The United States needs to increase its budget deficit!

[Post-Keynesian Economics]

"A debt death spiral." Interesting. How exactly would this occur? At what point would the debt begin to hurt average Americans, and how would it do this? What happens when the deficit grows that fast?

Inflation will emerge and it looks a lot like 1990s Argentina and might turn into hyper-inflation. The US needs to pare back at it's military intervention otherwise the US might find itself in a Vietnam like conflict and run into an economic crisis.

I would like to direct you back to everything I've been saying about inflation. As long as our unemployment is still so high, money growth will go towards GDP rather than price increases.

[The Tundra]

i think we are arguing the same point, but with just different wording. on another note, we don't see large increases in inflation because we are taking money out of the system. the Fed destroys currency after a certain date or it gets destroyed naturally (being put through the wash, getting lost, ect.). new bills get put in, old bills get taken out, and the cycle keeps flowing.

the non-upper class doesn't have enough spending power. the poor (who barely get taxed right now) need more money for spending, which can be achieved with a minimum wage increase, the middle class (who are taxed the most out of all the tax brackets) are scared of debt and collapse, so they don't spend money on consumer goods. a tax break on them will increase their spending power. ideally, this would make the upper class (Large Business owners, Corporate Bodies) would need to hire more people to meet the demand of people asking for product, thus circulating more money from places were it will not be moved at all. people will buy their products more, the more transaction there are the more the government gets in % revenue, the more money these companies make. after that we can add money into the system. inflation doesn't really take hold unless the money is stagnant. thankfully, America's money is not stagnant enough for things like the stimulus to cause mass inflation.

its the same effect with different methods, my theory is just abit different from yours

True, our logic does seem to be parallel. The good news is, though there are negilibile differences in our theories, the policy implications are mostly the same. For example, I am very much for an increase in the minimum wage.

its so weird when things on the internet workout.

[Post-Keynesian Economics]

I couldn't disagree more. The most important thing we can do to reduce the deficit is to facilitate economic recovery. Repeating 1937 through a sudden, massive tightening in fiscal policy would be a grave mistake, and would probably lead to another string of trillion dollar plus deficits.

I see it as the war mongering of the past as the real culprit of the deficits in the trillions. The US must stop intervening at the tip of a hat or be a limited participant in the wars.

I agree that we shouldn't be so prone to wars from a social standpoint. But war doesn't actually hurt our economy.

[Post-Keynesian Economics]

True, our logic does seem to be parallel. The good news is, though there are negilibile differences in our theories, the policy implications are mostly the same. For example, I am very much for an increase in the minimum wage.

its so weird when things on the internet workout.

Indeed.

[Lemanrussland]

Inflation will emerge and it looks a lot like 1990s Argentina and might turn into hyper-inflation. The US needs to pare back at it's military intervention otherwise the US might find itself in a Vietnam like conflict and run into an economic crisis.

I would like to direct you back to everything I've been saying about inflation. As long as our unemployment is still so high, money growth will go towards GDP rather than price increases.

There is a risk of inflation in the medium term as unemployment comes down, spending picks up again and all of that excess liquidity which has been pumped into the economy starts to spring into action. The Fed will have to begin policy tightening at some point in order to avoid this, most of the FOMC puts the appropriate time to begin tightening at sometime in 2015.

[The Serbian Empire]

The default occurs is roughly a month after the ceiling is reached when government is so stripped of it's ability in administration as to be unable to process the debt payments.

Which is why there is zero reason for us to have a debt ceiling. We're choking ourselves for no reason at all.

I am afraid that the debt ceiling was created to allow the government void the constitution if the debt isn't serviced.

[Vetalia]

Which is why there is zero reason for us to have a debt ceiling. We're choking ourselves for no reason at all.

I agree; the debt ceiling is an artificial limit. This is not to say borrowing to finance our debt is desirable over the long term, but artificially constraining our capability to borrow makes no economic sense.

[Post-Keynesian Economics]

Which is why there is zero reason for us to have a debt ceiling. We're choking ourselves for no reason at all.

