https://www.politico.com/story/2018/03/15/jeb-hensarling-bank-deregulation-bill-418536 I actually want Hensarling to sink this. The Sen dems bungled this and made it way too friendly and didnt extract enough out of the GOP. At least get Mulvaney gone from the CPFB for your signature.
https://www.politico.com/story/2018...ly-to-disavow-pelosi-lamb-pennsylvania-417425 Seems with Lamb's success more dems are gonna disavow Pelosi. I am all fine for winning and I get that she is a huge GOP bogeyman and caricture of all that is evil with the dems not to mention she is old and has been there forever. I get it, young blood, new leadership for a new breed of Dems and a fresh younger class giving the GOP no bogeyman. H However, Nasty Pelosi got it done. If she told you she would get you the votes she got the votes. She ran a tight ship and knew when to allow decent as long as the party goal was achieved. I don't want her ditched and we and up with some Boehner like insurrection where the House leader can't guarantee anything become some group want to hold things for hostage and we look more and more dysfunctional, so I hope the Dems play the game right.
Japan's debt to GDP ratio is 250%. They're doing okay. The US debt to GDP ratio is 105%. You'll also be fine. A country that issues it's own currency can never default on debts that have been issued in its own currency. Issuing currency to service debt can lead to currency depreciation which in turn leads to inflation. However provided you don't have too many structural problems the dampened demand for imports and increased demand for exports should help rebalance the economy to make it more competitive. Italy circa '18 cannot issue euro's on its own to service debt. It can't devalue. It can only internally devalue (ie cut costs) by retrenching large swathes of its workforce, cut wages etc to become more competitive. Italy pre EU ('98) had a lot of structural problems and so wasn't super responsive when the automatic stabilisers kicked in but in relative terms its only gone backwards since its lost its own currency. Nevertheless the Italian economy had a lot going for it and most Italians enjoyed a decent standard of living despite Debt to GDP over 100% in '98. Currencies like the US dollar and the Yen don't devalue when investors are skittish about growth prospects and bond repayments. The opposite happens because if the US defaults we no longer have a global economy. The US dollar is a safe haven which basically gives US policy makers a licence to print money. If you have been paying any sort of attention since '08 you know this is true. And no I'm not saying that you should just throw money away. Like for instance $600 Billion a year on wasteful military expenditure. Can you think of many more inefficient ways to allocate resources? You are literally wasting billions to blow shit up and kill potential consumers. And you still have the audacity to say of social programs "but we can't afford it". "as long as debt growth is lower than gdp growth then this is manageable" Debt is already growing faster than GDP and has been since the 80's: Never said that. I said:. Bond issuer: Asset increase / Liability increase Bond owner: Assets unchanged I ignored it on purpose because we're focusing on the principal which is most of the debt and to keep things simple. Money is Debt. When the US government spends net new money into the economy (ie through deficits) it is borrowing the equivalent of that money from the Fed. In other words the Fed creates the dollars (along with private banks) that gets spent by consumers and the business sector. Why does the government spend/issue debt? To stimulate the economy, to provide basic services. Why does the government issue bonds that don't create 'new' money 'apart from interest'? Because it wants to have some monetary policy levers to regulate USD flows, interest rates, manage investor sentiment. Debt is money. So saying you want to wipe out debt is like saying you want to return to a barter economy without money. All countries have public debt including the countries which have the largest trade surpluses like China and Germany. When you run a surplus you are removing money from circulation, which is growth negative. Not what an economy with tepid growth and high rates of unemployment that elects a Trump should consider as viable policy.
Will Japan ever repay back its debt? Because 1. They depreciate their currency to lower their debt total cost and/or 2. Eventually other countries stop lending them in local currency and they have to take up loans in foreign currency. As your currency gets weaker the cost of the products gets higher and the cost of debt get higher, not always as Japan has shown (and the USA could follow) that you can have deflation with high debt and low interest rates. But this works when the locals are willing to buy up your debt at low interest like in Japan, sure Americans can be scared to buy foreign debt and do buy into the safety of US bonds, but only if they feel they will eventually get paid back or be able to sell the debt. Sure and what were the interest payments on the debt pre 98? what social programs could have financed that debt, and what did Italy have to do to get below the debt % limit prior to joining the EU? hint: they sort of balanced their budgets (or lied about it like the Greeks). https://www.ft.com/content/760053a6-91fa-3c6f-9d71-e4efdef8b0fb No disagreement here, as long as everyone else is more fvcked up the USA bond market is a safe heaven. No doubt we can spend less on military and more on other shot (like paying down debt). But eventually you do have to pay it back, that is the fvcking point, Keynesian economics is fun, until you can't do it anymore and you have to pay back or default. Sure the asset increases so you can use it to finance an investment that will return dividends that you will use to cover the liability. Building roads, hospitals, trains, electrical grid, RRD, ect. does qualify as this. Increasing continuing social programs just means more liabilities in the future, to cove the cost of those increase liabilities you need to 1. increase GDP growth so future tax receipts (with the same rate) help you cover the future higher costs, this is what they Republicans try to sell with their budget deficits for tax cuts. 2. and/or issue more debt in the tune of where GDP growth does not cover the difference between the now higher liabilities and the higher tax intake. 3. and/or increase taxes to pay for the now increased social program cost and the increasing cost of debt interest payments. You place as your hope that #1 will be enough in the future, I say that is hopping for magic. There is an economic theory of Parachute money to stimulate the economy, and there are economist debating on what can Japan do to get out of their hole, some of it are weird balance sheet transfers that are way above may pay grade. In a sense, Japan is the canary in the coal mine, if Trump and the reps keep increasing the deficit, and then Democrats come in and just increase social spending with no similar tax revenue increase, we may be following the footsteps of Japan, so we should pay attention to what they do. Unemployment was not high when Trump was elected. https://www.bls.gov/opub/ted/2016/u...nes-to-4-point-6-percent-in-november-2016.htm Every country should have debt, no one is arguing against that, it is the level of debt that causes problems, yes Japan does show that we can have an economy with very high debt and low interest rates
This can hurt more than the 3rd party voters. https://www.npr.org/2018/03/17/593643801/black-voters-need-more-convincing-from-democrats-in-2018 Some people would rather see Trump re-elected than throw away their vote for a Democrat that in their opinion will not do much for them anyways. People that hare to the left but choose not to vote are probably >>>>>> people that vote 3rd party. I am sure you will find Latinos, Gays, women, ect. that feel the same.
