What about principal on the natl debt??

[RunningBum]

2) The national debt is an account of all the money spent in to the private sector but not taken out of it via taxes. We can no more "pay off" the debt than you can go back and get the $ you spent on a candy bar when you were 12.

I don't get that at all. Paying off the national debt isn't getting money back you've spent. It's paying off the credit card you used to buy that candy bar.

3) The Fed controls interest rates, not the market. If interest payments became too burdensome, guess what? We finance the whole thing in to rolling 6 month Treasuries instead of 30 years, and drop the interest rate to zero.

Oh yeah? Who's going to buy that debt? The fed controls interest rights, but only until they lose touch with reality, at which point the market is going to reject that rate and you have to adjust. I guess that's the trust point in the rest of your post. I think most of us understand how things work today, pretty much anyway, but this topic is about what happens if things get too out of control.

 

[imoldernu]

The realities are here, and spending the time to look at the historical comparisons will explain what is happening. Need to spend more than a few minutes to get the whole picture.

https://www.usdebtclock.org/index.html

An aside... look to see that taxpayers owe much more than citizens.

 

[Senator]

Oh yeah? Who's going to buy that debt? The fed controls interest rights, but only until they lose touch with reality, at which point the market is going to reject that rate and you have to adjust. I guess that's the trust point in the rest of your post. I think most of us understand how things work today, pretty much anyway, but this topic is about what happens if things get too out of control.

Goldman Sachs buys the debt. Then, the Fed buys it right back (with money from the debt limit increase), with a small premium. It becomes an asset on the Fed's balance sheet.

There will never be a shortage of debt buyers, when one of them is the Fed.

 

[ShokWaveRider]

Inflation is not a worry. Inflation is caused by too much money chasing too few goods. Not printing money. A $15 an hour minimum wage will cause more inflation than printing an extra trillion.

How do we know this for sure, is it just speculation? They will also spend more and not have to rely "so much" on the taxpayers to help them out. A lot of workers get paid a lot more than that. It is cost a buck more for a hamburger or doughnut, who the heck cares.

 

[Spock]

Government spending DOES help the economy. For example, if US Govt kept tax rates the same and then borrowed an extra $1 Trillion and spent it all on fighter jets from Boeing, what happens to GDP?
...
The problem with doing that is 'some day' the debt-to-GDP ratio gets so high that people lose confidence in the currency. And therefore, deficit spending should go towards things that will raise GDP in the future (ie good investments) rather than only raising it immediately. That's the eventuality that needs to be addressed rather than "paying off" debt.

I read some math yesterday that showed it now takes $3.5x (I don't remember the x) of debt to increase GDP by $1...
Another showed $1 debt = $0.44 in GDP.
Either way, debt is growing faster than GDP... and its not because of a lag in GDP, the $ aren't being "invested", just spent.

 

[Spock]

How do we know this for sure, is it just speculation? They will also spend more and not have to rely "so much" on the taxpayers to help them out. A lot of workers get paid a lot more than that. It is cost a buck more for a hamburger or doughnut, who the heck cares.

I do. I'll quit buying the hamburgers and doughnuts.

 

[marko]

A $15 an hour minimum wage will cause more inflation than printing an extra trillion.

It is cost a buck more for a hamburger or doughnut, who the heck cares.

Apparently places like McDonald's cares. They're automating more and more including trying (and failing to date IMO) to replace the order taker with an electronic kiosk and/or encouraging you to order using an app.

IMO a $15 minimum wage will only mean that the lower end workers will be taking home the same amount of money by working fewer hours.

 

[Senator]

How do we know this for sure, is it just speculation? They will also spend more and not have to rely "so much" on the taxpayers to help them out. A lot of workers get paid a lot more than that. It is cost a buck more for a hamburger or doughnut, who the heck cares.

The thing we know is that printing money does not cause inflation. And we know (Econ 101) that the definition of inflation is too much money chasing too few goods.

As long as the money is out of the hands of the people that spend, inflation is non-existent. Over the past 20+ years, inflation has been minimal, and a fair amount of money has been printed.

So I think it can be proven that the definition of inflation is correct.

Apparently places like McDonald's cares. They're automating more and more including trying (and failing to date IMO) to replace the order taker with an electronic kiosk and/or encouraging you to order using an app.

All I ever use at McDonalds is the App. No lines, just sit and wait.

 

[RobbieB]

Soon fast food will be all apps and robots. I'm sure burger cooking and assembly can be automated. Scan receipt code at conveyor to open door.

And nobody will ask if you want fries with that either.

 

[Senator]

I'm sure burger cooking and assembly can be automated.

Already done.

https://sf.eater.com/2018/6/21/17489084/creator-robot-burgers-san-francisco

 

[RAchip]

I mostly agree with Senator.

40% or so of the "debt" is owed to the government (its like inter-company debt) so it really doesn't count; it isn't technically "debt."

 

[RunningBum]

I mostly agree with Senator.

40% or so of the "debt" is owed to the government (its like inter-company debt) so it really doesn't count; it isn't technically "debt."

So it's "only" $13 trillion, instead of $21T. That still seems a tad high.

 

[jimandthom]

The thing we know is that printing money does not cause inflation. And we know (Econ 101) that the definition of inflation is too much money chasing too few goods.

As long as the money is out of the hands of the people that spend, inflation is non-existent. Over the past 20+ years, inflation has been minimal, and a fair amount of money has been printed.

So I think it can be proven that the definition of inflation is correct.

============================

While not of the great financial brains that inhabit this locale--- my statement/question

We are told, correctly or not, that the poorer people spend their money--don't save and invest.

The wealthy save and or invest.

