The Incessant Irrational Fear of Debt continues by Republican's even amidst Good News

Are you joking? The limit is what we can control under current circumstances, but the problem with your ideology is that you can't predict the outcome now... You can proclaim whatever nonsense you want, but we all know the reality of what comes, its that one unforeseen instance that cripples it... Do you think the Germans really thought they'd lose? Nope, they didn't... That happens all the time, history is rife with such stories, you simply ignore all that because you think you have a 'better' way... Don't make me laugh, how absolutely pathetic...

I'm tired of playing this game, your 'economics' is only part of a larger game, and if you don't or won't respect those other aspects you'll never get it...

 

FAIL, there was a war and spending was decreased after, that has not happened since. In fact, now that the stimulus spending (which was supposed to be one time spending) passed, this administration is spending the equivalent amount each year and whining that it is not enough.

 

No worries, this one thinks 'economics' is king, that simply isn't and has never been true when looking at the realities of nation-states and empires... Let the ignorant wallow in their filth...

 

Wow! 100% chance you are a Republican. A common theme with people who say ridiculous things that make no sense. Reagan and GWB were relatively the two biggest spending President's we have had in the past 60 years. You probably didn't care then. But now it's a Democrat, spending is all you care about. Embarrassing.

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These are nonsensical statements. Something that a psychiatrist would find in a patients journal.

 

So increasing our debt to blow people up is different than increasing our debt to build bridges or feed starving people?

Interesting dilemma you just put yourself in, lol. According to you, debt accumulated through war spending is different than debt accumulated from other spending. Now that is hilarious!! You guys are so brainwashed you will never in your lives be able to actually understand reality.

 

Those other aspects are about being educated and understanding what can collapse your economy. Like not investing in the military, not investing in education, creating plutocracies, allowing people to starve to death, etc. I'm sorry to tell you this and I know you hate to hear it, but we are the largest and most robust economy in the history of mankind and that's not going to stop any time soon. Your grandchildren and their grandchildren will be spewing the same uneducated crap you are and America will still be standing.

People having your thought process is exactly what brings countries down. There is a bigger threat of our country imploding because of conservative ideologies than anything any moderate Democrat or Republican thinks.

 

The biggest problem with conservatives/republicans/libertarians is, to understand what I'm saying you have to have an in-depth knowledge of...

1) The Fed
2) The banking system
3) Primary Dealers
4) Foreign central banks
5) the Treasury
6) Accounting
7) Math
Logic

Unfortunately conservatives understand none of the above which brings them to all their crazy conclusions. Like the US will run out of money, or we can't keep "borrowing", or debt is bad, spending is bad, etc, etc. If you understand the above, you would realize why debt in the US is necessary, why the Govt has increased spending every year for the past 57 years, and why we have 1% interest rates on our debt right now. You would also understanding the Fed's QE1/2/3 policies and why they aren't inflationary, you would understand why our broad money supply has not increased significantly despite the base money supplying growing quite largely.

You would understand why the US is not like Greece... or why 100% debt to GDP is not that big of a deal. You would also understand why every dollar you have in your pocket comes from debt.

If you just took the time to truly understand the system around you, you would know what I'm talking about. But you don't, you guys are complete ideologues. You guys have the same thought process as Sarah Palin and Michelle Bachmann! Everything is broken down in to simple theories that anyone who has no education can understand. That's why very uneducated people think like conservatives and very educated people think completely differently. Watching Michelle Bachmann question Ben Bernanke on the economy was absolutely hilarious!! I mean she truly thinks she understands what the Fed should be doing because of how she treats her daughter!!! It's absolutely unreal! Ideologues are the worst.

 

How about taking time out from attacking people long enough to explain and back up what you are claiming otherwise you just look silly with posts like the ones you are making.

 

What you said sounds like irony, but actually on closer inspection your accusation does not make sense. Yes, I am well aware of the hypocrisy of Reagan, and many Republican politicians who proceeded him. However, that still does not change the fact that Democrats have no regard for the consequences of all this debt. At least Republican politicians say they want to reduce the debt. To me, hypocrisy is the lesser of two evils compared to the reckless abandon on the other side.

Just because Republican politicians are spenders, does not mean the Republican voters are. Many Republican voters are not happy with their party leadership, a certain segment has hijacked the party. Unfortunately under the two party system it is not so easy to just bail ship.

