US National Debt / Deficit - How does it end? - page 3.

mmortal03

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Quote from: ScreamnShout on September 26, 2014, 12:36:54 AM

Quote from: mmortal03 on September 26, 2014, 12:22:33 AM

Quote from: wasserman99 on September 14, 2014, 06:40:40 PM

unless you are part of the 47% who pay no taxes and rely exclusively on government

This is factually wrong. While 47% of households paid no federal income tax for 2009, only 14% paid neither income nor payroll tax. Also, people pay sales taxes at the state and local levels.

If you pay no federal federal income taxes then you are receiving benefits from the federal government (national defense, food security, protections from federal regulations) but are paying nothing in return.

If it actually worked that way, you would be correct, but it doesn't. In actuality, any surplus money, of which you can consider the lower income brackets to be contributing a certain proportion of, has gone into treasury bonds, meaning intra-governmental debt has been created so that other areas of the government can spend it. The government always finds a way to do whatever it wants with the money it gets from people.

marryXmas

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Quote from: polynesia on September 26, 2014, 12:29:54 PM

Quote from: RoadTrain on September 26, 2014, 09:43:49 AM

Quote from: redHeadBlunder on September 25, 2014, 10:41:15 PM

He was arguing that you could prevent recessions by doing exactly what you are suggesting the government do.

IF the Kensians were correct then anytime there was a contraction in real GDP, the government could simply spend more money to "create" economic growth which would stop such recession.

Do you know that it's exactly what US government did in a latest recession? Do you know that in a recession the budget deficit rises naturally (it's called automatic fiscal stabilizers). It's hard to measure the efficacy of government efforts in the latest recession since a lot of support went to the financial sector, but it certainly helped mitigate the recession.

The fact that US is doing relatively well now is because they don't have austerity unlike the depressed Europe.

And a government can spend its way out of a recession, but it's very sluggish in such kind of actions (usually actions are taken only after a recession starts, when it already has momentum).

The problem is that it does get difficult to cut back on spending once you are out of a recession.
There are various special interest groups, which have a vested interest in ensuring that there are no cuts.

This is why you should not try to "stimulate" yourself out of a recession. You need to make it easier to conduct business in your country (by easing regulations) and by giving incentives to conduct business (via temporary tax cuts)

jjacob

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★Nitrogensports.eu★

Quote from: krodmandoon on September 26, 2014, 01:30:53 PM

it doesn't end. what is the incentive for ending it.

The end might not be in America's hands.

krodmandoon

full member

Activity: 434

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it doesn't end. what is the incentive for ending it.

RoadTrain

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Activity: 1386

Merit: 1009

Quote from: polynesia on September 26, 2014, 12:29:54 PM

Quote from: RoadTrain on September 26, 2014, 09:43:49 AM

Quote from: redHeadBlunder on September 25, 2014, 10:41:15 PM

He was arguing that you could prevent recessions by doing exactly what you are suggesting the government do.

IF the Kensians were correct then anytime there was a contraction in real GDP, the government could simply spend more money to "create" economic growth which would stop such recession.

Do you know that it's exactly what US government did in a latest recession? Do you know that in a recession the budget deficit rises naturally (it's called automatic fiscal stabilizers). It's hard to measure the efficacy of government efforts in the latest recession since a lot of support went to the financial sector, but it certainly helped mitigate the recession.

The fact that US is doing relatively well now is because they don't have austerity unlike the depressed Europe.

And a government can spend its way out of a recession, but it's very sluggish in such kind of actions (usually actions are taken only after a recession starts, when it already has momentum).

The problem is that it does get difficult to cut back on spending once you are out of a recession.
There are various special interest groups, which have a vested interest in ensuring that there are no cuts.

I agree, it's sometimes difficult politically, that's why many spending increases are designed as temporary "packages", so that governmet has some flexibility when they expire.
Still, any changes require political will.

Also, when you are out of a recession, the deficit decreases naturally, as does countercyclical spending (like unemployment insurance outlays), while revenues increase.

cellard

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Activity: 1372

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There will be an huge bailout and no one is going to help you after that so you can spend your money on stuff. Hopefully, before all that happens people is smart enough to diversify and keep a big % of their wealth in metals and Bitcoin.

polynesia

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Quote from: RoadTrain on September 26, 2014, 09:43:49 AM

Quote from: redHeadBlunder on September 25, 2014, 10:41:15 PM

He was arguing that you could prevent recessions by doing exactly what you are suggesting the government do.

IF the Kensians were correct then anytime there was a contraction in real GDP, the government could simply spend more money to "create" economic growth which would stop such recession.

Do you know that it's exactly what US government did in a latest recession? Do you know that in a recession the budget deficit rises naturally (it's called automatic fiscal stabilizers). It's hard to measure the efficacy of government efforts in the latest recession since a lot of support went to the financial sector, but it certainly helped mitigate the recession.

