So, what is the end game with this never-ending U.S. public debt?

[dozu888]

We have enough experience with supply side economics to permit the CBO to attempt to project what the likely outcome of Trump tax cuts will be on government revenue and deficits. (Of course, since these projections deal with the future, rather than the past where 100% accuracy is achievable, they are subject to substantial error. )

net revenue = revenue - expenditure ; when revenue > expenditures , net revenue is positive and a surplus is produced.

; when revenue < expenditures , net revenue is negative and a deficit is produced.
​

Unfortunately the relationship is complex because revenue = f(expenditure); the form of this function and the values of its parameters are the subject of debate. We can, however, say that it is generally true that when the government increases the amount spent into the economy compared to the amount it withdraws in revenue, savings are increased by the difference, and there is a consequent increase in investment and economic activity. This in turn results in increased tax revenue.

In the case of the initial and substantial Reagan tax cuts, revenues did increase but not nearly so much as spending increased and the net results was ballooning deficits. There have been many economic studies of this experiment in tax rate reduction. Economists have concluded that huge increases in government expenditure, and the consequent recovery from recession -- also helped by tax reductions-- were responsible for the increases in revenue. The government in that instance actually leveraged up well in excess of the private sector's leveraging down during the recession that existed when Reagan took office. After the Reagan cuts and huge increases in spending, the economy nicely recovered. Ballooning deficits soon caused the Congress to take back some of the cuts. The final result by the end of the Reagan era was a dramatic increase in the national debt, and a strong economy. Deficits equal additional private sector savings and huge deficits equal huge additional private sector savings. The distribution of those savings is another matter however.

it's actually very simple math, and the benefit is obvious -

- for the US on it's own, the tax rate should not matter, because 1 dollar out of the gov's pocket is now 1 dollar in the private sector. and that 1 dollar in the private will always work more efficiently than in the gov's pocket;

- but the US is not isolated. on this globe today money flows like water towards gravity, towards low tax rate... as a consultant I have worked on projects for multiple F500 companies to shift tax burden to lower rates... very simple - global companies have separate legal entities that deal with each other, and the price structure is set up such that big portion of the profit is shifted overseas.

so you see, tax cuts come down to 2 simple maths, both bring benefits to the economy.

 

[piezoe]

that 1 dollar in the private will always work more efficiently than in the gov's pocket;

[underlining mine] Many are able to say this, no one has been able to prove it. To disprove it, however, seems almost a trivial task. All you need is one example.

We wouldn't need to tax at all at the federal level. The government could just credit it's reserve account with as much money as it needed. The MMT economists say that taxation is what gives fiat money value, because a particular fiat money is the only thing the government will accept in payment for taxes. It seems this might be wrong, and it is really productivity and the goods and services produced that gives money value, or alternatively it is what you can buy with money that gives it value. But then you have to ask what will happen if the government just spends money into the economy and never takes any back out in taxes? Will the value of money drop rapidly to zero? So I am not so sure anymore. The MMT economists may be right after all.

 

[dozu888]

[underlining mine] Many are able to say this, no one has been able to prove it.

We wouldn't need to tax at all at the federal level. The government could just credit it's reserve account with as much money as it needed. The MMT economists say that taxation is what gives fiat money value because a particular fiat money is the only thing the government will accept in payment for taxes. It seems this might be wrong, and it is really productivity and the goods and services produced that gives money value, or alternatively it is what you can buy with money that gives it value. But then you have to ask what will happen if the government just spends money into the economy and never takes any back out in taxes? Will the value of money drop rapidly to zero? So I am not so sure anymore. The MMT economists may be right after all.

you are splitting hair... sure we need some essential gov functions, but that doesn't mean the gov dollar works more efficiently, just look at all the waste by the DoD... if there is a way to privatize these things, they sure will work better.... right now we just have other fish to fry first.

doesn't need proof... just common sense.

"Nobody spends somebody else's money as wisely as he spends his own"

Milton Friedman.

 

[piezoe]

you are splitting hair... sure we need some essential gov functions, but that doesn't mean the gov dollar works more efficiently, just look at all the waste by the DoD... if there is a way to privatize these things, they sure will work better.... right now we just have other fish to fry first.

doesn't need proof... just common sense.

"Nobody spends somebody else's money as wisely as he spends his own"

Milton Friedman.

