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Why we won't fix our SS problem

JaxsonRaine
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3/7/2012 11:25:32 PM
Posted: 4 years ago
This is from a report from ssa.gov

http://www.ssa.gov...

"The primary difficulty with reliance on voluntary savings is that too many people not only will not-save..."

The main reason why we have to have an inefficient, mandatory retirement fund, is because the government thinks we are too stupid to save for ourselves.

While I can understand that, I can also understand that if we teach Americans from youth that they have to save for their future, or they will end up homeless... it's an idea that can be taught(at least, in my mind).

I'll admit, I don't know how this really works in other countries... what countries show successful public retirement funds and what countries do well with private funds?
twocupcakes: 15 = 13
Mimshot
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3/7/2012 11:39:06 PM
Posted: 4 years ago
At 3/7/2012 11:25:32 PM, JaxsonRaine wrote:
This is from a report from ssa.gov

http://www.ssa.gov...

"The primary difficulty with reliance on voluntary savings is that too many people not only will not-save..."

The main reason why we have to have an inefficient, mandatory retirement fund, is because the government thinks we are too stupid to save for ourselves.

No, savings is a demand leakage -- it locks money away creating deflationary pressure. SS removes some of the need to save.
Mimshot: I support the 1956 Republican platform
DDMx: So, you're a socialist?
Mimshot: Yes
JaxsonRaine
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3/7/2012 11:45:36 PM
Posted: 4 years ago
At 3/7/2012 11:39:06 PM, Mimshot wrote:
At 3/7/2012 11:25:32 PM, JaxsonRaine wrote:
This is from a report from ssa.gov

http://www.ssa.gov...

"The primary difficulty with reliance on voluntary savings is that too many people not only will not-save..."

The main reason why we have to have an inefficient, mandatory retirement fund, is because the government thinks we are too stupid to save for ourselves.

No, savings is a demand leakage -- it locks money away creating deflationary pressure. SS removes some of the need to save.

As a net, it doesn't do that though. Every dollar saved will be spent at some point.

It's better, IMO, than giving it to the government to spend elsewhere(read: waste)

Not to mention that the voluntary savings could at least be partially based on investment.
twocupcakes: 15 = 13
DanT
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3/8/2012 9:34:52 AM
Posted: 4 years ago
At 3/7/2012 11:25:32 PM, JaxsonRaine wrote:
This is from a report from ssa.gov

http://www.ssa.gov...

"The primary difficulty with reliance on voluntary savings is that too many people not only will not-save..."

The main reason why we have to have an inefficient, mandatory retirement fund, is because the government thinks we are too stupid to save for ourselves.

While I can understand that, I can also understand that if we teach Americans from youth that they have to save for their future, or they will end up homeless... it's an idea that can be taught(at least, in my mind).

I'll admit, I don't know how this really works in other countries... what countries show successful public retirement funds and what countries do well with private funds?

Big brother is putting your money in savings, because your too irresponsible to do it yourself.
Than again, big brother isn't that fiscally responsible either.

Personally it reminds me of a parent who take's their kid's paycheck to "put it in savings" than spends it on beer and chips when they are short on cash.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
Mimshot
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3/8/2012 11:11:26 AM
Posted: 4 years ago
At 3/8/2012 9:34:52 AM, DanT wrote:
At 3/7/2012 11:25:32 PM, JaxsonRaine wrote:
This is from a report from ssa.gov

http://www.ssa.gov...

"The primary difficulty with reliance on voluntary savings is that too many people not only will not-save..."

The main reason why we have to have an inefficient, mandatory retirement fund, is because the government thinks we are too stupid to save for ourselves.

While I can understand that, I can also understand that if we teach Americans from youth that they have to save for their future, or they will end up homeless... it's an idea that can be taught(at least, in my mind).

I'll admit, I don't know how this really works in other countries... what countries show successful public retirement funds and what countries do well with private funds?

Big brother is putting your money in savings, because your too irresponsible to do it yourself.
Than again, big brother isn't that fiscally responsible either.

Personally it reminds me of a parent who take's their kid's paycheck to "put it in savings" than spends it on beer and chips when they are short on cash.

It is nothing like that because the parent is a currency user and the government is a currency issuer.

