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The National Debt - Ceiling Currently Set at 16.394 Trillion Dollars, $51,408 Per U.S. Resident


The Hersch

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I've been saying the same thing about the national debt for twenty years now, and nobody listens to me.

It's unclear exactly what you've been saying about the national debt, but if you're saying it's a looming crisis that's going to bring the U.S. economy crashing down, or end civilization as we know it, there's a good reason nobody listens to you: That's all nonsense. The great majority of U.S. debt held by the public is basically money that we owe ourselves; paying it doesn't make us poorer, because both the payer and the payee are us. Furthermore, almost all of the public debt is denominated in dollars, and the U.S. has absolute control over the supply of dollars. Finally, what better time to be in debt than when interest rates are practically zero? This is a great time to borrow, not such a great time to save.

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Bill Gates on Monetary Policy on cnbc.com:

Quote

Gates, who held the title of the richest man on Earth on and off for decades before Amazon CEO Jeff Bezos unseated him last year, also ripped the increasingly popular modern monetary theory.

The school of thought has received backing on the left from politicians such as Ocasio-Cortez and Sen. Bernie Sanders, who is likely to run for president in 2020. President Donald Trump has expressed views that align with it, too. "First of all, you never have to default because you print the money. I hate to tell you. So there's never a default," Trump said while campaigning in 2016.

The theory, also known as MMT, dismisses concerns about sovereign debt since countries that print their own currency can't really run out of money.

"That is some crazy talk," Gates told The Verge.

Thank goodness I'm not the only person who thinks that debt is a very real thing.

Debt-deniers remind me of the people dancing the "Circle Dance" in Milan Kundera's "The Book of Laughter and Forgetting" ...

At one point in his novel, the communist true believers become so detached from practical exigencies of the world around them that they actually start floating up 
into the air.  "Yes, they were soaring over Wenceslaus Square," the earthbound narrator relates with half-suppressed envy, "their dancing ring resembled a great 
wreath flying off, and I ran on the ground below and looked up to see them, as they soared farther and farther away, and there below them was Prague with its 
cafes full of poets and its prisons full of betrayers of the people."

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40 minutes ago, Al Dente said:

It's worse than that.

Think our $20 trillion debt is bad? Get a load of the real number  BY SHIVA RAJGOPAL from The Hill

Anyone who thinks we can just "print money" to get out of this situation needs to look at Argentina, et al. I'm not sure which one is going to be first, this, or climate change, but we have a truck and a train down the road, both of which are heading straight for us (or maybe I should say "a train and an asteroid").

Subtract $60,000 from every man, woman, and child in this country, and that's how much money we actually have as a nation (and that's not even accounting for Al Dente's post): The national debt is now larger than our Gross Domestic Product (GDP) - last year's tax cuts put us over the 100% mark for the only time since WWII.

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On 3/9/2015 at 9:36 PM, The Hersch said:

It's unclear exactly what you've been saying about the national debt, but if you're saying it's a looming crisis that's going to bring the U.S. economy crashing down, or end civilization as we know it, there's a good reason nobody listens to you: That's all nonsense. The great majority of U.S. debt held by the public is basically money that we owe ourselves; paying it doesn't make us poorer, because both the payer and the payee are us. Furthermore, almost all of the public debt is denominated in dollars, and the U.S. has absolute control over the supply of dollars. Finally, what better time to be in debt than when interest rates are practically zero? This is a great time to borrow, not such a great time to save.

I am of an evolving perspective on national debt; which is also to say I simply don't know, I'm not an economist, and more relevantly I'm not a practicing economist on the board of the Fed that works on regulating money supply and interest rates to impact the economy.

I've been hearing about debt since at least the 1980's.  Its usually in a political context. The political Right screams and warns about it in political races.  Then when the Right gets into power they dramatically increase federal debt and never speak about it.  See another Dem get into office and the Right screams again about debt.

All that being said, I have not seen ever increasing levels of federal debt sink or impact the economy in a serious way covering over 30+ years.  Regardless of the screaming.  Explosive levels of private debt have led to recessions--federal debt--no impact on that basis. 

I'm debt averse.  I've believed the arguments about too much federal debt.   But after 30+ years I haven't seen it negatively impact the economy.  

Hence the evolving perspective.  But it does cause plenty of screaming.

Now our federal debt is accelerating and taking off again.  I am aware of nations such as Argentina, Greece et al who have rung up humongous levels of federal debt and have created problems for their nations.   The US--no problems------Yet.   I have yet to see the prognosticator or fortune teller who can predict the debt level or level of debt to GDP that will sink the economy

OTOH, I've read about MMT but only superficially and don't fully grasp it at this point.  Regardless a "theory" that suggests endless borrowing and  spending and a lack of concern about debt doesn't sound reasonable to me;  think Argentina and Greece.

There is a big difference in this nation with this very large very diverse economy between federal and private debt.   The only thing I can predict is that if a Democrat replaces Trump the air waves will reverberate with endless screams about the dangers and horrors  of debt. 

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3 hours ago, DaveO said:

All that being said, I have not seen ever increasing levels of federal debt sink or impact the economy in a serious way covering over 30+ years.  Regardless of the screaming.  Explosive levels of private debt have led to recessions--federal debt--no impact on that basis. 