Unfortunately a single example to the contrary shows that your dictum, as you stated it in absolutes, is not correct, despite expressing common wisdom. Gore Vidal said "Common wisdom is nearly always wrong." I don't agree, but I do think it is often wrong.

It is not when we believe something is true, but rather the moment we believe it is invariably true, and therefore accept it as an axiom, that we risk believing something nonsensical is common sense. And that leads to bad decision making.

 

[dozu888]

Unfortunately a single example to the contrary shows that your dictum, as you stated it in absolutes, is not correct, despite expressing common wisdom. Gore Vidal said "Common wisdom is nearly always wrong." I don't agree, but I do think it is often wrong.

It is not when we believe something is true, but rather the moment we believe it is invariably true, and therefore accept it as an axiom, that we risk believing something nonsensical is common sense. And that leads to bad decision making.

so from splitting hair, you just evaporated to the highest level of philosophy.

 

[smallfil]

President Trump is trying to fix the problem created by past US Presidents kicking the can down the road! Congress did not care either because all they wanted was to remain in power! How many politicians in Congress have been there 30-40 years now? Too many corrupt individuals only out to enrich themselves! Politicians used to be called public servants but, who actually, serve the public these days? Most if not all, serve special interests be it companies, unions, big rich billionaires promoting their agendas! Americans if they were smart will support President Trump's economic policies. The fact that liberals in other countries are unhinged proves that he is doing something right! He is our President, not the President of the European Union, China, Mexico or other foreign country! First, we need to reduce the huge trade deficits. If not, you are just piling on more and more debt. That is why he is seeking fair trade. This is not rocket science, hard to figure out! We have been taken advantage off! Sold off by our no good politicians signing those unfair trade deals!

 

[Sig]

you are splitting hair... sure we need some essential gov functions, but that doesn't mean the gov dollar works more efficiently, just look at all the waste by the DoD... if there is a way to privatize these things, they sure will work better.... right now we just have other fish to fry first.

doesn't need proof... just common sense.

"Nobody spends somebody else's money as wisely as he spends his own"

Milton Friedman.

I want you to stop and really think about that throwaway statement you just made "just look at all the waste by the DoD". What "waste" exactly are you talking about? The "waste" paid to private companies who make all the U.S. weapons systems? But I thought private industry was always better? Or are you stuck on the Myth of the $600 hammer that is both 40 years old and never happened https://m.govexec.com/federal-news/1998/12/the-myth-of-the-600-hammer/5271/

Take a read on OMB circular A-76 some day, everything that can be privatized by DoD and any other federal agency has to be privatized. If there's a private company willing to do it, they can force an A-76 determination. So if there's anything at the federal level that isn't privatized it's either inherently governmental (i.e. enforcing laws or shooting enemies) or no private company wants to do it. Government is full of smart people at the GS 14 to SES level, they face tough nuancd problems that don't yield to trite sound bite solutions. There's a fine line between "common sense" and ignorant naivety. If you can provide a concrete example of this "waste" you seem to take for granted, along with an intelligent discussion of all the factors that went into it and the solution that should have been applied, without the benefit of hindsight, I'd be interested in hearing it.

I will agree that a bullet proof desk for the EPA administrator is an unmitigated unjustifiable waste, but hey he's busy destroying the environment and who doesn't hate clean air and water, so I guess we should let him get away with that right?

 

[dozu888]

I want you to stop and really think about that throwaway statement you just made "just look at all the waste by the DoD". What "waste" exactly are you talking about? The "waste" paid to private companies who make all the U.S. weapons systems? But I thought private industry was always better? Or are you stuck on the Myth of the $600 hammer that is both 40 years old and never happened https://m.govexec.com/federal-news/1998/12/the-myth-of-the-600-hammer/5271/

Take a read on OMB circular A-76 some day, everything that can be privatized by DoD and any other federal agency has to be privatized. If there's a private company willing to do it, they can force an A-76 determination. So if there's anything at the federal level that isn't privatized it's either inherently governmental (i.e. enforcing laws or shooting enemies) or no private company wants to do it. Government is full of smart people at the GS 14 to SES level, they face tough nuancd problems that don't yield to trite sound bite solutions. There's a fine line between "common sense" and ignorant naivety. If you can provide a concrete example of this "waste" you seem to take for granted, along with an intelligent discussion of all the factors that went into it and the solution that should have been applied, without the benefit of hindsight, I'd be interested in hearing it.

