Hillary Clinton The Queen by Hugh Hewitt

[BobF]

Try to learn something Bob.... The US budget is NOT like a houshold... and debt is not always bad...


http://www.rooseveltinstitute.org/new-roosevelt/federal-budget-not-household-budget-here-s-why

Whenever a demagogue wants to whip up hysteria about federal budget deficits, he or she invariably begins with an analogy to a household’s budget: “No household can continually spend more than its income, and neither can the federal government”. On the surface that, might appear sensible; dig deeper and it makes no sense at all. A sovereign government bears no obvious resemblance to a household. Let us enumerate some relevant differences.


1. The US federal government is 221 years old, if we date its birth to the adoption of the Constitution. Arguably, that is about as good a date as we can find, since the Constitutionestablished a common market in the US, forbade states from interfering with interstate trade (for example, through taxation), gave to the federal government the power to levy and collect taxes, and reserved for the federal government the power to create money, to regulate its value, and to fix standards of weight and measurement-from whence our money of account, the dollar, comes. I don’t know any head of household with such an apparently indefinitely long lifespan. This might appear irrelevant, but it is not. When you die, your debts and assets need to be assumed and resolved. There is no “day of reckoning”, no final piper-paying date for the sovereign government. Nor do I know any household with the power to levy taxes, to give a name to — and issue — the currency we use, and to demand that those taxes are paid in the currency it issues.


2. With one brief exception, the federal government has been in debt every year since 1776. In January 1835, for the first and only time in U.S. history, the public debt was retired, and a budget surplus was maintained for the next two years in order to accumulate what Treasury Secretary Levi Woodbury called “a fund to meet future deficits.” In 1837 the economy collapsed into a deep depression that drove the budget into deficit, and the federal government has been in debt ever since. Since 1776 there have been exactly seven periods of substantial budget surpluses and significant reduction of the debt. From 1817 to 1821 the national debt fell by 29 percent; from 1823 to 1836 it was eliminated (Jackson’s efforts); from 1852 to 1857 it fell by 59 percent, from 1867 to 1873 by 27 percent, from 1880 to 1893 by more than 50 percent, and from 1920 to 1930 by about a third. Of course, the last time we ran a budget surplus was during the Clinton years. I do not know any household that has been able to run budget deficits for approximately 190 out of the past 230-odd years, and to accumulate debt virtually nonstop since 1837.


3. The United States has also experienced six periods of depression. The depressions began in 1819, 1837, 1857, 1873, 1893, and 1929. (Do you see any pattern? Take a look at the dates listed above.) With the exception of the Clinton surpluses, every significant reduction of the outstanding debt has been followed by a depression, and every depression has been preceded by significant debt reduction. The Clinton surplus was followed by the Bush recession, a speculative euphoria, and then the collapse in which we now find ourselves. The jury is still out on whether we might manage to work this up to yet another great depression. While we cannot rule out coincidences, seven surpluses followed by six and a half depressions (with some possibility for making it the perfect seven) should raise some eyebrows. And, by the way, our less serious downturns have almost always been preceded by reductions of federal budget deficits. I don’t know of any case of a national depression caused by a household budget surplus.


4. The federal government is the issuer of our currency. Its IOUs are always accepted in payment. Government actually spends by crediting bank deposits (and credits the reserves of those banks); if you don’t want a bank deposit, government will give you cash; if you don’t want cash it will give you a treasury bond. People will work, sell, panhandle, lie, cheat, steal, and even kill to obtain the government’s dollars. I wish my IOUs were so desirable. I don’t know any household that is able to spend by crediting bank deposits and reserves, or by issuing currency. OK, some counterfeiters try, but they go to jail.


5. Some claim that if the government continues to run deficits, some day the dollar’s value will fall due to inflation; or its value will depreciate relative to foreign currencies. But only a moron would refuse to accept dollars today on the belief that at some unknown date in the hypothetical and distant future their value might be less than today’s value. If you have dollars you don’t want, please send them to me. Note that even if we accept that budget deficits can lead to currency devaluation, that is another obvious distinguishing characteristic: my household’s spending in excess of income won’t reduce the purchasing power of the dollar by any measurable amount.
If you put your mind to it, you will no doubt come up with other differences. I realize that distinguishing between a sovereign government and a household does not put to rest all deficit fears. But since this analogy is invoked so often, I hope that the next time you hear it used you will challenge the speaker to explain exactly why a government’s budget is like a household’s budget. If the speaker claims that government budget deficits are unsustainable, that government must eventually pay back all that debt, ask him or her why we have managed to avoid retiring debt since 1837-is 173 years long enough to establish a “sustainable” pattern?


Roosevelt Institute Braintruster L. Randall Wray is Professor of Economics at the University of Missouri-Kansas City.

Much of this post is confused to say the least. Yes they did do some research but their conclusions make no sense at all.

Cost just keep going up. Why? The value of the US dollar is going down as we add more and more debt to our economy. There is no crime in the paying back of our debts, as has been shown over the 200 years they spoke of.

