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Author Topic: Trump doesn't care about the deficit, no one does.  (Read 117 times)
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December 30, 2019, 06:18:12 PM
Merited by Gyfts (3)
 #1

While this isn't fully Bitcoin related, I still did think that this topic did require some sort of conversation. Just as a note, I'm going to be posting this thread here and in the P&S section for maximum visibility. I do hope that's fine.

Here's the quick and simple summary of all of this: The US deficit is soaring in the Trump era, as it reached $984B in 2019. This was fueled by spending increases, and tax cuts.

But lets take a walk down memory lane, when Republicans used to care about spending and Democrats even went across the aisle to help out as well. In 2011, the GOP House of Rep pushed for a Balanced Budget Amendment -- pretty much forcing the government to have a balanced budget every year. Due to this, the Obama Administration tried to cut back back on spending and had done a good job at a certain point. There is a bit of leeway you have to give the Obama administration though, given that they controlled the executive during a time of a recession they obviously would have a higher deficit then most presidents.

Trump had even promised to fight the Debt and the Deficit, but nothing has come out of this. Trump rarely mentions it anymore, as it's a losing game for him. Republicans ignore it as they know going against Trump is political suicide -- and Democrats mention it here and there but it's not enough.

Both sides are hypocrites -- only caring about problems when the other side is causing it. Democrats only carea about deficits when Republicans are doing it, and Republicans only care about deficits when Democrats are doing it.

We shouldn't kick the can down any longer. We must focus on the deficit and the debt and focus on it now, instead of trying to focus on it when it's too late and the next generation is saddled with something that has spiraled too far out of control.

Sources:
https://www.washingtonpost.com/business/2019/10/25/us-deficit-hit-billion-marking-nearly-percent-increase-during-trump-era/
https://www.thebalance.com/us-deficit-by-year-3306306
https://apnews.com/caeb6d6c4eff45e4bc5da12db06004bc




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December 30, 2019, 06:52:31 PM
 #2

Consider this, when you can create money out of thin air why worry about debt?
Whats "funny" is that USA can devalue its currency 10X today and still be the number one Global currency.
Like Mel Brooks said, "Its good to be the King"  Roll Eyes

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December 30, 2019, 07:16:48 PM
 #3

Yeah, there's zero chance of the debt being resolved without some big disaster. The incentives just aren't there. Politicians get reelected by bragging about what they've delivered to their constituents, not by endlessly explaining why they tried to defund <voter's favorite project>. So you get things like McConnell's $1 billion gift to Kentucky in the latest budget. To pass a budget, every politician gets to demand increases in the total.

Currently the debt per taxpayer is $187,000, about $9000 of which came just this year. Obviously this isn't ever going to be paid.

You can play with policies to reduce the debt in this little game. For most people, it's pretty difficult to do it while worrying just about your own ideals, but imagine that you were a politician who also had to satisfy your largely-clueless voters. It's not happening.

Quote
the next generation is saddled with something

It won't necessarily be the next generation:
 - By 2025, interest payments on the debt are projected to exceed the military budget.
 - By 2026, the Medicare Trust Fund is projected to run out of money.
 - The median baby boomer will retire in a couple of years.
 - Some predict that we're in a bond bubble that's coming to an end, leading perhaps to much higher interest rates within a few years.
 - China, Russia, Iran, etc. have a strong interest in challenging the USD's dominance, especially as the US becomes increasingly aggressive toward them.

I think that the only realistic end result is the collapse of the dollar through hyperinflation. If interest rates quickly rise or if deficits continue on their current trajectory for 5-20 years, the debt will start to truly go exponential. Once this happens, the Fed will try to rescue the situation by printing money, but this will cause hyperinflation, and the world will lose faith in the dollar. A worthless dollar "solves" the debt situation, but obviously it'd be a world-shaking event which would do enormous & widespread damage.

But because the dollar is currently the world reserve currency, this could take decades if nothing major happens to speed things up.

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December 30, 2019, 08:38:16 PM
 #4

I think that the only realistic end result is the collapse of the dollar through hyperinflation.
That was always a wonder to me. How is it possible that printing money will kill us but fractional reserving them out of thin air will not?
There is basically billions of digital dollars created out of debt everyday, what difference does it make to print some real cash instead?
All the mints in the world contracted to print dollars, would not match the rate that privatised banking makes digital bucks.
I think it's an exaggeration with this hyperinflation scenario, mostly because it already have happened, dollar lost tremendous amount of purchasing power in the last century, I think it can't do any worse. That's why they are printing, when all tenders are sharing the fate of Zimbabwean dollar, non of them do.