The reason we won't fix SS is because people still think it's a money problem and not a demographics problem. The way to fix SS is to spend money now on education, infrastructure, and research.
Mimshot: I support the 1956 Republican platform
DDMx: So, you're a socialist?
Mimshot: Yes
JaxsonRaine
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3/8/2012 11:17:54 AM
Posted: 4 years ago
At 3/8/2012 11:11:26 AM, Mimshot wrote:
At 3/8/2012 9:34:52 AM, DanT wrote:
At 3/7/2012 11:25:32 PM, JaxsonRaine wrote:
This is from a report from ssa.gov

http://www.ssa.gov...

"The primary difficulty with reliance on voluntary savings is that too many people not only will not-save..."

The main reason why we have to have an inefficient, mandatory retirement fund, is because the government thinks we are too stupid to save for ourselves.

While I can understand that, I can also understand that if we teach Americans from youth that they have to save for their future, or they will end up homeless... it's an idea that can be taught(at least, in my mind).

I'll admit, I don't know how this really works in other countries... what countries show successful public retirement funds and what countries do well with private funds?

Big brother is putting your money in savings, because your too irresponsible to do it yourself.
Than again, big brother isn't that fiscally responsible either.

Personally it reminds me of a parent who take's their kid's paycheck to "put it in savings" than spends it on beer and chips when they are short on cash.

It is nothing like that because the parent is a currency user and the government is a currency issuer.

The reason we won't fix SS is because people still think it's a money problem and not a demographics problem. The way to fix SS is to spend money now on education, infrastructure, and research.

No, it is a money problem. When the government takes your money and says 'we'll save this for you, you can have it back when you retire', and then they spend it, it means your money is gone. It's really, at the heart, a government problem. We'll have to raise withholding(not fair and not a good idea) to make up for the 10 trillion dollars or so that we are going to be short over the next 60 years.

The more we can keep government out of our lives, the better off we'll be. The government can't run profitable business, can't be financially responsible...
twocupcakes: 15 = 13
Contra
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3/8/2012 2:54:25 PM
Posted: 4 years ago
There are two solutions that I support for the S.S. problem:

1) Eliminate employee cap on payroll taxes paid, and raise employer cap. Lockbox

2) Forced personal savings accounts.

I favor 1# more though.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Mimshot
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3/8/2012 4:30:34 PM
Posted: 4 years ago
The reason we won't fix SS is because people still think it's a money problem and not a demographics problem. The way to fix SS is to spend money now on education, infrastructure, and research.

No, it is a money problem. When the government takes your money and says 'we'll save this for you, you can have it back when you retire', and then they spend it, it means your money is gone. It's really, at the heart, a government problem. We'll have to raise withholding(not fair and not a good idea) to make up for the 10 trillion dollars or so that we are going to be short over the next 60 years.

The more we can keep government out of our lives, the better off we'll be. The government can't run profitable business, can't be financially responsible...

Do you understand that in a non-convertible currency regime the issuer of the currency (in our case the government) operates differently than users of the currency in the private sector? There is no such thing as a government "saving" in it's own currency. It can spend money into the economy and it can tax it back out.

When the government makes a SS payment, they just go on the computer and increase the balance in the recipients' accounts. They don't jam a gold coin into the keyboard. They don't have a pile of dollars that they can run out of, nor do they get a bigger pile of dollars when they pretend to pay themselves interest on OASDI, nor when they tax you. Government receipts and government spending are not operationally connected.
Mimshot: I support the 1956 Republican platform
DDMx: So, you're a socialist?
Mimshot: Yes
JaxsonRaine
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3/8/2012 5:22:54 PM
Posted: 4 years ago
At 3/8/2012 4:30:34 PM, Mimshot wrote:
The reason we won't fix SS is because people still think it's a money problem and not a demographics problem. The way to fix SS is to spend money now on education, infrastructure, and research.

No, it is a money problem. When the government takes your money and says 'we'll save this for you, you can have it back when you retire', and then they spend it, it means your money is gone. It's really, at the heart, a government problem. We'll have to raise withholding(not fair and not a good idea) to make up for the 10 trillion dollars or so that we are going to be short over the next 60 years.

The more we can keep government out of our lives, the better off we'll be. The government can't run profitable business, can't be financially responsible...

