I do have a follow up question on your thoughts on money. Governments have always printed money. Weather it's to counter population growth or to provide some theoretical economic stimulis/liquidity. Anyway, typically there's a reason. Why do you think it's going to come to an end?
I don’t think it will, at least not anytime soon. When the dollar crashes, another paper (maybe digital?!) currency will take its place. Governments love centralized banking premised on currency because that allows the politicians to promise as many things as they want to get re-elected without living up to eventual consequences. Just print currency, elect me, and I’ll promise you whatever I can to get another term.
You disagree that it is not possible to pay back the debt, especially as it keeps going up exponentially?
Pretty much, yeah.
And I disagree. Why not just create 25 trillion in currency and pay off the debt tomorrow? You don’t default if the other countries holding the debt continue to have faith in the dollar and continue to be stupid enough to buy it via treasuries. That day will end, just as it has for every single example of fiat currency in human history. The US debt during WW II, for example was self-financed. It was floated by Americans who had SAVINGS, unlike today when we just have debt.
Lol - they can’t “pay off the debt tomorrow” because of treasury how securities work - it’s a contract that is paid off at an agreed upon time when it mature. It’s not like your credit card bill that will ding you with interest if you don’t pay it every month.
Again, the currency will collapse when countries stop having faith in the dollar. It is unavoidable. I certainly don’t understand everything, but I understand this particular issue. It’s strange, people who go to business school and get fed with Keynesian theory, or ‘standard policy’ or whatever you called it, actually come out knowing less about economics because they’ve been fed with nonsense, it is illogical, and it doesn’t work.
Completely agree with this part.
And you’ve offered nothing to counter the point. Your view is exactly what made people who got into the housing market in the early 2000s think they hit the lottery, the banks who made loans they normally wouldn’t have because the Fed artificially kept lowering interest rates etc, when in fact they had all gotten much much poorer. Those who understood monetary and fiscal policy history recognized this. It’s the false booms, the mirage of wealth when it is just built on debt, where the mistakes get made and people act in a way they ordinarily would not. History has a tendency to repeat itself.
Your point is poorly thought out misunderstandings of pretty much everything you touched on, but since I didn’t have anything nice to say I decided not to say much of anything at all and focused on the part we agreed on.
Appreciate that. No one has ever been able to logically explain how going into trillions of dollars of debt in perpetuity makes a country and its citizens better off, or how debasing a currency is sound monetary policy, but different views make the world go round. And I appreciate yours. Agree to disagree.
The answer is simple: the us government “invests” the dollars borrowed (in infrastructure, social programs, grants, etc. any government spending) and gets a higher return on the dollar than the interest on the security. Simple but not easy, you have to actually get a positive ROI on the money raised, but the US historically has and currently does. This is where smart government spending comes in, and returns are not always obvious. For example every dollar spent on food stamps returns on average $1.73 into the economy, which is more than spending on infrastructure ($1.59), and way more than cutting corporate tax cut ($0.30)
I understand and appreciate your points. I’ve heard both sides to the argument. The key for me is the government spending. Not all of it is created equally. There are many government expenditures that increase standards of living, in other words those resources yield a more optimal return than the private sector can achieve. Defense spending is an example where centralized government expenditures are fine because the goal is to protect everyone from potential harm. But as a vet, I can tell you that even in that sector, waste and unneeded bureaucracy are common. So yes, government spending is needed in certain areas, provided those resources can more efficiently address those issues than other mechanisms. I was a prosecutor in a major city, and if I told you how many disgusting ways public money was spent, it would make you sick. If I ran my business that way, I’d be out of business inside 3 months.
