The "National Debt" is not a problem.
Debate Rounds (5)
* A government that can print its own dollars and doesn't peg their currency cannot run out of dollars. Of course, the government can't just create 22 trillion dollars from thin air, resource constraints exist. However, we are nowhere near full output.
* The "national debt" is a silly political label used to describe government bonds. They're really a "debt instrument." A leftover from the gold standard days when we had no way to raise dollars. (We weren't fiat.) Bonds now are a safe investment option for entities, and taking away this safe investment option isn't positive right now.
* A government deficit goes hand in hand with a private sector surplus. What does a deficit represent? Spending more then one is taking in. How do you think the private sector has the ability to save or get dollars?
* High levels of public sector debt do not hinder the economy as a whole. The Reinhart-roghoff paper is horribly flawed.
* Government debt is quite literally a measure of how many dollars the government has created.
* "Paying off the debt" (Exchanging bonds for dollars) would simply mean, well, you guessed it. The govt's liability doesn't change.
* A national debt is necessary for the existence of dollars for the private economy to use.
* The national debt represents a net saving of dollars, more bonds purchased than redeemed.
1. It is a good investment until the government must default because the people are no longer willing to be taxed to pay for the interest (forget the principle) or until foreign investors decide to no longer fund it because it is too risky, destroying the value of the dollar, which screws the economy.
2. No, there is no such thing as a private sector surplus, for the private sector can always find things to spend its money on. The government is simply competing with other capital markets, destroying productive investment for redistribution of wealth schemes to buy votes. And let us not forget that the government can print money.
3. At least not until they have to be paid back. See number 1. And then there is the loss of private sector capital investment, which crushes an economy, preventing it from growing.
4. Nonsense, for the government does not create dollars, but consumes them. I assume here that you mean in terms of economic growth, not the printing of dollars.
5. Nonsense. The private economy is excellent at creating growth and is hinder when the government takes its money to do so.
6. Nonsense, the nation debt is not savings, but spending. Where do you get these silly notions?
1.) It is technically impossible for the us government to default. We can create dollars from thin air and have been doing it for decades, we're no longer on the gold standard.
2.) Wait, "taxed to pay for the interest?" You do realize entities are seeking out bonds even in times of extremely low interest rates, you know why? Bonds are a safe place to park earned dollars, even China knows this. It's hardly a "debt." These entities will be very angry if we stop allowing them to park dollars in bonds. Foreign investors love our bonds, they know it's safe, even with very low interest rates. The value of the dollar is fine. We're nowhere near full output, full employment..
- Claiming that the private sector can't have a surplus is.. funny to say the least. Do you know anything about sectoral balances?
- The private sector does not handle debt well at all, just look at what happened with the clinton surplus. (Disastrous.) Of course, you know how the private sector gets debt free dollars? Deficit spending. This isn't debatable.
- The us government is not destroying "productive investment." The economy as we know it would collapse without government interference. Deficit spending directly helps the private sector and the citizens. The stimulus is an example of this, although it was far to small.
- "Loss of private sector capital investment."
It seems like you're running with the idea that the private sector is going to lose the ability to invest or something silly along those lines. No hypothetical's, or I'm done. Remember, entities are still parking dollars in the form of bonds even with low interest rates.
- The us government doesn't create dollars? I'm sorry, but you're demonstrating that you know little about economics and the reality of the united states economy. What do you think deficit spending is?
- The national debt represents a net savings of dollars. I shouldn't have to explain why this is. How do you think the dollars got there?
- Yes, the private economy is indeed good at creating growth when it doesn't have to take on debt/worry about low demand. Here's the reality: The private sector needs liability free dollars, and they get them from the us govt in the form of deficit spending. When we slip into recessions, we tend to employ keynesian methods, and they work. The problem is, politicians are afraid to deficit spend to full employment/full output, due to an irrational fear of government bonds.
- The national debt represents government bonds.. you know what a government bond is, right? Think about your savings point again.
1) And it is very possible for the government to default. When interest payments on the debt exceed the political will to tax, the government will default. You solution of printing more money will cause hyper inflation, which destroys the economy and causes bond rates to skyrocket, which compounds, not solves the problem.
2) Yes, bonds are safe, because of the power to tax, not print money, but then comes default. And are you seriously denying the national debt is debt? ROFL Where is Mr. Orwell when you need him? BTW, China is using their massive trade surplus of dollars to invest all over the world to eventually become the preeminent economy. When this happens, their currency will replace ours as the world reserve and then you will find U.S. bonds worthless. This is why China has threated to sell all of their bond and cease being our number 1 creditor. Your short term thinking is killing this country.
3) And no, the private sector does not have a surplus because they are either investing their profits or paying them out as dividends. By wanting to tax companies (and individuals) more to pay for your debt service, you are taking money away from them to invest or pay dividends, hurting everyone. And the private sector handles debt very well, for their incentives are not as perverse as governments. Private companies use debt to improve their/offer new products. Government uses debt to buy votes, especially of the lower classes. The private companies would give them jobs. Government gives them freebies.
4) And yes, when the government taxes people, it takes money away from them that they could invest. By the government competing for investment dollars it takes away those investment dollars from private citizens. You need to know how these work before you make a fool of yourself in these debates. Your claim that the economy would collapse without government is absurd, which is why you offered no proof. Sorry, but Commie economics died a long time ago, at least for those of us living in the real world.
5) I know this will blow your mind, but every dollar the government takes from a company or an individual is a dollar the private sector does not have to spend. You get this right? Let me do the math for you, if you gross pay is $5K per month, but only $3.5K after taxes, do you have $5K to spend of $3.5K to spend?