Do you understand that in a non-convertible currency regime the issuer of the currency (in our case the government) operates differently than users of the currency in the private sector? There is no such thing as a government "saving" in it's own currency. It can spend money into the economy and it can tax it back out.

When the government makes a SS payment, they just go on the computer and increase the balance in the recipients' accounts. They don't jam a gold coin into the keyboard. They don't have a pile of dollars that they can run out of, nor do they get a bigger pile of dollars when they pretend to pay themselves interest on OASDI, nor when they tax you. Government receipts and government spending are not operationally connected.

They have balances. Yes, it's electronic, but they don't just inflate accounts. They transfer money from the trusts to the individuals.

The government can't just spend money it doesn't have, that's called deficit. Speaking of which, even with the CBO recommendations on reducing the budget, we'll have to pay over $600 BILLION on our debt interest within a decade. Debt is NOT a good thing. It's called compound interest... very bad.
twocupcakes: 15 = 13
Mimshot
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3/8/2012 6:05:01 PM
Posted: 4 years ago
At 3/8/2012 5:22:54 PM, JaxsonRaine wrote:
At 3/8/2012 4:30:34 PM, Mimshot wrote:
The reason we won't fix SS is because people still think it's a money problem and not a demographics problem. The way to fix SS is to spend money now on education, infrastructure, and research.

No, it is a money problem. When the government takes your money and says 'we'll save this for you, you can have it back when you retire', and then they spend it, it means your money is gone. It's really, at the heart, a government problem. We'll have to raise withholding(not fair and not a good idea) to make up for the 10 trillion dollars or so that we are going to be short over the next 60 years.

The more we can keep government out of our lives, the better off we'll be. The government can't run profitable business, can't be financially responsible...

Do you understand that in a non-convertible currency regime the issuer of the currency (in our case the government) operates differently than users of the currency in the private sector? There is no such thing as a government "saving" in it's own currency. It can spend money into the economy and it can tax it back out.

When the government makes a SS payment, they just go on the computer and increase the balance in the recipients' accounts. They don't jam a gold coin into the keyboard. They don't have a pile of dollars that they can run out of, nor do they get a bigger pile of dollars when they pretend to pay themselves interest on OASDI, nor when they tax you. Government receipts and government spending are not operationally connected.

They have balances. Yes, it's electronic, but they don't just inflate accounts. They transfer money from the trusts to the individuals.

Where do you think they get the money from? Where does it come from originally? It comes from government spending.

The government can't just spend money it doesn't have, that's called deficit. Speaking of which, even with the CBO recommendations on reducing the budget, we'll have to pay over $600 BILLION on our debt interest within a decade. Debt is NOT a good thing. It's called compound interest... very bad.

Yes, it can run a deficit, and it does all the time. The government chooses to pay interest on risk free bonds at a rate set by the Fed. It could stop if it wanted to. Where do you think the dollars the people "lend" to the government come from?
Mimshot: I support the 1956 Republican platform
DDMx: So, you're a socialist?
Mimshot: Yes
JaxsonRaine
Posts: 3,606
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3/8/2012 6:17:53 PM
Posted: 4 years ago
At 3/8/2012 6:05:01 PM, Mimshot wrote:
At 3/8/2012 5:22:54 PM, JaxsonRaine wrote:
At 3/8/2012 4:30:34 PM, Mimshot wrote:
The reason we won't fix SS is because people still think it's a money problem and not a demographics problem. The way to fix SS is to spend money now on education, infrastructure, and research.

No, it is a money problem. When the government takes your money and says 'we'll save this for you, you can have it back when you retire', and then they spend it, it means your money is gone. It's really, at the heart, a government problem. We'll have to raise withholding(not fair and not a good idea) to make up for the 10 trillion dollars or so that we are going to be short over the next 60 years.

The more we can keep government out of our lives, the better off we'll be. The government can't run profitable business, can't be financially responsible...

Do you understand that in a non-convertible currency regime the issuer of the currency (in our case the government) operates differently than users of the currency in the private sector? There is no such thing as a government "saving" in it's own currency. It can spend money into the economy and it can tax it back out.

