The United States needs to increase its budget deficit!

[Post-Keynesian Economics]

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.

You answered a question about taxes and then you recommend government spending. Are you suggesting that an increase in taxes is necessary for an increase in government spending?

[Jinwoy]

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.

You answered a question about taxes and then you recommend government spending. Are you suggesting that an increase in taxes is necessary for an increase in government spending?

Hell yes.
I know that the government could spend anyway (as they have been doing), but that still doesn't solve the fact that the US currency is slowly losing its value. Stop people hoarding money, and stop people printing money, and problem solved.
We start by taxing the true hoarders of money = top 1%. Tax them an amount that doesn't seem unfair, but still pretty hefty.
And for godsakes, nationalize the national mint!

[Post-Keynesian Economics]

You answered a question about taxes and then you recommend government spending. Are you suggesting that an increase in taxes is necessary for an increase in government spending?

Hell yes.
I know that the government could spend anyway (as they have been doing), but that still doesn't solve the fact that the US currency is slowly losing its value. Stop people hoarding money, and stop people printing money, and problem solved.
We start by taxing the true hoarders of money = top 1%. Tax them an amount that doesn't seem unfair, but still pretty hefty.
And for godsakes, nationalize the national mint!

I agree with your general idea there but I would note that inflation won't happen overnight. Right now inflation is actually lower than we want it. So if it starts increasing at an unhealthy rate we can react with a tax increase - even a hefty tax increase on the wealthy as you suggest.

[Divair]

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.

Interesting.

[Magna Libero]

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.

I'm not saying that you are implying anything, but do you think that loans or debt is actually beneficial? I'm talking mostly about problems in the structures of for instance USA or many of the European countries. At some point the amount of loan is a bad thing or do you deny that? Do you mean that the interest rates are low enough for countries who are struggling to pay their debts and that they will be able to pay them back much sooner than anticipated?

[Farnhamia]

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

I'm not saying that you are implying anything, but do you think that loans or debt is actually beneficial? I'm talking mostly about problems in the structures of for instance USA or many of the European countries. At some point the amount of loan is a bad thing or do you deny that? Do you mean that the interest rates are low enough for countries who are struggling to pay their debts and that they will be able to pay them back much sooner than anticipated?

Government debt is almost never a collection of loans, the way a private individual's debts are. Governments borrow money by issuing bonds which pay a set rate of interest over a set period of time. The money borrowed is not subject to repayment the way a loan is. For the United States, the largest lender is ... the United States. Foreign nationals and foreign governments hold less than half of the US public debt. They don't want their money back, they rather like the regular interest payments we send them, even at the low rates now on offer.

[Distruzio]

Your entire response rests on a dramatic assumption you make at the very beginning. You say "printing more money will cause inflation." But it really won't. I agree that a lot of money is stuck in places where it won't be spent. But that's why we should print more money and spend or cut taxes in ways that we get it to the poor and middle class.

But more importantly, let's address your claim that "printing more money will cause inflation."

I want you to meet Bob and Joe. They are the only two people in this limited economic system, and they go to the one store in this economic system, Mini-Mart. They each have $2 allocated that they can spend on milk.

There are four dollars total in the system.

Thus, Mini-Mart will charge $2 for milk. Now, inflation would occur if we printed two more dollars and thus now Bob and Joe can bring $3 each to Mini-Mart. Mini-Mart will charge $3 for milk, and inflation will occur while there are six dollars total in the system.

But, let's say INSTEAD two dollars get printed and then given to Fred, who previously could not afford milk. Now, there are again six dollars in the system. Bob, Joe, and Fred each have $2. Mini-Mart will charge $2. There is more money in the system, but prices will not go up.

The end lesson of this tale is that if GDP is not at a potential maximum, and unemployment is not at a potential minimum, then monetary growth will go towards the empty gaps, NOT an increase in prices.

Monetary growth does not necessaarily increase inflation. It certainly hasn't in this country thus far. See the article at the end of my OP.

I just spilled my alphabet soup. The mess of letters made more sense.

[Post-Keynesian Economics]

I'm not saying that you are implying anything, but do you think that loans or debt is actually beneficial? I'm talking mostly about problems in the structures of for instance USA or many of the European countries. At some point the amount of loan is a bad thing or do you deny that? Do you mean that the interest rates are low enough for countries who are struggling to pay their debts and that they will be able to pay them back much sooner than anticipated?

Government debt is almost never a collection of loans, the way a private individual's debts are. Governments borrow money by issuing bonds which pay a set rate of interest over a set period of time. The money borrowed is not subject to repayment the way a loan is. For the United States, the largest lender is ... the United States. Foreign nationals and foreign governments hold less than half of the US public debt. They don't want their money back, they rather like the regular interest payments we send them, even at the low rates now on offer.

