While I fully agree with the sentiment of your comment, I need to remark that national debt is a non-issue. The central bank of the US, in this case the Federal Reserve, is the one and only entity in planet Earth with the power to create dollars at will. It doesn’t even need to print them, since money now is mostly digital, they can be created at a keystroke on a keyboard.
As long as the national debt is denominated in USD, which it is, the US will never have a problem with debt payments, it could literally pay it all back early tomorrow pressing a keyboard 3 times, and it would cost taxpayers a grand total of $0.
Debt is simply a useful tool for other reasons, like being able to control the interest rate of loans the economy (as we saw during the recent increase enacted to attempt fighting inflation), but public expenditure isn’t reliant on debt or even on taxes, since the government can create an arbitrarily large amount of dollars. The desirable amount to be created should be discussed with scientific evidence in hand, or even modulated over time responding to the markets and the situation of the economy and inflation, but debt is absolutely not a limit on public expenditure. The US could create as many dollars as desired to pay for infrastructure or social support (as it did during the very successful new deal, or the pandemic cheques, or rescuing silicon valley banks).
Again, it’s not cavalier attitude, I’m at least as much of a leftist as you are, it’s just an explanation of the economics of the state and the public sector.
Who pays the interest? The government. Where does that money go? A combination of private sector of this country and others, and the public sector of other countries, basically anyone who wants to buy public debt. Myself included btw. I’m not paying interest on my country’s debt, my country is paying me interest on the debt I purchased from it.
I’m purely talking about public debt, not private debt. Unless someone in the private sector can get indebted in a currency they create and control, then they can’t pay for it immediately and without cost. It’s just that when people discuss the problem of national debt they’re usually talking about the debt of the public sector.
Government has only one way to raise revenue, taxes. Taxes are paid mostly by working people, ie middle aged. Most of public debt is owned by the wealthy and old.
So public debt is transfer of money from working middle aged wager slaves to the wealthy owner elites.
What benefit did working people get from this national debt? None.
So while you point stands, public debt does not matter for the federal government.
You pretending like it has no impact on the people paying taxes is rather naive take on how it actually works.
It is an extraction racket, no amount of modern monetary theory bullshit explains away the economic toll that is imposed on the working people.
We are clearly suffering from it as we talking right now. QoL is going down, this is a direct result of failed fiscal and monetary policy.
Again, I’m sorry, I’m not trying to be smug or a smartass here, but I’m not missing any points.
Government has only one way to raise revenue, taxes
A government doesn’t need revenue. As I said, a government like the US creates its own currency in whichever arbitrary amount it decides, whenever it wants. A government can spend as much as it wants in its own currency, without raising taxes first, and without going into debt. Want more doctors? It can create dollars to pay them. Want more roads? More dollars. You get the point.
My point isn’t that taxes are useless, they’re useful for several things such as forcing the private sector to use your currency (since they have to pay taxes with it). They’re useful to disincentivize certain behaviours (alcohol and tobacco taxes), to boost your industry and internal market (import taxes). And even better, they can be a great tool to reduce inequality (taxes on wealth, progressive taxes on income, taxes on inheritance, higher VAT for luxury products…). Another important thing they do is removing money from the private sector, this is important to prevent macroeconomic imbalances, you can’t have ONLY government expenditure without taxes.
But the thing is, we CAN pay for things without taxes. Government budgets don’t have any real reason to be linked to either debt, or taxes. And in fact as I mentioned already, they pay for lots of things without debt or taxes. They pay for wars this way, they pay for bank bailouts this way, they pay for COVID emergency measures this way. A government can pay ALL of its debt without raising A SINGLE dollar in taxes from the citizens. Why they don’t do that, is actually a good question.
Sadly, the right wing and neoliberalism have convinced us somehow that “governments budgets are paid by taxes”, when it’s backwards. The private sector can’t have dollars without the government creating them first. Budget deficits aren’t bad. In fact they’re so normal that they happen in every developed country every year, and they’re a GOOD THING! Yes, government budget deficit is a good thing for us! We’re the private sector. The ONLY way for the private sector to be able to have more money circulating or in savings, is if the state CREATES this money and spends it first in the private sector. If a government has more revenue than expenditure one year, they’re literally extracting currency from the economy, how’s that a good thing?
The hard and interesting question then isn’t “how are we gonna pay for things?”. Paying for things is very easy for the state, literally just create the dollars. The question is: how much deficit should we be running? How much deficit is the best for the economy? And where should be running this deficit, maybe less for military and more for healthcare and education and pensions and infrastructure?
The question on taxation shouldn’t be “how are we gonna pay for it?” But rather “how much money should we remove from the economy”? Or “what behaviours should the government disincentivize?” Or “where in the economy do we want to extract currency to reduce inequality?” “Should we be charging lower taxes on poor people and higher taxes on richer people and on big companies?”
