National Debt

Status
Not open for further replies.

JungRebel

Redshirt
Aug 23, 2012
2,606
0
0
Not meant to be political. Can someone explain to me what the pros and cons would be of raising or paying off our National debt? What is the 2024 budget showdown the debt clock website refers to? You dont have to explain it like I'm in the 4th grade, but like I dont have a formal education on the topic, which I dont. I have been told reducing it too quickly could be detrimental as well. What would be the consequences of that? Or the consequences of the major projects the Democrats propose being put into place? I'll hang up and listen unless someone says something I dont get.

Also, pros and cons of a VAT?
 

Jeffreauxdawg

All-American
Dec 15, 2017
8,857
7,904
113
1. Budget showdown. That is usually when the current Congressional budget agreement/debt ceiling runs out. It's usually only a year or too out, but they had to nuke the old one to spend this $5 trillion on Rona.

2. Debt. In of itself is not the problem. Constantly creating it is the problem. I could go on for hours and in fact... I have typed up 6000 words on it recently. But for here I will let uncle Milt explain.... 5 minutes you should watch.




3 VAT. I am not against, but only if we use it to completely abolish the income tax system.

Having so many forms of taxation is a complete waste of resources... The collection of taxes itself has become a humongous tax in of itself.
 

was21

Senior
May 29, 2007
9,950
603
113
National debt or budget deficit? National debt goes back a loooooong time...budget deficit is a budget year or so...huge difference
 

Leeshouldveflanked

All-American
Nov 12, 2016
14,183
9,315
113
All of the US Governments Credit Cards are maxed out at around a 40% APR.. China, who gifted the world the Covid 19, is the only country who will give us another credit card.
 

RutherfordBHayes

Redshirt
Nov 4, 2014
767
14
18
From about 1990 on, we were doubling the federal debt every 8 years. Under Obama we ramped that up, and went from about $8 trillion in debt to about $19 trillion. I think just the interest on federal debt is $400 billion a year.

None of that really scares you until you realize that the federal debt per taxpayer is about $180,000. Think about it; you are responsible for $180,000 in debt that Congress has borrowed on your behalf. That hits home a bit more.

I doubt that is sustainable. At some point, the only way to pay the interest is to devalue the currency which we’ve been doing forever. When the value of the dollar begins to lose significant value in a period of months, what then?
 

Jeffreauxdawg

All-American
Dec 15, 2017
8,857
7,904
113
All of the US Governments Credit Cards are maxed out at around a 40% APR.. China, who gifted the world the Covid 19, is the only country who will give us another credit card.

You are not wrong. There are two levers to pull to stimulate the economy without printing money... Interest rates and taxes. 6 months into Reagan's first term we were in a recession and interest rates were at 21%.. yes that is correct. Taxes were 70% for top earners, 35% for the median and 46% for corporations.

Everyone has been pulling those levers down ever since and rarely do the get pushed back up a little.

Now we are at 0% interest rates and the lowest taxes in history. Printing money is the only solution and that leads to inflation, which leads to higher taxes and higher interest rates....

The next decade is going to suck.
 

EngDawg

Redshirt
Mar 29, 2016
2,037
4
38
You are not wrong. There are two levers to pull to stimulate the economy without printing money... Interest rates and taxes. 6 months into Reagan's first term we were in a recession and interest rates were at 21%.. yes that is correct. Taxes were 70% for top earners, 35% for the median and 46% for corporations.

Everyone has been pulling those levers down ever since and rarely do the get pushed back up a little.

Now we are at 0% interest rates and the lowest taxes in history. Printing money is the only solution and that leads to inflation, which leads to higher taxes and higher interest rates....

The next decade is going to suck.

What are your thoughts on MMT? I imagine I can guess them, but...
 

Bulldog from Birth

All-Conference
Jan 23, 2007
2,499
1,067
113
We need to write off 100% of our debt owed to China as a small down payment on them unleashing their irresponsible plague on all of humanity.
 

Jeffreauxdawg

All-American
Dec 15, 2017
8,857
7,904
113
What are your thoughts on MMT? I imagine I can guess them, but...

No free lunch...

If you watch the video above, it's how I feel. MMT focuses on debt. It disregards the negative impact of unlimited spending. It's all about what we currently spend.

