US Debt Interest Bill Rockets Past a Cool $1 Trillion a Year
- Thread starter ipatent
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There is no debt as long as we print money.
Just hit me with another (global) force majeure and we're back at raising balance sheets and buying gov debt with money that noone ever had to work for.
Why did the Republicans create all the debt in the first place?
Technically they didn't... it was the democrats in 1913 (W. Wilson).
If you modify this slightly to "there is no debt as long as what you call "debt" is denominated in the same money units you can print without limit," then you've got it. Unfortunately, there is such a thing as price inflation.
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You're right! We sold war bonds to finance WWI. Big time debt! After the war ended (1919?), Wilson wanted us to pay off our war debt, so taxes were increased to retire the war bonds as quickly as possible. Naturally that threw the private sector economy into recession, just as we would expect if suddenly a lot of money was withdrawn from the economy. (We didn't understand our own money back then. Nothing has changed in that regard!) Then the Roaring twenties and bathtub Gin came in to vogue, and all was conveniently forgotten. Everybody was either happy-happy, or just plain drunk. (The income tax, 16th Amendment, went in in 1913 (probably first year for collection was 1914?) so the tax was in place by the time Wilson said, "Shucks y'all, let's just go ahead and retire those war bonds using increased tax revenue." In today's world, Mexico would pay for the war.
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Actually someone has to work for most dollars that enter the private sector economy because most dollars enter when the government decides to buy something that requires the private sector's time and energy to create. I guess the exception might be certain types of transfer payments such as the Covid payments, or the government decides to buy something that was originally stolen, e.g., land. OK, I guess that's not true because it does take time and energy to steal something.
Absolutely, i took this for granted
Inflation is a problem only when it's a supply shock driven. Demand driven inflation means nothing. If i print a million to every citizen then prices will just adjust to a level that doesn't give me any benefit of having that million.
So monetary policy driven inflation don't really exist. Or should i say, worsening of standard of living. Proof? Look at prices and affordability ratios post GFC until covid (2009-2020). Contrast to popular opinion, in that 10 years, you had one of the best times in a looong time to buy a home/real estate.
No, i meant the dollars printed are money that have an market price of 0. It's created out of nothing and it enters into a world where money has a market price. So what happens is, those two are bundled together and the result is lower cost of capital WITHOUT lower level of risk. Risk is taken out the equation ONLY thanks to capital that noone had to work for.
Otherwise, who would be stupid enough to lend their hard earned money at 0 or negative?
You're explaining synthetic demand. A demand that would never exist without printed money. So, in other words, this is just a job that was created because the real world is/was unable to create it.
So, your story is correct ofc but it doesn't change the fact that the market price of printed dollars is 0.
Maybe rethink this.
Our newly created "dollars" don't exist until the are spent into the economy. It is the actual act of deficit spending, as authorized by Congress, that "prints" the new outside money that appears in the private sector economy the instant it's spent into the economy. That's what we call "printing." These new dollars have the same value as all other dollars once they are in the private sector and they don't exist until they are in the private sector. (Only referring to new outside money here.)