I'm debt averse.  I've believed the arguments about too much federal debt.   But after 30+ years I haven't seen it negatively impact the economy.  

Here's what an oncologist once told me about cancer becoming symptomatic: 'Start pushing a book across a table, and sooner or later, it's going to fall onto the floor.'

The details are complex, but the national debt and climate change could have been averted with two simple guidelines (the latter of which I got from the Boy Scouts):

1) Don't live above your means.

2) Leave the bathroom as-clean or cleaner than it was.

There are exceptions, of course (e.g. WWII), but I've lived a long time, and haven't seen many.

The above two things can by wrapped up into The Golden Rule - this world would be a much better, happier place if people simply followed it, but they don't.

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16 hours ago, DonRocks said:

Here's what an oncologist once told me about cancer becoming symptomatic: 'Start pushing a book across a table, and sooner or later, it's going to fall onto the floor.'

The details are complex, but the national debt and climate change could have been averted with two simple guidelines (the latter of which I got from the Boy Scouts):

1) Don't live above your means.

2) Leave the bathroom as-clean or cleaner than it was.

There are exceptions, of course (e.g. WWII), but I've lived a long time, and haven't seen many.

The above two things can by wrapped up into The Golden Rule - this world would be a much better, happier place if people simply followed it, but they don't.

Analogies aside my comments above reflect a couple of points:

A.  I've been debt averse and believed in the (mostly political) warnings that warn about federal debt.

B.  After fervently believing this for 3 + decades, I have not seen where dramatic increases have adversely affected the US or individuals.  Who among us has been adversely affected by increases in federal debt?  If so how? 

C.  I do know that increases in federal debt have a significant effect on US budget expenditures.  We pay far more on an annual basis in debt payments than we used to and that affects what is left over for every other kind of federal expenditure.  Clearly if it gets too high, the US can't afford to do other things, like build roads, pay for national security, fund payments to farmers and fund food programs for low income folks and a myriad of other things.   That is a problem. 

D.  Meanwhile private debt on a consumer or corporate basis has caused recessions;  the '91 recession, the 2000 recession, the big one in '08.  Debt was a big cause of all of them.

E.  Holding debt and paying for it is a function of one's ability to pay it;  ie If you have a flat rate mortgage and you keep getting raises one's ability to pay that mortgage becomes easier (all other things remaining constant).  Likewise if tax revenues increase as does debt and debt payments, it is no more difficult to service than when debt payments were lower.

F.  We have been living in the land of low interest rates.  If interest rates rise, debt costs will go up up up. 

All that being said;  per your comments total US debt (using US accounting ) is now at $22 trillion and was at $16 trillion when you posted this almost 4 years ago.  Big increase.  If I recall US debt was around $11 trillion when Reagan was in office (and I started paying attention to this stuff) 

G.  The debt crises in nations such as Argentina and Greece are fair warning to the US.

H.  Oh one other thing:  the folks who were challenging rising debt during the Obama administration came up with simple formulas that reflected a relatively little bit of higher taxes and a relatively little bit of lower expenditures....and bingo the debt increases would have been halted (per reasonable formulas and assumptions)

I just don't know what is the "tipping point".  I have yet to read a convincing argument about where that might be.   Meanwhile, after paying attention to it for 30+ years and being US federal debt averse I can't for the life of me figure out how it has adversely affected my life in the last 30+ years since US fed debt has increased from about $11 trillion to $22 trillion.

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2 hours ago, DaveO said:

I just don't know what is the "tipping point".  I have yet to read a convincing argument about where that might be.   Meanwhile, after paying attention to it for 30+ years and being US federal debt averse I can't for the life of me figure out how it has adversely affected my life in the last 30+ years since US fed debt has increased from about $11 trillion to $22 trillion.

That's why I made the cancer/book analogy -  there are all sorts of parallels where something is going terribly wrong, yet is asymptomatic: As long as you have unlimited credit-card debt, for example, you can live out your life like a billionaire; the problem is when your credit cards max out.

I would argue that you answered your own question with C. up above - since we have to service the debt, we can't afford to do other things. Although there's no "fixed limit" to our credit debt, our opportunity costs get worse-and-worse every time the debt rises - like you, I have no idea when the "tipping point" will occur, but unless we take corrective action, it will occur (refer also to our Social Security debt, which is easily predictable going forward).

Another analogy: I would argue that nobody "felt" climate change until perhaps a generation ago (and even now, people think they don't feel it). In retrospect, the White Burgundy "premox" problem is, I believe, entirely ascribable to "that tipping point" in climate change - fourteen-years after writing that article, *nobody* knows what's causing it; yet the problem remains in force (I sold every bottle of post-1993 White Burgundy I own, years ago; yet, prices remain stratospheric, because these idiots who buy them at auction don't drink them - they're nothing more than expensive trophies). Perhaps the same is true with honeybees, or monarch butterflies (though I personally think those are likely chemically induced - recall the decline of the bald eagle and DDT) - it's almost certainly true with the violent storm systems and droughts of our recent past.

Instead of tip-toeing around what everyone doesn't want to hear, I'll come right out and say it: The United States is going broke, and humanity itself may-well end this millennium - life as we know it will be over, for everyone, and nobody seems to care about their great-great-great grandchildren.

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