Once-Mighty Deficit Hawks Hardly Chirp

Posted by CircuitGuy 3 years, 1 month ago to Economics
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We're like the Roman Empire.

"This month, the majority of Republicans in the House and the Senate voted to raise the debt limit without doing anything to rein in spending.

"Republican lawmakers are pushing to increase military spending by tens of billions of dollars, topping even Mr. Trump’s request for a beefed-up military. Democrats are sharing in the fiscal intemperance, lining up behind a “Medicare for all” proposal despite having no definitive plan for how to pay for universal, government-provided health coverage.

"And as Congress mulls large tax cuts, the tabs for Hurricanes Harvey, Irma and Maria keep rising."

"The budget office forecasts that deficits will total $10.1 trillion over the next decade. The deficit is expected to top $1 trillion a year in 2022 and keep growing from there. Federal debt held by the public is at the highest level since shortly after World War II, at 77 percent of the gross domestic product."
SOURCE URL: https://nyti.ms/2fASVrD


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  • Posted by DrZarkov99 3 years, 1 month ago
    Ironically, part of the problem is the refusal of legislators to pursue strong economic growth policies, as those tend to be light on government growth. Simultaneously, they deliberately refuse to use dynamic scoring when evaluating budget proposals, unquestionably because those might show favor for a lighter government hand as a stimulus for GDP growth.
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    • Posted by 3 years, 1 month ago
      Is what you're saying as simple as the issue of me and junk food? I know doing less of it is better, but I don't do what's good for me. Similarly, they know less spending is better, but they don't do it.
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  • Posted by $ blarman 3 years, 1 month ago
    Agreed. The Republicans have been lamenting their minority status and now that they have the majority (albeit a very slim one), they do nothing. It's one of the reasons I gave up being Republican several Presidents ago.
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  • Posted by $ CBJ 3 years, 1 month ago
    We have to begin treating the deficit and the debt as two separate issues. Much of the damage inflicted on the U.S. economy since we went off the gold standard has been caused by issuing debt to fund the deficit, not by issuing fiat money itself. To cite just one example: interest payments on the national debt amount to a steep $2,000 per year for each person in the U.S. over the age of 18. This amount must be paid each year by taxpayers or funded by going still further into debt. This is not sustainable. We can’t fix the deficit in the short term, but we can stop issuing debt and begin paying the existing one down. And we should. See www.fixourmoney.com .
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    • Posted by 3 years, 1 month ago
      The deficit, debt, and monetary policy are three separate issues. If we cut the deficit to zero, we'd still have to service the debt. If the Fed could not buy/sell Treasuries, the gov't would continue borrowing by issuing Treasuries and making Social Security and Medicare commitments. Treasuries would continue, until some future crisis, to be a low-risk low-yield investment.
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      • Posted by $ CBJ 3 years, 1 month ago
        I agree that the deficit and the debt are, or should be, separate issues. We have a growing debt because we finance the deficit by “borrowing” money instead of simply “printing” it. Pure or “unbacked” fiat money is much less destructive to the economy and to personal liberty than the “debt-backed” fiat money we use today. Transitioning to a debt-free currency will enable us to gradually pay off the national debt and stop paying $400+ billion in interest every year to service this debt.
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        • Posted by lrshultis 3 years, 1 month ago
          How can, "Pure or 'unbacked' fiat money is (sic, should be 'be' for my purpose) much less destructive to the economy and to personal liberty than the 'debt-backed' fiat money we use today.", i.e., inflation of the money supply, possibly be "much less destructive of the economy", etc. than the attempted less inflationary fiat money backed by borrowing from the public? Either way savings, etc., are depleted, though, with inflation one can believe erroneously that the increasing interest rates on saving and pay rates, etc., make up the difference.
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          • Posted by $ CBJ 3 years, 1 month ago
            Given that fiat money is with us for the foreseeable future, which type of fiat money is less destructive of individual liberty – unbacked or debt-backed?

            Many conservatives and libertarians favor money “backed” by government bonds, on the moral ground that such money is somehow more “honest” and “legitimate”. But is it really? How “moral” is it for a government to base its monetary system on the ability to impose burdensome financial obligations on present and future taxpayers? In the end, debt-based fiat money is nothing more than money backed by forced labor. Is this moral?

            Debt-based fiat money requires us to pay interest on the national debt, a drain on our income and wealth that currently amounts to a steep $2,000 per year for each and every adult American! Meanwhile, essential government services such as court systems are “crowded out” by the need to service the national debt. Is it moral for a government to force its citizens to pay heavily for the “privilege” of using a debt-based currency, while shortchanging them in the delivery of essential services?

            The growth of the national debt creates psychological effects that discourage virtues such as prudence, productiveness and thrift. Such effects do not show up in economic statistics, but they are real nonetheless. Why strive to get out of personal debt if you remain on the hook for your “share” of a growing government debt? Why strive to be more productive when the government demands an ever-increasing percentage of your earnings to service this debt?

            With debt-free money, these serious moral issues do not arise. Debt-free money does not burden future generations with unchosen obligations. It does not force taxpayers to make higher and higher interest payments on a growing national debt. It does not prevent the government from fulfilling its obligation to adequately fund essential services. It does not give the government an excuse to keep taxes high. These are just a few examples of why, in moral terms, debt-free fiat money causes less harm to free markets and individual liberty than debt-based fiat money.
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            • Posted by 3 years, 1 month ago
              This is interesting. You're envisioning a system in which monetary and fiscal policy are one. I'm intrigued. You mentioned it before, but I get it for the first time. My knowledge of the banking system is limited, but I'm imagining the gov't would sort-of merge with the Fed. The gov't would honor its Treasuries and maintain its top credit rating. But it could just burn all the Treasuries held by the Fed because the Fed has been nationalized. When the gov't wants to borrow money in the future, they just print it, and use the same indicators the Fed uses to determine how much it can print. As long as the markets have faith in the new system, interest rates and inflation are unaffected.

              That's weird and interesting.
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              • Posted by $ CBJ 3 years, 1 month ago
                That pretty much sums it up. A detailed analysis can be found at www.fixourmoney.com . Both the Federal Reserve and the national debt could be phased out over time, without resorting to the harsh and unpopular austerity program envisioned by the “deficit hawks”.
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        • Posted by 3 years, 1 month ago
          I think the debt, and structural deficits that add to it, are a looming problem. It competes for capital with other project and is bad for growth.

          Fiat money is the only money I understand. The whole concept of money is a medium of exchange. The whole concept is I don't want to carry around liters of brandy or notes promising liters of brandy that are stored in a warehouse. I want to trade value. The medium of exchange just has to be accepted by all market participants. If it actually had value, that presents problems. Fiat money has its own problems too though. Nothing's perfect. I prefer fiat money, though, to trading things of value.
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  • Posted by Herb7734 3 years, 1 month ago
    Here's the problem; are we talking about real money? Trillions? How many trillions would circle the globe how many times? $20 trillion. That is a galaxy sized debt that, lets face reality, will never get paid off. It is beyond imagining to allow the debt to be so out of control. We can't devalue it because of politics, but the nature of economics may just do that for us whether we like it or not. And who do we blame? Why every **%%###@@#^&! Elected and unelected Washington official for the last 50+ years.
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  • Posted by freedomforall 3 years, 1 month ago
    "I think the greatest threat to our nation is us,” warned Senator Bob Corker, Republican of Tennessee"
    Then he agreed to a tax cut with no spending cut.
    That proves he is right: DC is the greatest threat to America.
    Time for a strike.
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