 
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December 30, 2019, 11:00:52 PM
 #5

Yeah, there's zero chance of the debt being resolved without some big disaster. The incentives just aren't there. Politicians get reelected by bragging about what they've delivered to their constituents, not by endlessly explaining why they tried to defund <voter's favorite project>. So you get things like McConnell's $1 billion gift to Kentucky in the latest budget. To pass a budget, every politician gets to demand increases in the total.

Currently the debt per taxpayer is $187,000, about $9000 of which came just this year. Obviously this isn't ever going to be paid.

You can play with policies to reduce the debt in this little game. For most people, it's pretty difficult to do it while worrying just about your own ideals, but imagine that you were a politician who also had to satisfy your largely-clueless voters. It's not happening.

Quote
the next generation is saddled with something

It won't necessarily be the next generation:
 - By 2025, interest payments on the debt are projected to exceed the military budget.
 - By 2026, the Medicare Trust Fund is projected to run out of money.
 - The median baby boomer will retire in a couple of years.
 - Some predict that we're in a bond bubble that's coming to an end, leading perhaps to much higher interest rates within a few years.
 - China, Russia, Iran, etc. have a strong interest in challenging the USD's dominance, especially as the US becomes increasingly aggressive toward them.

I think that the only realistic end result is the collapse of the dollar through hyperinflation. If interest rates quickly rise or if deficits continue on their current trajectory for 5-20 years, the debt will start to truly go exponential. Once this happens, the Fed will try to rescue the situation by printing money, but this will cause hyperinflation, and the world will lose faith in the dollar. A worthless dollar "solves" the debt situation, but obviously it'd be a world-shaking event which would do enormous & widespread damage.

But because the dollar is currently the world reserve currency, this could take decades if nothing major happens to speed things up.

I mean at the end of the day, there's no reason for politicians -- within their own self interest -- to want to fix this problem. Why would they? They know that trying to fix the debt / lower the deficit is a losing goal -- see Bush having to raise taxes and then losing reelection. Politicans know that they're not going to have a job if they try to face the problem, so they don't. Instead they kick the can and they move on. Just wanted to say this again, though I know you've already stated such.

Insane insane insane figures Theymos -- it's disgusting that we've (as an electorate) allowed our politicians to get away with this.

The only way this works out 'somewhat' is if GDP continues to rise so that debt is still under 100-120 percent of GDP. At least that's manageable with the economy.

It'd just be nice to stop the bleeding, try to have a balanced budget by 2025 or something like that.







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December 31, 2019, 01:28:06 AM
 #6

Trump talked about not possibly ever having to default on debt because the money can be printed around the 2016 election but I can't find the clip because youtube is so screwed these days all it will show me is cnn..

I remember an old argument for Bitcoin being that governments wouldn't be able to print money to fund wars and therefore would be much more beholden to the people's opinion in that it would actually cost the citizens something to go to war..

The fed has also been injecting hundreds of billions of $ into the repo market lately I believe I read..

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December 31, 2019, 02:23:40 AM
 #7

I think that the only realistic end result is the collapse of the dollar through hyperinflation.
That was always a wonder to me. How is it possible that printing money will kill us but fractional reserving them out of thin air will not?
There is basically billions of digital dollars created out of debt everyday, what difference does it make to print some real cash instead?
All the mints in the world contracted to print dollars, would not match the rate that privatised banking makes digital bucks.
I think it's an exaggeration with this hyperinflation scenario, mostly because it already have happened, dollar lost tremendous amount of purchasing power in the last century, I think it can't do any worse. That's why they are printing, when all tenders are sharing the fate of Zimbabwean dollar, non of them do.

Hyperinflation is not a numerical phenomena, where it kicks in when some excess number of dollars have been printed. It is a psychological phenomena, where people on the street do not want the currency, but want hard goods instead. This increases the turnover of money by orders of magnitude. The US is not going to such a place.

We may be in for a moderate inflation, though. Such a thing can be tracked and is to a degree predictable.
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December 31, 2019, 01:33:07 PM
 #8

Right! Nobody cares about deficits, because they don't matter. I mean, when somebody cares about a financial deficit between two parties, they sue each other. The banks and the government who control the national debt are simply talking. There isn't any national debt that the people owe. If anything, the banks owe the people the national debt.

Nobody is ever going to sue over the national debt. But if they do, the smart people will win, anyway. So, why care about the deficit?

