about 1%)

But the explanation is simple. When the US experiences a recession, tax revenues decrease, government spending increases, which increases deficits and stops any decrease in the debt.

 

No money is created by "deficit spending".

The fact that investment taxes were cut from being equivalent to earned income taxes to half that amount may have something to do with it.

 

If.... by his call for an audit on the Federal Reserve President Donald Trump was perhaps setting himself up to save taxpayers billions of dollars in interest payments by using the Federal Reserve differently....... then.......
by initiating what most of us would tend to think of as superior Federal Reserve policy......(low or zero interest rate on infrastructure spending such as Canada did from 1940 - 1974)..... then this could lead to a significant reduction in income tax rates.... and even corporate taxation rates.

That would be one of the potentially most popular moves that President Trump and his administration could decide on.


Here is an article written by three Canadian economists in 1995 about the 1940 - 1974 highly successful Canadian central banking experiment.........


http://www.michaeljournal.org/artic...ry-debt-free-say-three-economists?/appenB.htm

.....

 

That is just a political view.

If the government collected as much in revenue as a percent of GDP as it did in 2000, the deficit would be almost completely eliminated.

 

Here is a crucial point that must be considered......

http://www.michaeljournal.org/artic...ry-debt-free-say-three-economists?/appenB.htm

 

The US Govt does not create money. Only the Fed creates base money. Banks create deposit accounts by lending.

 

But there would be hyperinflation as a consequence.

 

It would have been even a better thing to do it in 2010-2014, when we had people who needed work and income.

 

You mean the Fed is not audited!?

 

Yes... it is audited......
but President Trump calling for an audit seems to be an opening gambit
that sets up a move to alter the flavor of what the Fed is doing...... and why?

http://thehill.com/policy/finance/312662-audit-the-fed-bill-gets-new-push

'Audit the Fed' bill gets new push under Trump

 

I agree....
but it seems that at that time President Obama was preoccupied with Obamacare.

 

Canada's Prime Minister Pierre E. Trudeau, back in 1974 made what
most Canadians would agree was a terrible error.......... one of the possible reasons
why he may have done this was to decrease the amount of power in the hands of
political opponents if perhaps Canadians had elected an NDP Prime Minister in the next election???

To what degree is flawed central banking policy in the USA due to the G.O.P. and Democrats attempting to sabotage each other????

On the plus side......
terrible central banking policy does tend to be somewhat good for the environment.

http://www.politicalforum.com/index...tt-trudeau-save-the-world-environment.424298/

Did P. M. Pierre Elliott Trudeau save the world environment?


This is actually a quite serious question.

P. M. Trudeau made an error back in 1974, that may well come to be understood as one of the most important mistakes ever made by a political leader.

When P. M. Pierre Elliott Trudeau took Canada off the gold standard, (which incidentally had to be done for many valid reasons), a miscalculation was made that is the number one reason why our national debt has spiraled out of control.

But..... there is a very good side to this because all of us know that we humans have been in a somewhat similar mentality to our ancestors who shot, boiled, barbecued, roasted and fried passenger pigeons into extinction.

We are highly prone to OVER Consumptionism............. I addressed part of the background issues back in my 2006 provincial level campaign as an independent.

http://www.bankingsystemflaws.blogspot.ca/

 

Can you jump out of a plane without a parachute? That's really what you're saying when you say "we can pay our debt". Sure you can jump out of a plane without a parachute, but why would you? In the same vein, why would you repay the debt, even if you could? Repayment wouldn't result in hyperinflation, just the opposite. As the money was repaid, the value of dollars would increase but fewer people would have access to them as the quantity of dollars declines.

It's important to remember that prices are relative to salaries which are affected by the quantity of money and the population trying to earn those dollars.

Ahh, yes, thank you, that should have been interest paid on the debt as a percentage of GDP has remained fairly steady, the chart I posted illustrates this.

 

President Donald Trump has about 38 more IQ points than I do according to the most up to date estimates that I have read so far........
so I am sure that he and his team can do far, far, far more with this basic idea than I possibly could........

"A film devoid of conflict is boring." (R. W.)

Theoretically... the USA film industry could get into many aspects of what I am proposing here:


http://www.politicalforum.com/index...f-modern-world-problems-even-possible.432571/
Is a Unified Theory of Modern World Problems even possible?



and.....

http://www.politicalforum.com/index.php?threads/is-president-trumps-iq-around-156.497274/

Is President Trump's IQ around 156?

 

I find it's difficut to explain to some people the necessity of paying down the national debt. Millenials, unfamiliar with the "dark times" when tax collectors knocked on your door, and sheriffs auctioned off your property, cannot conceive the consequences of living beyond ones means. Today bankruptcies are common. No debtors prisons, or county poor houses exist. Young America doesn't appreciate the gravity of US default. War, famine, poverty, depression ... just words.

 

The likely explanation is that he is a misinformed idiot, as he has repeatedly demonstrated.

 

No, because that as passed in 2009.

It seems at the time the Republicans were preoccupied with a different agenda:



"The single most important thing we want to achieve is for President Obama to be a one-term president."

Senate Republican leader Mitch McConnell, 10/29/2010

 

A central bank, like any other human endeavor, is based on human beings which are prone to error.

The question is whether there is a superior method for making monetary policy, and a gold standard certainly is not it.