 

Do you see anyone asking questions for me to explain anything? Absolutely not. They are just confirming my OP... they have an irrational fear of debt. They aren't trying to figure out what I'm saying or ask questions why I believe what I believe. If someone wanted to know the reasons why and have an honest discussions with out any partisan shenanigans, I would gladly oblige. But if you go through this thread you will not see a single person wanting an intellectual debate about economics and monetary systems. It is all just the anti-Govt crowd coming in with their crazy fears of debt. They basically just confirmed everything I said in the OP.

 

That's the difference between you and I. I don't care what politicians say, I care what they do. And Republican's up until now, did not care about balancing the budget. They might have said it, but they definitely did exactly what should have been done for the economy. And Obama has talked about reducing the debt and balancing the budget many times. Just like Republican's, I don't care what Obama says. While everyone is talking about reducing the debt we still have trillion dollar deficits... so obviously this talk is going to continue, because these guys have intelligent economists in the background telling them that they can't just gash spending with out destroying the economy.

They can talk about it, but as long as they don't actually do it, we are good. Which is why you haven't seen the Govt spend less in a year than the previous year in almost 57 years. Every single year you have been alive the Govt has been the biggest spending Govt in history for every year they were in office regardless of it being a Republican or Democrat.

You guys are literally trying to force Obama to do something that no President has done in 6 decades and then blame him for the results. It's embarrassing!

 

I'm just trying to give constructive criticism by telling you that you aren't helping to get your point across. You may have some good points but by going back and forth with others the point gets lost. Just saying I would like to hear why you think the massive debt the US has isn't a problem? I have heard Obama kind of say the same while just a few years earlier he was concerned about the US debt. Why is it not a problem now? What about the US printing money, is that a problem? Why not?

 

I understand what you are saying but after being here on and off for two years, I've learned that no matter how hard you try to get your point across it is a lost cause on this site. The ideologues will not bend no matter what.

Like I said to understand why it's "not a problem", you would have to understand the complexities of the system and how the different entities interact. So to answer this question to where you would actually believe or even understand what I'm saying would take a lot of back and forth conversation.

So for short synopsis just to get the ball rolling... is you have to realize that the banks (Primary Dealers), the Fed, and the Treasury work together to make our bond market. The only thing that matters in terms of debt to a fiat currency issuing nation is inflation. We can never run out of made up money, we don't need China to give us back our own made up money, we don't need taxpayers to give us back our own made up money... we simply make our own money. And we make it via debt. So therefore the problem isn't can we pay off the debt, the problem becomes how much money does the Govt need to create in order to fund our economy and will that cause unsustainable inflation.

Think of the national debt to our country as a revolving loan that we create ourselves that we can continue to revolve until infinity. There will never be a time where we can't pay off maturing debt because all we do is replace the debt with debt because that is how our made up money is made. So for us to actually pay off the debt, the Govt would literally have to tax all the money they gave us back. Remember, the national debt is an asset to you and I... it is a liability to the Govt. The problem people have is they think the Govt's liabilities are the taxpayers liabilities. They are not, because most people simply do not understand our banking system and federal reserve system. We paid off over $4 trillion of maturing debt last year... and taxpayers were ask to pay simply $200 billion of that in interest. Around 5% of the money the Govt paid was in the bucket for taxpayer money.

So if you understand how the Govt creates debt through the Primary Dealers and how the Fed controls this debt through their monetary operations you would see that the national debt is actually our private sectors savings. So the money we all have comes from debt. Every dollar you have in your bank account or wallet comes from debt whether it's private sector debt or Govt debt. The difference between the debt is Govt debt gives the private sector net savings. So we don't have a liability when the Govt creates debt. I know none of this really makes sense unless you understand the Primary Dealers and the Fed... but trust me, it will eventually click and you will see why our debt never stops growing.

I don't care what politicians say. Obama said the debt was a problem then because he wasn't President and even Democrats are concerned with debt. No President will ever say "debt doesn't matter". The reason he is not concerned with debt now is cause he knows he has to create debt. It's on him, before it wasn't on him, he could say whatever he wanted to buy votes. Every politician for the past 60 years has been concerned about debt... absolutely none of those President's were able to control the debt whatsoever. The debt will continue to grow for the rest of our countries lifespan. In 75 years the debt will be around $1 quadrillion as the cost of this country will continue to grow. And those people in 75 years will not even consider our complaints about $16 trillion as reasonable... just like in 1937 when they complained about $40 billion in debt. They had the exact same fears we do today 75 years ago... yet they were very wrong, just like we are very wrong.