Actress and activist Cynthia Nixon, best known for "Sex and the City," announces she is running for governor in New York as a Democrat https://t.co/97z6kOmsJ5 pic.twitter.com/ZbMLng8CX5— CNN Breaking News (@cnnbrk) March 19, 2018 The whole sexism political attacks are gonna be weird when all the Bernie "bros" support her candidacy
You said all of the following: Will Japan ever repay back its debt? But eventually you do have to pay it back, that is the fvcking point, Keynesian economics is fun, until you can't do it anymore and you have to pay back or default. Japan is the canary in the coal mine Every country should have debt, no one is arguing against that, it is the level of debt that causes problems, yes Japan does show that we can have an economy with very high debt So are you saying its ok for Japan to have a Debt to GDP ratio of 250%? And it's rising. According to your logic therefore they are never going to pay it back . At what point will your predictions of financial armageddon come true? At 300%, 500%, 700%? The US economy is larger than Japan's why can't they expand their debt to GDP ratio esp. into productive social initiatives like jobs, infrastructure, healthcare, education? You also said: They depreciate their currency to lower their debt total cost As your currency gets weaker the cost of the products gets higher and the cost of debt get higher So which is it? The answer is neither. US debt denominated in US dollars will still remain US dollar debt regardless of whether the dollar goes up or down. Also you didn't address a few points I made. In the case of issued currency every asset (dollar) has a corresponding liability (debt). When you pay down debt you reduce the stock of money which is deflationary and not conducive to economic growth. You said that the debt is not yet a problem because GDP is still growing faster than debt. Actually debt is growing faster than GDP. If the US dollar is a safe haven why can't it spend more esp on productive things ie not war?
The USA Economy is larger, but our debt is also larger, you do understand how Debt as a percentage of GDP means right? The "Armageddon" happens when you run out of people that want to buy your debt, as long as people trust that it will get paid back or as long as you can strong arm (or talk into) local business, retirement funds, ect. into buying your debt, you can keep doing it. The USA could run a Debt of 500% of GDP and still probably pay low interest rates, and most of us will be long debt when the bills are finally due. That is deferentially the mentality many lefty in here seem to have, like the old Regan saying (it may not be Regan actually) Debt does not matter because in the long run we are all dead. As Long as people are willing to buy Treasury Notes at the current low rates, as interest rates go up, the amount that you have to pay to service the debt is higher, as I told you before, our interest payments are as much as we pay for Medicare. You can Print money to increase the supply, that also devaluates the currency (in theory) increases inflation and is conductive to growth. Other countries buying safe US dollars also decrease the money in circulation I did not say it is not yet a problem, I said it becomes a problem when you grow (for long periods of time) your debt at a higher rate of your GDP, because you just keep increasing it as a percentage of over all GDP and you are pushing problems into the future. When you are in the camp that Debt never has to be paid back, it is easy to make the argument to never worry about Budget deficits. Eventually someone gets left holding the worthless bag, be it at 250%, /500% or 700%.
I did not say it is not yet a problem, I said it becomes a problem when you grow (for long periods of time) your debt at a higher rate of your GDP It has been growing at a higher rate than GDP in the US for a long while now. Give me a straight answer and tell me whether you think its a problem now in the US? The USA could run a Debt of 500% of GDP and still probably pay low interest rates Because even at 500% of GDP it still wouldn't be a problem? "Armageddon" happens when you run out of people that want to buy your debt If interest rates are low its because the risk premium remains low (among other things) and investors are still buying up bonds. Apparently the case according to you even when debt is at 500% of GDP. Other countries buying safe US dollars also decrease the money in circulation I was referring to issued currency/credit. Stuffing money under your mattress doesn't reduce currency on issue. When you write down the national debt through surpluses you decrease the stock of money. Agree? And when a bond is issued to China or a pension fund no new money is created apart from the eventual interest payment. Agree? When you are in the camp that Debt never has to be paid back, it is easy to make the argument to never worry about Budget deficits. Provide me a single example of a country ever that has paid back all of its national debt.