Couldn't have said it better myself.

[Post-Keynesian Economics]

Your entire response rests on a dramatic assumption you make at the very beginning. You say "printing more money will cause inflation." But it really won't. I agree that a lot of money is stuck in places where it won't be spent. But that's why we should print more money and spend or cut taxes in ways that we get it to the poor and middle class.

But more importantly, let's address your claim that "printing more money will cause inflation."

I want you to meet Bob and Joe. They are the only two people in this limited economic system, and they go to the one store in this economic system, Mini-Mart. They each have $2 allocated that they can spend on milk.

There are four dollars total in the system.

Thus, Mini-Mart will charge $2 for milk. Now, inflation would occur if we printed two more dollars and thus now Bob and Joe can bring $3 each to Mini-Mart. Mini-Mart will charge $3 for milk, and inflation will occur while there are six dollars total in the system.

But, let's say INSTEAD two dollars get printed and then given to Fred, who previously could not afford milk. Now, there are again six dollars in the system. Bob, Joe, and Fred each have $2. Mini-Mart will charge $2. There is more money in the system, but prices will not go up.

The end lesson of this tale is that if GDP is not at a potential maximum, and unemployment is not at a potential minimum, then monetary growth will go towards the empty gaps, NOT an increase in prices.

Monetary growth does not necessaarily increase inflation. It certainly hasn't in this country thus far. See the article at the end of my OP.

I just spilled my alphabet soup. The mess of letters made more sense.

Well I sure hope you're going to back that up. I'm sorry if I used some big words which might not appear in alphabet soup, but I think what I said was pretty solid. Elaborate?

[Distruzio]

I just spilled my alphabet soup. The mess of letters made more sense.

Well I sure hope you're going to back that up. I'm sorry if I used some big words which might not appear in alphabet soup, but I think what I said was pretty solid. Elaborate?

There is no need. I adhere to the Austrian Theory of Economics. Alphabet soup is the best you'll get. Why? Because you were convinced that it was something else entirely while I would maintain its just a bowl of alphabet soup.

We'd never agree or understand one another.

[Magna Libero]

I'm not saying that you are implying anything, but do you think that loans or debt is actually beneficial? I'm talking mostly about problems in the structures of for instance USA or many of the European countries. At some point the amount of loan is a bad thing or do you deny that? Do you mean that the interest rates are low enough for countries who are struggling to pay their debts and that they will be able to pay them back much sooner than anticipated?

Government debt is almost never a collection of loans, the way a private individual's debts are. Governments borrow money by issuing bonds which pay a set rate of interest over a set period of time. The money borrowed is not subject to repayment the way a loan is. For the United States, the largest lender is ... the United States. Foreign nationals and foreign governments hold less than half of the US public debt. They don't want their money back, they rather like the regular interest payments we send them, even at the low rates now on offer.

Yes, I'm sure that the lenders and bankers are happy with all the interest rates paid. The question is does the government like it? Does the tax payer like the ever increasing government debt? Are you suggesting that no debt shall be paid back -- only the interest rates?

(I'm not familiar with the contract rules of let's say USA's loans.) Now, $16 trillion is quite a big chunk of the US GDP. Add a small interest rate to that amount every year. The final result is government expenditures consists of mostly the payment of the Interest rates.
How is the US going to pay for that much? I mean like ever?

[Post-Keynesian Economics]

Government debt is almost never a collection of loans, the way a private individual's debts are. Governments borrow money by issuing bonds which pay a set rate of interest over a set period of time. The money borrowed is not subject to repayment the way a loan is. For the United States, the largest lender is ... the United States. Foreign nationals and foreign governments hold less than half of the US public debt. They don't want their money back, they rather like the regular interest payments we send them, even at the low rates now on offer.

Yes, I'm sure that the lenders and bankers are happy with all the interest rates paid. The question is does the government like it? Does the tax payer like the ever increasing government debt? Are you suggesting that no debt shall be paid back -- only the interest rates?

(I'm not familiar with the contract rules of let's say USA's loans.) Now, $16 trillion is quite a big chunk of the US GDP. Add a small interest rate to that amount every year. The final result is government expenditures consists of mostly the payment of the Interest rates.
How is the US going to pay for that much? I mean like ever?

You're forgetting that the GDP grows every year too. Does the debt increase every year? Yes. Does the debt to GDP ratio increase every year? Not necessarily (see the graph in my flag). And our debt to GDP ratio would have to increase A LOT for our interest payments to make up too much of our budget.

[Yue-Laou]

Well I sure hope you're going to back that up. I'm sorry if I used some big words which might not appear in alphabet soup, but I think what I said was pretty solid. Elaborate?