The fact that US is doing relatively well now is because they don't have austerity unlike the depressed Europe.

And a government can spend its way out of a recession, but it's very sluggish in such kind of actions (usually actions are taken only after a recession starts, when it already has momentum).

The problem is that it does get difficult to cut back on spending once you are out of a recession.
There are various special interest groups, which have a vested interest in ensuring that there are no cuts.

RoadTrain

legendary

Activity: 1386

Merit: 1009

Quote from: redHeadBlunder on September 25, 2014, 10:41:15 PM

He was arguing that you could prevent recessions by doing exactly what you are suggesting the government do.

IF the Kensians were correct then anytime there was a contraction in real GDP, the government could simply spend more money to "create" economic growth which would stop such recession.

Do you know that it's exactly what US government did in a latest recession? Do you know that in a recession the budget deficit rises naturally (it's called automatic fiscal stabilizers). It's hard to measure the efficacy of government efforts in the latest recession since a lot of support went to the financial sector, but it certainly helped mitigate the recession.

The fact that US is doing relatively well now is because they don't have austerity unlike the depressed Europe.

And a government can spend its way out of a recession, but it's very sluggish in such kind of actions (usually actions are taken only after a recession starts, when it already has momentum).

ScreamnShout

full member

Activity: 206

Merit: 100

Quote from: mmortal03 on September 26, 2014, 12:22:33 AM

Quote from: wasserman99 on September 14, 2014, 06:40:40 PM

unless you are part of the 47% who pay no taxes and rely exclusively on government

This is factually wrong. While 47% of households paid no federal income tax for 2009, only 14% paid neither income nor payroll tax. Also, people pay sales taxes at the state and local levels.

If you pay no federal federal income taxes then you are receiving benefits from the federal government (national defense, food security, protections from federal regulations) but are paying nothing in return.

FICA taxes are a zero sum game because they should get a cash benefit from these taxes in the future.

mmortal03

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Activity: 1762

Merit: 1011

Quote from: wasserman99 on September 14, 2014, 06:40:40 PM

unless you are part of the 47% who pay no taxes and rely exclusively on government

This is factually wrong. While 47% of households paid no federal income tax for 2009, only 14% paid neither income nor payroll tax. Also, people pay sales taxes at the state and local levels.

redHeadBlunder

member

Activity: 81

Merit: 10

Quote from: RoadTrain on September 25, 2014, 10:02:51 AM

Quote from: snappa4ever on September 24, 2014, 07:58:01 PM

Quote from: RoadTrain on September 24, 2014, 03:16:11 PM

Quote from: zorke on September 23, 2014, 11:00:07 PM

Quote from: RoadTrain on September 22, 2014, 09:42:11 AM

And once again we come to the GDP calculating principle which clearly defines how government spending contributes to the economic output.

If the government spends an additional dollar then $1 is added to GDP. If as a result of the additional borrowing the government needs to borrow as a result of this additional $1 in spending the private sector will spend (lets say) $0.01 less, therefore GDP would decline by $0.01. The net effect in this scenario is that government spending goes up by $1.00 but GDP only goes up by $0.99.

That's a good explanation, but I don't see any reason why the increase in GDP is necassirily lower than additional government spending.
Keynes introduced a term to describe this effect: fiscal multiplier.

They are wrong. This is why in the 2009 stimulus package, it cost ~$300k for each job that was created that was paying at most ~$50k

If this actually worked then there would never be a recession because countries could simply "stimulate" themselves out of negative economic growth.

That's a weak argument. If you use a microscope to hammer in nails it's no wonder why it doesn't work well.
Budget is a powerful tool, but it should be used wisely. E.g. in expansionary economic regime increasing government spending might be pointless, while in a recession it makes a lot more sense.
http://www.nber.org/papers/w17447

He was arguing that you could prevent recessions by doing exactly what you are suggesting the government do.

IF the Kensians were correct then anytime there was a contraction in real GDP, the government could simply spend more money to "create" economic growth which would stop such recession.

CMMPro

hero member

Activity: 588

Merit: 500

Debt write off? You know who are the bag holders then? US bond holders

All that wealth that the baby boomers have squirreled away for retirement...gone with the stroke of a pen.

It's already happening via inflation and QE....it's like a more secret and sinister version of Cyprus.

Q7

sr. member

Activity: 448

Merit: 250

Debt write-off? That's how i see it.

RoadTrain

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Activity: 1386

Merit: 1009

Quote from: snappa4ever on September 24, 2014, 07:58:01 PM

Quote from: RoadTrain on September 24, 2014, 03:16:11 PM

Quote from: zorke on September 23, 2014, 11:00:07 PM

Quote from: RoadTrain on September 22, 2014, 09:42:11 AM

And once again we come to the GDP calculating principle which clearly defines how government spending contributes to the economic output.

