or is it just a great scare tactic by conservatives?

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TBH the fact that you're even a mod here fits squarely within Jag's narrative of OK-sanctioned aggression, bullying, and toxicity. *shrug*

>or is it just a great scare tactic by conservatives?
>
>
The Republicans use the deficit to try to have a reason to stop spending on things they do not like.

The completely ignore it when it comes to things they like.

2Trillion on Infrastructure? NOPE. 2 trillion on tax cuts that mainly go to the wealthy and ultrawealthy? YES.

Could the deficit ever be a real issue - yes.

But the idea of running a government like a small business is LAUGHABLE. You can run deficits forever as long as you find a way to pay them under the terms of the debt.

The fake idea that everything must be bought and paid for in full is a joke.

The national debt rose by 7.8 BILLION under Trump - if Republicans were serious and not LIARS then that would not have happened.

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Gone: My Discogs collection for The Roots:
http://www.discogs.com/user/tomhayes-roots/collection

they are never concerned about the deficit when they are in power

I'm also a member of the Progressive Talent Pipeline 2020 cohort and during one of our training sessions, we got to do a webinar w/Congresswoman Pramila Jayapal (and others) and they gave us a lil tutorial around the truth about budgets/appropriations...

One thing someone said that stood out (cuz i wrote it down lol) was that all deficits are good for someone. Federal deficits are really nothing more than a financial contribution to other parts of our economy...it shows up as a financial surplus on some other ledger.

Its accounting. its moving money around.

the GOP understands this acutely when the money is being moved from the federal govt's balance sheet into either the military, large corporations coffers or their rich friends

they hate it when the spending is used for social programs, education or the arts.

d


"But rest assured, in my luxurious house built on the backs of people darker than me, I am sipping fine scotch and scoffing at how stupid you are." - bshelly

Fiscal conservatives think the deficit and debts are a real issue for the country's future. They just don't make up enough of the GOP to matter anymore.

The GOP (and the Dems) don't really look past their next elections so they're not incentivized to do anything about these issues. The GOP will play lip service to it, like you said, to undercut Dem ideas or to win some fiscal conservative votes but they're not really going to take the drastic cuts needed across the board.

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With interest rates as low as they've been for the past 10-15 years, deficits don't matter much. As long as the deficits are not crazy high, the debt (debt to GDP) won't grow that fast (or even at all).
We can borrow more at low rates and pay off old debt when it comes due all while paying very little interest.

But big question is what is the limit? At what point does increasing deficits (and debt) lead to investors demanding higher interest rates? Because at a certain point, a country could have so much debt investors will have concerns that they will be able to manage it. More risk => higher interest rates.

And at higher rates, things start to fall apart and could lead to a downward spiral.


So as of now, talk about the deficit is a scare tactic (especially with what the economy has been going through recently). And a hypocritical one at that given they have no interest in reducing it when they're in power.

But there is potential for problems down the line if things get out of hand

This video explains...
https://www.youtube.com/watch?v=mmuysv17T9M

--
Sometimes you have to look reality in the face and say 'No!'
-Ben (Reaper)

If you need any help, don't. Hesitate to ask.

The budget deficit is the difference between annual revenue and annual expenses, while the national debt is the accumulated deficits over time.

Anyway, I think the concerns about the national debt are real, the problem is that nobody really knows exactly when it becomes a problem.

(disclaimer... I'm no economist so this is cobbled together from my readings over the years).

The general concern is that, at some point, the debt will matter to other countries that do business with America or in American dollars with each other bc it will signify our country lacks financial discipline.

The American dollar is the reserve currency of the world, meaning everyone does business in dollars. There's minimal risk that the $10M you spent today will lose significant value in a week or two. You can theoretically get all of your $10M back.

If that $10M thing you bought is still perfect a week later but is now only $9.8M, then you're going to have a problem. Eventually, you're going to want to do business in a more stable currency and those decisions can eventually lead to everyone dumping the dollar and choosing a new reserve currency.

(BTW, having alot of your currency circulating around the world is generally a good thing because it makes it cheaper for you to do business in the world. Being dumped as the reserve currency around the world would be a huge headwind to American businesses)

That $10M can become $9.8M in short order if inflation gets too high. The way we get high inflation is if our Federal Reserve *allows* it as a strategy to help pay the national debt but doesn't manage it correctly.

The Fed wants to keep inflation a little higher than 2% but there's alot of controversy that the official inflation numbers don't measure what matters anymore. That makes some people skeptical that the Fed can keep inflation in a manageable range.

Inflation raises the prices of goods but it is also beneficial because it raises the prices of assets and would result in greater tax income for the government, while the debts stay fixed. So the government takes in more money while it's expenses theoretically stay the same. But, if they're not measuring inflation correctly, or they don't move quick enough to raise rates (because people are going to hate seeing rates go upp), then you can have run away inflation.

Anyway, other countries have built large national debts through uncontrolled spending before and ended up trying to inflate their way out of debt. When they've lost control of inflation, they've caused financial catastrophes that's left people dead through hunger or unrest. None of those countries have been as large or as powerful as the United States so we've been on some "Who gon check me , boo?" shit for the last 40 years. But what's doomed other countries could eventually doom us.

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If investors (domestic and foreign) start to worry about the US's debt burden, then our status as a safe place to park money goes away. And that will be bad news

At what level of debt does that happen? We don't know.



>
>The general concern is that, at some point, the debt will
>matter to other countries that do business with America or in
>American dollars with each other bc it will signify our
>country lacks financial discipline.
>
>The American dollar is the reserve currency of the world,
>meaning everyone does business in dollars. There's minimal
>risk that the $10M you spent today will lose significant value
>in a week or two. You can theoretically get all of your $10M
>back.
>
>If that $10M thing you bought is still perfect a week later
>but is now only $9.8M, then you're going to have a problem.
>Eventually, you're going to want to do business in a more
>stable currency and those decisions can eventually lead to
>everyone dumping the dollar and choosing a new reserve
>currency.
>

Your last paragraph nails it.

Not an economist either but from an international perspective the MMT/Kelton dEfIcItS-dOn'T-mAtTeR stuff really does boil down to American Exceptionalist propaganda.

It relies *a lot* on the TINA assumption ("There Is No Alternative") and lacks a coherent theory for how to deal with its inflationary effects. It also disregards the interests of the very foreign creditors it relies on (i.e. the governments, businesses, investors, etc buying the $10Ms in bonds in your example) for all that money it advocates printing to retain its value/reserve status.

I mean there's the Euro, the Renminbi, and for those who believe fiat currencies as a whole may fall out of favor... cryptos are attracting more and more institutional investment (and foreign government exploration) as we speak. Plus, old faithfuls (eg. gold) will forever remain in the mix. So imho TINA is dead and it's not a question of if the US dollar loses supremacy but when. As a share of the currency composition in official foreign exhange reserves, the US dollar's already declined by over 10% since 2000 (https://data.imf.org/regular.aspx?key=41175). It is not at all beyond the realm of possibility that foreign creditors dump it at an accelerated rate.

Reckless deficit spending, rapid debt expansion, unlimited QE etc are all gas pedals that could trigger such acceleration, as is the rallying and increased adoption of viable alternatives. But policymakers on both sides would rather people believe that some of the most consistently failed policies in economic history could never fail in the US. Straight up ponzi shit.