The debt is a necessity in our monetary system. It will always grow over time and deficits will be larger and larger as the economy and global economy grows.

 

I agree with you and after being on other forums I think it just comes with the territory. I see it as an opportunity to get my points out there whether or not someone else agrees with me or not. It can be aggravating at times though. Some forums have moderators with agendas as well. This one isn't as bad as others.

You are probably right on that point. It isn't as simple as alot of people think it is. I see the effects mostly with foreign currency exchange rates. After travelling for years to other countries I see the hit the US dollar has taken over the past few years. That tells me that internationally our currency is losing value but I will say there could be other factors as well.

That is true as long as our currency remains strong internationally. The reason the US dollar is strong internationally is because the US economy has been stable for a long period of time when compared to other economies. Other countries even use the dollar to back their currency. If that confidence is ever lost we won't be able to print as much money as we want. If foreign countries ever dump the dollar it will destroy our currency. Seems like our government is gambling to me.

The problem with that, as I understand it, is the more debt we have to more interest we pay. $200 billion is alot to pay in interest because you are paying for something but not getting anything in return. Alot of people complain about how much Social Security costs and how it or national defense and other things take up such a huge chunk of our budget. At least we do get something in return for that money spent. With interest you really don't get anything and with the rising debt comes rising costs of interest. That is money paid out for nothing in return.

Those are interesting points and may be where I am missing the point. It seems to me that our government is only as good as its ability to provide a stable currency. That stability depends on our economy which has gotten less stable.

I'm in agreement with you on that. Politicians say whatever they have to in order to get elected. I don't have much faith in what any of them say. It is more of a show than anything.

To sum up the points I have mentioned the things that seem worrisome to me are 1)Is the money printing hurting the US currency to a pointed which can lead to a disaster? 2)Is the interest on our rising debt going to reach a point where interest payments will be more than defense or the social programs we currently have?

 

It's losing value because the worldwide demand for USD is greater than any other currency out there. To meet that demand we have to continue pumping out more and more currency. This causes it to lose value relative to other currencies, but there is MORE of our currency out there. So even though we lose value, people also continually make more USD. That's because we are the most productive economy in the world. Any country that ever competes with us will have to devalue their currency also as that's the only way to fulfill the worldwide demand for that currency. That's what China are trying to do right now. If you gain a full understanding of our monetary system and our economy you wouldn't want the USD to gain value. It might sound like a good thing, but it is a horrible sign for our economy.

I disagree with that. We will always be able to print as much as we want. Foreign countries don't give us the ability to print our own made up money. We can close our doors and stop doing any business with foreign countries and still be able to print as much as we want.

And what do you mean by "dump the dollar"? Where are they going to dump it?

Once again interest is another thing that becomes clear when you truly gain a grasp of all the moving parts. It is nothing more than another expense for the Govt. And it's a reward for savers not investors. It is completely controlled by the Fed. And the biggest factor of interest is with banks. During economic crises, banks like to park their money in to savings. So if interest on govt debt is 3% and inflation is running at 1%, and demand for credit contracts because of the bad economy, banks will just take that 3% and sit on it. So the Fed comes in and drives those rates down to get banks to look for other investments. Primarily in to low interest loans to the private sector.

That is why we paid almost the same amount in interest last year as we did 20 years ago in nominal terms. That is crazy when you think about it. That is how low interest is right now. But, if the economy heated up and banks started lending more money at low interest rates... then the Fed would pump more treasuries back in to the market trying to increase interest on the national debt because they want MORE money saved rather than spent. Interest on the national debt is nothing but a tool for the Fed to control savings. It's a rather interesting concept. But the common misconception is that the private sector/foreign countries control interest rates on our debt. They do not. The Fed and the Primary Dealers control interest rates and it's all about what the Fed wants in terms of monetary policy.

There is a lot more to explain here but interest is really not that big of a deal when it comes to our debt. It's just another expense like anything else and rewards savers.

I think people concern themselves too much with our currency and our debt. The most important part of our entire economy is our productivity. What's the point of having a stable currency if you have 8% unemployment and producing less than you did 5 years ago? What's more important... producing more and providing more jobs for your human capital or making sure you balance the budget and have a stable currency?

