Hi Scott, Pls reread. I said the opposite. I also said the bounce back started in Trump's last year. And I said that no president controls these ratios. You skimmed. Because you are repeating back what I wrote. Pls reread. best, Larry
Hi Paul, Which speaker was remove in the past? And yes, we are doing linguistic-based accounting and missing the overall picture of our country's long-term fiscal insolvency. best, Larry
Hi Kerry and Bradley, The fiscal gap and generational accounting provide measures of our long-term fiscal problem that are far better than the debt to GDP ratio, particularly because the debt in the ratio is only what politicians choose to put on the books. This present value treatment of both government assets, including future taxes, and liabilities, including future spending, shows we are bankrupting our children via the entitlement programs, not tics up in discretionary spending. Best, Larry
PS, I've revised the piece and fixed all the typos. Writing with very little sleep! Thanks for reading!!
Anyone who still tries to casually link Putin to Trump, as if they aren’t aware that it was a hoax set up by Hillary Clinton, is a lying jackass who should be treated with the zero respect or credibility they he deserves.
Same lies that Biden uses. If you pretend that the huge drop in GDP related to the shutdowns was actually “normal”, and that the bounce back when the shutdowns ended was all due to the brilliance of Joseph Robinette Biden, then you can say the real debt ratio fell. But only a moron would believe that.
That is news! Better tell all of the banks that compare your income to your debt when they grant mortgages or other loans. We can all be Billionaires just by borrowing.
Let's stay with your analogy. You buy a house by assuming $500,000 in mortgage debt from the bank (which created the money out of thin air). The value of the house balances the debt. The bank is happy. You're happy. US debt is balanced by an equal and opposite amount of assets on the other side of the ledger: in the private sector. The debt is the measure of the credit-money that the US has created and spent into the economy in excess of the amount that it has removed through taxes, fees, fines, etc. The US debt is the basis of all of our private wealth and savings. The pervasive mistake is that the US government and the US private sector are somehow on different balance sheets, with the gov't holding the debt and the private sector the assets. They're on the same balance sheet. The gov't borrows credit-money into existence, and taxes it out of existence. Banks loan credit-money into existence and then cancel the money when they are repaid. The problem is that we've chosen not to tax ourselves and that the banks run a perpetual float ($17 trillion and growing).
None of that supports your original comment. Essentially your original comment indicated that there is no value in comparing a cumulative debt to a stream of income, when in fact, it does. (Making the assumption that you agree that GDP is indicative of levels of gross taxation) Your explanation defeats your original comment. You correctly indicate that "the problem is that we have chosen not to tax ourselves". (ie. provide a realistic stream of income) I agree... and that "stream of income" should be reinstated.
Perhaps you believe that annual GDP determines the government's ability to service the accumulated debt. Maybe. It's complicated. Deficit spending adds to GDP. It supports private asset values. My problem is with the portrayal of the debt as a millstone around the country's neck. It is also a measure of the country's financial assets. Every penny of Treasury debt is a penny of assets held by somebody somewhere. Private wealth comes from government debt; only the federal gov't can create net new money. The bailouts of the past 20 years, when the government went "into debt" to maintain inflated asset values, demonstrate the trade-off. This was a choice by... the Fed, or Wall Street, or the executive branch; it's all one. You agree on that?
Larry, believe that a House Speaker was removed just over a 100 yrs ago? It appears that you maybe arguing that we have no long term budget priorities or a vision of what one might look like. Congress fails America and Americans with their basic lack of understanding of economics and budgets.
Most people still think of money as a finite commodity that, like matter, is neither created or destroyed. Many legislators are probably among them. They don't understand that vast amounts of credit-money (dollars are IOUs) come into and go out of existence every day. Money is more a flow than a stock. At the federal level or banking level (but not the local or personal level), the question, "Where will the money come from?" indicates a failure to understand this. So does panic over the national debt or the future of Social Security.
One of the most easily understandable explanations of how the numbers work I've read in a very long time (along with a few nice digs here and there). Thank you.
