The United States needs to increase its budget deficit!

[Post-Keynesian Economics]

Why does the concept only work when the US is the world's reserve currency? Even if we weren't, we're still in control of the supply of US dollars. So if inflation or interest rates ever become an issue, then we can take necessary measures. But that isn't happening and won't happen until we are at virtual full employment (4% unemployment).

As long as others are willing to purchase US government (and private) securities then the US dollar will remain reasonably, but not completely, inflation resistant and will remain the reserve currency. What happens when this no longer occurs and others begin to buy non-US securities as their reserve? The federal government can then only print money with no security to back it. There are plenty of national examples of what happens when this is done.

Discuss the situation if petroleum products, agricultural products, and basic metals were priced in a national currency other than U S dollars.

Let me ask you this: do you believe it is possible to not have enough of a certain currency in circulation?

[Post-Keynesian Economics]

Alexander Hamilton would. http://www.usnews.com/opinion/articles/2008/09/18/past-present-alexander-hamilton-and-the-start-of-the-national-debt

Did Alexander Hamilton have in mind the unfamothably large amount of debt we've accumulated to date? Not a chance. Publically held debt in the US will exceed 76% of GDP this year. $16 trillion and growing is unsustainable and will ultimately bring economic misfortune as the deficit approaches 90% of GDP, which is scheduled to occur in the next 5 to 10 years.

In many ways, it's similar to the climate issue. How long will we watch it happen and take no action to stop it? Just as we're addicted to oil, we're addicted to spending. And in both these dependencies, something's gotta give.

Only one study has ever found that the "90%" mark actually means anything. And it was debunked due to a spreadsheet error.

[Post-Keynesian Economics]

So long as the US decides to pay its bills (i.e. doesn't get just completely asinine in some debt ceiling fiasco) then people will remain willing to purchase US securities. Yes, reckless spending with no concerns for full employment of resources could drive margins up -- but no one is recommending printing unchecked amounts of money, and if that is the concern then we are cutting off our nose to spite our face.
Regarding petroleum, agricultural, basic metals in another currency I don't see the issue - most of the major currencies float against one another currently, you're just selecting which one is the benchmark starting point.

Which one is the basis is critical. Priced in U S dollars, there is no exchange problem for the U S even if it prints a few too many dollars. U S, no problem. But if the TransPecos want to buy, it has to buy using U S dollars. If the TransPecos prints too many Carbonias, who is going to be willing to trade relatively good U S dollars for relatively worthless TransPecos Carbonias? TransPecos, real bad problems.

Now turn it around and you'll start to see the problem. Interest on the US federal debt is horrific and can only get worse. When China and others start saying enough is enough on federal notes and when they can find better investments elsewhere than the US, it will be time to quickly convert your holdings to Carbonias. I've got a few you might be interested in...

Interest on the US federal debt is horrific? By what measure?

[Valendia]

Which one is the basis is critical. Priced in U S dollars, there is no exchange problem for the U S even if it prints a few too many dollars. U S, no problem. But if the TransPecos want to buy, it has to buy using U S dollars. If the TransPecos prints too many Carbonias, who is going to be willing to trade relatively good U S dollars for relatively worthless TransPecos Carbonias? TransPecos, real bad problems.

Now turn it around and you'll start to see the problem. Interest on the US federal debt is horrific and can only get worse. When China and others start saying enough is enough on federal notes and when they can find better investments elsewhere than the US, it will be time to quickly convert your holdings to Carbonias. I've got a few you might be interested in...

Interest on the US federal debt is horrific? By what measure?

By the "ermagerd debt is BAAAD" measure, despite the fact that the US is bordering on surplus at the moment. The people who say such things are generally ignorant of concepts like Debt vs. GDP, deficit versus debt, and deficit budgeting (i.e. fiscal policy).

[Post-Keynesian Economics]

Interest on the US federal debt is horrific? By what measure?

By the "ermagerd debt is BAAAD" measure, despite the fact that the US is bordering on surplus at the moment. The people who say such things are generally ignorant of concepts like Debt vs. GDP, deficit versus debt, and deficit budgeting (i.e. fiscal policy).

