Younger Americans Should Repudiate US Debt

Much of the arguments I'm hearing basically attribute magical powers to central banking and FIAT money, as if economic prosperity is impossible in their absence.

Do any of you really believe that pieces of paper with no inherent value are the reason that humans get up each day and produce wealth? Do you realize that the US economy operated without a central bank or FIAT money for over a century?

 

If a recession hits, then the government will have to slash spending, since revenue fell, and we can't have any deficits because nobody will lend to the government. This is basically austerity and was absolutely disastrous in Greece. During a recession, part of the problem is that everyone is spending less, which means businesses are getting less revenue, then they are letting people go, and those newly unemployed are then spending less, making everything worse. When the government slashes spending during a recession, a bunch of people are getting less money, which just escalates the downward cycle of the recession and could turn it into a depression.

The government is also unable to pass stimulus bills to reverse the downward cycle of the recession and get people spending again. It is unable to bailout industries that employee millions of people who are spending money, and industries that our economy depends on, like the banking and auto industry. The government is also unable to enact Reagan-style tax cuts during the recession since you can't cut taxes when revenue just crumbled, in fact you might have to raise taxes to make up for revenue losses. This happened to Greece and they couldn't do any stimulus or bailouts the US did.

Wrong, the Chinese only own 1 trillion of our 22 trillion debt. Our foreign debt is owned by a large number of countries, all allies and trading partners who wouldn't be happy if we just stole their money. American investors own about 7 trillion. Our allies and trading partners will all just cancel their debts owned by the US government, citizens, and businesses, and become friends with China.

No. The government hasn't actually raised taxes to pay the interest on the debt, it just goes into more debt. Nobody will get a tax cut.

Well, cancelling the debt is basically the government lying to people and illegally stealing their money. In fact taking people's money and contractually promising to pay them back, and then just stealing it is illegal and the government can be sued. A lot of these bondholders are businesses, business owners, and people who invest in businesses. They gave their own money to these investments and cancelling the debt is basically stealing their money and hurting their businesses and employees.

We aren't going to pay off the entire national debt. All we have to do is pay the interest on the debt, and not run any more deficits, which will make the debt smaller and smaller relative to GDP. We did this after WWII and had a great economy. Greece tried your approach and they still haven't recovered.

You think 22 trillion dollars in economic value disappearing will create an economic boom?

Defaulting on a loan is a very bad thing financially and a sign of a business soon to go under. Business thrive by being able to raise capital through borrowing and defaulting on loans means sky-high interest rates in the future, and limited future fundraising, and lawsuits.

Here is how we take care of our debt without raising taxes, stealing from investors, or going into depression.
1: Slash military spending, raise taxes on the wealthy, slash welfare spending, and make healthcare cost-effective. Do whatever it takes to get our spending down.
2: Keep doing this a few decades.
3: Eventually the debt will be very small relative to GDP. At this point we can pay it off with one big check.

 

Blaming "austerity" for Greece's economic problems is like blaming drug rehab for a heroin addict's withdrawal symptoms.

Greece's economic problems weren't caused by "austerity", they were caused by years of reckless spending and borrowing. And the idea that you can solve problems created by too much spending and borrowing with more spending and borrowing is the sort of ass-backwards Keynesian logic that puzzles the rational mind.

Only $1 trillion... interesting way to put it.

Anyway, someone is getting screwed no matter what. I simply prefer that the ones getting screwed are bondholders instead of working class people.

Which causes inflation, which is a tax on earnings and savings.

If inflation is reduced, they'll get a gigantic tax cut in the form of increased purchasing power.

The government lying to people? You don't say...

Uh, no. Loans are investments just like any other. They come with risk and there is no guarantee of a return. Individuals and corporations default on loans all the time. It's not illegal and it's not stealing.

I never made any promises to anyone.

Anyway, a loan is an investment. That's why all bonds have a "risk" premium priced into their interest rate. It's understood that when you make a loan, the borrower might default. So while defaulting may be legally frowned upon, it's not legally prohibited.

Correlation is not causation. There were other variables, like the total destruction of all our major economic competitors, that allowed the US economy to remain unchallenged during the post-WWII period.

Greece cut taxes and spending by 50%? That's news to me.

It's only $22 trillion in economic value for bondholders. For the working class Americans paying the interest, it's $22 trillion in economic losses. Your entire position rests on the unspoken assumption that US fiscal and monetary policy should favor wealthier bondholders at the expense of working class Americans.

Again, the US government collects $3 trillion in tax revenue each year. It doesn't need to borrow any money. And even if the US government defaulted on a bunch of old loans, they could still secure new loans based solely on the strength of the US economy and its tax base. Look no further than the US president himself. He declared bankruptcy several times, yet he was able to get new loans and become a billionaire.

Agree on the slash military spending. That alone would be enough to balance the budget over time.

 

If you can't handle other opinions, debate isn't for you. I suggest an echo chamber, I like those myself.

Correct, their crazy debt caused the problem. But it was the austerity and inability to go into deficit to stimulate the economy that has made the recession so much worse for them.

Compared to most, which is at least 11 trillion and is your claim, yeah its only 1 trillion.

Those bondholders own businesses that we working class people get our salaries from. If you screw bond owners, you screw the economy and working class people too.

No, the government borrowing money from someone doesn't increase the money supply or cause inflation.

So fine if the government lies people out of 22 trillion dollars?

Actually when someone loans you money, they literally just gave you their hard earned money. And yes, you did contractually agree to pay them back. So when you take someone's money and don't pay them back when you promised to, that is stealing, theft.