Where the depression might come from is from the lack of the people to have jobs. That is where the government has come in and helped to end the depressions. How about the Hoover dam and other major projects that helped to end a big depression. That project helped to put lots of folks back to work. The outcome was for private industries now had reasons to build miles and miles of electrical systems and power distribution companies that also hired folks to help the customers and on and on it goes. A good stimulus to get things started and the economy got going again.

Again, after WWII, the government decided we needed better highways. So the interstate system was born. Much of the interstate system was done by state and local funds but with the interstate idea designed to control minimums for width and tunnels and bridges designs and to support some of the higher costs the states could not afford.

Until we get those debts paid down our dollar value will continue to fall. Try again. It was an interesting article but incomplete in explaining how debt brings us prosperity.

 

[QuickSilver]

So bob.... Where did YOU get your degree in economics? And WHERE do YOU teach.. hahahahahahah

 

[BobF]

A degree in economics has nothing to do with knowing debt in such sizes is wrong. I suppose you have a degree in economics. If so then you should know that continuous and expanding debt is very dangerous.

I mentioned the problems Greece is having but you fail to recognize that event. Have you looked into South America? I believe we have at least one country down there that has been having problems with their economy. Take a look at Argentina for one. Maybe another one too. I will do a look at S America myself and be ready to respond if you do take a look and see anything interesting.

 

[QuickSilver]

http://www.dailykos.com/story/2015/08/19/1413484/-National-Debt-Isn-t-Bad#


The only time the US has been debt-free was in 1835. President Andrew Jackson balanced the budget and the US held no debt. This is the only time in the history of this country that it has been done.
The outcome was negligible, as the early 1830s were prosperous anyway. Being debt-free, however, did not prevent a major recession two years later that lasted six years: The Panic of 1837.Since then, the US has always held debt and seen its share of bank failures, recessions, depressions and other economic calamities.
[h=2]Debt-free doesn't work[/h]

The reason why the Federal Government should never have a balanced budget requirement is because many projects and grants are multi-year (especially research grants), which are funded in a single appropriation. Other multi-year activities include land leasing.If the government was required to balance out every year, then certain programs and research would be impossible to fund, as uncertainty would stifle investment. Take, for example, what happened to the alternative energy industry in the face of the production tax credit's expiration. In 2014, Congress voted to extend it for only one year with no guarantee it would be subsequently extended, thus causing slowdown:

But while there are more than 13,600 more MW of wind capacity currently under construction, that number is expected to drop off sharply as projects are brought online and fewer new projects are started due to the expiration of the wind production tax credit (PTC).
— "Uncertainty Over Tax Credits Causing Turmoil In Renewable Energy Sector"​

When I take out a loan to buy a car or get a mortgage on my house, I'm taking on debt that must eventually be repaid. If, for example, I lose my job, then my creditors can seize my assets to settle my debt.

Unlike individuals, Governments can reduce the impact of debt in a number of ways. One of the easiest is to adjust the money in circulation, i.e., print money. One of the reasons the EU—specifically Greece—is in trouble is member states aren't allowed to print money to get out of debt. If a government goes too far and prints too much money, then its economy mayhyperinflate. This is what happened in Germany, post WWI, when the Allied Powers insisted Germany pay crippling reparations for starting the war. The government was forced to print more and more money in order to make the payments, making their currency more and more worthless.Let me sum up

Governments are not like people and can use debt to achieve things individuals cannot. The trick is knowing which is good debt and promoting it, and which is bad debt and discouraging it.

 

[Pookie]

I just ordered this for my Kindle through Amazon. Has anyone read the book?

Yes, I have. It's very interesting.

I've seen the replies here and I just want to say, kindly and nicely, to each their own. We can't all be alike and our differences make us who we are. I'm glad to be a part of a forum where no one is alike; If everyone here were just like me, I'm sorry, but I'd have to sell ALL of you upriver to the Gypsies.

 

[BobF]

http://www.dailykos.com/story/2015/08/19/1413484/-National-Debt-Isn-t-Bad#


The only time the US has been debt-free was in 1835. President Andrew Jackson balanced the budget and the US held no debt. This is the only time in the history of this country that it has been done.
The outcome was negligible, as the early 1830s were prosperous anyway. Being debt-free, however, did not prevent a major recession two years later that lasted six years: The Panic of 1837.Since then, the US has always held debt and seen its share of bank failures, recessions, depressions and other economic calamities.
Debt-free doesn't work

The reason why the Federal Government should never have a balanced budget requirement is because many projects and grants are multi-year (especially research grants), which are funded in a single appropriation. Other multi-year activities include land leasing.If the government was required to balance out every year, then certain programs and research would be impossible to fund, as uncertainty would stifle investment. Take, for example, what happened to the alternative energy industry in the face of the production tax credit's expiration. In 2014, Congress voted to extend it for only one year with no guarantee it would be subsequently extended, thus causing slowdown:

But while there are more than 13,600 more MW of wind capacity currently under construction, that number is expected to drop off sharply as projects are brought online and fewer new projects are started due to the expiration of the wind production tax credit (PTC).
— "Uncertainty Over Tax Credits Causing Turmoil In Renewable Energy Sector"​

When I take out a loan to buy a car or get a mortgage on my house, I'm taking on debt that must eventually be repaid. If, for example, I lose my job, then my creditors can seize my assets to settle my debt.