Indeed. I'll start worrying when interest rates are as they were in the 1970's.

[United States of Capital]

Simply abolish the payroll tax and the US economy will fully recover in less then a year.

[Divair]

Simply abolish the payroll tax and the US economy will fully recover in less then a year.

So.. bankrupt social security? How about no.

[Valendia]

Simply abolish the payroll tax and the US economy will fully recover in less then a year.

So.. bankrupt social security? How about no.

If anything, the US needs to move more towards compulsory superannuation like they have in Australia.

[United States of Capital]

Simply abolish the payroll tax and the US economy will fully recover in less then a year.

So.. bankrupt social security? How about no.

There is no reason why social security has to be funded by payroll taxes. It should be funded by income taxes, goverment borrowing, Ad valorem taxes, corporate income tax and so forth like most thing the goverment spends on is funded.

[Dorhagen (Ancient)]

Simply abolish the payroll tax and the US economy will fully recover in less then a year.

But if revenue of United States decreases drastically in short time but financial obligations grow, then economy of USA will just collapse. There will come time when USA has no option but to introduce their own austerity program like governments in Europe did.

[United States of Capital]

Simply abolish the payroll tax and the US economy will fully recover in less then a year.

But if revenue of United States decreases drastically in short time but financial obligations grow, then economy of USA will just collapse. There will come time when USA has no option but to introduce their own austerity program like governments in Europe did.

The US goverment debt would soar in the short term but the economy of the USA would not collapse. If the US keeps a strict budget dicipline during good economic times and stays out costly wars there is no reason why goverment debt would come out of control and cause a collapse of the US economy.

“The boom, not the slump, is the right time for austerity at the Treasury.”

- John Maynard Keynes

[Dorhagen (Ancient)]

But if revenue of United States decreases drastically in short time but financial obligations grow, then economy of USA will just collapse. There will come time when USA has no option but to introduce their own austerity program like governments in Europe did.

The US goverment debt would soar in the short term but the economy of the USA will not collapse. If the US keeps a strict budget dicipline during good economic times and stays out costly wars there is no reason why goverment debt would come out of control and cause a collapse of the US economy.

“The boom, not the slump, is the right time for austerity at the Treasury.”

- John Maynard Keynes

If payroll tax is abolished for one year in the USA, then debt of USA will grow 2,3 trillion dollars during this year. It is just too much when you consider that current US debt is around 17 trillion dollars.

[United States of Capital]

The US goverment debt would soar in the short term but the economy of the USA will not collapse. If the US keeps a strict budget dicipline during good economic times and stays out costly wars there is no reason why goverment debt would come out of control and cause a collapse of the US economy.

“The boom, not the slump, is the right time for austerity at the Treasury.”

- John Maynard Keynes

If payroll tax is abolished for one year in the USA, then debt of USA will grow 2,3 trillion dollars during this year. It is just too much when you consider that current US debt is around 17 trillion dollars.

The United States of America has a bigger problem then government debt, a huge amount of humans who could be doing productive work doing nothing. Masses of unemployed people is a bigger problem then Government debt. No payroll tax would mean a huge increase in consumption that would increase employment. All production, trade, investment is ultimately for satisfying the consumers, increase consumer spending and we have less unemployment and more wealth.

[Valendia]

The United States of America has a bigger problem then government debt, a huge amount of humans who could be doing productive work doing nothing. Masses of unemployed people is a bigger problem then Government debt. No payroll tax would mean a huge increase in consumption that would increase employment. All production, trade, investment is ultimately for satisfying the consumers, increase consumer spending and we have less unemployment and more wealth.

We don't need to abolish payroll tax to accomplish that. Raising taxes on the wealthy through income and capital gains would suffice and probably result in more government revenue in the long run.

[Post-Keynesian Economics]

The United States of America has a bigger problem then government debt, a huge amount of humans who could be doing productive work doing nothing. Masses of unemployed people is a bigger problem then Government debt. No payroll tax would mean a huge increase in consumption that would increase employment. All production, trade, investment is ultimately for satisfying the consumers, increase consumer spending and we have less unemployment and more wealth.