If the government spends an additional dollar then $1 is added to GDP. If as a result of the additional borrowing the government needs to borrow as a result of this additional $1 in spending the private sector will spend (lets say) $0.01 less, therefore GDP would decline by $0.01. The net effect in this scenario is that government spending goes up by $1.00 but GDP only goes up by $0.99.

That's a good explanation, but I don't see any reason why the increase in GDP is necassirily lower than additional government spending.
Keynes introduced a term to describe this effect: fiscal multiplier.

They are wrong. This is why in the 2009 stimulus package, it cost ~$300k for each job that was created that was paying at most ~$50k

If this actually worked then there would never be a recession because countries could simply "stimulate" themselves out of negative economic growth.

That's a weak argument. If you use a microscope to hammer in nails it's no wonder why it doesn't work well.
Budget is a powerful tool, but it should be used wisely. E.g. in expansionary economic regime increasing government spending might be pointless, while in a recession it makes a lot more sense.
http://www.nber.org/papers/w17447

600watt

legendary

Activity: 2338

Merit: 2106

the western elites know that it has driven the financial system and with it the entire economy so deep into the shit that there is no escape. defaulting would be admitting that they fucked up. the elites want to still be the elites AFTER the collapse. they cannot stay up there while admitting it was their beliefs, their ideology, their greed that got us into this mess. they need a scapegoat.

this scapegoat is and always has been: war

the elites will rather unleash an apocalypse which they can later blame all the cruelty on, than just admit they fucked up and leave the stage. afterwards they will tell the tale that it all broke during and because of the recent world war, and after everything is reset they will continue with their old ideology.

Grand_Voyageur

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https://dadice.com | Click my signature to join!

Quote from: itsAj on August 29, 2014, 11:46:06 PM

Quote from: odolvlobo on August 29, 2014, 03:27:13 PM

Quote from: zolace on August 29, 2014, 01:26:32 PM

Quote

- Assess the range of potential dangers to the US, along with benefits of US influence, and scale military spending appropriately, or let it grow more slowly with time.

Unfortunately scaling back the military kills huge numbers of jobs.

Scaling back the military kills huge numbers of unproductive jobs. If you put those people to work doing productive things instead, everybody will be better off.

Both military and defense industry related jobs are actually incredibly productive. The weapons that are created by defense related companies are able to save thousands (if not millions) of lives and can do incredible damage to our enemies. These weapons also can deter others from even thinking about attacking us.

Also economic studies told us that for every bucks US Govt put in Defense spending they got more than 1 buck growth in the US GDP. Only food stamps do better! Grin

snappa4ever

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Quote from: RoadTrain on September 24, 2014, 03:16:11 PM

Quote from: zorke on September 23, 2014, 11:00:07 PM

Quote from: RoadTrain on September 22, 2014, 09:42:11 AM

And once again we come to the GDP calculating principle which clearly defines how government spending contributes to the economic output.

If the government spends an additional dollar then $1 is added to GDP. If as a result of the additional borrowing the government needs to borrow as a result of this additional $1 in spending the private sector will spend (lets say) $0.01 less, therefore GDP would decline by $0.01. The net effect in this scenario is that government spending goes up by $1.00 but GDP only goes up by $0.99.

That's a good explanation, but I don't see any reason why the increase in GDP is necassirily lower than additional government spending.
Keynes introduced a term to describe this effect: fiscal multiplier.

They are wrong. This is why in the 2009 stimulus package, it cost ~$300k for each job that was created that was paying at most ~$50k

If this actually worked then there would never be a recession because countries could simply "stimulate" themselves out of negative economic growth.

CMMPro

hero member

Activity: 588

Merit: 500

With extreme measures they can barely slow the rate of increase....talk a bout any sort of reversal and pay down.

manselr

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Activity: 868

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You are out of your mind if you think the debt will ever be paid. Check this beautiful page:

http://www.usdebtclock.org/

Numbers speak for themselves. I dont know if it will be Bitcoin, a new FIAT, or something, but the debt as we know it... that cannot be paid in a million years.

RoadTrain

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Activity: 1386

Merit: 1009

Quote from: zorke on September 23, 2014, 11:00:07 PM

Quote from: RoadTrain on September 22, 2014, 09:42:11 AM

And once again we come to the GDP calculating principle which clearly defines how government spending contributes to the economic output.

If the government spends an additional dollar then $1 is added to GDP. If as a result of the additional borrowing the government needs to borrow as a result of this additional $1 in spending the private sector will spend (lets say) $0.01 less, therefore GDP would decline by $0.01. The net effect in this scenario is that government spending goes up by $1.00 but GDP only goes up by $0.99.

That's a good explanation, but I don't see any reason why the increase in GDP is necassirily lower than additional government spending.
Keynes introduced a term to describe this effect: fiscal multiplier.

Topic: US National Debt / Deficit - How does it end? - page 3. (Read 9057 times)