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The National Debt is not what you think it is

akphidelt
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8/4/2011 2:42:48 AM
Posted: 5 years ago
First off our country is stupid. The simple terminology it uses makes everyone think we are "borrowing" our own money. If we didn't issue bonds with our spending our Government would just have seigniorage over USD issuance. But instead we have to follow through with old Gold Standard logic. But what you gotta try to comprehend is that the system is a series of debits and credits. Every asset has a corresponding liability. Every dollar in existence is backed by a corresponding debt.

Think about this. Every year we have a large portion of the debt mature. Why isn't principle payments on maturing debt included as a Government expenditure? Only interest is considered an expense.

This is interesting, because if you think about the correlation between asset/liability the reason why principal payments on maturing debt is not included as an expense is because taxes can not pay for principal. If you used tax money to pay off the maturing principal debt, you would have money that is no longer backed by debt. The Govt would have to issue new debt to cover that un-backed money. That is why you will never ever pay off the national debt. You won't pay it off, because by accounting identity you can't pay it off, you can't even pay it down.

Principal pays for principal
Taxes pay for spending - deficit spending
Deficit spending does not exist (it has to be "borrowed")

Want to know how the Govt creates money through deficit spending?

This is how simple it is.

I have $1000 in Bank A
The Govt issues $1000 treasury
Bank A lends $1000 to the Govt to purchase the treasury
The Govt buys a widget from you for $1000

I now have $1000, you now have $1000.

Over 80% of Govt debt auctioned off is bought by banks who then create a secondary market. What money do you think the banks are using? Yes, they aren't using any real money. They are "lending" money to the Govt. It's all accounting. Govt Debt is simply all the money we have that we don't owe to banks.
Ragnar_Rahl
Posts: 19,297
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8/4/2011 3:13:42 AM
Posted: 5 years ago
At 8/4/2011 2:42:48 AM, akphidelt wrote:
Think about this. Every year we have a large portion of the debt mature. Why isn't principle payments on maturing debt included as a Government expenditure?
Principal was counted in previous years when the spending the loan exists to cover happened, presumably.

. If you used tax money to pay off the maturing principal debt, you would have money that is no longer backed by debt.
"Cash backed by debt" always strikes me as an absurdity. You turn it in and you owe? That's not a back, that's a "Front" if you will-- it's a reason NOT to have the money, if it were to happen.
No, it's backed by the fact that you need the cash to pay your taxes.

If you're speaking some economics jargon where up is down, well, have fun, but in plain English your concept contradicts itself

The Govt would have to issue new debt to cover that un-backed money.
Why?

Principal pays for principal
Taxes pay for spending - deficit spending
Is that supposed to be subtraction or something else? If taxes (or user fees) pay for spending, it's not deficit spending, it's just spending.

Deficit spending does not exist (it has to be "borrowed")
Weight does not exist it has to fall? If something doesn't exist it doesn't have needs.

I have $1000 in Bank A
The Govt issues $1000 treasury
Bank A lends $1000 to the Govt to purchase the treasury
The Govt buys a widget from you for $1000

I now have $1000, you now have $1000
Investor that bought the treasury has $1000 dollars less and the govt is liable. You started with $1000 here.


Over 80% of Govt debt auctioned off is bought by banks who then create a secondary market. What money do you think the banks are using? Yes, they aren't using any real money. They are "lending" money to the Govt. It's all accounting. Govt Debt is simply all the money we have that we don't owe to banks.
They aren't using ANY legal tender ("Real money" you could mean any number of things by, is that what you mean)? Then how do I go to the bank and get legal tender? I've done that before you know. Surely they are using some. Yes, fractional reserve banking does certain things, but it's not clear what you are saying it does.

In short, your explanation sucks, it's not clear what your complaint is let alone what you're advocating.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
Tiel
Posts: 1,500
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8/4/2011 3:36:47 AM
Posted: 5 years ago
Observation: It would seem that you are having trouble understanding something yet again Ragnar. Maybe if you would quit thinking that you know everything and acting so stubborn, you might learn something and be able to understand some things that you currently do not. Wisdom is found in humility and wonder, not in arrogance and ignorance.

Either way, it's your choice. It's just a word of advice from someone who had to learn this lesson the long way.