This reality-based understanding of government budgets, deficits, debt creation, money creation and taxation, instead of the neoliberal dogma, opens up so many cans of worms and exposed so many non-issues. I’ll say it again: “GOVERNMENT BUDGET DEFICITS AND DEBT AREN’T A BAD THING”.
You still out right ignoring the point how this behavior has consequences on working people’s lives and finance
Also, sounds like you are high on modern monetary theory and have not thought this through beyond repeating talking points of the theory, which were circulated on teevee during covid.
COVID was an attempt do this trick and inflation spiked and people’s QoL went down.
Either, money got spend and nothing to show for it. How is this good?
You still out right ignoring the point how this behavior has consequences on working people’s lives and finance
I’m not ignoring this, I’m saying increasing expenditure in healthcare, education, infrastructure and pensions can have a POSITIVE impact on peoples’ lives.
Either, money got spend and nothing to show for it. How is this good?
It’s not. We sadly live under mostly governments that follow neoliberalism. I want the opposite, I don’t want smaller governments spending less, I want bigger more progressive governments eliminating homelessness by making huge amounts of public housing in well planned out cities with great public transit, eliminating unemployment through guaranteed jobs, raising the expenditure in universal healthcare and education to have more professionals… I want actual leftism, not lukewarm centrist socialdemocrats/liberals.
Also, sounds like you are high on modern monetary theory and have not thought this through beyond repeating talking points of the theory, which were circulated on teevee during covid.
I’m very high on MMT, but why does that mean I’m repeating talking points? I’m personally very interested in economics for the past years. MMT is just a stepping stone imo for people (myself included) to learn about economics. I’d gladly apply much, MUCH more radical leftist measures than those prescripted by MMT. But a productive talk about debt and budgets isn’t a thing I’ll deny :)
COVID was an attempt do this trick and inflation spiked and people’s QoL went down.
If you think inflation was a consequence of government spending, I’m sorry, but you’ve been lied to. Inflation did spike, and people’s purchase power went down, but none of that is due to public expenditure. I’m personally European so I can tell you about the reasons for inflation:
Spike in energy prices as a consequence of the war in Ukraine
Problems in supply of goods as a consequence of COVID bottlenecks
Companies rising prices more than would be necessary to just maintain profit, in order to get more profits by riding the wave of inflation
Like, these are known, studied, measured effects, it’s not even a discussion in serious academia that these are the reason, they can even quantify by how much. Just think about it, inflation happened widespread across the world. If it had been a monetary phenomenon, it would have been confined to specific currencies, the policy in the US (dollars) was very different as that on Canada (Canadian Dollars) or in the UK (Pounds) or in the EU (Euros) or in Japan (yen).
While I fully agree with the sentiment of your comment, I need to remark that national debt is a non-issue. The central bank of the US, in this case the Federal Reserve, is the one and only entity in planet Earth with the power to create dollars at will. It doesn’t even need to print them, since money now is mostly digital, they can be created at a keystroke on a keyboard.
As long as the national debt is denominated in USD, which it is, the US will never have a problem with debt payments, it could literally pay it all back early tomorrow pressing a keyboard 3 times, and it would cost taxpayers a grand total of $0.
Debt is simply a useful tool for other reasons, like being able to control the interest rate of loans the economy (as we saw during the recent increase enacted to attempt fighting inflation), but public expenditure isn’t reliant on debt or even on taxes, since the government can create an arbitrarily large amount of dollars. The desirable amount to be created should be discussed with scientific evidence in hand, or even modulated over time responding to the markets and the situation of the economy and inflation, but debt is absolutely not a limit on public expenditure. The US could create as many dollars as desired to pay for infrastructure or social support (as it did during the very successful new deal, or the pandemic cheques, or rescuing silicon valley banks).
Yes national debt is not a problem for the state printing money… Make no mistake that it is has impact on people responsible for paying it.
Where is this cavalier attitude coming from?
Who do you think pays the interrest and where do you think that money goes?
Again, it’s not cavalier attitude, I’m at least as much of a leftist as you are, it’s just an explanation of the economics of the state and the public sector.
Who pays the interest? The government. Where does that money go? A combination of private sector of this country and others, and the public sector of other countries, basically anyone who wants to buy public debt. Myself included btw. I’m not paying interest on my country’s debt, my country is paying me interest on the debt I purchased from it.
I’m purely talking about public debt, not private debt. Unless someone in the private sector can get indebted in a currency they create and control, then they can’t pay for it immediately and without cost. It’s just that when people discuss the problem of national debt they’re usually talking about the debt of the public sector.
You are still missing the point.
Government has only one way to raise revenue, taxes. Taxes are paid mostly by working people, ie middle aged. Most of public debt is owned by the wealthy and old.
So public debt is transfer of money from working middle aged wager slaves to the wealthy owner elites.
What benefit did working people get from this national debt? None.
So while you point stands, public debt does not matter for the federal government.
You pretending like it has no impact on the people paying taxes is rather naive take on how it actually works.
It is an extraction racket, no amount of modern monetary theory bullshit explains away the economic toll that is imposed on the working people.
