Explain to a complete idiot using the simplest terms possible why an increasing national debt does or does not matter

Explain to a complete idiot using the simplest terms possible why an increasing national debt does or does not matter.

It all depends on the countries ability to pay their debt and who owns the debt. Usually debt past 100% GDP is terrible. Most of the world is in debt and nothing has collapsed yet so

What you and many other people do not understand is that the United States isn't taking on debt because it needs it. This country is so fucking powerful and trusted (in a fiduciary sense) that foreign countries and nationals are basically throwing money at the United States for free. The country is run like a business and any business is going to accept a 0.01% interest loan to help further its operations. These stupid liberals are so dumb and uninformed that they can't help but propagate this notion that the United States takes on debt because it needs it. It doesn't need the money. People just can't stop throwing money at it

If a country has limited credit then its debt matters.

If a country has unlimited credit then its debt doesn't matter.

For a country to have unlimited credit, it has to issue its own currency, and NOT fix the value of that currency to any other currency or commodity.

And even countries with unlimited credit only have unlimited credit in the currency they issue. Foreign currency debt (aka sovereign debt) always matters.

And when debt does matter, that doesn't necessarily mean that reducing it is always the best way to cope with it. Often the nation's better off making itself more productive so that it increases its ability to service the debt.

National debt isn't inherently harmful. Regardless of its magnitude, it can generally be rolled over into new debt at maturity, as long as the underlying currency remains strong and in demand. As such, its not really the debt that causes a problem.

The issue, really, is the interest. Debt must be serviced, and those interest payments increase as the level of debt rises. Debt service competes with other government spending, and unchecked, can make it difficult or impossible for the government to make appropriate expenditures on infrastructure, welfare, military, etc. But when the debt is used to grow the economy, and/or when the interest rate is low, it becomes easier (even desirable) to shoulder increasing debt level.

>dumb and uninformed
How ironic, because you're 100% wrong. The revenue generation of the U.S. is insufficient to fund government spending needs. This has been true under both Democratic and Republican administrations for the last many decades. Without a fundamental change in the Federal government that will never happen in our lifetime, the government absolutely, unequivocally, provably needs debt.

money != currency

but debt is growth borrowed from the future

because its a loop, youre going to get national debt even if you try to get rid of it. ( i forgot the specifics) all politicans know this, but they need some way of marketing a dumb campaign to dumb people.

The US could generate enough revenue to fund government spending needs. However the US dollar would be significantly lower without foreign lenders.

>The US could generate enough revenue to fund government spending needs.
Could? Sure, by raising the marginal tax rates to 85% and killing the economy dead in its tracks. Try not to be a pedantic idiot in an adult conversation.

in a system with perfect intergenerational altruism, rational expectations and no chance of government default, rational economix actors will buy bonds when a government runs a deficit to pay the expected tax increases.

entities run by technocratic precision who see out to the infinite time horizon do exist. They are called governments. The REH predicts that such entities will buy government bonds if they expect future tax increases that the bonds are going to pay off. Let me repeat that because it is important, the reason other governments will buy US treasuries is if they have a rational expectation that, at some future point in time, there will be a dramatic increase in the cost of government.

But governments don't pay taxes . They shouldn't have any rational reason to buy treasuries to pay future taxes - unless they rationally expect there to be a situation where they will have to pay increased costs related to the debt that they can then sell the bonds to pay the costs of. That is, REH holds for governments if they are rationally expecting that the bonds will be redeemable for the costs that the borrowing is incuring.

Let's think on that. They aren't buying the bonds to get more of the US, otherwise the rational thing to do would be to let the US sell bonds, have interest rates rise, and then buy up the US when the costs of borrowing got very high, and the US is forced to sell assets at the low prices of a high interest rate

The only way REH holds for governments then is if the US can later charge other states higher prices for something they have to buy - and they are buying zero risk bonds denominated in dollars against that eventuality or they are expecting there to be higher costs charged by some other means which the purchase of zero risk bonds denominated in dollars will allow them to purchase.

the deficit then is not based on GDP or exports, but on the expected future tax increases. How can the US increase taxes on other governments?

