The next time your friend, colleague, family member or local politician says to you, "How are we going to pay back the Chinese" you tell them...
We paid back $32 trillion in the past six months and there has been no hypinflation, interest rates are at zero, the stock market is up, the economy is growing, jobs are being created an life is going on as normal.
Then show them the proof, right from the government's own checkbook here at the Treasury: Table IIIA Total Redemptions.
That ought to shut them up or at least start a legitimate discussion.
ANY ASSERTION WHATSOEVER THAT WE ARE BROKE AND CAN'T PAY BACK OUR DEBTS IS PURE BULLSHIT (pardon my French).
Imagine that. It must be magic! Someone send it to Samtelli.
ReplyDeleteGiven that the debt is just a 'liability', wouldn't it be more appropriate to call it National Equity?
ReplyDeleteOr National Working Capital? Hmm... no, that's not right. I'm looking for a term that more reflects the useful function and dynamic potential here.
ReplyDeleteNeil, how is the national debt just a liability?
ReplyDeleteFrom wikipedia: "In financial accounting, a liability is defined as an obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future."
ReplyDeleteSo it seems like Neil meant it's just a liability because the governments "owes" that money to the holder of the U.S. Treasury security. The Treasury security is an asset of the entity that bought it, and a liability of the FRB/U.S. government.
Is that correct?
There's a difference between liability and debt - the latter has to be paid within a set time frame.
ReplyDeleteI thought the national debt was $15trillion? This article doesn't make sense.
ReplyDeleteAre you sure you're not confusing millions, or billions, with trillions?
It also shows how the currency game is rigged -
ReplyDeleteEuropeans want and have their stronger Euro ( because they are mostly Austrian school who use MMT for their own backdoors )
Americans want and have their weaker dollar ( export puritans )
The fact that we paid this all off should have skyrocketed the US Dollar
No, it's trillions. There is debt being rolled over all the time.
ReplyDeleteThe total amount outstanding is $15 trillion, however, that gets rolled over many times. It also shows the folly of the claim that QE or other Fed programs causes inflation. History shows that when bonds are bought by the Fed, the public just uses the proceeds to buy more bonds, not commodities or gold.
ReplyDeleteOK, thanks for the explanation.
ReplyDeleteSomething I don't understand is the argument that there will always be buyers of government debt, under any circumstance.. Could you explain this or direct me to the relevant info? Cheers.
Default risk free means the the interest is free money as long as the interest rate exceeds the inflation rate. Large holders of financial assets like that kind of govt subsidized parking place.
ReplyDeleteYes, but if investors believe that the government debt is not 'sustainable' (even if they are wrong), then they might not see government bonds as being "risk free". Or alternatively they might see "no default risk" as meaning "default by another name, i.e through inflation".
ReplyDeleteAlso, what about when the interest rate is below the inflation rate?
Anon, we just pushed the supposed fear of default to the outer edge and the market did not blink, so let's put that to rest in the US at least. Similarly, Japan has been able to issue bonds at low rates for decades even as the debt ratio goes through the roof. The constraint, as you mention next, is inflation, and that is a constraint that will affect the yield curve. Yet, with all the noise about impending inflation, rates remain low in countries with currency sovereignty and don't face default. Inflation is not default, no matter how hard one tries to push the equivalence.
ReplyDeleteMike, can you give us that link again? with the exact date. I hope i'm not asking for too much here.
ReplyDeletePlease post it again.