Unlike individuals, Governments can reduce the impact of debt in a number of ways. One of the easiest is to adjust the money in circulation, i.e., print money. One of the reasons the EU—specifically Greece—is in trouble is member states aren't allowed to print money to get out of debt. If a government goes too far and prints too much money, then its economy mayhyperinflate. This is what happened in Germany, post WWI, when the Allied Powers insisted Germany pay crippling reparations for starting the war. The government was forced to print more and more money in order to make the payments, making their currency more and more worthless.Let me sum up

Governments are not like people and can use debt to achieve things individuals cannot. The trick is knowing which is good debt and promoting it, and which is bad debt and discouraging it.

Interesting comments and they do describe some of the US problems. Especially the part about printing more money that destroys the entire economy. The US has been printing more money for several years now and still not paying off our debts.

For all those many years of "small debts" that the US had and then never really being out of debt was OK as the debts were mostly small and were getting paid off while new debts were creating. Not like the way we have been doing since 1970 with a rotating debt that never gets paid off, just keeps getting bigger and bigger. Our day of reckoning will come. It won't be nice. It will force many changes to how we live. We need to get back to our older ways of lower debt and the constant payoff of one debt and the formation of newer debts in its place.

That again was an interesting article but it does not justify what we are doing to ourselves these days.

 

[QuickSilver]

Interesting comments and they do describe some of the US problems. Especially the part about printing more money that destroys the entire economy. The US has been printing more money for several years now and still not paying off our debts.

For all those many years of "small debts" that the US had and then never really being out of debt was OK as the debts were mostly small and were getting paid off while new debts were creating. Not like the way we have been doing since 1970 with a rotating debt that never gets paid off, just keeps getting bigger and bigger. Our day of reckoning will come. It won't be nice. It will force many changes to how we live. We need to get back to our older ways of lower debt and the constant payoff of one debt and the formation of newer debts in its place.

That again was an interesting article but it does not justify what we are doing to ourselves these days.

NO Bob... read the article.. Printing money does NOT destroy the economy.... Printing TOO MUCH does. The Federal Government has a obligation to use the tools at it's disposal to control our economy... Printing money... and adjusting interest rates are just examples...

 

[QuickSilver]

For all the reasons listed... let it again be reiterated... comparing the economy so big and so complex to a household budget may seem like common sense.. but it's not. The US can do so much more that Betty and Bob Smith can to control it's finances, like printing money, and controlling it's currency and interest rates.. These are things that Betty and Bob can't do.

However, if you insist on comparing the US economy to Betty and Bob... look at it this way. Debt is NOT always a bad thing. Some debt is necessary... Most of us have had mortgages or taken on a car note.. It's how we pay back that debt that's important as it strengthens our credit rating and helps our interest rates.. The US will never be debt free... it never has been... and our notes are still the most sought after in the world.

 

[BobF]

That is pure nonsense and not at all true. Just your way of wanting to say we are doing OK, when we are not.

Did you ever read any articles on Qualitative Easing, QE? It is only for small amounts of debt and not this ever increasing amount of debt we have now. It can be used to try to stabilize, tweak, the economy from small changes up or down, but not to excuse out of control debt.

Try reading from other sources like Forbes. Just search for 'money printing' or 'QE'. Also take a look a this in Wikipedia. I have already posted this in a different thread.

https://en.wikipedia.org/wiki/Quantitative_easing

Quantitative easing (QE) is a type of monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective.[SUP][1][/SUP][SUP][2][/SUP][SUP][3][/SUP][SUP][4][/SUP] A central bank implements quantitative easing by buying financial assets from commercial banks and other financial institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the money supply.[SUP][5][/SUP][SUP][6][/SUP] This differs from the more usual policy of buying or selling short-term government bonds to keep interbank interest rates at a specified target value.[SUP][7][/SUP][SUP][8][/SUP][SUP][9][/SUP][SUP][10][/SUP]
Expansionary monetary policy to stimulate the economy typically involves the central bank buying short-term government bonds to lower short-term market interest rates.[SUP][11][/SUP][SUP][12][/SUP][SUP][13][/SUP][SUP][14][/SUP] However, when short-term interest rates reach or approach zero, this method can no longer work.[SUP][15][/SUP] In such circumstances monetary authorities may then use quantitative easing to further stimulate the economy by buying assets of longer maturity than short-term government bonds, thereby lowering longer-term interest rates further out on the yield curve.[SUP][16][/SUP][SUP][17][/SUP]