We don't need to abolish payroll tax to accomplish that. Raising taxes on the wealthy through income and capital gains would suffice and probably result in more government revenue in the long run.

What exactly do you think raising taxes on the wealthy would do besides take money away from them?

[The TransPecos]

Which one is the basis is critical. Priced in U S dollars, there is no exchange problem for the U S even if it prints a few too many dollars. U S, no problem. But if the TransPecos want to buy, it has to buy using U S dollars. If the TransPecos prints too many Carbonias, who is going to be willing to trade relatively good U S dollars for relatively worthless TransPecos Carbonias? TransPecos, real bad problems.

Now turn it around and you'll start to see the problem. Interest on the US federal debt is horrific and can only get worse. When China and others start saying enough is enough on federal notes and when they can find better investments elsewhere than the US, it will be time to quickly convert your holdings to Carbonias. I've got a few you might be interested in...

Interest on the US federal debt is horrific? By what measure?

As a percentage, at the moment, it doesn't appear to be problematic. It is, at present, still larger than any expenditure category other than DOD, Social Security, and Medicare and other associated health care. And the current interest rates are too low to be sustainable for very long. Again, it really is only a matter of how long the major holders, all Asian, will feel it is in their interest to keep buying U S federal debt at these low interest rates. If they even slow, then interest rates will have to climb and the rot will begin to set in. Still offering Carbonias to those with longer viewpoints than a few years...

[Gallup]

Decreasing is a much more attainable goal.

[Post-Keynesian Economics]

Decreasing is a much more attainable goal.

But why on earth would you want to do that?

[Divair]

So.. bankrupt social security? How about no.

There is no reason why social security has to be funded by payroll taxes. It should be funded by income taxes, goverment borrowing, Ad valorem taxes, corporate income tax and so forth like most thing the goverment spends on is funded.

Do tell what taxes you'd increase and by how much.

[Post-Keynesian Economics]

There is no reason why social security has to be funded by payroll taxes. It should be funded by income taxes, goverment borrowing, Ad valorem taxes, corporate income tax and so forth like most thing the goverment spends on is funded.

Do tell what taxes you'd increase and by how much.

Why do we need to increase taxes right now?

[Divair]

Do tell what taxes you'd increase and by how much.

Why do we need to increase taxes right now?

He suggests abolishing payroll and paying for social security via taxes. I'd like to know how he plans on accomplishing that.

[Post-Keynesian Economics]

Why do we need to increase taxes right now?

He suggests abolishing payroll and paying for social security via taxes. I'd like to know how he plans on accomplishing that.

A common misunderstanding is that taxes pay for government spending. That's false. If anything, government spending pays for taxes. Taking in taxes simply prevents inflation. If taxes actually paid for government spending, then the IRS would take the money they get and give it to the various executive departments. But they don't. At no point does the IRS give money to the executive departments. In fact, if you pay your taxes in cash, your money will literally be shredded. You can buy shredded money in Washington D.C. for that reason.

[Cameroi]

oddly, in many ways i agree with the title of this thread.

what is far more meaningful, for benefit or otherwise, is how and what it is spent on.

social programs and infrastructure, even research, education and space,
not wars and military, except to compensate veterans and enlisted ranks.
(and not to bail out financial institutions either, nor buy their ceo's get out of jail free cards)

[Post-Keynesian Economics]

oddly, in many ways i agree with the title of this thread.

what is far more meaningful, for benefit or otherwise, is how and what it is spent on.

social programs and infrastructure, even research, education and space,
not wars and military, except to compensate veterans and enlisted ranks.
(and not to bail out financial institutions either, nor buy their ceo's get out of jail free cards)

Amen!

[Jinwoy]

Do tell what taxes you'd increase and by how much.

Why do we need to increase taxes right now?

to get money back into circulation.
If we can get a general spending increase across the population, more money will go into circulation rather than collecting dust at the back of my overseas trust account.