I should have qualified with national debt tied to a fiat money based system ie current US monetary regime.
Oh. Silly me. You asked if a county ever repaid its debt. I didnt know you meant Western nations after 1974. I was merely reading the words you wrote.
never said you were being silly, nevertheless context is important And in practice the US went off the Gold standard in '33.
I must not have laid the sarcasm on thick enough. If you type one thing and mean another on this forum, expect to be dinged for it.
Yes, the USA has room to increase National debt up to or even higher than Japan levels and still pay relative low interest rates, do you know what would be the yearly interest payment we would have to pay if we had 45 trillion worth of debt obligations? Lets just use 2.5% since it would depend on the time limits of the debt. That would be over a trillion dollars per year just to cover interest payments, to you that is not a problems, to me it is a bit of a problem. https://www.bloomberg.com/markets/rates-bonds/government-bonds/us I assume you mean surpluses in terms of balancing the budget so tax revenues are higher than government expenses. You are taking that money out of stock by taxing it, but then you give it back by buying back the debt. You can say it is decreased since you pay less interest so in that sense there is less money paid out from taxpayers debt to bond holders. Well it depends on what do you mean, if we sell T-bonds then the government receives money to use to pay services which means the money goes back out. So sure money is recirculated. Countries pay down debt all the time, all countries have debt, they run it up in bad times (or war) and then pay some of it back in good times (well they are supposed to). Obviously governments will have debt, that is not the argument, you are arguing for ever increasing debt.
Moving the goal posts are we? I thought you two were talking about countries and then you tried to slip counties in there. I’m onto you.
I just want a straightforward yes or no answer to a simple question. The interest is a part of the debt obligation. Given what we know about the risk premium inherent in bond yields (ie interest rates) and given you said the following: The USA could run a Debt of 500% of GDP and still probably pay low interest rates Are current US debt to GDP ratios a problem? Yes or no? Yes No, wrong. Money=debt=liabilities=assets. When there is a budget surplus debt/money is wiped out. Mostly it's just key strokes but in the case of physical tender it is shredded: https://www.moneyfactory.gov/services/shreddedcurrency.html Wrong. You're conflating money issued with money in circulation. After China swaps their US dollars with Treasury bonds, Treasury holds onto those dollars until redemption of the bond. If as you are saying the Government spends that money into the economy it would need to issue further securities to honour the redemption of the Chinese purchased bond at maturity. Therefore it is the act of spending into the economy that creates new money. That new money is spent by American consumers to buy Chinese goods and China uses the US dollars it receives to buy more bonds and so on. Chinese bond purchases do not create new money or finance anything. I've lost count of the number of times you've said that the US needs to pay off its debt. That's now changed to as long as it's not increasing b/c all countries have debt. When you say pay off, the implication is all of it, maybe you need to say pay down from now on. What would be the negative consequence of increasing the US debt? Use the example of the last 35+ years. And no interest obligations will go up cop out answers please, the interest is a part of the debt obligation.
How is interest part of the debt obligation, debt can be long term, interest are something you have to pay all the time (every year) these are real costs, not a cop out. No really, the USA could take more debt as long as interest rates and inflation stay relatively low. by low I mean 5% maybe even 10%. Unless something unforeseeable happens that will lead to high inflation like it happened in the 80's. What? ok I may be getting lost here, the only reason to even offer T-bonds to china or what ever is to finance more government spending, it is recycling money from a bond holder to what ever the USA purchases (or fiances). So yes no deflationary pressure on money here, no need to print new money. Not even paying down, but staying in place, bond buyers have to know that they will get their money back. Debt that you issue has to be repaid, you can issue 100 year bonds that are due in 100 years, when the times comes up to when they are due, you have 2 options (well 3, with default) you can pay them off or issue new debt to pay them off. But yes your correction is accurate, not paying down the debt to zero, that is not going to happen, there will always be some debt, the question is how much.
Debt = interest and principal. This is taught at elementary school level. Interest maturity matches debt maturity. Interest is not payable all the time (these are not at call accounts) it is only payable at maturity or if government decides to buy the debt before it fully matures (ie monetise the debt). It is part of the debt and not worth a whole other discussion. Please answer my question: Are current US debt to GDP ratios a problem? Yes or no? Inflation is around 2% are you conceding that the US should and could implement Sanders style fiscal reforms? If no, why not? Government never needs to sell bonds before it spends. Government however cannot sell bonds unless it has first provided the currency (by spending) that bond buyers require. The buying and selling of bonds is purely a money market operation used to set/meet various interest rate targets. You said it yourself the government can always meet debt repayments in its own currency and b/c the US dollar is a reserve currency it has lots of scope to increase the debt (ie rates/inflation will stay low). So as long as it is done for a good cause why are you against the idea?