If balancing the budget is more important you would have to do that at the expense of the real economy. That's why you NEVER see it done. They talk about it every year but it's never actually done. The LAST time they tried to cut spending in order to balance the budget because they feared large deficits was 75 years ago. That's how long it's been since we have tried it. Because in order to do so you have to accept the consequences in the real economy where real humans are out of work, hungry, and in need. So the question than becomes, is balancing the budget and reducing the debt really necessary and why? Most people when asked this question think of their own lives and the answer is you should spend what you make or when you make less you should reduce your debt. That's the complete opposite of what the Govt should do in a fiat currency issuing nation.

There is nothing crazy about our money printing. Here is the year to year change of our money supply...




And as for point #2... interest is controlled by the Fed. There will never be a point where the Fed allows interest payments to be more than our defense expenses or social programs. If you understand how interest is set and why it's set you would not actually fear interest payments. Remember, interest rates and payments are set up completely to change the dynamics of savings/investing primarily in banks.

The one thing people do not realize about our economy is it is literally completely controlled by banks and not the private sector. So many people think we will have to pay the debt back and our children will have to pay it back and we'll have to pay these ridiculous interest expenses that will cripple us. That will never happen... it is controlled by the Fed, banks, and Treasury... all which have special rules that allow them to have full control of our debt, interest rates, and money supply.

It's an absolutely amazing system once you understand all the moving parts. The one thing you have to remember is as a country who has a made up money supply... we can do whatever we want. The only laws stopping us is our own made up laws. There is no limit to how much money we can create, there is no limit to what we set interest rates at. It is completely in control... that's what's so spectacular about our system and why the rest of the developed world is adopting it.

 

Alot of good points and info there. Thanks for posting it. It seems too good to be true. I would think a good sound economic policy would be not to carry alot of debt but I guess when you are on top what can stop you? I just see the strength of the US economy in the past has been in manufacturing and since that has left, or alot of it has left, it seems there is nothing really to support our economy. The housing debacle seemed to take alot of people by surprise but I had a bad feeling about it several years ago. When I bought the house I live in now the bank approved me for way more money than I wanted and acted surprised that I didn't borrow that much. I told them after being a homeowner for several years I had a set % of my income that I allocated for mortgage payment that worked for me and that was what I was going by. I realized something was fishy about the mortgage industry then. I get the same feeling about US debt and currency now. Something doesn't seem right but maybe I am looking at it thru my own personal experience with debt and what I have seen with currency exchange rates in other countries. When I pay with a foreign currency it really hits home at how strong the dollar is. Buying a soda with a $2000 bill in foreign currency makes that money seem worthless. It is all a matter of one's perspective I guess.

 

Thanks for at least listening to another point of view with out completely blowing it off because it doesn't coincide with your beliefs. Like I said, if anyone ever wants to have rational debates and discuss these topics in depth I'm always down. It's very difficult on this site though because of how extreme some people are in their anti-govt beliefs. The simple thought of Govt spending or anything Govt sends them over the edge regardless of our real life monetary system and how our economy works.

The thing that made me actually start really understanding the madness was to start a country from scratch using our system and to actually follow the transactions. When you do that, you will see exactly what the national debt means to the private sector. The national debt is necessary for our growth. That's why it continues to grow and will continue to grow, There is no stopping it unless you want the country to suffer.

As far as the housing crisis and manufacturing... all of that is regulatory problems. They are just a segment of our entire monetary system and what I'm talking about.

It's hard for many people to truly grasp this because it's hard to get out of the mindset that the private sector supports the monetary system. The private sector builds all the chit, innovates, eats, sleeps, lives, etc. The monetary system though... is completely separate from the private sector. The only thing the private sector controls in terms of our monetary system is their demand for credit. Otherwise the monetary system is completely controlled by entities that play with completely different rules than you and I. The banking system can create an infinite amount of money and continue funding our Govt spending to infinity. If the banking system ever has trouble, because of our self made laws, of funding our debt... then the Fed will come in and take it over. That's why the Govt doesn't go door to door anymore looking for people to invest in our bonds to fund our wars. They don't need your money or my money.

