%% MAYbe , if he is in line with country boy+ president Andy Jackson, back to my budget + charts. Looks like country boy reads the tape
Ever since the the collapse of the upper brackets in the progressive income tax under the Reagan Admin., the carried interest loophole, and the Court's ruling in favor of Rove et al's 'Citizens United' gambit, etc., your description of the country as a business conglomerate is moving inexorably closer to the truth. https://www.citizen.org/news/story-...ds-wisconsin-governors-industry-ties-exposed/
It's also unfortunate that all three major credit rating agencies are in the US. Otherwise, the US government would have gotten downgraded by now.
Albeit for the wrong reason! Credit rating agencies' understanding of U.S. government financing is stuck in incorrect thinking of the past. (S&P downgraded U.S. bonds in 2011 and both Moody's and Fitch warned, all for the wrong reasons.) The U.S. has no real debt and cannot go bankrupt. Nevertheless the U.S. can not, in my view, grow its aggregate deficit faster than GDP grows or we will eventually be faced with a very unpleasant reality: either decrease the proportion of discretionary to non-discretionary spending and/or tax more, or else suffer intolerably high inflation. Although the U.S. cannot go "bankrupt" in anything like the traditional meaning of this word, it can manage its spending and taxing so as to reduce, at an accelerating rate, the buying power of each dollar created by government and each lent within the private sector. This would leave the Central Bank with few options other than to force the economy into a deep recession. The long term cure is to elect a better informed and more comprehensively educated Congress and President, because fiscal measures are inherently far more powerful than any tool of the Central Bank. The MAGA republicans represent the antithesis of what is needed. They block Tax reform and push tax policy that threatens the dollar's future. This is incomprehensible to neutral observers. Although all Americans would benefit from sound, long-term tax policy, the ones blocking reform are the very ones who would benefit the most from it. It's as though mis- and dis-information are both more powerful than truth, although I am not at all sure this is the main reason for our incomprehensible decision making. Perhaps it is more a matter of ideology cooked up in the minds of those infected with religion and those who recognize such brain-fog as opportunity to advance their personal interests. (For an interesting take on a similar theme, see Thomas B. Edsall's opinion piece in today's NY Times [May 15, 2024].
I'm obviously falling behind because this statement ain't going through my thick skull. Bring me up to speed on what you mean here. Is there a difference between "real" and "fake" when it comes to debt? And, although unlikely, suppose the US defaults on its debt due to unforeseen circumstances like civil war (which seems very credible now than ever before), don't you think our government can technically go belly up?
He just means that because US can print as much money as needed, it will never default, and hence the debt doesn't mean anything. But when the rest of the world wakes up and realizes the game is rigged, why would they want to play your game? It's like an unhappy husband. He spends years trying to make the wife happy, buying her everything and begging for sex. But one day he realizes he is successful, and even if he loses half in the divorce, he can easily get sex somewhere else. At that point, wife has zero power over him and he can cut his losses. Now you tell me who secretly enjoys doing business with the USD vs. being forced into it?? Give them an alternative, and the world will look much different. Nobody wants to play the US game anymore, and I know nobody agrees with me, but it won't take much to tip the scales.
Noah, the US is printing money not just to save our own economy. It's to save the world economy. Back in 2008, we didn't bail out only America banks. We bailed out a lot of foreign banks as well. If it weren't for our printing press, there would have been many sovereign defaults.
