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Does anyone ever stop and think about how much our deficit spending increases growth?
Posted on 12/21/19 at 11:03 am
Posted on 12/21/19 at 11:03 am
(no message)
This post was edited on 1/20/20 at 12:47 pm
14
Posted on 12/21/19 at 11:09 am to cahoots
Most Americans want government to take care of them and yet pay nothing in taxes. They yap about the government and spending, but heaven forbid their government checks get turned off. This is what happens your population is fat, lazy and stupid.
Posted on 12/21/19 at 11:11 am to cahoots
quote:
Basically, cutting taxes and spending more is a recipe for good short term growth. You’re just financing a big chunk of prosperity. That it all.
and that has only been that way for the last 2 years, right?
Posted on 12/21/19 at 11:19 am to cahoots
The threat of deficit spending is that it potentially crowds out investment. And since investment is the largest driver of long-run growth, it could potentially put a significant strain of future generations.
That said, investment really only gets crowded out when interest rates rise, and as of now, interest rates have remained low, so the crowd out is relatively minimal. Latest estimate I’ve seen is that a dollar of deficit spending crowds out about 30 cents of investment. But if our ballooning debt forces us to raise treasury rates, that percentage will rise right along side the debt, which would cause a significant sustainability issue.
That said, investment really only gets crowded out when interest rates rise, and as of now, interest rates have remained low, so the crowd out is relatively minimal. Latest estimate I’ve seen is that a dollar of deficit spending crowds out about 30 cents of investment. But if our ballooning debt forces us to raise treasury rates, that percentage will rise right along side the debt, which would cause a significant sustainability issue.
This post was edited on 12/21/19 at 11:24 am
Posted on 12/21/19 at 11:20 am to cahoots
quote:
Does anyone ever stop and think about how much our deficit spending increases growth?
I do
Posted on 12/21/19 at 11:23 am to cahoots
How do you propose that we satisfy the debt when the time comes? It is the Fed policies that is erasing the middle class. The expansion of the monetary supply equates to a hidden inflation tax which is crushing the middle class. While the U.S. continues to spend money on losing wars, useless foreign aid, and building up the military offense, China and Russia are buying gold, investing in countries with natural resources, etc.
Imagine if we stopped wasting a trillion dollars a year on welfare and warfare and actually invested in our country.
It will come to an end sooner or later.
Imagine if we stopped wasting a trillion dollars a year on welfare and warfare and actually invested in our country.
It will come to an end sooner or later.
Posted on 12/21/19 at 11:24 am to cahoots
Nope.
The number is so huge it will NEVER be paid off.
So eventually we will tell the Chi coms- “ yeah, you know those treasury notes we owe you on? Yeah about this. We’re not paying those back.”
In preparation of the for this, I started to purchase tangible gold as a part of the portfolio. Unfortunately, as I was attempting to butt it in a secret spot, my canoe capsized and it went overboar- never to be seen again.
Sucks but I’ll keep giving g it a try.
But seriously the number is a widget- a widget is something that doesn’t exist.
I do recommend buying some tangible gold bars to supplement a portfolio if you are worried about a collapse.
The number is so huge it will NEVER be paid off.
So eventually we will tell the Chi coms- “ yeah, you know those treasury notes we owe you on? Yeah about this. We’re not paying those back.”
In preparation of the for this, I started to purchase tangible gold as a part of the portfolio. Unfortunately, as I was attempting to butt it in a secret spot, my canoe capsized and it went overboar- never to be seen again.
Sucks but I’ll keep giving g it a try.
But seriously the number is a widget- a widget is something that doesn’t exist.
I do recommend buying some tangible gold bars to supplement a portfolio if you are worried about a collapse.
This post was edited on 12/21/19 at 11:27 am
Posted on 12/21/19 at 11:29 am to cahoots
The bill comes due.
Posted on 12/21/19 at 11:34 am to cahoots
quote:
We’re at a point where the government is pumping over a trillion extra dollars into the economy every year. If we cut out that level of spending, growth would take a huge hit.
Can you possibly see the issue here?
Posted on 12/21/19 at 11:36 am to SCLibertarian
quote:Entitlement spending is nothing more than protection money paid to the weak and useless to keep them placated and unrebellious.
Most Americans want government to take care of them and yet pay nothing in taxes. They yap about the government and spending, but heaven forbid their government checks get turned off. This is what happens your population is fat, lazy and stupid.
This post was edited on 12/21/19 at 11:37 am
Posted on 12/21/19 at 11:44 am to Covingtontiger77
China only holds about 5% of the debt. I am not sure giving them the finger will help when the time comes.
Posted on 12/21/19 at 11:45 am to gthog61
(no message)
This post was edited on 1/20/20 at 12:47 pm
Posted on 12/21/19 at 11:51 am to ericberryistheman
(no message)
This post was edited on 1/20/20 at 12:46 pm
Posted on 12/21/19 at 2:40 pm to cahoots
quote:Do you have any idea where that spending money comes from?
Does anyone ever stop and think about how much our deficit spending increases growth?... Think about it. We’re at a point where the government is pumping over a trillion extra dollars into the economy every year. If we cut out that level of spending, growth would take a huge hit.
Posted on 12/21/19 at 4:15 pm to Taxing Authority
(no message)
This post was edited on 1/20/20 at 12:46 pm
Posted on 12/21/19 at 8:26 pm to cahoots
Posted on 12/21/19 at 8:30 pm to cahoots
quote:Prelude to Crisis
Beginning with Greenspan, we have now had 30+ years of ever-looser monetary policy accompanied by lower rates. This created a series of asset bubbles whose demises wreaked economic havoc. Artificially low rates created the housing bubble, exacerbated by regulatory failure and reinforced by a morally bankrupt financial system.
And with the system completely aflame, we asked the arsonist to put out the fire, with very few observers acknowledging the irony. Yes, we did indeed need the Federal Reserve to provide liquidity during the initial crisis. But after that, the Fed kept rates too low for too long, reinforcing the wealth and income disparities and creating new bubbles we will have to deal with in the not-too-distant future.
This wasn’t a “beautiful deleveraging” as you call it. It was the ugly creation of bubbles and misallocation of capital. The Fed shouldn’t have blown these bubbles in the first place.
The simple conceit that 12 men and women sitting around the table can decide the most important price in the world (short-term interest rates) better than the market itself is beginning to wear thin. Keeping rates too low for too long in the current cycle brought massive capital misallocation. It resulted in the financialization of a significant part of the business world, in the US and elsewhere. The rules now reward management, not for generating revenue, but to drive up the price of the share price, thus making their options and stock grants more valuable.
Coordinated monetary policy is the problem, not the solution. And while I have little hope for change in that regard, I have no hope that monetary policy will rescue us from the next crisis.
Posted on 12/21/19 at 9:12 pm to cahoots
Most people don’t think about deficit spending this way, but it is the most fair way to tax and fund government spending. Deficit spending mostly comes from issuing bonds to the federal reserve who just prints money to buy the debt and therefore increases money supply and decreases the value of every other dollar in circulation at that time. It is an incremental tax on all holders of US dollars at the same rate of inflation. This is much more fair than the progressive income tax rate. The downside is the tax is kind of hidden and most people are too dumb to understand the mechanism.
Posted on 12/21/19 at 9:17 pm to cahoots
Does anyone ever think about the value of the assets we are borrowing against?
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