Yes they do buy Birkin Handbags and have their own style of spending that is more of a want rather than a need and quite often that Birkin Handbag even used can increase in value making it almost an investment than an expense.

MY question----- shall we limit inflation by limiting the amount of $$ availbable to the spendors and provide the greatest gains from tax policy to the investing and saving class? We could then keep the circle going of low inflation/rates to sustain the debt paying interest at low rates etc.

 

[joeea]

IMO a $15 minimum wage will only mean that the lower end workers will be taking home the same amount of money by working fewer hours.

If their employers could have gotten by with fewer hours, they already would have done so.

 

[Masquernom]

Forget the principle for now. Better worry about the interest. in 2015 the interest payments on the debt were 6% of the federal budget. In 2019 it's 9% of the federal budget. It's also the fastest growing item in the federal budget.

As the interest payments grow, they will start to put the squeeze on other budget categories.

 

[Spock]

The thing we know is that printing money does not cause inflation. And we know (Econ 101) that the definition of inflation is too much money chasing too few goods.

As long as the money is out of the hands of the people that spend, inflation is non-existent. Over the past 20+ years, inflation has been minimal, and a fair amount of money has been printed.

So I think it can be proven that the definition of inflation is correct.

Inflation occurs in segments where the printed money is available. "Follow the money".
The printed money has not been available to the consumption end of the economy. The inflation from the newly "minted" money is in the stock and bond market values.

There was an interesting article that described how the wealth gap was widened by the uneven distribution of access to the new money. It alleged that this is fueling the rise of populist politicians and made an argument for why the next round of "quantitative easing" would be aimed at the bottom/consumer end of the economy vs. making it available to banks and just hoping banks lend it out.

 

[Independent]

Goldman Sachs buys the debt. Then, the Fed buys it right back (with money from the debt limit increase), with a small premium. It becomes an asset on the Fed's balance sheet.

There will never be a shortage of debt buyers, when one of them is the Fed.

And, the Fed uses newly created dollars to buy the bonds.

That money goes into private hands immediately because the gov't paid Boeing or whomever for the goods that the gov't bought.

 

[Mr._Graybeard]

Apparently places like McDonald's cares. They're automating more and more including trying (and failing to date IMO) to replace the order taker with an electronic kiosk and/or encouraging you to order using an app.

IMO a $15 minimum wage will only mean that the lower end workers will be taking home the same amount of money by working fewer hours.

IMO, the minimum wage is irrelevant to whether companies like MickeyD's will automate. They would continue to do so even if they were paying employees less than they're paying now.

 

[marko]

IMO, the minimum wage is irrelevant to whether companies like MickeyD's will automate. They would continue to do so even if they were paying employees less than they're paying now.

Agree. For almost every company labor is the highest cost, either through benefits, pay or regulations. Each reduction of labor cost adds to the bottom line.

 

[dd564]

I'm not worried about the national debt nor our debt to GDP ratio.
We can go over 100% ratio and it doesn't really matter. Other nations have done this I believe.

What I do believe is the middle class and lower class is being eroded. Automation will bring cheaper goods and greater abundance for those who have money, but those who are less hard working or making lower incomes will suffer more greatly.

As a society we will likely see continued shorter lifespans, and an increases in mass shootings, homicides, and suicides. Suicides will increase tremendously in white males over the age of 40 over the next 20 years.

 

[joeea]

What I do believe is the middle class and lower class is being eroded. Automation will bring cheaper goods and greater abundance for those who have money, but those who are less hard working or making lower incomes will suffer more greatly.

As a society we will likely see continued shorter lifespans, and an increases in mass shootings, homicides, and suicides. Suicides will increase tremendously in white males over the age of 40 over the next 20 years.

Wow, rather negative here.

"White males over 40"? Hmm

 

[Masquernom]

Just look at a comparison of wage growth to inflation. Companies are holding down wages, so inflation is very low. Efficiency gains become profit improvements which increase stock value. It's great for everyone except the person with stagnate or eroding purchasing power on the bottom of the wage scale.

 

[dd564]

Wow, rather negative here.

"White males over 40"? Hmm

https://afsp.org/about-suicide/suicide-statistics/

There is a mental health issue going on that's affecting white men at 3x the rate of most other races.

It's not getting a lot of publicity, but the rate is accelerating. We've broken records the last few years on quantity of suicides.

Also, the number of mass shootings as you may have noticed is increasing.
GDP doesn't seem to help reduce depression, mass shooting, and suicide.

 

[dd564]

Just look at a comparison of wage growth to inflation. Companies are holding down wages, so inflation is very low. Efficiency gains become profit improvements which increase stock value. It's great for everyone except the person with stagnate or eroding purchasing power on the bottom of the wage scale.

What is happening is a wage gap. Erosion of middle class and lower class.

This is only going to broaden in the next 5-10 years greatly because of computing power and people with intelligence being able to advance and take advantage of technologies at far great paces.

In the past new business owners had to leverage employees. With technology, the need to pay people is becoming less, and people can find new ways of doing business that rely on technology more and wage-earners less.

At a certain point it will be bad enough where something will have to be done.

In the meantime, more depression, more suicides, more mass shootings, nore mental health issues.

 

[joeea]

https://afsp.org/about-suicide/suicide-statistics/

There is a mental health issue going on that's affecting white men at 3x the rate of most other races.

It's not getting a lot of publicity, but the rate is accelerating. We've broken records the last few years on quantity of suicides.

Also, the number of mass shootings as you may have noticed is increasing.
GDP doesn't seem to help reduce depression, mass shooting, and suicide.

I'm guessing you are a white male over 40. If this is a cry for help, please seek professional counselling. I'm being very serious here.

And as you know, guns account for more than half the suicides. Maybe there's a clue on what to do in that.