When the government makes a SS payment, they just go on the computer and increase the balance in the recipients' accounts. They don't jam a gold coin into the keyboard. They don't have a pile of dollars that they can run out of, nor do they get a bigger pile of dollars when they pretend to pay themselves interest on OASDI, nor when they tax you. Government receipts and government spending are not operationally connected.

They have balances. Yes, it's electronic, but they don't just inflate accounts. They transfer money from the trusts to the individuals.

Where do you think they get the money from? Where does it come from originally? It comes from government spending.

The government can't just spend money it doesn't have, that's called deficit. Speaking of which, even with the CBO recommendations on reducing the budget, we'll have to pay over $600 BILLION on our debt interest within a decade. Debt is NOT a good thing. It's called compound interest... very bad.

Yes, it can run a deficit, and it does all the time. The government chooses to pay interest on risk free bonds at a rate set by the Fed. It could stop if it wanted to. Where do you think the dollars the people "lend" to the government come from?

The government can't just choose to stop paying interest unless it wants to default. There are consequences for the government running a constant defecit.
twocupcakes: 15 = 13
Mimshot
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3/8/2012 7:04:25 PM
Posted: 4 years ago
The government can't just choose to stop paying interest unless it wants to default.
Strictly speaking this is correct, but that's not really what I meant. The government could stop issuing new bonds and thus, in several years once all the outstanding bonds mature, it would no longer be making any interest payments. This would remove their ability to set interest rates, which one might argue is a bad thing. I'm just saying that the government doesn't need to pay interest in order to spend.

There are consequences for the government running a constant defecit.
Only if its spending beyond the ability of the economy to produce as this will cause inflation. If you can make an argument that running a deficit of 5-10% of GDP per year has negative consequences, I'd love to hear it. I've heard lots of doomsday predictions by politicians -- that doesn't interest me. I've yet to hear a compelling argument that a reasonable and counter-cyclical deficit is bad for the economy or will cause some catastrophe.
Mimshot: I support the 1956 Republican platform
DDMx: So, you're a socialist?
Mimshot: Yes
jimtimmy
Posts: 3,953
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3/8/2012 7:28:07 PM
Posted: 4 years ago
At 3/8/2012 2:54:25 PM, Contra wrote:
There are two solutions that I support for the S.S. problem:

1) Eliminate employee cap on payroll taxes paid, and raise employer cap. Lockbox

2) Forced personal savings accounts.

I favor 1# more though.

1.) Major economic harm from deadweight loss of higher tax rates.

2.) Good idea.
President of DDO
JaxsonRaine
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3/8/2012 7:35:44 PM
Posted: 4 years ago
At 3/8/2012 7:04:25 PM, Mimshot wrote:
The government can't just choose to stop paying interest unless it wants to default.
Strictly speaking this is correct, but that's not really what I meant. The government could stop issuing new bonds and thus, in several years once all the outstanding bonds mature, it would no longer be making any interest payments. This would remove their ability to set interest rates, which one might argue is a bad thing. I'm just saying that the government doesn't need to pay interest in order to spend.

There are consequences for the government running a constant defecit.
Only if its spending beyond the ability of the economy to produce as this will cause inflation. If you can make an argument that running a deficit of 5-10% of GDP per year has negative consequences, I'd love to hear it. I've heard lots of doomsday predictions by politicians -- that doesn't interest me. I've yet to hear a compelling argument that a reasonable and counter-cyclical deficit is bad for the economy or will cause some catastrophe.

Are you kidding? GDP is 15 trillion, 10% is 1.5 trillion.

We are already on track to be paying $600-$900 billion per year in just interest. Running a constant deficit means you are fighting against compound interest, and you cannot constantly increase your debt and also service it. Eventually, you will lose.
twocupcakes: 15 = 13
jimtimmy
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3/8/2012 7:42:46 PM
Posted: 4 years ago
At 3/8/2012 7:33:57 PM, Ren wrote:
We do have forced personal saving accounts. They're called "insurance."

Not in SS.
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Mimshot
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3/8/2012 8:02:50 PM
Posted: 4 years ago
At 3/8/2012 7:35:44 PM, JaxsonRaine wrote:
At 3/8/2012 7:04:25 PM, Mimshot wrote:
The government can't just choose to stop paying interest unless it wants to default.
Strictly speaking this is correct, but that's not really what I meant. The government could stop issuing new bonds and thus, in several years once all the outstanding bonds mature, it would no longer be making any interest payments. This would remove their ability to set interest rates, which one might argue is a bad thing. I'm just saying that the government doesn't need to pay interest in order to spend.