I agree; the debt ceiling is an artificial limit. This is not to say borrowing to finance our debt is desirable over the long term, but artificially constraining our capability to borrow makes no economic sense.

I would say as long as our interest rates stay reasonable, we shouldn't be particularly restrictive in our borrowing.

[The Serbian Empire]

I see it as the war mongering of the past as the real culprit of the deficits in the trillions. The US must stop intervening at the tip of a hat or be a limited participant in the wars.

I agree that we shouldn't be so prone to wars from a social standpoint. But war doesn't actually hurt our economy.

It will when the revenues aren't high enough to pay for the war and the increased demands on the government to assist citizens. War is not destructive to the economy outside of a recession.

[Post-Keynesian Economics]

I would like to direct you back to everything I've been saying about inflation. As long as our unemployment is still so high, money growth will go towards GDP rather than price increases.

There is a risk of inflation in the medium term as unemployment comes down, spending picks up again and all of that excess liquidity which has been pumped into the economy starts to spring into action. The Fed will have to begin policy tightening at some point in order to avoid this, most of the FOMC puts the appropriate time to begin tightening at sometime in 2015.

I would agree except for two things:

1) Our unemployment is not decreasing at any truly significant rate.

2) Unless our unemployment gets within jumping distance of 4.0%, monetary growth has big holes to flow through. The economy is not crowded.

[The Serbian Empire]

There is a risk of inflation in the medium term as unemployment comes down, spending picks up again and all of that excess liquidity which has been pumped into the economy starts to spring into action. The Fed will have to begin policy tightening at some point in order to avoid this, most of the FOMC puts the appropriate time to begin tightening at sometime in 2015.

I would agree except for two things:

1) Our unemployment is not decreasing at any truly significant rate.

2) Unless our unemployment gets within jumping distance of 4.0%, monetary growth has big holes to flow through. The economy is not crowded.

The money produced just goes into banker's wallets and inflates commodities. stocks, and other investment vehicles. Commodities being purchased causes prices to creep up in the stores creating inflation in the marketplace.

[Post-Keynesian Economics]

I agree that we shouldn't be so prone to wars from a social standpoint. But war doesn't actually hurt our economy.

It will when the revenues aren't high enough to pay for the war and the increased demands on the government to assist citizens. War is not destructive to the economy outside of a recession.

When you describe how the "revenues aren't high enough to pay for the war," you assume that taxation pays for government spending. This is a common misunderstanding. Taxation doesn't pay for government spending - instead, government spending allows for taxation. The people at the IRS and the people at the Fed don't regularly contact each other and say, "hey, so make sure you wire us that tax money so we can spend it."

Tax money doesn't directly finance government spending. Actually, it doesn't even really finance it.

[The Serbian Empire]

It will when the revenues aren't high enough to pay for the war and the increased demands on the government to assist citizens. War is not destructive to the economy outside of a recession.

When you describe how the "revenues aren't high enough to pay for the war," you assume that taxation pays for government spending. This is a common misunderstanding. Taxation doesn't pay for government spending - instead, government spending allows for taxation. The people at the IRS and the people at the Fed don't regularly contact each other and say, "hey, so make sure you wire us that tax money so we can spend it."

Tax money doesn't directly finance government spending. Actually, it doesn't even really finance it.

I fear that releasing debt to the open markets will eventually come back to haunt nations when the bankers come a knocking. Never trust Goldman Sachs with your government otherwise stuff tends to become run only to benefit Goldman Sachs and other investment banks.

[Post-Keynesian Economics]

I would agree except for two things:

1) Our unemployment is not decreasing at any truly significant rate.

2) Unless our unemployment gets within jumping distance of 4.0%, monetary growth has big holes to flow through. The economy is not crowded.

The money produced just goes into banker's wallets and inflates commodities. stocks, and other investment vehicles. Commodities being purchased causes prices to creep up in the stores creating inflation in the marketplace.

You're making assumptions based on current Fed policies. It's a very different story if we have policies in place to get new money to the poor or unemployed.

