U.S. Budget Deficit Widens 11.8% in First Quarter of Fiscal Year

Discussion in 'Budget & Taxes' started by Giftedone, Feb 10, 2020.

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Does Trumps massive spending make him an even bigger Socialist than Obama ?

  1. Yes - Society is on the hook for all this spending and wealth redistribution is socialism

    4 vote(s)
    57.1%
  2. No - Military and other programs that I like are funded by Santa Clause and not Taxes.

    3 vote(s)
    42.9%
  1. a better world

    a better world Well-Known Member

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    Actually you are all 'barking up the wrong tree' re deficits.

    Explained here:

    http://www.politicalforum.com/index.php?threads/mmt-overcoming-the-political-divide.569365/
     
  2. Giftedone

    Giftedone Well-Known Member Past Donor

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  3. a better world

    a better world Well-Known Member

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    We have been fore-warned of this type of response - by no less than Keynes himself!

    As Keynes wrote, "[Lerner's] argument is impeccable, but heaven help anyone who tries [to] put it across to the plain man at this stage of the evolution of our ideas." (Keynes to Meade, April 1943).

    [For historical context, MMT is a successor to Functional finance, an economic theory proposed by Abba P. Lerner, based on effective demand principles and chartalism. It states that government should finance itself to meet explicit goals, such as taming the business cycle, achieving full employment, ensuring growth, and low inflation].

    Re "money doesn't grow on trees": here is how it IS created: (from Warren Mosler's "7 Deadly Innocent Frauds of Economic Policy"

    https://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

    (from pg 16)
    The Chairman of the Federal Reserve Bank is telling us in plain English that they give out money (spend and lend) simply by changing numbers in bank accounts. There is no such thing as having to “get” taxes (or borrow) to make a spreadsheet entry that we call “government spending.” Computer data doesn’t come from anywhere. Everyone knows that!

    Where else do we see this happen? Your team kicks a field goal and on the scoreboard, the score changes from, say, 7 points to 10 points. Does anyone wonder where the stadium got those three points? Of course not!

    We all know how data entry works, but somehow this has gotten turned upside down and backwards by our politicians, media, and, most all, the prominent mainstream economists. Just keep this in mind as a starting point: The federal government doesn’t ever “have” or “not have” any dollars.

    You now have the operational answer to the question: “How are we going to pay for it?” And the answer is: the same way government pays for anything, it changes the numbers in our bank accounts. The federal government isn’t going to “run out of money,” as our President has mistakenly repeated. There is no such thing.

    So....while money doesn't grow on trees, it IS created in bank accounts - in either the public sector (via central bank and treasury) OR private sector banks (when they write loans for credit worthy customers).

    Mosler explains further:

    Question: If the government doesn’t tax because it needs the money to spend, why tax at all?

    Answer: The federal government taxes to regulate what economists call “aggregate demand” which is a fancy word for “spending power.” In short, that means that if the economy is “too hot,” then raising taxes will cool it down, and if it’s “too cold,” likewise, cutting taxes will warm it up. Taxes aren’t about getting money to spend, they are about regulating our spending power to make sure we don’t have too much and cause inflation, or too little which causes unemployment and recessions.
     
    Last edited: Mar 12, 2020
  4. Giftedone

    Giftedone Well-Known Member Past Donor

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    Then we should all stop paying taxes - if the gov't can just create money as much money as it wants out of thin air.
     
  5. a better world

    a better world Well-Known Member

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    Didn't you read Mosler's answer?

    "Taxes aren’t about (government) getting money to spend, they are about regulating our (private sector) spending power, to make sure we don’t have too much (spending power) and cause inflation, or too little which causes unemployment and recessions".

    Now as to "gov't just creating as much money as it wants out of thin air", that (non MMT) proposition violates a basic MMT principle which says that government IS constrained by the resources available for purchase in the economy.

    Understand?

    http://www.politicalforum.com/index.php?threads/mmt-overcoming-the-political-divide.569365/
     
    Last edited: Mar 12, 2020
  6. Giftedone

    Giftedone Well-Known Member Past Donor

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    OK - but doesn't relate
    It is you that does not understand the meaning of your own quote :) Your have not detailed how this constraint addresses the question - sans a very simplistic upper bound. If the Gov't were to attempt to create money anywhere near that boundary - things would go south very quickly.

    Money creation has consequences - it is not "funny money" - You can pull on a string -but you can't push on a string. You can make loads of money available for borrowing - but you can't force the lenders to borrow that money - and you can't force the consumer (already weighted down with big debt) to borrow.

    I am not weak at math - nor am I ignorant in basic economic theory.

    Deficits matter.
     
  7. a better world

    a better world Well-Known Member

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    Why so? you asked "why do we need taxes..etc), and Mosler gave you the answer.


    ? ….that "government is constrained by the resources available for purchase in the economy"?

    What part of that don't I understand? I'll make it even simpler for you:

    The currency-issuing government is constrained by resources, not money.


    Not so. Inflation is the result of excessive demand on available resources, which can be managed by ….taxation, as explained by Mosler, above. Nothing is "going south very quickly". Rather, we WILL have more efficient, sustainable use of available resource

    Exactly.
    eg a government can implement a business-cycle-busting above-poverty Job Guarantee, with money created in the consolidated government sector ie treasury + central bank.

    Which is exactly what central banks around the have been trying to do since the GFC.... with monetary policy now exploring negative interest rates. But highly indebted, insecure citizens aren't interested in borrowing money....