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December 31, 2019, 02:26:35 PM
 #9

The US is not going to such a place.

How do you imagine it ending, then? At the current trajectory, it looks to me like debt will go exponential in 2030-2040.

 - Will Congress somehow massively rein in spending and/or massively increase taxes despite not really having any incentive to do so?
 - Will people/institutions/governments' demand for treasuries grow exponentially alongside the exponential increase in debt, allowing interest rates to remain low?
 - Will the US default on its treasuries, wiping out many Americans' retirement accounts in a very obvious way? (Hyperinflation might do the same thing, but it's less obvious.)
 - Will the Fed print trillions of dollars every year in order to buy treasuries, but yet this money will not cause hyperinflation? If it won't cause hyperinflation, where will the money go? The money would be created and given to the government in exchange for treasuries, and the government would be spending it on things like medical expenses, social security benefits, and military hardware, so it should in fact enter the economy pretty quickly & widely.

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December 31, 2019, 03:10:47 PM
 #10

The US is not going to such a place.

The money would be created and given to the government in exchange for treasuries...


But it is how and why the money is being created that counts.

In order for the money to be given to the government, the government has to apply for it in one way or another. The application/request for the money includes the signature of the appropriate government person.

When the application paperwork is prepared, the paperwork has no value without the signature on it. It is worthless. Then when the application is signed, it has value. Government gets its money. It's what the banking system does with the application form that shows the true nature of the application.

The bank deposits the application form into the bank just like it was money or a check. The bank ledger confirms this. What has happened is that the government and the bank jointly created new money. When the money is given back to the government like it is a loan from the bank, the bank is really only paying back the loan of the new money that the government created and loaned to them (in the form of the signed application).

The securities that government pays to the bank are not loan repayment. They are simply credit purchase, so the government can keep on borrowing at a later date, because their credit is good, as attested to by the purchase of good credit through the securities "gift." The securities have nothing to do with the loan money government gets from the bank. The loan has been taken care of as loan repayment from the bank to the government for the application/money the government created and loaned to the bank.

To say it simply:
1. Government creates private money by signing a loan agreement/application;
2. Government loans their newly created private money to the bank;
3. Bank repays the loan money it received from government by giving government public money;
4. Securities from government to bank buys good credit so the government can do the private money loan process with the bank next time.

All bank loans to all people are this. All that loan repayment does is buys good credit. The loan is the person loaning his private money to the bank, and the bank repaying this loan by giving him public money for his private money he loaned to the bank.

The bank is never at risk. Without the private money loaned to them, they will never give public money back to anyone. Just try getting so-called loan money on unsigned paperwork. The signature on the paperwork makes it into money. Prove it by checking the bank ledger to see that they deposit the loan paperwork into a bank account just like they would a check or cash.

Money in, money out. It's what the bank ledger shows. Government and banking operations are simply a bit more complicated.

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December 31, 2019, 05:51:10 PM
 #11

The US is not going to such a place.

How do you imagine it ending, then? At the current trajectory, it looks to me like debt will go exponential in 2030-2040.

 - Will Congress somehow massively rein in spending and/or massively increase taxes despite not really having any incentive to do so?
 - Will people/institutions/governments' demand for treasuries grow exponentially alongside the exponential increase in debt, allowing interest rates to remain low?
 - Will the US default on its treasuries, wiping out many Americans' retirement accounts in a very obvious way? (Hyperinflation might do the same thing, but it's less obvious.)
 - Will the Fed print trillions of dollars every year in order to buy treasuries, but yet this money will not cause hyperinflation? If it won't cause hyperinflation, where will the money go? The money would be created and given to the government in exchange for treasuries, and the government would be spending it on things like medical expenses, social security benefits, and military hardware, so it should in fact enter the economy pretty quickly & widely.

The only incentive for Congress to do so would be something happening - like some sort of financial meltdown where the government is forced to or we go into utter chaos. Where the demand crashes for treasury bonds because the people see the writing on the wall. But then again, any other investment you go into if you shun T-Bonds is going to go to shit too, cause the if the US government goes to shit we have a ton of other issues.

I think the most likely scenario is that we clean up the deficit, instead of cleaning up the debt. If you are to do that at least you stop the bleeding and the interest payments don't continue to increase. -- Balanced Budget Amendment Right there.

But even in my most likely scenario, Congress still has to rein in on spending and or raise revenues. So honestly I don't think we're going to see the change unless we have some sort of tea party revolution round 2 -- or some other party or something along  those lines.




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