[Post-Keynesian Economics]

When you describe how the "revenues aren't high enough to pay for the war," you assume that taxation pays for government spending. This is a common misunderstanding. Taxation doesn't pay for government spending - instead, government spending allows for taxation. The people at the IRS and the people at the Fed don't regularly contact each other and say, "hey, so make sure you wire us that tax money so we can spend it."

Tax money doesn't directly finance government spending. Actually, it doesn't even really finance it.

I fear that releasing debt to the open markets will eventually come back to haunt nations when the bankers come a knocking. Never trust Goldman Sachs with your government otherwise stuff tends to become run only to benefit Goldman Sachs and other investment banks.

Who exactly will come knocking? Also, nobody will "come knocking" without a warning via increase in interest rates first.

[The Serbian Empire]

The money produced just goes into banker's wallets and inflates commodities. stocks, and other investment vehicles. Commodities being purchased causes prices to creep up in the stores creating inflation in the marketplace.

You're making assumptions based on current Fed policies. It's a very different story if we have policies in place to get new money to the poor or unemployed.

The poor and unemployed will be harmed by the bankers putting their money into the commodities markets to drive up prices in speculation. That is where my problem with the monetary policy is. The bankers are not out their to help the poor and unemployed, but to enrich themselves.

[The Serbian Empire]

I fear that releasing debt to the open markets will eventually come back to haunt nations when the bankers come a knocking. Never trust Goldman Sachs with your government otherwise stuff tends to become run only to benefit Goldman Sachs and other investment banks.

Who exactly will come knocking? Also, nobody will "come knocking" without a warning via increase in interest rates first.

The interest rates will rise out of control to the point the US can't service existing debts once it goes long enough. That is the problem of paying debt with more debt.

[The Shia Califate]

A little, in-control debt is a good thing, but debt larger than your GDP is a bad thing. A really, really, really, bad thing.

[Post-Keynesian Economics]

Who exactly will come knocking? Also, nobody will "come knocking" without a warning via increase in interest rates first.

The interest rates will rise out of control to the point the US can't service existing debts once it goes long enough. That is the problem of paying debt with more debt.

Yes, but we can shift from borrowing to printing if interest rates threatened to rise. And then we could cut spending if inflation actually threatened to rise signficantly. But that's not where we are now.

[Post-Keynesian Economics]

A little, in-control debt is a good thing, but debt larger than your GDP is a bad thing. A really, really, really, bad thing.

Why? It was bigger than our debt during WWII.

[The Serbian Empire]

The interest rates will rise out of control to the point the US can't service existing debts once it goes long enough. That is the problem of paying debt with more debt.

Yes, but we can shift from borrowing to printing if interest rates threatened to rise. And then we could cut spending if inflation actually threatened to rise signficantly. But that's not where we are now.

Just ask Argentina about the hazards of an interest rate increase.

[Kumrann]

No the US doesn't want an increased deficit. Surpluses are great but this is almost impossible to achieve so I would happily have year by year having a slight deficit or if your lucky a slight surplus.

[Post-Keynesian Economics]

Yes, but we can shift from borrowing to printing if interest rates threatened to rise. And then we could cut spending if inflation actually threatened to rise signficantly. But that's not where we are now.

Just ask Argentina about the hazards of an interest rate increase.

I understand that, but there is a slight difference between the Argentine peso and the world's reserve currency. In addition, Argentina saw the threat of high interest rates and then didn't do anything about it. We could easily shift in time.

[Post-Keynesian Economics]

No the US doesn't want an increased deficit. Surpluses are great but this is almost impossible to achieve so I would happily have year by year having a slight deficit or if your lucky a slight surplus.

What is good about a surplus? Most of our surpluses are followed by economic depressions.

[Kumrann]

No the US doesn't want an increased deficit. Surpluses are great but this is almost impossible to achieve so I would happily have year by year having a slight deficit or if your lucky a slight surplus.

What is good about a surplus? Most of our surpluses are followed by economic depressions.

Reserves are good, we hopefully have some money saved so when we have a recession we can spend on infrastructure projects without building up debt - saying this I'm no economist.