May the Light brighten your path with new clarity and a fresh perspective.
"Only the inner force of curiosity and wonder about the unknown, or an outer force upon your free will, can brake the shackles of your current perception."
akphidelt
Posts: 13
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8/4/2011 4:25:07 AM
Posted: 5 years ago
@Ragnar_rahl

What you said makes absolutely no sense. You didn't bring up any significant rebuttal. If you want me to go in to the accounting of how deficit spending creates money then I will.

But if you are going to have this arrogant way to you, then don't bother responding.

I'm not sure what in the heck you were even trying to say there. I'm not trying to get in to the philosophy of what money is or what money isn't. I'm simply discussing the checks and balances of our economy. Everything I said is 100% factually correct.

So, I'm sorry you do not understand.
Wnope
Posts: 6,924
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8/4/2011 6:47:48 PM
Posted: 5 years ago
At 8/4/2011 2:42:48 AM, akphidelt wrote:
First off our country is stupid. The simple terminology it uses makes everyone think we are "borrowing" our own money. If we didn't issue bonds with our spending our Government would just have seigniorage over USD issuance. But instead we have to follow through with old Gold Standard logic. But what you gotta try to comprehend is that the system is a series of debits and credits. Every asset has a corresponding liability. Every dollar in existence is backed by a corresponding debt.


What does this have to do with "Gold Standard Logic?"
akphidelt
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8/4/2011 7:42:26 PM
Posted: 5 years ago
At 8/4/2011 6:47:48 PM, Wnope wrote:

What does this have to do with "Gold Standard Logic?"

Since the quantity of gold is limited to how much gold you have, the Govt would have to borrow before they could spend. They were revenue constrained.

Now that there is no gold and there is no where to find "new" USD... USD has to be created. And our system still requires the Govt to borrow this made up currency before they can spend it. The process is simply done by banks lending money to the Govt like they do you and I. Basically created out of "thin air".
Ore_Ele
Posts: 25,980
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8/4/2011 7:44:08 PM
Posted: 5 years ago
At 8/4/2011 7:42:26 PM, akphidelt wrote:
At 8/4/2011 6:47:48 PM, Wnope wrote:

What does this have to do with "Gold Standard Logic?"

Since the quantity of gold is limited to how much gold you have, the Govt would have to borrow before they could spend. They were revenue constrained.

Now that there is no gold and there is no where to find "new" USD... USD has to be created. And our system still requires the Govt to borrow this made up currency before they can spend it. The process is simply done by banks lending money to the Govt like they do you and I. Basically created out of "thin air".

There's no real difference. You can "create" more gold by mining it up. Which one can argue that there is only a limited amount of gold in the world, the same it true for paper for paper money, or metal coins. It is all limited, just not as limited.
"Wanting Red Rhino Pill to have gender"
akphidelt
Posts: 13
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8/4/2011 7:49:03 PM
Posted: 5 years ago
At 8/4/2011 7:44:08 PM, Ore_Ele wrote:
At 8/4/2011 7:42:26 PM, akphidelt wrote:
At 8/4/2011 6:47:48 PM, Wnope wrote:

What does this have to do with "Gold Standard Logic?"

Since the quantity of gold is limited to how much gold you have, the Govt would have to borrow before they could spend. They were revenue constrained.

Now that there is no gold and there is no where to find "new" USD... USD has to be created. And our system still requires the Govt to borrow this made up currency before they can spend it. The process is simply done by banks lending money to the Govt like they do you and I. Basically created out of "thin air".

There's no real difference. You can "create" more gold by mining it up. Which one can argue that there is only a limited amount of gold in the world, the same it true for paper for paper money, or metal coins. It is all limited, just not as limited.

There is a huge difference. One is a commodity that you have to find... and is scarce. The other has no limit and you don't have to find it. You can create an infinite amount of dollars using paper and computers.
Ragnar_Rahl
Posts: 19,297
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8/4/2011 8:49:44 PM
Posted: 5 years ago
At 8/4/2011 7:49:03 PM, akphidelt wrote:
At 8/4/2011 7:44:08 PM, Ore_Ele wrote:
At 8/4/2011 7:42:26 PM, akphidelt wrote:
At 8/4/2011 6:47:48 PM, Wnope wrote:

What does this have to do with "Gold Standard Logic?"

Since the quantity of gold is limited to how much gold you have, the Govt would have to borrow before they could spend. They were revenue constrained.

Now that there is no gold and there is no where to find "new" USD... USD has to be created. And our system still requires the Govt to borrow this made up currency before they can spend it. The process is simply done by banks lending money to the Govt like they do you and I. Basically created out of "thin air".