There are consequences for the government running a constant defecit.
Only if its spending beyond the ability of the economy to produce as this will cause inflation. If you can make an argument that running a deficit of 5-10% of GDP per year has negative consequences, I'd love to hear it. I've heard lots of doomsday predictions by politicians -- that doesn't interest me. I've yet to hear a compelling argument that a reasonable and counter-cyclical deficit is bad for the economy or will cause some catastrophe.

Are you kidding? GDP is 15 trillion, 10% is 1.5 trillion.

No, I'm not. You just made my point. I asked for a reason that running a 5% (peaking to 10%) deficit is bad and you're answer was that it has too many zeros. That's not a reason at all.

We are already on track to be paying $600-$900 billion per year in just interest. Running a constant deficit means you are fighting against compound interest, and you cannot constantly increase your debt and also service it. Eventually, you will lose.

First, I don't know where you got $600M. You're off by almost $400M (http://research.stlouisfed.org...). Note, while you look at that chart how far we are below the trend from 1940 to 1998.

Second, again this is bad because you say so. The government is not required to borrow before it spends. The dollars used to buy government bonds comes from government spending in the first place.
Mimshot: I support the 1956 Republican platform
DDMx: So, you're a socialist?
Mimshot: Yes
JaxsonRaine
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3/8/2012 9:28:00 PM
Posted: 4 years ago
At 3/8/2012 8:02:50 PM, Mimshot wrote:
At 3/8/2012 7:35:44 PM, JaxsonRaine wrote:
At 3/8/2012 7:04:25 PM, Mimshot wrote:
The government can't just choose to stop paying interest unless it wants to default.
Strictly speaking this is correct, but that's not really what I meant. The government could stop issuing new bonds and thus, in several years once all the outstanding bonds mature, it would no longer be making any interest payments. This would remove their ability to set interest rates, which one might argue is a bad thing. I'm just saying that the government doesn't need to pay interest in order to spend.

There are consequences for the government running a constant defecit.
Only if its spending beyond the ability of the economy to produce as this will cause inflation. If you can make an argument that running a deficit of 5-10% of GDP per year has negative consequences, I'd love to hear it. I've heard lots of doomsday predictions by politicians -- that doesn't interest me. I've yet to hear a compelling argument that a reasonable and counter-cyclical deficit is bad for the economy or will cause some catastrophe.

Are you kidding? GDP is 15 trillion, 10% is 1.5 trillion.

No, I'm not. You just made my point. I asked for a reason that running a 5% (peaking to 10%) deficit is bad and you're answer was that it has too many zeros. That's not a reason at all.

The reason, is if you add that amount every year, the interest grows. The more the interest grows, the more you have to pay into interest, meaning you will have more deficit in the future. If you continually add to the debt, especially at a rate more than GDP grows, then you will eventually run into bankruptcy. There is no other option.

We are already on track to be paying $600-$900 billion per year in just interest. Running a constant deficit means you are fighting against compound interest, and you cannot constantly increase your debt and also service it. Eventually, you will lose.

First, I don't know where you got $600M. You're off by almost $400M

No, I'm not. I got that from CBO.

http://www.cbo.gov...

With their improved alternative scenario, we would still be at $624 billion by 2022. Without the improved alternate scenario, we'll be in the 800-900 billion range.

(http://research.stlouisfed.org...). Note, while you look at that chart how far we are below the trend from 1940 to 1998.

Second, again this is bad because you say so. The government is not required to borrow before it spends. The dollars used to buy government bonds comes from government spending in the first place.

I don't think you appreciate what government spending entails. The government can't just spend nothing. If it borrows money, then the debt grows. If it prints money(even in principle only) then it weakens the dollar. There is an effect for every action.