I could buy a $10 million house tomorrow if all I had to make were interest payments because I never have to pay back the principal. Great. But in that system, everyone else is going to bid up the price of the house to the point where only the millionaires can afford the price if the interest.

Fist currency, gold standard, gold itself, never pelts and tobbaco..it doesn't matter. Money is the physical representation of value created by some form of work or resource. The more money that is injected into the system without an equivalent resource or amount of work, is inflation.

Luckily, the vast majority we have printed in the last decade has stayed in financial markets for the most part, that is about to change.... Work has declined and lots of money is going to people who will spend it. Inflation and possibly stagflation on the horizon if we don't create some work to go along with the money printing.
 

Shamoan

Redshirt
Jun 27, 2013
12,466
0
0
Until there is a balanced budget across the board, nobody is serious about the national debt and its an arbitrary can we collectively kick down the road. There is so much waste and abuse rampant, nobody seems willing to tackle the kraken. It’s taken a life of its own at this point and we may be forced to use the bombs and tanks other countries pay for to settle the debt. Obviously I’m exaggerating and being facetious, but maybe not.
 

paindonthurt_

All-Conference
Jun 27, 2009
9,528
2,046
113
Understood, but if people are spending more money, someone is either working or making more money.
 

ronpolk

All-Conference
May 6, 2009
9,172
4,778
113
Shouldn’t people spending money create work?

For a period of time. Eventually it will lead to a bubble. If there is a product or industry that is selling product more companies are going to move in that industry until eventually there is too much of that product. That will lead to companies failing and workers losing jobs, which just creates a chain reaction.
 

Jeffreauxdawg

All-American
Dec 15, 2017
8,857
7,904
113
Shouldn’t people spending money create work?

Slowly. Inflation comes first. If inflation comes too fast, it causes even more layoffs. Here's an example:

I own a brewery. You were the leader of my third shift. When the economy tanked, I laid all of the third shift off. You now get $3000 per month from the government for doing nothing. You spend $1000 a month on beer, because why not. The 500 other guys on your shift do the same. Now there is a constraint on the beer supply.

What is the first thing that happens? Price increase. If I raise the price, some buyers are going to choose or be unable to buy as much. If not, I will raise it more. Eventually I will match supply and demand by pricing. If demand holds long enough, I will bring my 3rd shift back.

But in the meantime the same thing happened accross the board in all aspects of the economy. Even though I can produce more, I can't lower prices because costs have caught up. Hell, I have to pay you a premium to get you and the rest of the crew to come back.

Since I am a small brewery, it hits me extra hard because I don't have a big supply chain. My hopps guy decided to sell my share to the big guy, because he was willing to pay more. Now I have no hopps. Game over. All 3 shifts back on the street.

Extreme example, but I hope it proves the point. Access money in the system drives up prices. That's inflation. The only to keep it from happening is to increase supply. There are some industries with very elastic supply (technology for instance). But the stuff we spend most of our money on (food, housing, medical care, and transportation.) They all require a lot of work.

So in its simplest form, I think money = work. More money with less work bids up prices which is inflation. Less money with more work causes price cuts which is deflation

We pumped a shitload of money into the system and it will take a long time to get work back to where it was... 4-5 years probably. Inflation is coming.
 

Scottfield1

Sophomore
Nov 21, 2013
356
152
43
Incorrect

From about 1990 on, we were doubling the federal debt every 8 years. Under Obama we ramped that up, and went from about $8 trillion in debt to about $19 trillion. I think just the interest on federal debt is $400 billion a year.

None of that really scares you until you realize that the federal debt per taxpayer is about $180,000. Think about it; you are responsible for $180,000 in debt that Congress has borrowed on your behalf. That hits home a bit more.

I doubt that is sustainable. At some point, the only way to pay the interest is to devalue the currency which we’ve been doing forever. When the value of the dollar begins to lose significant value in a period of months, what then?

The budget was balanced and the deficit reduced to a surplus under Clinton. Clinton’s economy is the most prosperous in US History, next to Obama and then Trump. The difference between the three. Clinton’s budget spent less than the government’s revenue. Novell premise. The deficit free fall began under the Bush administration and hasn’t stopped.
 

garddog

Freshman
Dec 10, 2008
792
99
28
The US needs to do away with income tax, social security tax, employer taxes, etc. Then you institute a 20% federal sales tax. Make corporate tax 15%. And outlaw banks and credit cards from charging merchant fees on taxes. And limit them to 1% max on transaction fees on goods sold.