There's no real difference. You can "create" more gold by mining it up. Which one can argue that there is only a limited amount of gold in the world, the same it true for paper for paper money, or metal coins. It is all limited, just not as limited.

There is a huge difference. One is a commodity that you have to find... and is scarce. The other has no limit and you don't have to find it. You can create an infinite amount of dollars using paper and computers.

Correction, the gov't can. For you it's a crime.

And there are consequences to them doing it too much.

What you said makes absolutely no sense. You didn't bring up any significant rebuttal.
Actually, I did. And you haven't addressed those parts.

If you want me to go in to the accounting of how deficit spending creates money then I will.
I thought that was what you were trying to do here. Go on, at face value it's absurd.

I'm not sure what in the heck you were even trying to say there.
Turnabout is fair play ^_^

I'm not trying to get in to the philosophy of what money is or what money isn't. I'm simply discussing the checks and balances of our economy.
That sounds like a philosophical point.

Everything I said is 100% factually correct.
Saying doesn't make it so.

It would seem that you are having trouble understanding something yet again Ragnar.
Tiel, do you understand what he said?

Maybe if you would quit thinking that you know everything and acting so stubborn, you might learn something and be able to understand some things that you currently do not.
Does not follow.

Wisdom is found in humility and wonder, not in arrogance and ignorance.
Package deal fallacy, and bare assertion.

It's just a word of advice from someone who had to learn this lesson the long way.
I listen to reasoned arguments, not "Words of advice" from an ad hominem.

May the Light brighten your path with new clarity and a fresh perspective.
Vague pseudotheological koans get you nowhere.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
akphidelt
Posts: 13
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8/4/2011 9:30:00 PM
Posted: 5 years ago
@Ragnar_Rahl

I have absolutely no clue what you are trying to say here. I speak in logical, mathematical, and economic terms. Everything you said there is nonsensical. I'm not going to take part in this philosophical arguments.

Your arguments are weak. Of course I know I can't create money out of thin air and of course I know printing too much money has consequences.

I'm speaking about operational realities of our economic system. Not the philosophical impacts of such system.

If you have a rebuttal that involves an actual case that includes either accounting, economics, or math, then we can start having a reasonable debate.

But I have a feeling you will just respond to everything I said above with more philosophical bull crap. So my hopes are low.
Ragnar_Rahl
Posts: 19,297
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8/4/2011 10:01:16 PM
Posted: 5 years ago
At 8/4/2011 9:30:00 PM, akphidelt wrote:
@Ragnar_Rahl

I have absolutely no clue what you are trying to say here. I speak in logical, mathematical, and economic terms.
Wishing doesn't make it so.

Everything you said there is nonsensical. I'm not going to take part in this philosophical arguments.
Logic is part of epistemology, a branch of philosophy. Make up your mind.


Your arguments are weak. Of course I know I can't create money out of thin air and of course I know printing too much money has consequences.

I'm speaking about operational realities of our economic system. Not the philosophical impacts of such system.
Philosophy is about reality.
Tell me WHAT you are saying about these supposed "operational realities," and what you think that implies.


If you have a rebuttal that involves an actual case that includes either accounting, economics, or math, then we can start having a reasonable debate.
I see you ignored my response to the 1000 dollars scenario (one of the few parts of your original post where what you were saying was clear).

Math without context is meaningless. And btw the only math you used in your case was the number 1000-- which I responded to with an argument about your accounting, don't ask for something you've already gotten as though you haven't, and the random, context-free, meaningless factoid that "Over 80% of Govt debt auctioned off is bought by banks who then create a secondary market. "

It seems to me as though you're taking an economics textbook on faith but not remembering its arguments very well, and none of your subsequent posts have clarified what exactly you're trying to prove, let alone how you get there. There were sections in your OP with subarguments that were coherent, but as a whole, they just don't seem to make a broader argument. In the terms of the thread title-- I don't know what you think we think the National Debt is, and I don't know what you think the National Debt is.

Am I missing something? Oreele, you don't agree with me often but you're usually coherent to me-- Do you have any idea what he's trying to prove and how, as a broad point? Anyone else have a clue? Chime in if ya do. I can't agree or disagree with a guy if I don't know what he's trying to say.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
akphidelt
Posts: 13
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8/4/2011 10:16:35 PM
Posted: 5 years ago
Ragnar_Rahl

I'm sorry once again I do not see anything you said that applies to the context of the post. I really am not going to get in stupid philosophical discrepancies over what I said. I explained my point of view pretty clear. If you have something to say, then say it, the thing I hate most in life is philosophers. Get to the point.

