The US deficit hit 3 Trillion dollars this year. What's another TRILLION here or there? U.S. deficit to hit $3 trillion in 2021, CBO says Just to make a small comparison, the deficit in 2000 was only $236 billion (more than 10 times less) and there were experts still complaining about the country constantly running budget deficits then. Yeah, I don't think anyone really cares. Not until it starts coming time to pay the bill.
The 'bills' are paid every year...the interest on the debt. What's your solution? A deficit indicates the nation spends more than it's income so the only solution is to decrease spending to match income, or increase income to match spending, or some of both. Money spent, including deficit money, energizes the economy and creates jobs...so less money spent de-energizes the economy and terminates jobs. How much reduced spending do you think the US economy can handle? Lopping off $1 trillion in deficit spending is the loss of approximately 10 million jobs! Do you know some politicians who are willing to campaign on greatly reduced spending and increases in taxation? Do you know any voters who will vote for decreased spending and higher taxes? As I review the nation, I think much of it is in shambles! It's unconscionable to me that we should ever reduce spending. Therefore, spending should actually be increased and income needs to be doubled! Higher taxes...double what is currently paid...needs to be paid by people and business...
see a point brought up in this thread: Current U.S. National Debt approaching $20 Trillion Interest rates are very very low right. But if the economy suddenly changes and interest rates become like what they were in the past, the country could suddenly have a huge huge problem being able to continue to pay the interest rates on the debt. Yeah, when is that infrastructure spending ever going to happen? It has been an issue and politicians have been talking about it for decades. Then the Democrats come along with a huge "Infrastructure" bill that is actually only 7% infrastructure. Clearly repairing highways and bridges is not a big priority to those running the government. I don't think either the Republicans or Democrats have a problem with spending money on roads and bridges. The issue is they're both just not actually very enthusiastic about doing so either. This issue about borrowing money being important to pay for infrastructure is mostly a red herring, when most all that money being borrowed isn't going to pay for infrastructure!
Not that it can't happen but the Fed does a better job today at regulating the economy...not worried about extreme high interest rates. Where do YOU come up with the 7% infrastructure budget?? Maybe YOU should read; https://www.whitehouse.gov/briefing...2021/03/31/fact-sheet-the-american-jobs-plan/ Who said 'all that money' is borrowed? Do you know the tax scenarios in the future? It's not just spending...it's creating lots of jobs and boosting the economy and improving efficiencies, etc. all of which need to be deducted from the spending for the net cost.
That might just be naive complacency. Probably the reality is most people don't really understand what actually causes high and low interest rates in an economy. (And no, the Fed can't magically control interest rates all the time. If you thought that then you definitely don't understand this)
You owe 3 trillion dollars, you pay the yearly interest....BUT YOU STILL OWE THE DAMN 3 TRILLION DOLLARS, DUH!!!!
Actually, the Fed does set the interest rates. Like I said, I have no worry about runaway interest rates in the near term...
Actually no... You're trying to drastically oversimplify what the situation is. It costs MONEY to "set" interest rates. You didn't realize that? If you disagree with that, I'm not getting into an argument here with you. We can discuss that in another thread. It might be very complicated to explain exactly how that all works.
The term "monetary policy" refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit to help promote national economic goals. The Federal Reserve Act of 1913 gave the Federal Reserve responsibility for setting monetary policy. The Federal Reserve controls the three tools of monetary policy--open market operations, the discount rate, and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee is responsible for open market operations. Using the three tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including employment, output, and prices of goods and services. Structure of the FOMC The Federal Open Market Committee (FOMC) consists of twelve members--the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis. The rotating seats are filled from the following four groups of Banks, one Bank president from each group: Boston, Philadelphia, and Richmond; Cleveland and Chicago; Atlanta, St. Louis, and Dallas; and Minneapolis, Kansas City, and San Francisco. Nonvoting Reserve Bank presidents attend the meetings of the Committee, participate in the discussions, and contribute to the Committee's assessment of the economy and policy options. The FOMC holds eight regularly scheduled meetings per year. At these meetings, the Committee reviews economic and financial conditions, determines the appropriate stance of monetary policy, and assesses the risks to its long-run goals of price stability and sustainable economic growth.
