- 29 Apr 2023 13:40
#15272625
It's been a year since the last reply. I'd like to have another go at this topic.
1] Why does anyone think the a large modern nation would ever need to pay off its debt?
. . a] Such nations intend to go on forever. This is more like corps than people.
. . b] How often has anyone asked when a large corp is going to pay off its debts? I have never heard this question asked. Have you?
. . c] If you have never heard this question about corps, that are more likely to fail than large modern nations are, can you explain why this is asked about nations?
. . d] IMHO, this is asked about nations for political reasons, not economic ones.
. . e] The UK, aka England, has had a national debt in every year since 1694, so for 329 years. It has rerely paid it down much in any year for 329 years. And during those years it lost its Empire, and at that time the gold standard was functionally still in place. The gold staandard was ended in 1971 when Nixon took the US off it. Now, all nation have a fiat currency. Those in the EU and EZ are special cases and have put themselves back onto a modified gold standard. So, don't compare the US to Greece, ever!
2] OK, how is a modern large nation supposed to pay off its national debt?
. . a] One way would be to print a lot of currency and pay all the bond holders with that.
. . b] This not the way that everyone means when they ask the question of 'How can the US pay off its debt?'
. . c] Everyone intends for the US to increase its taxes and reduce its spending so that it has a surplus, and use those surplus dollars to pay off the debt.
. . d] OK, who's taxes will be used to generate that surplus? The poor can't pay more, they are living paycheck to paycheck, now. Only the super rich, the merely rich, and the middle class can survive if their taxes are raised.
. . e] OK, who's beneefits cn be cut to reduce spending if taxes can't be raised much? Again the poor don't get much in the way of benefits, so we are back to the ,iddle class and rich to see their benefits or free money reduced.
3] OK, now I ask you is it fair to take $31 trillion from the people and corps of America to pay off the debt? With a $500 billion a year surplus this would take over 65 years.
4] OK, even is it is 'fair', is it possible? What will happen to the US economy if it ran a $500B surplus year afer year? Every economist would predict that it would cause a recession and then a depression. They saw this from 1930 to 1933, when Hoover tried to cut spending as tax revenue fell after the 1929 stock market crash. It didn't stop the recession, it make it into the Great Depression.
So, the conclusions to reach are =>
. . 1] There is no need to ever pay off the US national debt.
. . 2] That the idea that it will be necessary someday is disingenuous.
. . 3] That it unfair to tax the wealth away from the super rich to do it. Also, the merely rach, and especially from the middle class. And impossible from the poor.
. . 4] That running a $500B surplus for 65 years would be impossible because the economy would crash.
BTW --- This question is close to the current crisis about reducing the deficit or have the US default on its debt for a few weeks.
. . . Reducing the deficit by spending cuts would also crash the US economy. Not as fast as a $500B surplus would, but just as surely.
OTOH, raising taxes on the rich corps and the super rich is possible and will also reduce the deficit. This will not likely crash the economy.
.525
1] Why does anyone think the a large modern nation would ever need to pay off its debt?
. . a] Such nations intend to go on forever. This is more like corps than people.
. . b] How often has anyone asked when a large corp is going to pay off its debts? I have never heard this question asked. Have you?
. . c] If you have never heard this question about corps, that are more likely to fail than large modern nations are, can you explain why this is asked about nations?
. . d] IMHO, this is asked about nations for political reasons, not economic ones.
. . e] The UK, aka England, has had a national debt in every year since 1694, so for 329 years. It has rerely paid it down much in any year for 329 years. And during those years it lost its Empire, and at that time the gold standard was functionally still in place. The gold staandard was ended in 1971 when Nixon took the US off it. Now, all nation have a fiat currency. Those in the EU and EZ are special cases and have put themselves back onto a modified gold standard. So, don't compare the US to Greece, ever!
2] OK, how is a modern large nation supposed to pay off its national debt?
. . a] One way would be to print a lot of currency and pay all the bond holders with that.
. . b] This not the way that everyone means when they ask the question of 'How can the US pay off its debt?'
. . c] Everyone intends for the US to increase its taxes and reduce its spending so that it has a surplus, and use those surplus dollars to pay off the debt.
. . d] OK, who's taxes will be used to generate that surplus? The poor can't pay more, they are living paycheck to paycheck, now. Only the super rich, the merely rich, and the middle class can survive if their taxes are raised.
. . e] OK, who's beneefits cn be cut to reduce spending if taxes can't be raised much? Again the poor don't get much in the way of benefits, so we are back to the ,iddle class and rich to see their benefits or free money reduced.
3] OK, now I ask you is it fair to take $31 trillion from the people and corps of America to pay off the debt? With a $500 billion a year surplus this would take over 65 years.
4] OK, even is it is 'fair', is it possible? What will happen to the US economy if it ran a $500B surplus year afer year? Every economist would predict that it would cause a recession and then a depression. They saw this from 1930 to 1933, when Hoover tried to cut spending as tax revenue fell after the 1929 stock market crash. It didn't stop the recession, it make it into the Great Depression.
So, the conclusions to reach are =>
. . 1] There is no need to ever pay off the US national debt.
. . 2] That the idea that it will be necessary someday is disingenuous.
. . 3] That it unfair to tax the wealth away from the super rich to do it. Also, the merely rach, and especially from the middle class. And impossible from the poor.
. . 4] That running a $500B surplus for 65 years would be impossible because the economy would crash.
BTW --- This question is close to the current crisis about reducing the deficit or have the US default on its debt for a few weeks.
. . . Reducing the deficit by spending cuts would also crash the US economy. Not as fast as a $500B surplus would, but just as surely.
OTOH, raising taxes on the rich corps and the super rich is possible and will also reduce the deficit. This will not likely crash the economy.
.525