Just to add facts to this discussion... here is the Fed's breakdown of who buys our debt from the Govt.

http://www.newyorkfed.org/research/current_issues/ci13-1/ci13-1.html

You will see 71% of the debt issued by our Treasury dept is purchased by our Primary Dealers. If it was necessary 100% of our debt could be purchased from our Primary Dealers. Will our banks ever run out of the ability to make up money out of thin air to purchase our debt? Absolutely not. So our debt literally just moves between entities and the only thing that changes is the interest rate. It does not disappear unless the Govt taxes it out of the system.

Our system is absolutely amazing and I think people really forget the fact that it's completely made up and we have complete control. Just think about it... how does a country with made up money and made up laws run out of money? It's impossible... the fact is the national debt funds us... we don't fund the national debt. Hard concept to realize, but if you break it down or want to see the actual accounting behind how it happens just let me know.

 

So the reason you look like the very thing you accuse everyone else of acting like is actually the fault of everyone else?

 

Increasing debt for constitutional reasons and paying back that debt as soon as possible is different than incurring debt for unconstitutional social engineering with no intent in paying it back in one generation. The latter is an immoral use and abuse of future generations. Unfortunately it takes an understanding of the constitution to comprehend this.

 

Unfortunately the Supreme Court disagrees with you... and I'm sorry, I think the Supreme Court knows more about what's Constitutional or not. So your entire argument about debt is a moral one on where money is spent and you feel spending money on wars is more moral than spending money on welfare?

Hahahaha!! Republican logic right there!

 

If anyone wants to have a rational discussion, I'll oblige all day long. Unfortunately 99% of you on this forum do not want to have a debate since you guys already know everything about everything because Rush or Sarah Palin told you so.

 

You offer a rational discussion followed by an insult. If that doesn't show you the problem nothing will.

 

There has been over 520 posts and only one poster in those 520 posts actually asked a question and even though he didn't completely agree he at least acknowledged that the system is complex and that a simple explanation of debt and our economy is not really sufficient enough to explain it and there might be more to it.

The rest of you guys have not made any attempts whatsoever. Just injected all of your anti-govt beliefs without any attempt at understanding exactly why the developed countries all across the world do the complete opposite of what you are saying.

You started in this thread with a simple one liner that didn't have anything to do with the subject at hand and now you are questioning me about having a "problem"... hahahahahaha. Embarrassing.

 

Funny how the Republicans kept the deficit, a one year worst, to $400B during the 2000/2001 recession and recovery and then cut it dramatically in 2005, 2006 and 2007 to a measly $161B after those tax rate cuts produced soaring tax revenues.

Except it was the Clinton tax rate increases that slowed revenue growth and the Gingrich/Kasich and Bush tax rate cuts that caused them to soar. But do try to prove that the Bush tax rate cuts hurt revenue growth and remember they did not go into effect until 2003. How little did revenues grow between 2003-2007?

You mean the ones that brought the deficit down from the $400B peak in the recovery down to a measly $161B?

ROFL after Obama and the Democrats raised it from $161B to $1,400B now you brag that they may bring it down to $845B still more than FIVE TIMES the deficit they inherited 6 years ago? And Obama didn't inherit anything, he supported and voted for the Democrat 2008 budget and spending, he supported and voted for and signed into law as President the Democrat 2009 omnibus spending bill.

Prove it and what do you mean by "under Bush", what exactly is that suppose to mean? He was not king.

Clinton had the luxury of "inheriting" an economy in the second year of a very strong recovery with revenue growth head towards double digit. His tax increase slowed the economy and tax revenues, from 9% growth down to 7% else we would have hit a surplus earlier. He opposed the measures that got the economy back on track but Gingrich and Kasich finally forced him to sign the tax rate cuts that sent that revenue growth into double digits and the lower spending which he opposed and welfare reform which he opposed. And he "handed" Bush and economy in a slowdown that went into a recession within weeks with the surplus being cut in half before a Bush budget was ever voted into law. Had Gore been elected the surplus would have still gone away due to the dot.com bust, the recession and 9/11 all hitting.

Deficit Bush and the Republicans handed the new Pelosi/Reid Congress, included one Senator Obama, $161B.

Oh let's see i put on 100lb's last year and now lost 50 of them. And BTW the deficit in 2009 was $1,400B. And Obama and the Democrats have had deficits over $1,100 billion ever since.

But HEY your party and your guy now say deficits and debt don't matter, we can just spend as much as we want to and not worry about it.