The whole issue of people not paying taxes is gone. You also reduce illegals coming in. And people become much more conscious about spending.
 
Nov 16, 2012
2,481
2
0
Here’s the sad thing - every extra dollar printed for stimulus and other handouts only make the rich more richer and the poor more poorer via inflation. It shouldn’t be more obvious than what we’ve seen this year in the stock market.
 

Hail State

Sophomore
Dec 27, 2009
464
106
43
When you owe the bank 3 million dollars, it’s your problem. When you owe the bank 26 trillion, it’s their problem.
 

Irondawg

Senior
Dec 2, 2007
2,896
553
113
What’s really amazing is how little citizens care about this issue. It never comes up as a series election issue and it doesn’t matter who is in power, they keep spending.

I had a little hope that Trump might try to attack it but early on his congress with all those “fiscal conservatives” just continued to make it worse.

First thing we have to do is balance the budget but a balanced budget bill never gets introduced and nobody runs on that platform.

Also agree that a simplified tax code really needs to be introduced
 

BoomBoom.sixpack

Redshirt
Aug 22, 2012
810
0
0
Not meant to be political. Can someone explain to me what the pros and cons would be of raising or paying off our National debt? What is the 2024 budget showdown the debt clock website refers to? You dont have to explain it like I'm in the 4th grade, but like I dont have a formal education on the topic, which I dont. I have been told reducing it too quickly could be detrimental as well. What would be the consequences of that? Or the consequences of the major projects the Democrats propose being put into place? I'll hang up and listen unless someone says something I dont get.

Also, pros and cons of a VAT?

The first main effect is interest payments. The higher the debt, the more interest we have to pay every year out of the budget.

The second effect is the interest rate on the debt. If the overall debt gets too high, we may have to start paying higher rates (bonds) to nervous investors. No one knows this level. A few years ago there was noise about 90% of GDP being a dangerous threshold. This was a transparent ploy to prevent spending under Obama for political reasons. expect a repeat under Biden.

Most people don't realize that you don't have to bring the budget deficit down to zero to reduce the national debt. The debt actually deflates away over time, If you aren't adding more to it with your annual deficit than it is deflating away. That level is about $400B. Keep the deficit to that, and the debt will shrink. That is feasible even with Den spending proposals if we tax at typical levels rather than our current historical lows.

Inflation is not a worry.
 

Jeffreauxdawg

All-American
Dec 15, 2017
8,857
7,904
113
What’s really amazing is how little citizens care about this issue. It never comes up as a series election issue and it doesn’t matter who is in power, they keep spending.

I had a little hope that Trump might try to attack it but early on his congress with all those “fiscal conservatives” just continued to make it worse.

First thing we have to do is balance the budget but a balanced budget bill never gets introduced and nobody runs on that platform.

Also agree that a simplified tax code really needs to be introduced

I think I am going run on term limits for Congress and a balanced budget next time. I will resign after getting those 2 ideas passed into law and we can return to partisan hackery.
 

Irondawg

Senior
Dec 2, 2007
2,896
553
113
I think I am going run on term limits for Congress and a balanced budget next time. I will resign after getting those 2 ideas passed into law and we can return to partisan hackery.

I’m a little surprised some superpac hasn’t tried to rally around the issue.
 

BoomBoom.sixpack

Redshirt
Aug 22, 2012
810
0
0
Not meant to be political. Can someone explain to me what the pros and cons would be of raising or paying off our National debt? What is the 2024 budget showdown the debt clock website refers to? You dont have to explain it like I'm in the 4th grade, but like I dont have a formal education on the topic, which I dont. I have been told reducing it too quickly could be detrimental as well. What would be the consequences of that? Or the consequences of the major projects the Democrats propose being put into place? I'll hang up and listen unless someone says something I dont get.

Also, pros and cons of a VAT?

Slowly. Inflation comes first. If inflation comes too fast, it causes even more layoffs. Here's an example:

I own a brewery. You were the leader of my third shift. When the economy tanked, I laid all of the third shift off. You now get $3000 per month from the government for doing nothing. You spend $1000 a month on beer, because why not. The 500 other guys on your shift do the same. Now there is a constraint on the beer supply.