The bill is on the government, and the government gets its money through taxes on you, and you are responsible for voting for good leaders. So you will have to chip in, or leave.

The government took people's hard earned money and promised to pay them back in contractual legal documents. Defaulting on this promise is a legal matter and people whose money was just stolen have a right to take the debtor to court to get their money back. This is what bankruptcy is all about. There is risk, but people have a right to the money they loaned because its their money and they were promised every dime back plus interest.

My point is that actually paying our war debts and not incurring any more was immensely successful, so lets do that again. Greece didn't pay their debts back and had to do austerity measures during a recession, which made the recession far worse.

So we can do things like the post-war US and workers get 3% unemployment, or do things like Greece and have 20% unemployment.

When you are in a recession, people won't loan money to you anymore, and your revenues just got slashed, you can't lower taxes without even deeper spending cuts than you would have to implement anyway. When the government cuts spending in a recession, that is hundreds of thousands of people who lose their government funded jobs, and stop spending money, and this hurts businesses, and they start letting people go, who also start spending less. You want to save the spending cuts for when the economy is good and not in a downward spiral.

And yes, the Greeks did slash spending during a recession. They were running huge deficits before, couldn't borrow any more money, and their revenues crumbled. They had to.

Our last recession was caused when a bunch of rich people lost trillions of dollars. This did immense damage to the working class. I'd rather pay 500 billion every year, which will get smaller and smaller relative to GDP, than plunge the working class into a depression.

Yup, but your financial problems don't end when you stop borrowing more money.

If your friend just defaulted on 22 trillion dollars on loans, would he be able to secure new loans with you?

But he isn't legally liable for his corporations. They are liable, and they went belly up. Also, he didn't make 22 trillion dollars of economic value vanish overnight, just a few hundred million.

Military budget is 600 billion. Deficit is 1.1 trillion projected to rise to 1.5 trillion. Not going to balance the budget, but glad we found something we agree on.

 

You need to get outside your circle of 1 percenters more often

But as I said, you are not serious about reducing the budget deficit

Rather yiu just want to feed yiur paranoia against national defense

 

1) Production also requires debt, at least for people who do not have the capital to start a company. That's the whole principle of capitalism, and the basis behind the $9 trillion of corporate debt, all of which is built into prices as another "tax".

2) I am not a fan of the fractional reserve banking system, but it is what it is. Going back to the gold standard would throw the economy into a depression. Why? Read my first post in this thread as to the math of why no politician is going to balance the budget, let alone pay down the debt.

3) Ah, the old dream of deflation as getting more for your money. Let's go back to 1929 and 2008 to see how well that dream works out.

 

I rest my case then.

 

Do you think that and repudiation of the debt are not entirely separable from each other?

Will our creditors pretend we haven't given them the shaft?

No, the value of the dollar internationally is based on the demand for it relative to the supply of it, which rests in turn on its status as the leading reserve currency. With that in mind, tell us why it would maintain that status following repudiation of significant portions of US debt.

 

as do I, but I want every American to not pay taxes on any income earned under the poverty limit, rich or poor

and I want all income to be taxed the same, labored income should not be taxed more

 

the Millennials will never be able to ditch the elderly, or ignore the debt

the debt is America's debt and as Americans, it's all of our debt

what we need to do is not vote republicans that want to spend all our money on wars and give huge tax cuts the rich and mega corps and make the American working class pay for it

 

If the poor are exempt from federal taxes taxes then they should not be allowed to vote in federal elections

 

so no one on social security should be able to vote?

everyone pays taxes on the income that is taxable

you act like letting the poor and rich not pay taxes on say the first 20k of their income means they are deadbeats, Trump says that makes them smart

I thought you were for letting Americans keep more of their money, why would you not want to be "not taxed" on your first 20k earned

 

about 4.5 actually.

 

Bullshit. About 1/2 of all seniors make less than the fed poverty level of about 22,000 grand. And what federal taxes are they exempt from besides the income tax? Do you think they should have free speech too, or what price do you put on that? Maybe they should just shut up too.

This has got to be one of the craziest ideas I heard on this board, and they have been many.

 

Retirees would be exempted

As would people on disability

But the common ordinary housefly?

Not under my plan

 

I support every free American being allowed to vote

but I understand why the right is against this

 

See post 90

 

Because the taxes should be shared equally

 

you mean 5.4 trill budget between the 220 mill adults. Isn't that like 25,000 each? Wouldn't that mean that only people that make 200,000 a year or more will be able to vote? Hell the most I ever paid was about 10,000 and I made 1.5 times the average household income.

With a 5 trill budget and 20 trill in income that means you think a guy making 10 bucks an hour should pay 2.50 for every hour he works before buying food and shelter.

"Those who are badly off must go there." "Many can't go there; and many would rather die." "If they would rather die," said Scrooge, "they had better do it, and decrease thesurplus population."

 

yes, they are, everyone should pay their taxes, it's not smart not to pay taxes

the poor pay their taxes like everyone else and if they earn enough to pay taxes on income, there too

do you support taxing all income as income? or think labored income should be taxed more

 

The poor should not receive income suppliments like the unEITC and should pay taxes on every penny they earn

 

if you tax the poor more, even more will need gov assistence

how about require employers to pay them more, at least enough to not need assistance?

we have to pay because employers want cheap labor

the Trump tax cuts meant Amazon payed zero taxes.... I think we need to worry more about taxing the rich vs taxing the poor

 

I know we spend too much on government that the poor want but are unwilling to pay for

As it is the poor can vote for more services that others have to pay for

 

Thats a clever slight of hand trick

See post 98

 

we give too many tax cuts to the rich