One way is to engage in Neo-Liberism, create a dollar shortage - which is why there were so many global financial crisis points in the 1990's, because dollars were in short supply - and create a great deal of new wealth that will be denominated in dollars. The other way is for the US to pursue a neo-con strategy and gain control over the scarce resources, particularly oil, in the world by creating a series of regimes which are extensions of the US, and which will then create a shortage of resources, and thus a rapid rise in resources priced in dollars. The rational purchase of US treasuries against the possibility of a dollar shortage is then the expected future tax increase which the US can credibily levy. Above this point the US must raise interest rates, if the expected future tax increase drops - for example by having it possible that some other nation will be the source of innovation, or that the US cannot credibly invade and control resources - then the bonds will be dumped. Afterall, the other governments are only buying them in the rational expectation of a future tax increase

make rule national debt=0
ban all further government finance
cut spending by gov until debt 0
simple
youtube yaron brook for any questions

So let us takes the steps so far: REH applies to governments, within a Wallacian debt-currency equivalency, the criterion for crowding inexists, and produces a deflationary pressure in the REH anchor economy which is, in effect, net investment. The limit of the US Federal Budget deficit is the size of the expected future dollar shortage, not the basic GDP of the United States, but the quantity of either resources or assets which are expected to be in short supply later on.

However, there is a hole in the bottom of this boat, namely this only works so long as the monetary policy authority, namely the Federal Reserve, does not reduce interest rates to increase employment in the US.

Why is this? Let us assume that the Federal Reserve is thought to be willing to cheat to produce higher employment. At that point there is no credibility of a future dollar shortage: because at any time that a dollar shortage develops, the Fed could be tempted to print money into it and restore dollar glut conditions. Hence the Rational Economic Asian Central Bank will discount future tax increases, and therefore the amount of treasuries to be bought to pay for future seinurage tax.

This is answered by the next pillar of the Neo-Conservative monetary theory: namely the non-discretionary nature of monetary policy in a credibility environment. Remember that the ability to run a deficit is based on credibility of a future tax increase. That future tax increase is based on the seinurage tax. Thus the US central bank must maintain lack of discretion, not on the question of inflation per se - that is immaterial here - but on the nature of the debt and future tax increase itself.

One way to do this is to set a rule and have very strict people enforce it - another way, however, is to put the central bank in a semi-permanent policy bind: make it so that it has no choice about the interest rates it sets, because they are as close to zero as they can get. That is, if the central bank cannot effectively lower interest rates, because they are as low as they can go, there is no possibility that the central bank can cheat. Japan's central bank is in such a position - the central bank can't give money away there.

This means that if the US is at a level of economic growth just above deflation, it has credibility on not "cheating" to produce more employment. As paradoxical as it sounds, a central bank just above a liquidity trap has perfect credibility on not lowering rates.

The role of religion as part of the Neoconservative Monetary Economy

This is where the third leg of Barro's work comes into play. Many people in the world of economics do not see the point of his work on religion and economic growth. However, it is absolutely crucial as the final pillar to a Neo-conservative monetary economy.

Japan's experience shows why: the other hole in the bottom of a REH monetary order is that the anchor economy will cheat and try and print more money than it can credibly extract from the seinurage tax. After all, if one can run a 400 billion dollar deficit, why not 600 billion?

There are two components. The first is that the sienurage tax has two prongs: one goes down the road of Neo-Liberalism and technology, and the other goes down the road of militarization and invasion. Both must be kept credible in order to maintain the credibility, and indeed inevitability, of a future increase in the seinurage tax.

The problem, as has been pointed out by military thinkers, is that the two are in conflict: in order to invade and occupy resource countries, one needs a military which is both economically more powerful than any one else, to maintain a technological edge, and one where there is a surplus of military personnel who have the dedication to spend their lives invading and occupying other nations. The use of religion in creating military devotion was a point made by Machiavelli in his Discourses on Livy.

However, the theory of the liberal economies of the 20th century was that secularization was necessary for economic development, since science and commerce were most effectively pursued in an environment where individuals pursued ends based on disciplines, rather than on a prior beliefs from religous texts. To have credibility in a future technological boom, then, there must be credibility that the militarized state of high belief is compatible with economic development. This is exactly the contention of Baro's recent work.