What is the first thing that happens? Price increase. If I raise the price, some buyers are going to choose or be unable to buy as much. If not, I will raise it more. Eventually I will match supply and demand by pricing. If demand holds long enough, I will bring my 3rd shift back.

But in the meantime the same thing happened accross the board in all aspects of the economy. Even though I can produce more, I can't lower prices because costs have caught up. Hell, I have to pay you a premium to get you and the rest of the crew to come back.

Since I am a small brewery, it hits me extra hard because I don't have a big supply chain. My hopps guy decided to sell my share to the big guy, because he was willing to pay more. Now I have no hopps. Game over. All 3 shifts back on the street.

Extreme example, but I hope it proves the point. Access money in the system drives up prices. That's inflation. The only to keep it from happening is to increase supply. There are some industries with very elastic supply (technology for instance). But the stuff we spend most of our money on (food, housing, medical care, and transportation.) They all require a lot of work.

So in its simplest form, I think money = work. More money with less work bids up prices which is inflation. Less money with more work causes price cuts which is deflation

We pumped a shitload of money into the system and it will take a long time to get work back to where it was... 4-5 years probably. Inflation is coming.

Your example will not lead to "inflation". Inflation is not a one time event. (Well technically any price increase is inflation, but in regards to macroeconomics an effect is only considered inflation if it is a long running process. That's because a one-time minor inflation event is a pretty minor macroeconomic concern.)

Continual inflation requires that spenders see income increases. Otherwise they can't keep spending more on the same amount of goods whose prices are increasing. Back in the day when most workers had guaranteed cost of living increases to their pay (Or expectations of it, which economically is the same thing), this held true, thus any event that triggered price increases was considered inflationary as incomes would continuously adjust upwards to match prices. Today that does not hold true. That is a massive change from the past, and must be accounted for in any inflation-expectation an analysis.

Your example is arguably not even a one-time inflation event. Your spenders would have to use credit to maintain their increased spending level. Otherwise they pay for the more expensive beer by not buying something else. That decreases the price of other goods by just as the beer increase, which is not inflation.
 

BoomBoom.sixpack

Redshirt
Aug 22, 2012
810
0
0
None of that really scares you until you realize that the federal debt per taxpayer is about $180,000. Think about it; you are responsible for $180,000 in debt that Congress has borrowed on your behalf. That hits home a bit more.

On an average basis, this is true, just as it is true that on average Michael Jordan and I each have 3 NBA championships. Yet there ain't any rings on my fingers.

Most of the "debt" is in bonds held by Americans (not China). That "debt" results in money taken from a taxpayer and given to another taxpayer (bond holder). Not that thats insignificant, but economically that is far different from debt that results in money being taken from a taxpayer and sent to China. Pay or cancel the first type of debt, and America is no richer or poorer, it's just money changing hands between Americans. That is not debt that should be counted as what the typical American is "responsible" for when phrased as you did.
 

Jeffreauxdawg

All-American
Dec 15, 2017
8,857
7,904
113
I’m a little surprised some superpac hasn’t tried to rally around the issue.
I have always claimed if any small group ever wanted maximum control you only need about 6-8 Senators. Call it the Moderate Party.

There would never be enough R's or D's to get anything done and both sides would have to come to the M's to get anything done. Whoever is in the WH would have to kiss the ring too.We could probably get a few Justices too.

I honestly think it would be healthy.
 

SheltonChoked

Redshirt
Feb 27, 2008
1,786
0
0
Not meant to be political. Can someone explain to me what the pros and cons would be of raising or paying off our National debt? What is the 2024 budget showdown the debt clock website refers to? You dont have to explain it like I'm in the 4th grade, but like I dont have a formal education on the topic, which I dont. I have been told reducing it too quickly could be detrimental as well. What would be the consequences of that? Or the consequences of the major projects the Democrats propose being put into place? I'll hang up and listen unless someone says something I dont get.

Also, pros and cons of a VAT?


the debt is only an issue when Democrats have control of government. When the GOP has control, there is always an excuse to slash taxes and increase spending ( usually on the Military).