We are clearly suffering from it as we talking right now. QoL is going down, this is a direct result of failed fiscal and monetary policy.
Again, I’m sorry, I’m not trying to be smug or a smartass here, but I’m not missing any points.
A government doesn’t need revenue. As I said, a government like the US creates its own currency in whichever arbitrary amount it decides, whenever it wants. A government can spend as much as it wants in its own currency, without raising taxes first, and without going into debt. Want more doctors? It can create dollars to pay them. Want more roads? More dollars. You get the point.
My point isn’t that taxes are useless, they’re useful for several things such as forcing the private sector to use your currency (since they have to pay taxes with it). They’re useful to disincentivize certain behaviours (alcohol and tobacco taxes), to boost your industry and internal market (import taxes). And even better, they can be a great tool to reduce inequality (taxes on wealth, progressive taxes on income, taxes on inheritance, higher VAT for luxury products…). Another important thing they do is removing money from the private sector, this is important to prevent macroeconomic imbalances, you can’t have ONLY government expenditure without taxes.
But the thing is, we CAN pay for things without taxes. Government budgets don’t have any real reason to be linked to either debt, or taxes. And in fact as I mentioned already, they pay for lots of things without debt or taxes. They pay for wars this way, they pay for bank bailouts this way, they pay for COVID emergency measures this way. A government can pay ALL of its debt without raising A SINGLE dollar in taxes from the citizens. Why they don’t do that, is actually a good question.
Sadly, the right wing and neoliberalism have convinced us somehow that “governments budgets are paid by taxes”, when it’s backwards. The private sector can’t have dollars without the government creating them first. Budget deficits aren’t bad. In fact they’re so normal that they happen in every developed country every year, and they’re a GOOD THING! Yes, government budget deficit is a good thing for us! We’re the private sector. The ONLY way for the private sector to be able to have more money circulating or in savings, is if the state CREATES this money and spends it first in the private sector. If a government has more revenue than expenditure one year, they’re literally extracting currency from the economy, how’s that a good thing?
The hard and interesting question then isn’t “how are we gonna pay for things?”. Paying for things is very easy for the state, literally just create the dollars. The question is: how much deficit should we be running? How much deficit is the best for the economy? And where should be running this deficit, maybe less for military and more for healthcare and education and pensions and infrastructure?
The question on taxation shouldn’t be “how are we gonna pay for it?” But rather “how much money should we remove from the economy”? Or “what behaviours should the government disincentivize?” Or “where in the economy do we want to extract currency to reduce inequality?” “Should we be charging lower taxes on poor people and higher taxes on richer people and on big companies?”
This reality-based understanding of government budgets, deficits, debt creation, money creation and taxation, instead of the neoliberal dogma, opens up so many cans of worms and exposed so many non-issues. I’ll say it again: “GOVERNMENT BUDGET DEFICITS AND DEBT AREN’T A BAD THING”.
You still out right ignoring the point how this behavior has consequences on working people’s lives and finance
Also, sounds like you are high on modern monetary theory and have not thought this through beyond repeating talking points of the theory, which were circulated on teevee during covid.
COVID was an attempt do this trick and inflation spiked and people’s QoL went down.
Either, money got spend and nothing to show for it. How is this good?
I’m not ignoring this, I’m saying increasing expenditure in healthcare, education, infrastructure and pensions can have a POSITIVE impact on peoples’ lives.
It’s not. We sadly live under mostly governments that follow neoliberalism. I want the opposite, I don’t want smaller governments spending less, I want bigger more progressive governments eliminating homelessness by making huge amounts of public housing in well planned out cities with great public transit, eliminating unemployment through guaranteed jobs, raising the expenditure in universal healthcare and education to have more professionals… I want actual leftism, not lukewarm centrist socialdemocrats/liberals.
I’m very high on MMT, but why does that mean I’m repeating talking points? I’m personally very interested in economics for the past years. MMT is just a stepping stone imo for people (myself included) to learn about economics. I’d gladly apply much, MUCH more radical leftist measures than those prescripted by MMT. But a productive talk about debt and budgets isn’t a thing I’ll deny :)
If you think inflation was a consequence of government spending, I’m sorry, but you’ve been lied to. Inflation did spike, and people’s purchase power went down, but none of that is due to public expenditure. I’m personally European so I can tell you about the reasons for inflation:
Spike in energy prices as a consequence of the war in Ukraine
Problems in supply of goods as a consequence of COVID bottlenecks
Companies rising prices more than would be necessary to just maintain profit, in order to get more profits by riding the wave of inflation
Like, these are known, studied, measured effects, it’s not even a discussion in serious academia that these are the reason, they can even quantify by how much. Just think about it, inflation happened widespread across the world. If it had been a monetary phenomenon, it would have been confined to specific currencies, the policy in the US (dollars) was very different as that on Canada (Canadian Dollars) or in the UK (Pounds) or in the EU (Euros) or in Japan (yen).