There is no need. I adhere to the Austrian Theory of Economics. Alphabet soup is the best you'll get. Why? Because you were convinced that it was something else entirely while I would maintain its just a bowl of alphabet soup.

We'd never agree or understand one another.

Pretty sure most economist understand austrian economics perfectly fine, just like most biologists understand 'intelligent design', they just reject it.

[United States of Capital]

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.

If not taxes the Government goes into the debt to fund its spending, if not printing money wich will cause big inflation in the long run if too much is printed.

[Post-Keynesian Economics]

There is no need. I adhere to the Austrian Theory of Economics. Alphabet soup is the best you'll get. Why? Because you were convinced that it was something else entirely while I would maintain its just a bowl of alphabet soup.

We'd never agree or understand one another.

Pretty sure most economist understand austrian economics perfectly fine, just like most biologists understand 'intelligent design', they just reject it.

[Post-Keynesian Economics]

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.

If not taxes the Government goes into the debt to fund its spending, if not printing money wich will cause big inflation in the long run if too much is printed.

That's true eventually, but I would argue that we aren't at the level yet where it will cause inflation (though we will find out for sure in two days when the inflation report comes out.)

[United States of Capital]

If not taxes the Government goes into the debt to fund its spending, if not printing money wich will cause big inflation in the long run if too much is printed.

That's true eventually, but I would argue that we aren't at the level yet where it will cause inflation (though we will find out for sure in two days when the inflation report comes out.)

I would not say that big inflation will come soon, Velocity is falling and Inflation is the least of my worries. But my post was about you saying this

A common misunderstanding is that taxes pay for government spending.

[Dorhagen (Ancient)]

Meanwhile USA is in trouble with budget deficit they are being angry with Germany, because Germany has budget surplus. USA shouldn't teach Germany what to do.
USA is mad because Germany has left over money but they don't want to spend it on US services and products.

[Yue-Laou]

Meanwhile USA is in trouble with budget deficit they are being angry with Germany, because Germany has budget surplus. USA shouldn't teach Germany what to do.
USA is mad because Germany has left over money but they don't want to spend it on US services and products.

Right. It's not like they are worried because germanys economic policy is harming the eurozone and putting the world economy at risk.

[Farnhamia]

Meanwhile USA is in trouble with budget deficit they are being angry with Germany, because Germany has budget surplus. USA shouldn't teach Germany what to do.
USA is mad because Germany has left over money but they don't want to spend it on US services and products.

Who said we're "angry with Germany"?

[The Emerald Dawn]

Meanwhile USA is in trouble with budget deficit they are being angry with Germany, because Germany has budget surplus. USA shouldn't teach Germany what to do.
USA is mad because Germany has left over money but they don't want to spend it on US services and products.

Spend through bust, save through boom.

Germany isn't following logic.

[Post-Keynesian Economics]

That's true eventually, but I would argue that we aren't at the level yet where it will cause inflation (though we will find out for sure in two days when the inflation report comes out.)

I would not say that big inflation will come soon, Velocity is falling and Inflation is the least of my worries. But my post was about you saying this

A common misunderstanding is that taxes pay for government spending.

Could you elaborate on what exactly your graph proves?

[Dorhagen (Ancient)]

Meanwhile USA is in trouble with budget deficit they are being angry with Germany, because Germany has budget surplus. USA shouldn't teach Germany what to do.
USA is mad because Germany has left over money but they don't want to spend it on US services and products.

Spend through bust, save through boom.

Germany isn't following logic.

Maybe because Germany doesn't follow logic their economy is so strong. They can't force their citizens to buy foreign services and products if German products have very high reputation and quality. For example why would german buy Chevrolet instead of Mercedes?

Are there any example countries whos spending did help them trough economical crisis?

[The Emerald Dawn]

Spend through bust, save through boom.

Germany isn't following logic.

Maybe because Germany doesn't follow logic their economy is so strong. They can't force their citizens to buy foreign services and products if German products have very high reputation and quality. For example why would german buy Chevrolet instead of Mercedes?

Are there any example countries whos spending did help them trough economical crisis?

No, their economy is so strong for many different factors, but basic economic theory indicates that saving through a boom and spending through a bust is going to net the most favorable results.

[Dorhagen (Ancient)]

Maybe because Germany doesn't follow logic their economy is so strong. They can't force their citizens to buy foreign services and products if German products have very high reputation and quality. For example why would german buy Chevrolet instead of Mercedes?

Are there any example countries whos spending did help them trough economical crisis?

No, their economy is so strong for many different factors, but basic economic theory indicates that saving through a boom and spending through a bust is going to net the most favorable results.

I think country should never spend more money than they have. That's where all problems begin when they have budget deficit and must borrow huge amounts of money. At least Europeans have figured this out, hopefully USA will follow the example.