It's bad, because if you keep adding and adding and adding, you will just waste money on interest payments until you default.
twocupcakes: 15 = 13
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3/9/2012 9:58:37 AM
Posted: 4 years ago
At 3/8/2012 9:28:00 PM, JaxsonRaine wrote:
At 3/8/2012 8:02:50 PM, Mimshot wrote:
At 3/8/2012 7:35:44 PM, JaxsonRaine wrote:
At 3/8/2012 7:04:25 PM, Mimshot wrote:
The government can't just choose to stop paying interest unless it wants to default.
Strictly speaking this is correct, but that's not really what I meant. The government could stop issuing new bonds and thus, in several years once all the outstanding bonds mature, it would no longer be making any interest payments. This would remove their ability to set interest rates, which one might argue is a bad thing. I'm just saying that the government doesn't need to pay interest in order to spend.

There are consequences for the government running a constant defecit.
Only if its spending beyond the ability of the economy to produce as this will cause inflation. If you can make an argument that running a deficit of 5-10% of GDP per year has negative consequences, I'd love to hear it. I've heard lots of doomsday predictions by politicians -- that doesn't interest me. I've yet to hear a compelling argument that a reasonable and counter-cyclical deficit is bad for the economy or will cause some catastrophe.

Are you kidding? GDP is 15 trillion, 10% is 1.5 trillion.

No, I'm not. You just made my point. I asked for a reason that running a 5% (peaking to 10%) deficit is bad and you're answer was that it has too many zeros. That's not a reason at all.

The reason, is if you add that amount every year, the interest grows. The more the interest grows, the more you have to pay into interest, meaning you will have more deficit in the future. If you continually add to the debt, especially at a rate more than GDP grows, then you will eventually run into bankruptcy. There is no other option.

We are already on track to be paying $600-$900 billion per year in just interest. Running a constant deficit means you are fighting against compound interest, and you cannot constantly increase your debt and also service it. Eventually, you will lose.

First, I don't know where you got $600M. You're off by almost $400M

No, I'm not. I got that from CBO.

http://www.cbo.gov...

With their improved alternative scenario, we would still be at $624 billion by 2022. Without the improved alternate scenario, we'll be in the 800-900 billion range.

Oh, I see you're talking about imaginary crystal ball numbers in which the interest rate on 3-mo tys goes up by 3800% -- a conclusion they have no basis for whatsoever. Even then, the CBO claims that this would push us to interest expense of 2.5% of GDP. This is less than it was in the late 80s early 90s.

Also, next time, it would be nice if you want to source a statistic to a 167 page document, you give page numbers. Page 73 for those of you following along at home.

(http://research.stlouisfed.org...). Note, while you look at that chart how far we are below the trend from 1940 to 1998.

Second, again this is bad because you say so. The government is not required to borrow before it spends. The dollars used to buy government bonds comes from government spending in the first place.

I don't think you appreciate what government spending entails. The government can't just spend nothing. If it borrows money, then the debt grows. If it prints money(even in principle only) then it weakens the dollar. There is an effect for every action.
So, you agree that they can print whatever money they want. The constraint is inflation not solvency.

It's bad, because if you keep adding and adding and adding, you will just waste money on interest payments until you default.
Oh, wait, now you're back to saying the government can be forced to default because it needs to borrow before it can spend. You seemed a second ago to understand the difference between an issuer of a currency and a user of the currency, but are ignoring the consequences of that conclusion. The U.S. government can never run out of money and it doesn't need to borrow to spend. Where do you think people got the dollars to "lend" to the government?
Mimshot: I support the 1956 Republican platform
DDMx: So, you're a socialist?
Mimshot: Yes
JaxsonRaine
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3/9/2012 11:05:43 AM
Posted: 4 years ago
This is ridiculous, you seem to think the Dollar lives in a closed bubble. If you can't understand that there are consequences to debt and printing money, then go do some reading.

Here's an example, let's say there are $10 trillion in circulating currency. The USD is 1:1 with the Euro. Then, the government prints $10 trillion more. Where do you think the dollar will be on the international market? At least 2:1, but probably worse as people would have no confidence in it.

So, if the government tries to print off money to pay off debt, it will have to pay more money to pay off the same debt.

If the government adds to debt, it adds to the interest payments. If you add debt faster than GDP grows, then your % of the budget that goes to debt every year will grow. If your % of interest grows every year, you will eventually reach a point where 100% of your revenues go to paying interest.
twocupcakes: 15 = 13
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3/9/2012 4:33:55 PM
Posted: 4 years ago
At 3/9/2012 11:05:43 AM, JaxsonRaine wrote:
This is ridiculous, you seem to think the Dollar lives in a closed bubble. If you can't understand that there are consequences to debt and printing money, then go do some reading.