In short Baro's development is not filled with sharp breaks, but follows a consistent pattern in addressing the results of a dominant strategy by an anchor currency nation - the US - down a road towards a stable monetary order based on a reactionary society controlled by a plutocratic state with a militarized elite as the credible threat of a seinurage tax in the future.

From the indications of both the Democratic and Republican parties, the Barosian monetary theory, consciously or not, has been accepted, and the United States is now embarking on a course of attempting to force the world economic order into a system where the US uses the threat of future seinurage tax as a means to have rational governments to fund its government deficit.

Since this deficit is largely devoted to the creation of a military, and the debt borrowed produces investment which produces deflation, which allows the US to remain near liquidity trap levels of Federal Funds, the entire structure is a closed loop.

That is, as long as the Federal Reserve is not for any length of time in a position where it can credibily lower rates to trade consumer inflation for employment, and the US can maintain a credible stance of eventually creating either a dollar shortage or a resource shortage. When any of these conditions are removed, then the credibility of the Barosian monetary regime is weakened, and steps will have to be taken by the executive to restore either near recession conditions, credibility on a future stock boom or series of resource wars, or the ability of the American consumer to continue to import the goods which the investment is creating.

These conditions represent the limits of the Barosian monetary order, and models which seek alternate means of economic order will have to predict which combination of events will snap any one of these pillars, and what the response of the REH buyers will be in response to them.

>Could? Sure, by raising the marginal tax rates to 85% and killing the economy dead in its tracks.
No, by domestic borrowing. And even if nobody else wanted to lend to them, they could borrow from the Fed.

there is no such thing as gay or neo conservative
or trickle down economics
or robber barons
or alt right
all just ghosts made up to delude
youtube yaron brook

I knew the guy who helped set this up you retard.

This is basic economics. Go shill bitcoins if your mind can't handle it.

>No, by domestic borrowing.
They could eliminate debt by borrowing? Do you even realize how stupid you sound?

>they could borrow from the Fed.
The Fed runs a balance sheet, just like everyone else. Even if the Fed did lend to Treasury or purchased U.S. debt, it has to be paid. See above.

As a reminder, your original statement was:
>The US could generate enough revenue to fund government spending needs.
This is provably false and you haven't stated a single argument suggesting otherwise

Protip: borrowing and revenue generation are NOT the same thing, son.

You knew who?
Paul Krugman is not an economist.
Youtube yaron brook.
great depression and 2008 caused by government
lower gov spending+restrictions on action
economy boom

Barros.

english please
TRump won biiiiitch!!
swayyyyonnnnk!!

Trump won, but I don't see why somebody who praises Yaron Brook thinks that's a good thing. He wants to increase government spending at a much higher magnitude than Clinton wanted to and he's already proposed multiple regulatory policies, including halting the AT&T/Time Warner merger, which is a direct interference by a federal entity on the market, which would make Ayn Rand vomit.

OK, I accept the words "raise enough revenue" were misleading. Technically the USA could not generate enough revenue to fund government spending needs (in the current economic circumstances). However the revenue is not the limiting factor because it has access to enough funding to meet government spending needs. And yes, I do know that it's been denying itself access to that funding.

The point I was trying to make is that your criticism of went too far. Other countries invest in US government bonds because they see them as a good investment, but the money could just as easily be sourced from the Fed, or from banks who source the money from the Fed.

The Fed has the power to create money. Yes it will have to be paid back eventually, but that could be financed simply by borrowing more from them.

>The Fed has the power to create money.
Wrong. The money supply is controlled by the Treasury Department, not the Federal Reserve. The Fed can, at best, use its considerable influence to affect M1 policy decisions, but they do not have the power to make them.

What the Fed can do if affect the amount of money in circulation, which it does by buying or selling treasury securities. The Fed can essentially punish Treasury for running the presses excessively by affecting the price of treasuries. But, no, the Fed does not have the power to create money.

Lastly, my criticism of was 100% accurate. He claimed -- falsely -- that the government only incurs debt because it chooses to do so, and implies that the government could stop doing so at any time. This is provably false, as anyone with an accurate understanding of monetary policy would know.

>nothing has collapsed yet so
>collapsed yet
>yet