What exactly about my accounting do you not agree with?

You are embarrassing yourself with these comments. I think everyone can clearly see that you have not really said anything at all. Is the sky blue?
mongoose
Posts: 3,500
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8/4/2011 10:55:55 PM
Posted: 5 years ago
At 8/4/2011 2:42:48 AM, akphidelt wrote:
Govt Debt is simply all the money we have that we don't owe to banks.

Government debt is the total amount of money that the government owes others. What are you even trying to say?
It is odd when one's capacity for compassion is measured not in what he is willing to do by his own time, effort, and property, but what he will force others to do with their own property instead.
akphidelt
Posts: 13
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8/4/2011 11:09:11 PM
Posted: 5 years ago
At 8/4/2011 10:55:55 PM, mongoose wrote:
At 8/4/2011 2:42:48 AM, akphidelt wrote:
Govt Debt is simply all the money we have that we don't owe to banks.

Government debt is the total amount of money that the government owes others. What are you even trying to say?

I'm saying that the government debt is really government spending.It is the United States of America's base money supply that we use to pay our taxes and pay the interest on the National Debt (aka the base money supply).

Think about it. Back in the day USD used to be backed by gold. So now you think maybe the USD is backed by nothing. But that is false. The USD is backed by debt. Every single dollar in existence outside of a bank loan is backed by US debt.

Govt Deficits = Private Sector Savings

The national debt is simply the amount of money the Govt has spent in to existence for us to create and purchase goods and services.
darkkermit
Posts: 11,204
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8/4/2011 11:12:52 PM
Posted: 5 years ago
At 8/4/2011 11:09:11 PM, akphidelt wrote:
At 8/4/2011 10:55:55 PM, mongoose wrote:
At 8/4/2011 2:42:48 AM, akphidelt wrote:
Govt Debt is simply all the money we have that we don't owe to banks.

Government debt is the total amount of money that the government owes others. What are you even trying to say?

I'm saying that the government debt is really government spending.It is the United States of America's base money supply that we use to pay our taxes and pay the interest on the National Debt (aka the base money supply).

Think about it. Back in the day USD used to be backed by gold. So now you think maybe the USD is backed by nothing. But that is false. The USD is backed by debt. Every single dollar in existence outside of a bank loan is backed by US debt.

Govt Deficits = Private Sector Savings

The national debt is simply the amount of money the Govt has spent in to existence for us to create and purchase goods and services.

Are you referring to the multiplier effected created by debt used in fractional reserve banking or are you referring to the FED's open market transactions in which treasury bonds are bought and sold.

By the way, fractional reserve banking has existed long before going off the gold standard.
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akphidelt
Posts: 13
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8/4/2011 11:31:32 PM
Posted: 5 years ago
At 8/4/2011 11:12:52 PM, darkkermit wrote:
At 8/4/2011 11:09:11 PM, akphidelt wrote:
At 8/4/2011 10:55:55 PM, mongoose wrote:
At 8/4/2011 2:42:48 AM, akphidelt wrote:
Govt Debt is simply all the money we have that we don't owe to banks.

Government debt is the total amount of money that the government owes others. What are you even trying to say?

I'm saying that the government debt is really government spending.It is the United States of America's base money supply that we use to pay our taxes and pay the interest on the National Debt (aka the base money supply).

Think about it. Back in the day USD used to be backed by gold. So now you think maybe the USD is backed by nothing. But that is false. The USD is backed by debt. Every single dollar in existence outside of a bank loan is backed by US debt.

Govt Deficits = Private Sector Savings

The national debt is simply the amount of money the Govt has spent in to existence for us to create and purchase goods and services.

Are you referring to the multiplier effected created by debt used in fractional reserve banking or are you referring to the FED's open market transactions in which treasury bonds are bought and sold.

By the way, fractional reserve banking has existed long before going off the gold standard.

No. Fractional reserve banking has a limit. It is constricted by the amount of reserves it has. Under the gold standard when people found more gold and deposited it in to banks, reserves would increase and the money multiplier effect would go in to effect. But banks can't create these reserves. They can only loan up to what reserves they are given or these days "borrowed".

And the Federal Reserve is only limited to already purchased securities. So they don't "create" money. They increase reserves in the banking system by swapping interest bearing govt debt with non-interest bearing govt debt. This is one of the ways that banks are allowed to lend more money.