Biden is leading in the polls, so now you are starting to hear about how bad the debt is and how its a problem...
 

johnson86-1

All-Conference
Aug 22, 2012
14,444
4,934
113
On an average basis, this is true, just as it is true that on average Michael Jordan and I each have 3 NBA championships. Yet there ain't any rings on my fingers.

Most of the "debt" is in bonds held by Americans (not China). That "debt" results in money taken from a taxpayer and given to another taxpayer (bond holder). Not that thats insignificant, but economically that is far different from debt that results in money being taken from a taxpayer and sent to China. Pay or cancel the first type of debt, and America is no richer or poorer, it's just money changing hands between Americans. That is not debt that should be counted as what the typical American is "responsible" for when phrased as you did.

This is nonsensical. Unless we are going to stiff american bondholders, then that is debt that the government will either have to inflate away (in which case it's basically "paid" by holders of US dollars) or that they will pay (in which case it's paid by taxpayers).

In theory it's I guess politically easier to stiff foreigners that hold US Debt, but I'm not sure of the practicality of that. If we make indications that we are going to stiff foreigners but not US citizens, foreigners will immediately start selling US debt to US citizens. And then there is all the debt held by institutions. Maybe it's easy to track which bonds were under foreign ownership when we announce that we're stiffing them so we can zero them out.

But then there is the issue that if we do that, some (lots?) of foreign governments will probably immediately freeze any US owned assets in their country. If we're talking about China specifically, and singling out China, they might treat it as an act of war.
 

johnson86-1

All-Conference
Aug 22, 2012
14,444
4,934
113
Understood, but if people are spending more money, someone is either working or making more money.

I'm not very good with analogies/metaphors, but I'll try to give this a shot. It might be easier to focus in your mind on money being just a medium of exchange. A simplified way to think about it ot me would be to view money as a score keeping system that roughly ensures that people get to consume in proportion to the amount of value they create. (There are obviously a lot of exceptions to this; people who get their money through stealing, or scamming, or just convincing the government to give them money, etc; but looked at from 30k feet, that's basically what it does).

At any particular time, there is a certain amount of goods and services available in the world and money is used to determine how much of those goods and services each person could call on, if they wanted to. If the government just gives people money, nothing immediately changes with respect to the amount of goods and services available. If everybody just gets an additional $100, in reality, nobody is "$100 richer" as far as the amount of goods and services they can call on. The amount of goods and services are the same, the number of dollars is greater, so the portion of goods and services that each dollar can buy has gone down.

That's inflation in a nutshell. More money chasing after the same amount of goods and services.

Of course it gets much more complicated when you look beyond that initial instant. There are circumstances where economic activity might be significantly reduced such that people want to hold their money to maintain optionality for the future, and when enough people start doing that, the velocity slows down and people value the money even more, which makes them even more likely to hold on to it, and you end up with a situation where creating more money can help break out of a bad, self-reinforcing cycle with respect to holding money. So even though the money itself doesn't make people richer instantly, it results in more economic activity, some of which will be consumption and some of which will be investment in increasing the future amount of goods and services available. That's generally I think why a lot of economists think a low, predictable level of inflation is good. It greases the wheels so to speak.

Or in what is arguably the current situation, we have a ton of debt financed activity, so if economic activity slows down, even from a real economic shock (i.e., people stop doing stuff b/c of a pandemic), then we can kick off a contractionary cycle just because when debt stops getting paid, some debtors stop being able to spend, and so more debt stops getting paid, etc. Printing money, even if it is essentially "robbing" current holders of cash, ensures that we don't go through a painful adjustment as all the debt goes bad, and even the people "robbed" are still better off than if we went through a significant contraction and had to work through all the bad debt.


Not sure any of that's helpful or if it's too simplified to accurate enough. Bu that's my shot.
 
Last edited:

BoomBoom.sixpack

Redshirt
Aug 22, 2012
810
0
0
This is nonsensical. Unless we are going to stiff american bondholders, then that is debt that the government will either have to inflate away (in which case it's basically "paid" by holders of US dollars) or that they will pay (in which case it's paid by taxpayers).

In theory it's I guess politically easier to stiff foreigners that hold US Debt, but I'm not sure of the practicality of that. If we make indications that we are going to stiff foreigners but not US citizens, foreigners will immediately start selling US debt to US citizens. And then there is all the debt held by institutions. Maybe it's easy to track which bonds were under foreign ownership when we announce that we're stiffing them so we can zero them out.