6) The private sector is amazing at creating growth, which is why they government should get out of their way. And no, the private sector needs to be left alone, not given corporate welfare, which forces citizens to buy products they do not want from entitles they do not want to do business with. This is slavery. No thank you. BTW, recessions are caused by government interference in the market, not free people engaged in private trade.
7) The national debt is a government liability that must be paid back. I prefer to spend my money as I see fit. Thanks anyway.
Unlimited spending is silly, spending Is limited by real resources. However, we can afford to spend until we are at maximum output. You keep saying "government borrowing." China decided to get bonds with US dollars they've earned, what's the problem? You appear to be arguing from ideology, which I do not enjoy entertaining since ideology causes one to ignore simple facts. A minimum wage does indeed affect the labor market, increasing demand, causing some businesses to lay people off... Nothing is perfect, but all of the MW increases in US history have not led to a great "collapse" of the private/public sector, so I don't want to talk about that.
1.) Please explain how a country sovereign in its currency (fiat) can ever default. Wait.. I think I understand what you're arguing. You believe that the government has been taxing to pay for things. That's not how it works. Think of it this way. An entity has dollars in a treasury security and wants to move them to a reserve account, with a tiny bit of interest. Remember, all bonds "roll over" at different times. And since the entities holding bonds tend to never convert them to dollars to use in the economy, it's absurd to say "hyper inflation" will occur. In fact, hyper inflation has only ever occurred when connected to resource issues. When the economy can't produce enough to keep up with dollars added, of course inflation will occur. But we're nowhere near that point, and some numbers on a computer aren't going to change that. Bonds are safe because the us govt ensures they're a safe tool for entities to park dollars. Where do you think the dollars the government taxes to destroy come from? (That's right, taxes aren't "used" for anything, not operationally at the federal level.") A gold coin doesn't magically appear somewhere when the government gets your taxes, in fact, the government gets nothing of value. Taxes exist to regulate demand/control inflation/create a demand for the currency. It's all accounting when we hear about things like the trust fund..
I refuse to call the "national debt" "debt" in the common usage of the word. It's simply government bonds, and entities love having a safe place to park dollars. I don't want to flirt with conspiracy theories about China, we're talking about the united states government bonds. China is not going to "sell all of their bonds." I've heard this before, and it's never come to pass. Even with near 0 IR'S, china is still using their earned US dollars to get bonds.
3.) You really need to understand sectoral balances and stop going off of ideology. When the government spends more than it taxes, well, first of all, GDP increases, and the private sector gets plenty of liability free dollars. Of course, the private sector is already in loads of debt, but the private sector doesn't take on as much debt when we run deficits. You immediately assume I am in favor of higher taxes, a byproduct of your ideology. I am in favor of lower taxes and higher spending to get us to the point of full output, and from there, we adjust things. You are also assuming that the government has to take from somewhere else to add numbers to a spreadsheet. That is not the case. The private sector doesn't handle debt well, at all. I urge you to look into the private sector debt taken on during the clinton surplus, and the disaster that followed. We saw something similar recently.. Something about housing. Your ideology is creeping back in. Claiming the government is "perverse" is silly ideological.. nonsense. You make this assumption that the private sector handles debt better then the government, which can't be demonstrated to be true at all. In fact, every time we've run a surplus in united states history, the private sector has taken on large amounts of debt and recessions followed. This isn't debatable. Saying the government uses debt to "buy votes" is absurd. Without debt, none of us would have liability free US dollars. You claim that government spending doesn't create jobs.. I point you to the new deal/world war 2/infrastructure building up in the 50s/60s, the recent (weak) stimulus..
4.) You assume speculative investments are a good thing. Demand is what drives economies, consumers. I am not in favor of higher taxes, not at this point, after all, taxes aren't used operationally to "fund" anything at the federal level. What??? The government "competing" for investment dollars?? The government has been creating dollars from thin air for decades, that is how WE the people and businesses have liability free dollars. Your idea that the government "takes from taxpayers" is ideological nonsense only relevant to the pre 30's. The government has to spend before it can tax. "Commie economics." I take an accounting perspective to the economy, and recognize that we're fiat, our currency is not pegged, and we've been spending for decades from thin air. This isn't debatable. Even ronald reagan loved deficits, and when they were cut, a recession occurred. Ain't that something? This isn't "commie economics" considering I support lower taxes.
The economy would indeed collapse without the government, the private sector would lose its source of liability free dollars, and we would lose the public sector completely. Demand would drastically decrease due to those who spend the most, the poor/middle class, losing dollars. (Dollars get sucked up at the top if in circulation long enough, the government adds new dollars to compensate..)
5.) Utter absurdity. In fact, deficits directly represent THE GOVERNMENT SPENDING MORE THEN IT'S TAXING. And spending directly benefits the private sector, if the government is running a deficit. Economists agree a deficit goes hand in hand with less private sector debt/more private sector savings. Sectoral balances 101.
6.) The private sector cannot possibly provide enough growth to account for our trade deficit and the host of other things we have to deal with. Making almost religious claims about the private sector not ground in reality is foolish. Saying recessions are caused by government interference is absolute absurdity with no historical basis. Recessions come and go, and governments have to step in with Keynesian policies to make things right. We've had many recessions before we adopted keynesian policy, and every single one lasted longer then recessions after the GD. Every single time we've tried to cut the debt/drastically cut spending, a recession has followed. The private sector can't handle recessions well at all.
7.) The national debt is a representation of saved dollars, and it represents PEOPLE using their earned us dollars as they see fit. Parking the dollars in the form of bonds.
Deficit_Owl forfeited this round.
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