But none of this can happen with out a base of money. What I'm explaining here is the base of money is the Govt debt. What people think is the Govt "borrowing" is really the Govt spending.
darkkermit
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8/4/2011 11:42:22 PM
Posted: 5 years ago
At 8/4/2011 11:31:32 PM, akphidelt wrote:
At 8/4/2011 11:12:52 PM, darkkermit wrote:
At 8/4/2011 11:09:11 PM, akphidelt wrote:
At 8/4/2011 10:55:55 PM, mongoose wrote:
At 8/4/2011 2:42:48 AM, akphidelt wrote:
Govt Debt is simply all the money we have that we don't owe to banks.

Government debt is the total amount of money that the government owes others. What are you even trying to say?

I'm saying that the government debt is really government spending.It is the United States of America's base money supply that we use to pay our taxes and pay the interest on the National Debt (aka the base money supply).

Think about it. Back in the day USD used to be backed by gold. So now you think maybe the USD is backed by nothing. But that is false. The USD is backed by debt. Every single dollar in existence outside of a bank loan is backed by US debt.

Govt Deficits = Private Sector Savings

The national debt is simply the amount of money the Govt has spent in to existence for us to create and purchase goods and services.

Are you referring to the multiplier effected created by debt used in fractional reserve banking or are you referring to the FED's open market transactions in which treasury bonds are bought and sold.

By the way, fractional reserve banking has existed long before going off the gold standard.

No. Fractional reserve banking has a limit. It is constricted by the amount of reserves it has. Under the gold standard when people found more gold and deposited it in to banks, reserves would increase and the money multiplier effect would go in to effect. But banks can't create these reserves. They can only loan up to what reserves they are given or these days "borrowed".

And the Federal Reserve is only limited to already purchased securities. So they don't "create" money. They increase reserves in the banking system by swapping interest bearing govt debt with non-interest bearing govt debt. This is one of the ways that banks are allowed to lend more money.

But none of this can happen with out a base of money. What I'm explaining here is the base of money is the Govt debt. What people think is the Govt "borrowing" is really the Govt spending.

I think I understand your point. Since treasury bonds are essentially what creates base money, am I correct? No treasury bonds = No money.
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akphidelt
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8/4/2011 11:55:31 PM
Posted: 5 years ago
At 8/4/2011 11:42:22 PM, darkkermit wrote:
I think I understand your point. Since treasury bonds are essentially what creates base money, am I correct? No treasury bonds = No money.

Exactly. Our money is backed by debt. That is why principal on maturing debt is not included as a Govt expense. Because it already exists.

So when the Govt deficit spends it spends. The way they issue debt is usually just by taking a loan from one of their "special" market dealing banks.

It really is a stupid system because it causes so much friggin confusion. Everyone thinks when the Govt "borrows" they are taking money from them but what they don't realize is the Govt is giving them money.
darkkermit
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8/5/2011 12:02:59 AM
Posted: 5 years ago
At 8/4/2011 11:55:31 PM, akphidelt wrote:
At 8/4/2011 11:42:22 PM, darkkermit wrote:
I think I understand your point. Since treasury bonds are essentially what creates base money, am I correct? No treasury bonds = No money.

Exactly. Our money is backed by debt. That is why principal on maturing debt is not included as a Govt expense. Because it already exists.

So when the Govt deficit spends it spends. The way they issue debt is usually just by taking a loan from one of their "special" market dealing banks.

It really is a stupid system because it causes so much friggin confusion. Everyone thinks when the Govt "borrows" they are taking money from them but what they don't realize is the Govt is giving them money.

If the government borrows money, it is actually contracting the money supply. Selling treasury bonds decreases the money supply. If the FED buys the treasury bonds, then the money supply increases, which is really a form of monetization of the debt.
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akphidelt
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8/5/2011 12:11:39 AM
Posted: 5 years ago
At 8/5/2011 12:02:59 AM, darkkermit wrote:
If the government borrows money, it is actually contracting the money supply. Selling treasury bonds decreases the money supply. If the FED buys the treasury bonds, then the money supply increases, which is really a form of monetization of the debt.

This is what I'm trying to say. The Govt doesn't "borrow" money. They issue debt. And the debt is what is the money. Whether China buys it from the Govt or you buy it from the Govt, or the bank buys it from the Govt, it becomes a net asset to country.

When the Fed's buy bonds they 99% of the time buy bonds just from banks. It is meant to target reserves. The Fed's don't increase the money supply by giving the treasury holder back his money. The Fed's increase the money supply by increasing reserves, which means the banks can now lend more money.