But then there is the issue that if we do that, some (lots?) of foreign governments will probably immediately freeze any US owned assets in their country. If we're talking about China specifically, and singling out China, they might treat it as an act of war.

It makes perfect sense. Imagine 3 people. Person A owes person B $100k. Person B owes person A $50k. Person C owes nothing. Is person C "responsible" for $50k of debt? Hell, even if you average out the debts, it's still only $50k/3. The total debt is $50k, not $150k.

To pay the bondholders.....we tax the bondholders. Always have, always will. It's just an arbitrary accounting trick. We either decide to tax workers to pay capital, or the opposite, or a blend. Nothing changes. Stiff the bondholders directly by cancelling the bonds, or pay the bonds and tax them otherwise. What the hell is the difference?
 

CreekFishin

Redshirt
Jun 11, 2020
208
0
0
What would all the accountants and tax lawyers do? Could they be re-trained to build something or grow something?


3 VAT. I am not against, but only if we use it to completely abolish the income tax system.

Having so many forms of taxation is a complete waste of resources... The collection of taxes itself has become a humongous tax in of itself.
 

johnson86-1

All-Conference
Aug 22, 2012
14,444
4,934
113
It makes perfect sense. Imagine 3 people. Person A owes person B $100k. Person B owes person A $50k. Person C owes nothing. Is person C "responsible" for $50k of debt? Hell, even if you average out the debts, it's still only $50k/3. The total debt is $50k, not $150k.

To pay the bondholders.....we tax the bondholders. Always have, always will. It's just an arbitrary accounting trick. We either decide to tax workers to pay capital, or the opposite, or a blend. Nothing changes. Stiff the bondholders directly by cancelling the bonds, or pay the bonds and tax them otherwise. What the hell is the difference?

I agree there is no difference between stiffing the bondholders and "paying" them but levying a 100% tax and collecting before they get it. If the plan is to just stiff the bondholders, then that is a plan. I'm not sure it's a good plan, but it's not obviously the worst plan.

But unless I misunderstood your post, you were arguing that debt held by americans shouldn't count in the burden owed for debt. And that is not true if you are planning on paying them. If I get taxed more to pay back debt, it doesn't really make a difference to me whether the debt is held by a chinese national or an american. The chinese national might use the proceeds to invest in america. The american might use the proceeds to buy consumer electronics from China. That might have a marginal impact on my finances, it will be much closer to immaterial than it will to somehow making it meaningfully less painful that my money was taken.
 

BoomBoom.sixpack

Redshirt
Aug 22, 2012
810
0
0
I agree there is no difference between stiffing the bondholders and "paying" them but levying a 100% tax and collecting before they get it. If the plan is to just stiff the bondholders, then that is a plan. I'm not sure it's a good plan, but it's not obviously the worst plan.

But unless I misunderstood your post, you were arguing that debt held by americans shouldn't count in the burden owed for debt. And that is not true if you are planning on paying them. If I get taxed more to pay back debt, it doesn't really make a difference to me whether the debt is held by a chinese national or an american. The chinese national might use the proceeds to invest in america. The american might use the proceeds to buy consumer electronics from China. That might have a marginal impact on my finances, it will be much closer to immaterial than it will to somehow making it meaningfully less painful that my money was taken.

I'm saying that you have to be careful to not be double dipping. He was double dipping. The Red borrows money from the banks, the banks borrow money from the Fed, the banks borrow money from depositors, the depositors borrow money from the banks. You can't just add it all up and say that's our debt. You have to find out what is actually NET owed.

You also have to be careful that it isn't used an excuse to fleece workers for the sake of capital, yet again.
 

ronpolk

All-Conference
May 6, 2009
9,172
4,778
113
I'm saying that you have to be careful to not be double dipping. He was double dipping. The Red borrows money from the banks, the banks borrow money from the Fed, the banks borrow money from depositors, the depositors borrow money from the banks. You can't just add it all up and say that's our debt. You have to find out what is actually NET owed.

You also have to be careful that it isn't used an excuse to fleece workers for the sake of capital, yet again.

No one nets out any debt. To do that would ignore interest rate and time value of money.