There is a BIG difference between real and fake when it comes to sovereign debt. Nearly all of us were brought up with an untruth. I don't call it a lie, because those telling the untruth, our parents, our ninth grade civics teacher, our politicians and our Presidents did not realize what they told us wasn't true. It was just an innocent misunderstanding on their part. We were all told that government imposes taxes so that it will have money to spend for the things it needs. And if the government wants to spend more then its tax revenue will allow, it must borrow the difference. This made perfect sense in the context of our personal finances!; yet in the context of modern government finances, for any country that has great sovereignty over its money, what we were taught is nonsense. In reality our government does not need to tax one cent in order to spend; yet it would be a mistake not to tax sufficiently for reasons I have detailed elsewhere. Let's go back to the time our currency was backed by gold. Were did the gold needed to back our money come from? Did we steal it? Did we win it as a spoil of war? No, in truth Congress authorized the printing of money out of thin air in the form of gold certificates. We made these certificates legal tender and exchangeable for gold at the Treasury. The first stop for these newly printed certificates was where the gold was. The government bought gold with the certificates. Sources of gold were happy to exchange gold for gold certificates, a more convenient form of legal tender, because they knew they could exchange their certificates for gold should they want their gold back. The gold certificates circulated as legal tender in the economy and eventually found their way back to the Treasury. This might occur, for example, when taxes were paid using gold certificates. Then the Treasury would have both the certificates and the gold! The circulating certificates could be eventually exchanged for legal tender bank notes not convertible to gold. The above is about as short a history of the gold standard as you are likely to come across. It's unlikely to be correct in every detail, but it's close enough to truth to get my point across. What we learn from it is that our present day fiat money is fundamentally little different from gold standard money in that both are born from printing "out of thin air". Fiat money, however, is far more convenient if a crisis makes it necessary to print a lot of money in a hurry. The money needed is printed, not borrowed. This is what the U.S. does today. Every deficit is covered by printing rather than borrowing. The "printing step" is synonymous with the Fed covering a Treasury overdraft. There is not a single cent actually borrowed!* It is only later that the Treasury will give the appearance of borrowing when it auctions securities in amounts equal to its deficits. What it is really doing is exchanging money printed and spent into the economy for a Treasury security. If you use a model where Treasury securities are just an interest paying form of money, then you will see this exchange as making zero difference in the total amount of money in the private sector at the moment of exchange. (This is the model that MMT economists use.) So what are these liabilities of the Treasury we call bonds. Bonds are structured like private sector debt instruments. They look like debt, act like debt -- up to a point -- but are not debt.** They are nevertheless liabilities of the Treasury, as is all money created by our government. What then is the difference between Treasury securities and real debt instruments. It's this: Treasury securities are paid off in a currency the Congress prints (using the Treasury and Fed as Congress's authorized agents). Real debt, of course, cannot be paid with money the debtor prints.*** This is why I have labeled so-called U.S. Government debt, "Ersatz Debt." No country can borrow the money it prints!, just as you could not borrow dollars if you could legally print them in your basement. Oh you could make it look like you were borrowing if, say, you took out a bank loan and than printed the money to pay it off, but what would be the point? Why not simply print the money you need , just as our government does. Although Treasury securities don't represent real debt, they have multiple important roles to play. They are an essential tool of the Central Bank which uses them to implement monetary policy. They are in demand world-wide as a low risk, interest paying hoard of money and hedge against inflation in dollar denominated foreign exchange accounts. They serve a similar role in all sorts of pension and other funds. (It used to be their only risk was inflation. But nowadays there is political risk too, as a lawless Congress could, in violation of the Constitution, simply refuse to pay the interest or principle owed. (The "debt ceiling statute" is an absurdity beyond comprehension.) Indeed, virtually everything you and I were taught turns out to be wrong in the context of modern, U.S. government finances. And yet it is perfectly possible for a country such as the U.S. to go belly up, as you say. But it is not for the reasons most people suppose. _____________________ *World War I was financed by real borrowing followed by taxing to pay off the war debt. That is to say, instead of printing and then appearing to borrow the money just printed, as we do today, President Wilson's America did not print the money needed for the war. Instead it borrowed from the private sector and then later taxed the private sector to pay off the war bonds. As not all of the money borrowed was spent back into the U.S. domestic economy, a net money hole appeared in the domestic economy resulting in a recession. (See the Wikipedia article on Wilson and World War I financing.) **This is an example of something that looks like a duck, walks like a duck and quacks like a duck, but is not a duck. (I had a friend with a toy, battery operated plastic duck that looked, walked and quacked like a duck. It too wasn't a duck!) ***There are plenty of Countries (Russia!) with real debt. These are countries that issued debt denominated in another countries currency. They can't pay off real debt by printing.
Indeed our Treasury and Fed were instrumental in preventing a much worse calamity. We printed the bailout money, and it was returned to us with interest. Overall the U.S. made money from the bailouts. Neither the Fed nor the Treasury can give money away. Only Congress can do that. The transfer payments made during the Covid pandemic would be an example. (Go to Treasury.gov and take a look at the Tarp Account).