But regardless of who purchases the treasury... it never disappears. If the Fed owns a treasury, they will just roll it over and the treasury will still be backing the same amount of money it spent. The only thing the Govt creates is the interest because that money doesn't exist in the system. That is why that is including in Govt expenditures but principal payments are not.

So in essence, the Fed just plays with Govt spent money to increase/decrease reserves which increases/decreases the demand for money so that banks can lend more or less.
darkkermit
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8/5/2011 12:24:52 AM
Posted: 5 years ago
At 8/5/2011 12:11:39 AM, akphidelt wrote:


This is what I'm trying to say. The Govt doesn't "borrow" money. They issue debt.

Borrowing money means going into debt.

And the debt is what is the money.

It depends who holds the bond last. If the bond holder is the FED, then the debt becomes money. Essential, If the FED owns the bond its basically a in debt to oneself, since the interest goes back to congress. If the bond holder is myself, then the government has to pay me money. Essentially it isn't that money is debt, but money is created via government spending.

Whether China buys it from the Govt or you buy it from the Govt, or the bank buys it from the Govt, it becomes a net asset to country.

Yes


When the Fed's buy bonds they 99% of the time buy bonds just from banks. It is meant to target reserves.

Yes

The Fed's don't increase the money supply by giving the treasury holder back his money. The Fed's increase the money supply by increasing reserves, which means the banks can now lend more money.

Well that, and the fact that the treasury bond has been exchanged for cash, the bank has more cash as well.

But regardless of who purchases the treasury... it never disappears. If the Fed owns a treasury, they will just roll it over and the treasury will still be backing the same amount of money it spent. The only thing the Govt creates is the interest because that money doesn't exist in the system. That is why that is including in Govt expenditures but principal payments are not.

So in essence, the Fed just plays with Govt spent money to increase/decrease reserves which increases/decreases the demand for money so that banks can lend more or less.
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akphidelt
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8/5/2011 12:48:40 AM
Posted: 5 years ago
At 8/5/2011 12:24:52 AM, darkkermit wrote:

Borrowing money means going into debt.

Yes, all money is debt. So is there any other way for the US to create it's own made up currency with out going in debt?


It depends who holds the bond last. If the bond holder is the FED, then the debt becomes money. Essential, If the FED owns the bond its basically a in debt to oneself, since the interest goes back to congress. If the bond holder is myself, then the government has to pay me money. Essentially it isn't that money is debt, but money is created via government spending.

It does not depend on who holds the bond last. The bond never disappears. If the Govt pays you off for your bond they roll that bond over in the next auction. If the Fed owns a bond, they get paid for interest, give most of it back to the treasury, and they just roll over the principal with new debt. The Fed always has the same amount of treasuries until they sell or buy more regardless of when they mature. Principal on bonds never disappears. It is always rolled over because it is backs existing money. So accounting wise it doesn't matter who owns it... interest will be an expense, and the principal will be rolled over. Even the bonds the Govt owns themselves.

Whether China buys it from the Govt or you buy it from the Govt, or the bank buys it from the Govt, it becomes a net asset to country.

Yes


When the Fed's buy bonds they 99% of the time buy bonds just from banks. It is meant to target reserves.

Yes

The Fed's don't increase the money supply by giving the treasury holder back his money. The Fed's increase the money supply by increasing reserves, which means the banks can now lend more money.

Well that, and the fact that the treasury bond has been exchanged for cash, the bank has more cash as well.

The banks have more reserves. The banks can't lend reserves and they can't use reserves to do anything with. They don't profit from having reserves since reserves are backed by our deposits. If you want to see the accounting transition between this I can go in to more detail
Ragnar_Rahl
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8/5/2011 3:39:18 AM
Posted: 5 years ago
At 8/4/2011 10:16:35 PM, akphidelt wrote:
I explained my point of view pretty clear.
Wishing doesn't make it so.
If you have something to say, then say it, the thing I hate most in life is philosophers.
What on earth did you learn to think "philosopher" means?
Get to the point.
That's one way to rephrase my request to you.

What exactly about my accounting do you not agree with?
Some of it isn't clear what you're saying. Some of the rest of it, well, I'll quote myself, in areas you haven't addressed.

"Principal was counted in previous years when the spending the loan exists to cover happened, presumably."

"No, it's backed by the fact that you need the cash to pay your taxes."