I've explained thoroughly before how government spending actually works. You have not refuted it except through bare assertions to the contrary. My conversation with you in this thread is similar to the global warming one. You reject any fact that does not support your world view -- in this case that government spending needs to be lower in the U.S.

Here's an example, let's say there are $10 trillion in circulating currency. The USD is 1:1 with the Euro. Then, the government prints $10 trillion more. Where do you think the dollar will be on the international market? At least 2:1, but probably worse as people would have no confidence in it.
Foreign exchange rates are complicated and depend on the balance of trade and interest rates than they do on money supply. This is why we need PPP adjustments to comparison of GDP across countries.

So, if the government tries to print off money to pay off debt, it will have to pay more money to pay off the same debt.

No, not if the debt is denominated in the government's currency (this was not the case in Wiemar Germany, Zimbabwe, or Greece). In the U.S. paying off the debt just means swapping one piece of government issued paper (a $100 bill) for another (a $100 treasury bond).

If the government adds to debt, it adds to the interest payments. If you add debt faster than GDP grows, then your % of the budget that goes to debt every year will grow. If your % of interest grows every year, you will eventually reach a point where 100% of your revenues go to paying interest.

I proposed 5-10% deficits. This is on the order of the nominal GDP growth rate.
Mimshot: I support the 1956 Republican platform
DDMx: So, you're a socialist?
Mimshot: Yes
JaxsonRaine
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3/9/2012 11:16:09 PM
Posted: 4 years ago
At 3/9/2012 4:33:55 PM, Mimshot wrote:
I proposed 5-10% deficits. This is on the order of the nominal GDP growth rate.

Not really.

Adding more to the deficit than gdp grows means interest rates as a percentage of revenue will rise. There is no getting around that. Not to mention that interest rates won't always be as low as they are now. There is no way to increase the percentage of debt you own every year and not default at some point. Eventually, your entire budget will be interest payments. Obviously we don't agree on this, but why don't you run up your credit card debt more and more every month. You'll see what I'm talking about fairly quickly.
twocupcakes: 15 = 13
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3/9/2012 11:26:32 PM
Posted: 4 years ago
I wasn't going to reply to all of it, but oh well.

At 3/9/2012 4:33:55 PM, Mimshot wrote:
I've explained thoroughly before how government spending actually works. You have not refuted it except through bare assertions to the contrary. My conversation with you in this thread is similar to the global warming one. You reject any fact that does not support your world view -- in this case that government spending needs to be lower in the U.S.

1 - When the government spends more than it takes in, the deficit is added to the debt. The debt is sold off in various forms, but all forms(with the exception of self-robbery) come with interest. If your % of your budget you pay into interest raises every year, eventually you will be paying 100% of your budget in interest. It is unavoidable. The only way to stop interest % from rising is to stop adding to your debt faster than your budget grows.

2 - I replied to your assertions about global warming. You asserted that a phenomenon that caused temperatures in the 1940s to be recorded too high would also cause temperatures in the 2000s to be recorded too low. The effect is 'urban heat island effect'. I accept viewpoints that support the truth, I have no political bias in my quest for truth. I am not an R or a D or a liberal or a conservative... I just look for truth.

Foreign exchange rates are complicated and depend on the balance of trade and interest rates than they do on money supply. This is why we need PPP adjustments to comparison of GDP across countries.

Yes, they are complicated, but all things being equal, if you double the money supply of a country, it's international worth will be cut in half. That affects the prices of imports and exports, affects trade, and further affects the price.

No, not if the debt is denominated in the government's currency (this was not the case in Wiemar Germany, Zimbabwe, or Greece). In the U.S. paying off the debt just means swapping one piece of government issued paper (a $100 bill) for another (a $100 treasury bond).

I'm sorry, I meant that if a government prints off money to pay off its current debt, then it will effectively cost more to pay off future debt. The reason is because of the damage to the value of the dollar that affects decisions about purchasing debt in the future, causing higher interest payments and less trust in the dollar.
twocupcakes: 15 = 13