If I owe you $100 and you owe me $50, it’s not as simple as saying I just really owe you $50. What if I owe you $100 at 10% for 10 years and you owe me $50 at 1% for 3 years. You really going to to just let me only pay you $50 and ignore the fact that the $50 you want to net out costs you very little to pay me back but costs me a lot to pay you back?
 

BoomBoom.sixpack

Redshirt
Aug 22, 2012
810
0
0
No one nets out any debt. To do that would ignore interest rate and time value of money.

If I owe you $100 and you owe me $50, it’s not as simple as saying I just really owe you $50. What if I owe you $100 at 10% for 10 years and you owe me $50 at 1% for 3 years. You really going to to just let me only pay you $50 and ignore the fact that the $50 you want to net out costs you very little to pay me back but costs me a lot to pay you back?

You really don't like to reply "correctly" do you? J/ k

Agreed, rates make it not simple. But you can't just ignore the net effect.
 

johnson86-1

All-Conference
Aug 22, 2012
14,444
4,934
113
I'm saying that you have to be careful to not be double dipping. He was double dipping. The Red borrows money from the banks, the banks borrow money from the Fed, the banks borrow money from depositors, the depositors borrow money from the banks. You can't just add it all up and say that's our debt. You have to find out what is actually NET owed.

You also have to be careful that it isn't used an excuse to fleece workers for the sake of capital, yet again.

Not sure exactly what numbers he used, but it looks like federal debt. That's not adding up bank deposits. If you use the current federal debt (~$22T), then it's about $67,500 per person. He gave it per taxpayer, and not sure what his definition of taxpayer is. Probably per adult is a good approximation of the burden. That'd be ~$105k per adult.

There may be some debt in the total federal debt that is intragovernmental and shouldn't be included. But the most significant portion of that is probably social security, and unless we're going to stiff social security recipients before the "trust fund" is exhausted, that should be included in the burden. Not sure what else is in there that shouldn't be included, I guess debt held by the fed as part of it's management of the money supply, which is also probably pretty significant.

If you use the debt held by the public (~$19T), it's $58k per person, or $90k per adult.

ETA: this numbers are pulled from whatever popped up first in a google search, which was mostly wikipedia, so...
 
Last edited:

BoomBoom.sixpack

Redshirt
Aug 22, 2012
810
0
0
Not sure exactly what numbers he used, but it looks like federal debt. That's not adding up bank deposits. If you use the current federal debt (~$22T), then it's about $67,500 per person. He gave it per taxpayer, and not sure what his definition of taxpayer is. Probably per adult is a good approximation of the burden. That'd be ~$105k per adult.

There may be some debt in the total federal debt that is intragovernmental and shouldn't be included. But the most significant portion of that is probably social security, and unless we're going to stiff social security recipients before the "trust fund" is exhausted, that should be included in the burden. Not sure what else is in there that shouldn't be included, I guess debt held by the fed as part of it's management of the money supply, which is also probably pretty significant.

If you use the debt held by the public (~$19T), it's $58k per person, or $90k per adult.

ETA: this numbers are pulled from whatever popped up first in a google search, which was mostly wikipedia, so...

Why would 2040's SS payments be a debt burden of today's taxpayer when nothing else in 2040's budget is?
 

johnson86-1

All-Conference
Aug 22, 2012
14,444
4,934
113
Why would 2040's SS payments be a debt burden of today's taxpayer when nothing else in 2040's budget is?

Why would any debt be a burden of today's taxpayer. The only burden today's taxpayer has today is his actual tax bill today. But if our plan is not to stiff our creditors, it would be useful to think about what it will mean for us to honor our obligations, and most people can understand a dollar amount and what it means for it to be say amortized over 30 years. If you're over 60, you can probably say 17 it, not my problem except if you are 60 and live to 90 you will probably at some point get lower social security payments compared to the current schedule.

But if you're 30, there's a good chance things will come to a head in a short enough time frame to matter to you. Even if we just cap our spending growth at 1% per year, so that we just wait for inflation to eat away the value of the debt, thinking about amortizing a per taxpayer portion of the bill over 30 years, and then adjusting it up or down compared to whether you pay more or less taxes than the average, will give you a pretty decent idea of the burden you are carrying.
 
Status
Not open for further replies.