" If taxes (or user fees) pay for spending, it's not deficit spending, it's just spending.
"

" If something doesn't exist it doesn't have needs."

"Investor that bought the treasury has $1000 dollars less and the govt is liable. You started with $1000 here."

(Note: The unspoken conclusion is that the net change in money is zero).

"They aren't using ANY legal tender ("Real money" you could mean any number of things by, is that what you mean)? Then how do I go to the bank and get legal tender? I've done that before you know. Surely they are using some."


You are embarrassing yourself with these comments.
Fallacy, argument from intimidation

...This is what I'm trying to say.
But it's the opposite of what he quoted you saying.

The Govt doesn't "borrow" money. They issue debt. And the debt is what is the money
It issues a treasury bond. It takes in currency. Are you saying currency isn't money, treasury bonds are?
But wait, you've already said you're not discussing what money is?

So accounting wise it doesn't matter who owns it... interest will be an expense, and the principal will be rolled over. Even the bonds the Govt owns themselves.
How do you sell your cake and own it too? Why would anyone be a buyer?
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
akphidelt
Posts: 13
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8/5/2011 12:21:17 PM
Posted: 5 years ago
At 8/5/2011 3:39:18 AM, Ragnar_Rahl wrote:
The Govt doesn't "borrow" money. They issue debt. And the debt is what is the money
It issues a treasury bond. It takes in currency. Are you saying currency isn't money, treasury bonds are?

Does it take in currency? Think about what I've been saying... since you like to be all cryptic and crap.

So accounting wise it doesn't matter who owns it... interest will be an expense, and the principal will be rolled over. Even the bonds the Govt owns themselves.
How do you sell your cake and own it too? Why would anyone be a buyer?
Because they can buy iPhones and crap with those useless pieces of paper. People want USD because we are the most robust and productive nation in the world.

It would be nice if you asked more direct questions. My claim is Govt debt is really Govt spending and all the money we have to pay taxes is actually the Govt debt itself. So instead of writing more red-herrings, to ask direct and pointed questions or give me examples involving math of how I am incorrect.
TheAtheistAllegiance
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8/6/2011 9:32:55 PM
Posted: 5 years ago
At 8/4/2011 3:36:47 AM, Tiel wrote:
Observation: It would seem that you are having trouble understanding something yet again Ragnar. Maybe if you would quit thinking that you know everything and acting so stubborn, you might learn something and be able to understand some things that you currently do not. Wisdom is found in humility and wonder, not in arrogance and ignorance.

Either way, it's your choice. It's just a word of advice from someone who had to learn this lesson the long way.

May the Light brighten your path with new clarity and a fresh perspective.

What are you, the official DDO Buddhist? Quit being so gay and try adding something of substance to the conversation instead of acting like your Ragnar's dad or something.
sadolite
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8/7/2011 7:20:44 PM
Posted: 5 years ago
If you include the unfunded liabilities of social security medicare and medicaid the actual debt is about 200 trillion or about 1/4 of a Steinhaus-Moser notation.
It's not your views that divide us, it's what you think my views should be that divides us.

If you think I will give up my rights and forsake social etiquette to make you "FEEL" better you are sadly mistaken

If liberal democrats would just stop shooting people gun violence would drop by 90%
akphidelt
Posts: 13
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8/7/2011 11:18:26 PM
Posted: 5 years ago
At 8/7/2011 7:20:44 PM, sadolite wrote:
If you include the unfunded liabilities of social security medicare and medicaid the actual debt is about 200 trillion or about 1/4 of a Steinhaus-Moser notation.

Unfunded liabilities are not a part of this discussion. They are a common fallacy that involves trying to promote fear in to the actual financial condition of America.

Most unfunded liability equations deal with the infinite horizon. So basically if things progress as they do not, when we reach infinity, we will have "x" gap in receipts/expenditures. The others deal with the notion that for some reason the Govt should have the money right now to pay me in 40 years when my SS becomes due.

It can be best expressed in a simple example. Suppose the Govt comes up with an bill that guarantees they will spend $1 trillion a year on defense spending for the next 60 years. Immediately the Govt would take on $60 trillion of unfunded liabilities. But then as the years go by they would all of a sudden become "funded liabilities". So this SS/Medicare nonsense is not true.

Are we on a path to where SS expenditures are greater than receipts and the SS Trust Fund is $0, yes, we are. But we can do plenty of things in legislation from paying $.80 on the dollar, raising the retirement age, or simply getting more SS receipts.