Hi Scott, Pls reread. I said the opposite. I also said the bounce back started in Trump's last year. And I said that no president controls these ratios. You skimmed. Because you are repeating back what I wrote. Pls reread. best, Larry
Hi Paul, Which speaker was remove in the past? And yes, we are doing linguistic-based accounting and missing the overall picture of our country's long-term fiscal insolvency. best, Larry
Hi Kerry and Bradley, The fiscal gap and generational accounting provide measures of our long-term fiscal problem that are far better than the debt to GDP ratio, particularly because the debt in the ratio is only what politicians choose to put on the books. This present value treatment of both government assets, including future taxes, and liabilities, including future spending, shows we are bankrupting our children via the entitlement programs, not tics up in discretionary spending. Best, Larry
PS, I've revised the piece and fixed all the typos. Writing with very little sleep! Thanks for reading!!
Anyone who still tries to casually link Putin to Trump, as if they aren’t aware that it was a hoax set up by Hillary Clinton, is a lying jackass who should be treated with the zero respect or credibility they he deserves.
Same lies that Biden uses. If you pretend that the huge drop in GDP related to the shutdowns was actually “normal”, and that the bounce back when the shutdowns ended was all due to the brilliance of Joseph Robinette Biden, then you can say the real debt ratio fell. But only a moron would believe that.
GDP is a one-year number. US debt is a long-term cumulative number. No reason to compare them.
That is news! Better tell all of the banks that compare your income to your debt when they grant mortgages or other loans. We can all be Billionaires just by borrowing.
Let's stay with your analogy. You buy a house by assuming $500,000 in mortgage debt from the bank (which created the money out of thin air). The value of the house balances the debt. The bank is happy. You're happy. US debt is balanced by an equal and opposite amount of assets on the other side of the ledger: in the private sector. The debt is the measure of the credit-money that the US has created and spent into the economy in excess of the amount that it has removed through taxes, fees, fines, etc. The US debt is the basis of all of our private wealth and savings. The pervasive mistake is that the US government and the US private sector are somehow on different balance sheets, with the gov't holding the debt and the private sector the assets. They're on the same balance sheet. The gov't borrows credit-money into existence, and taxes it out of existence. Banks loan credit-money into existence and then cancel the money when they are repaid. The problem is that we've chosen not to tax ourselves and that the banks run a perpetual float ($17 trillion and growing).
None of that supports your original comment. Essentially your original comment indicated that there is no value in comparing a cumulative debt to a stream of income, when in fact, it does. (Making the assumption that you agree that GDP is indicative of levels of gross taxation) Your explanation defeats your original comment. You correctly indicate that "the problem is that we have chosen not to tax ourselves". (ie. provide a realistic stream of income) I agree... and that "stream of income" should be reinstated.
Perhaps you believe that annual GDP determines the government's ability to service the accumulated debt. Maybe. It's complicated. Deficit spending adds to GDP. It supports private asset values. My problem is with the portrayal of the debt as a millstone around the country's neck. It is also a measure of the country's financial assets. Every penny of Treasury debt is a penny of assets held by somebody somewhere. Private wealth comes from government debt; only the federal gov't can create net new money. The bailouts of the past 20 years, when the government went "into debt" to maintain inflated asset values, demonstrate the trade-off. This was a choice by... the Fed, or Wall Street, or the executive branch; it's all one. You agree on that?
Larry, believe that a House Speaker was removed just over a 100 yrs ago? It appears that you maybe arguing that we have no long term budget priorities or a vision of what one might look like. Congress fails America and Americans with their basic lack of understanding of economics and budgets.
Most people still think of money as a finite commodity that, like matter, is neither created or destroyed. Many legislators are probably among them. They don't understand that vast amounts of credit-money (dollars are IOUs) come into and go out of existence every day. Money is more a flow than a stock. At the federal level or banking level (but not the local or personal level), the question, "Where will the money come from?" indicates a failure to understand this. So does panic over the national debt or the future of Social Security.
One of the most easily understandable explanations of how the numbers work I've read in a very long time (along with a few nice digs here and there). Thank you.
Superb article.... as usual