Blah, blah, blah... The fact is they don't have the power of law to set interest rates, and instead they have to try to set interest rates through other ways, but that costs money. Which translates to inflation, obviously. Wow, isn't that simple? Yeah, they don't have "magic" powers over the economy, and you can't get something free for nothing. If innate market pressures become too strong, the Fed won't be able to hold back the dam and keep holding rates at a certain level. That could lead to mounting inflation.
Anything can happen but be sensible...runaway inflation? The Fed does a pretty good job and should be given credit. Sorry but the FOMC does set interest rates...
Those who believe there is absolutely nothing to ever worry about because the Fed controls interest rates have a very dangerous mindset. The Fed may not be able to control interest rates under all possible situations, and when they do control interest rates it carries a financial or economic cost. Probably this would be a discussion for another separate thread.
Give people trillions of dollars to spend at Walmart and Amazon, China and the top 1% win yet again. Perhaps one day people will get that anything the democrats does in the name of helping the poor, the richer the elites get.
No one ever said 'there is absolutely nothing to ever worry about'???? If you think the Fed has failed then identify something they did and recommend how YOU think it should have been handled and we can discuss...
Interesting your comments are 100% politics and 0% facts. It's not about winning and losing! It's about doing what is needed in the moment with an eye on the long term. Capitalism is not only about democrats. The economy is not only about democrats. Name a single policy the democrats have put in place that is a failure? Please be specific why?
What makes you think the Fed (central banks) doesn't set the interest rates? They meet 8 times a year to determine what the rates should be. What they decide affects short term and variable interest rates. What they can do wrong is wait too long to increase interest rates.
Just stated one. Slick Willy's changes to banking laws led to the Great Recession. There's you a second one. In the mean time, the Walton's and Bezos appreciate the trillion you sent their way.
That may or may not be true. You shouldn't be so quick to believe things the media tells people. It might have only been a minor little smaller cause. But that's not a discussion we're going to have here because it's off topic.
I'm not going to waste this thread explaining it to you. But I'll give you a very quick explanation. When they say they "set" rates, what really mean is that the Fed tries to get rates moving towards a certain target. The strategies they undertake to try to move those rates are not without costs and trade-offs. The more they are trying to move the rates, the more the costs. As an example, if interest rates would normally have been 3.4% if they did nothing to intervene, and they wanted to decrease them to 3.3%, it would not be too difficult because that's not much of a difference. They could simply print more money and lend it out at those rates. Of course that's also going to result in an inflationary cost to the economy. Not because they printed more money, but because they printed more money and are getting 0.1% less than the going rates in the market would have otherwise been. They have to give away free money to change the interest rates this way. The thing to point out is that in a possible future crisis, there is a limit to how much the Fed can control interest rates. They could try to reduce interest rates, but the inflation that would cause would have an opposite reaction and put an upward pressure on interest rates. So the efforts could turn out to be futile. If inflation starts becoming a big worry, the Fed is going to have trouble being able to keep interest rates down too much for too long.
The dollar is a debt-backed instrument. There is no time to eliminate deficit spending if you want "growth", no matter how real or imagined it might be.
You cannot argue deficit spending without knowing what the US budget should be. Certainly you, and everyone else, has no idea how much money should be spent annually in the US...this is a fact! Maybe it should be $3 trillion? Maybe $7 trillion? Maybe $10 trillion? Fact is there has never been a comprehensive study of how much the government must spend every year. And even if this miraculously could be known, there are constant emergencies and other national issues, like Covid, like a military attack, in which deficit money is going to be spent. And...I predict you can never do a comprehensive study how much the US government should spend...because...no two people can agree on the direction of the US or where and how much to spend? Can never happen!