So, this really does not play a part in my original post about how the National Debt is actually the amount America has spent.
TheAtheistAllegiance
Posts: 1,251
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8/8/2011 4:20:34 PM
Posted: 5 years ago
At 8/7/2011 7:20:44 PM, sadolite wrote:
If you include the unfunded liabilities of social security medicare and medicaid the actual debt is about 200 trillion or about 1/4 of a Steinhaus-Moser notation.

Actually, it's around 4,000,000 quadrillion. True story.
sadolite
Posts: 8,834
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8/8/2011 7:11:44 PM
Posted: 5 years ago
At 8/7/2011 11:18:26 PM, akphidelt wrote:
At 8/7/2011 7:20:44 PM, sadolite wrote:
If you include the unfunded liabilities of social security medicare and medicaid the actual debt is about 200 trillion or about 1/4 of a Steinhaus-Moser notation.

Unfunded liabilities are not a part of this discussion. They are a common fallacy that involves trying to promote fear in to the actual financial condition of America.

Most unfunded liability equations deal with the infinite horizon. So basically if things progress as they do not, when we reach infinity, we will have "x" gap in receipts/expenditures. The others deal with the notion that for some reason the Govt should have the money right now to pay me in 40 years when my SS becomes due.

It can be best expressed in a simple example. Suppose the Govt comes up with an bill that guarantees they will spend $1 trillion a year on defense spending for the next 60 years. Immediately the Govt would take on $60 trillion of unfunded liabilities. But then as the years go by they would all of a sudden become "funded liabilities". So this SS/Medicare nonsense is not true.

Are we on a path to where SS expenditures are greater than receipts and the SS Trust Fund is $0, yes, we are. But we can do plenty of things in legislation from paying $.80 on the dollar, raising the retirement age, or simply getting more SS receipts.

So, this really does not play a part in my original post about how the National Debt is actually the amount America has spent.

"So basically if things progress as they do not"

You are correct. It will exponentially increase until the economy collapses and we become a "Wiemar Republic". You are absolutely dreaming if you think you are going to get a dime in Social Security.

I predict one more rally in the stock market after this last huge drop and then it will crash again to 6500 or lower at the end of the 1st quarter of fiscal year 2012. The stock markets value is completely phony. The govt will spend it's last hurray with QE3, it will fail miserably and we as a nation will enter a full blown depression. Everyone will lose their pensions and retirement savings both by the stock market crash and hyper inflation. Chinese currency will most likely replace the US dollar as the worlds leading trading currency.

America is filled with weak entitlement minded pu@@ies who couldn't survive without govt subsidies if their lives depended on it. They will just burn and pilfer their own neighborhoods and kill each other when the govt checks stop coming. It's as predictable as the sun coming up in the morning. Like you are going to tell some 25 year old that was born raised and indoctrinated to believe that govt is supposed to pay for every need in their life that they aren't going to get their food stamps. Ya right
It's not your views that divide us, it's what you think my views should be that divides us.

If you think I will give up my rights and forsake social etiquette to make you "FEEL" better you are sadly mistaken

If liberal democrats would just stop shooting people gun violence would drop by 90%
Ragnar_Rahl
Posts: 19,297
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8/8/2011 7:30:05 PM
Posted: 5 years ago
At 8/5/2011 12:21:17 PM, akphidelt wrote:
At 8/5/2011 3:39:18 AM, Ragnar_Rahl wrote:
The Govt doesn't "borrow" money. They issue debt. And the debt is what is the money
It issues a treasury bond. It takes in currency. Are you saying currency isn't money, treasury bonds are?

Does it take in currency?
That's what you sell a treasury bond for. I've held a treasury bond that someone turned in 50 bucks currency to the gummint for.

So accounting wise it doesn't matter who owns it... interest will be an expense, and the principal will be rolled over. Even the bonds the Govt owns themselves.
How do you sell your cake and own it too? Why would anyone be a buyer?
Because they can buy iPhones and crap with those useless pieces of paper
So in other words the useless pieces of paper (WHAT YOU ARE ACCOUNTING) have left, in order to be used to buy iphones.

It would be nice if you asked more direct questions. My claim is Govt debt is really Govt spending and all the money we have to pay taxes is actually the Govt debt itself.
Then demonstrate it.

So instead of writing more red-herrings, to ask direct and pointed questions or give me examples involving math of how I am incorrect.
Fallacy, shifting the burden of proof.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.