I will agree that a bullet proof desk for the EPA administrator is an unmitigated unjustifiable waste, but hey he's busy destroying the environment and who doesn't hate clean air and water, so I guess we should let him get away with that right?

that all sounds good on paper.. but it's common sense that gov operates less efficiently than private... and what looks good on paper is subject to interpretation anyway... most recent example being Trump negotiated better pricing from Boeing, and how about those no bid contracts with Halliburton? any chance for price improvement there? Naivety much, just because the DoD put up some guidelines for themselves and magically all waste is gone?

destroying the environment? or unleash the economy? which is the bigger evil- more pollution, or more poverty?

 

[elitenapper]

• The debt is paid down with hyper-inflated USD.
• I think the Germans pulled that off in the 1920's.

Weimar Germany (1919-1933)? Not sure what you mean by "pulled that off"

see the USD-collapse worriers never see the difference.. Russia defaulted because they don't have the aircraft carriers and no longer have enough missiles to shove their currency down other countries' throat.

two pillars of US power: military, petrodollar, especially the latter.

That's why anyone who tried to move away from the petrodollar had to be eliminated under false pretext - Quaddafi of Libya (gold-backed dinar), Saddam Hussein of Iraq (the Euro), ... Argentina, Brazil, ... and now the Establishment is working on regime changes / chaos in Venezuela, Iran, even Russia.

Of course, Russia, India, and China are just too big and strong to deal with. So big question marks there.

in 2008 the US created the whole crisis, but who end up eating most of the losses? The Chinese, the europeans etc...

I doubt that the Chinese, Japanese, and the Europeans lost more than the American taxpayers, including future taxpayers. Foreign dollar assets were mostly US treasuries. Not much loss there.

In the past 100 years or so, look at the Gold performance in crisis' - 1929 flat, 1987 down, 2000 down, 2008 down.... whenever there is a flight to safety, where do the entire world run? the US Dollar - that is the true gold.

It's beginning to change as de-dollarization around the world accelerates in the years to come.

And again, if gold cannot save you from a crisis - and people are now putting their hope on some digital puff of thin air, created by a nameless faceless Satoshi, a puff of air that can only be obtained by Proof of (MEANINGLESS) Work, which is no different from digging a hole in the ground and filling it up.

I believe gold is meant to be used to shield your savings / assets from hyperinflation during a crisis. I concur on the bitcoin bubble.

 

[Sig]

that all sounds good on paper.. but it's common sense that gov operates less efficiently than private... and what looks good on paper is subject to interpretation anyway... most recent example being Trump negotiated better pricing from Boeing, and how about those no bid contracts with Halliburton? any chance for price improvement there? Naivety much, just because the DoD put up some guidelines for themselves and magically all waste is gone?

destroying the environment? or unleash the economy? which is the bigger evil- more pollution, or more poverty?

That's exactly the nativity I'm reffering to! The Air Force One project is huge and complex, and if you buy the whole "Trump negotiated" line of bullshit it demonstrates ones lack of knowledge on that particular procurement is eclipsed only by one's blind acceptance of the tweets of an imbicle with a similarly limited understanding of complexity ("who knew health care was so complicated"!).

But more importantly, you are either contradicting yourself or don't realize that Halliburton is the private sector which you seem to think is universally more efficient than government? Are you asserting that the government should have outsourced the outsourcing of providing combat civil engineering support? What would have been your "private sector" solution to the Halliburton debacle that Bush/Cheney foisted on us? I agree, that no bid contract was horrible. I see no way you could have "privatized" that decision though, what's your "private industry" solution to that. It's really a textbook case of why we need government, you do realize that sole source contracts in the private sector are more the rule than the exception, don't you? So go private sector and you get sole source contracts everywhere. What's your private industry solution to Air Force One, again Boeing is a private company. You're really making little sense here.

And seriously, controlling pollution causes poverty? What kind of fever dream does the idea that you have to trade one off the other come from! Its actually the opposite, pollution is a massive drag on the economy, $5 Trillion dollars a year, worldwide, to put a number on it https://www.theguardian.com/global-...rillions-holds-back-poor-countries-world-bank You seriously think we need thousands of hospitalizations, lost work days, and premature deaths to "unleash the economy"? That's some messed up thinking, on so many levels.