Yes. If we’re making strong investments in America’s future, then borrowing can pay off even without inflation working on the debt.
I’m not so sure that borrowing in order to reduce the taxes of rich people really makes sense, but one can’t rule out the idea that there are justifications for debt.
Most of our public discourse about economics is complete nonsense.
But I think people greatly overestimate how much of that nonsense is deliberately planted, compared to the stuff that grows naturally and freely and wildly in the ready fertilizer that is the bullshit of modern political discourse. There are a lot of wacky econo-ideas out there, no doubt, but in my own experience at least, the proponents of wacky ideas are not in general blind dupes. They are believers.
But of course, I cannot say that my own personal experience is a fair sample of those with political power. I could easily be wrong.
Keeping in mind that I am not an expert on this, and you’d be better off asking me how central banking works…
The elites do not in general prioritize the white working class. And the white workers in the rust belt know it. It’s impossible to not realize it. When someone like me says I favor free trade, I am specifically saying that I do not prioritize the opinions of working class rust belt people who do favor trade restrictions. I want them to do better, sure, but their concerns are simply not a priority, placed above other concerns. I am not going to pander to their ignorance about a cheap short-term solution that will impoverish their region, and the country, over longer horizons. I do not prioritize their concerns, and most politicians are with me at least as far as that particular topic (if not on most other topics).
So what happens when a candidate comes along who says, “I prioritize YOU over all other concerns!” They vote for that guy.
In just enough numbers, in just the right battleground states, to put him over the top in the electoral vote. It doesn’t matter how obvious it is that he doesn’t actually care about them. At least he SAYS he does. That’s more than anybody else says. We have to admit that much, at least. Almost no one else gives such lip service to this group. The only other candidate who made such a convincing display to the white working class in the rust belt was Bernie Sanders… and he was thumped soundly by Clinton among minority voters, which is the whole reason he didn’t take the nomination. It’s not sufficient among Democrats to just win the whites.
This is my best guess about a very important factor that’s happening in politics right now. I’m not going to debate it vigorously, tho, because I’m not confident enough that I’m correct.
We taxpayers do not “owe” even the debt held by the public. To say someone owes something is to say they are legally obligated to pay it. We are legally obligated to pay only the amount on our tax bills. Therefore we do not owe $15 trillion. The government owes this money to its lenders, and the government should default on this debt. If the government defaulted, it would have no effect on whether or not I could borrow money from a creditor because I never owed this money in the first place.
If the U.S. government defaulted, it is a little naive to assume that this would have no effect on whether you could borrow money.
Defaulting on our national debt would be catastrophic. Even mentioning it is insane.
And, it definitely WOULD have an impact on your ability to borrow.
We the people authorized that debt. Suggesting we now don’t owe it makes zero sense.
This sounds like more of the pathetic political nonsense about the government being a separate and evil entity.
Our government IS us. Our government is “of the people, by the people”.
Most interest rates are tied to some degree to the interest rates set by the Fed and government rates. If the government defaulted interest rates would rise precipitously, and thus so would your interest rates. You might be able to borrow - at 30% interest or something. Plus interest rates depend on uncertainty, and uncertainty would certainly increase.
Hope you don’t have any stock, because a government default would almost surely cause a crash in the market.
Aside from that it is a great idea.
No.
No it isn’t.
Cool magic words. Maybe you could have a Wizardry bout with the sovereign citizens.
Anything could crash the stock market at this point, but that is a bizarre non-sequiter.
There would be a short period in which things were thrown off-kilter, but there is no reason to think that without the most demanding and stable borrower, that interest rates would increase. There is no theory that would explain such a strange prediction.
Not sure what that idea comes from besides fear. I understand that for the past 70 years, things have been a certain way, I don’t need anecdotes along those lines.
You apparently don’t understand who these “lenders” are. They are, directly and indirectly, the American people (plus some foreigners): individuals, their banks, their bonds, their mutual funds, their public and private pension funds, their insurance companies, their corporations, their local governments – everything across the board that makes up the bedrock of the financial system. If the government defaulted you wouldn’t be able to borrow money because there wouldn’t be a functioning economy for you to do it in. It would be a dystopian anarchy in which “money” in the modern sense of the term no longer even existed in any meaningful way.
That’s an understatement.
Apparently not to anti-government anarchists with a poor grasp of reality.
And when the sun turns into a red giant, there will be a short period when we all need to wear sunglasses and hats.
You really think that if the government of the US had to pretty much shut down (which it would since it wouldn’t be able to borrow) there would only be a minor effect?
Government debt isn’t only issued to fund the deficit. It is also used to deal with the gap between tax revenue and expenditures, which are not in sync.
You think the countries that we stiffed wouldn’t retaliate?
How about the people for whom T-bills are assets?
How about Social Security?
Or would the government not default to itself.
You seem to be proposing a total default. A minor default (which would not be minor at all) would probably not cause retaliation as much (but would kill the market for government debt) but also would not fix the debt “problem.”
Sure there are other things that might cause a crash. Do you deny that your proposal would also?
BTW, as a civilian example, Trump went bankrupt and screwed his lenders, and wound up with US banks not wanting to deal with him. Only Deusche Bank would. The money launderers. We’ll see if that money came from Russia. Trump defaulting might have a big impact on his future, and that is trivial compared to the government defaulting. He’s hardly the first real estate person to know the inside of a bankruptcy court.
Yes, the default would be bad for the government. That is a feature, not a bug. It wouldn’t have to “pretty much” shut down, though. That’s fear talking.
I would feel bad for the folks who had their money in government debt etc. I can’t say they haven’t had plenty of advance warning. There is much information put forth about the instability of government-backed paper money. Perhaps that would teach them a lesson not to invest in an enterprise that derives its ability to pay creditors through fiat money creation and outright theft.
Make up your mind! I thought you’ve said that the government was supported by jack-booted “statists” happy to steal your money and rape your daughters at gunpoint. Now the government is too weak-kneed to even raise your taxes? What’s the matter? Did their credit rating fall so low they couldn’t buy jackboots?
It is truly strange that you think there would no longer be a common medium of exchange if the government defaulted.
After a brief period of adjustment , absent the crowding out effects of government spending, you have no theory that would explain why there would be no functioning economy. The producers would still have incentive and momentum to produce, and consumers the incentive and momentum to consume.
They could raise taxes, but why would I advocate for tax raises by daughter rapers and funeral bombers? They can’t seem to raise the tax rate much higher than 20% of GDP anyway, so the debt will continue to pile up until the default.
This chart is one reason why getting riled up by marginal tax rates makes little sense one way or another. Tax rates simply bob and weave around 17% of GDP. This seems close to immutable in American society.
This thread has become like listening to a fundamentalist talk about how Armageddon is going to be a great thing for all his fellow devout Christians. “Don’t worry, guys! Yeah, most of you are going to die and be sentenced to an eternity in hell, but me and mine are going to great in the Kingdom of God!”
You will see some the most comical hyperbole about default coming from government employees and associated contractors.
I wasn’t just talking about me, but anyone who supposedly “owes” $15 trillion. If this was true, our creditworthiness would plummet in the event of a default. This is not the case.
Yes, the “sinners” I implied reference to in my comment.
And you will continue to live the good life for eternity in Heaven, as I referred to in my comment.
Still waiting on the theory that suggests in the event of a decrease in the demand for loanable funds, interest rates will increase.