    Notice how I already beat you to that conclusion.....(since you don't recognise a role for the public sector, in money creation...)

    I've no doubt your math is fine ; as for your grasp of basic economic theory, I've no doubt Mosler's comment is correct:

    "We all know how data entry works, but somehow this has gotten turned upside down and backwards by our politicians, media, and, most all, the prominent mainstream economists. Just keep this in mind as a starting point: The federal government doesn’t ever “have” or “not have” any dollars."

    Recommended reading: "The Deficit Myth", by professor Stephanie Kelton.
     
    Last edited: Mar 12, 2020
  8. Giftedone

    Giftedone Well-Known Member Past Donor

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    You did not beat me to the conclusion - you agreed with my conclusions ... then you build a strawman - accusing me of a position that I did not state - nor hold - "role of the public sector in money creation"

    I hate strawmen .. you should to.
     
  9. a better world

    a better world Well-Known Member

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    I hate strawmen too. In fact I was offering an explanation as to why you wrote this:

    on reflection, I should have directly addressed the first bit: "you can make loads of money available for borrowing".
    (the 2nd bit about 'forcing' we agree on, and I got there first...)

    No-one is talking about "making loads of money available for borrowing"; only private sectors players need to borrow, that is an MMT principle.

    MMT'ers are talking about government creating bank deposits for specific social programs, subject to availability of resources, and implementing avoidance of excess demand on said resources, with taxation if/when required.

    I accept you retraction re "strawmen".
     
    Last edited: Mar 13, 2020
  10. Giftedone

    Giftedone Well-Known Member Past Donor

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    What retraction ? Either show where I stated what you said or shut up... spending obviously stimulates the economy - be it Gov't or otherwise... and I did not claim otherwise.
     
  11. a better world

    a better world Well-Known Member

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    You said:
    I should have pulled you up right there, the first time you said it.

    Done.

    (I ignored your wrong premise, and jumped straight to the next part of your sentence instead - and came to the same conclusion as you, re that second part).

    ...obviously.... and neither did I claim otherwise.

    Note: the underlined part above has absolutely NOTHING to do with MMT, which DOES NOT make "loads of money available for borrowing"

    MMT does explain how currency-issuing governments can directly fund government spending on specific programs without first taxing (or borrowing); taxation is in fact a means of removing excessive demand in the economy, if such arises. [A well designed public program will not necessarily cause inflation, if the necessary resources are un-underutilised].

    http://www.politicalforum.com/index.php?threads/mmt-overcoming-the-political-divide.569365/
     
    Last edited: Mar 16, 2020
  12. Giftedone

    Giftedone Well-Known Member Past Donor

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    You can't be this daft. . You said - "Notice how I already beat you to that conclusion.....(since you don't recognise a role for the public sector, in money creation...)"

    and I stated specifically that this was your strawman. Show where I said anything that did not recognize a role for the public sector in money creation.

    To the contrary - I gave an example of public sector money creation.

    Now go back to the drawing board - and get some reading comprehension.
     
  13. a better world

    a better world Well-Known Member

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    1. Your premise - "making loads of money available for borrowing" - was wrong, irrelevant, and nothing to do with the MMT discussion. You need to admit your premise was wrong.

    2. I have explained 3 times now that what you are claiming to be a strawman was not a strawman, ie I was attempting to understand why you made the ridiculous, wrong and irrelevant assertion about "loads of borrowing", I was not commenting on the second part of your comments with which I agreed.

    3. What you mean by public sector money creation is NOT what MMT means by public sector money creation.

    That is YOUR strawman!

    MMT does mean sovereign currency issuing governments creating deposits - ex nihilo - in bank accounts; NOTHING to do with "loads of money for borrowing" by anyone.

    Hence no strawman, though I doubt you will see this even now, since you think

    1. governments must tax (or borrow) in order to spend:
    2. governments like households must balance their budgets. (hence the erroneous assumption that government deficits are bad (as implied in the OP(.

    …..

    Listening to the news now …..QE is back as a policy consideration for the Fed.
    But, just as lowering interests rates to zero won't keep people in jobs during a pandemic, likewise pumping money into bank reserves will not keep people in jobs when we are faced with massive industry closures.






     
    Last edited: Mar 16, 2020
  14. Giftedone

    Giftedone Well-Known Member Past Donor

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    You are lost.. The above is not the premise that is being referred to - and in fact it is not "My Premise" that is being discussed but Your Claim that is being discussed.

    That would be the definition of me accusing you of building a "Strawman" - this references a claim that you made.

    The last post opens with that claim -a claim that you made. When you manage to get on the same page - and figure out what claim/premise we are discussing.. - do let me know

    Second " Making loads of money available for borrowing" is not a premise - it is what the Gov't does but it is not a premise. if you have some great revelation .. - do let me know - so far is is near like the Charlie Brown Teacher in the background.


    Agreed
     
  15. a better world

    a better world Well-Known Member

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    So I will reply to your post in reverse order, to get to the bottom of the strawman issue.

    You agree with:
    OK. And your solution is?
    …...
    [Next, continuing in reverse]

    And those are the erroneous, nonsensical beliefs of yours that MMT dispenses with.

    http://www.politicalforum.com/index.php?threads/mmt-overcoming-the-political-divide.569365/page-2

    Or alternatively, search Stephanie Kelton in youtube.

    [Note: sovereign currency issuing governments are constrained by real resources and the economy's productive capacity, NOT primarily by money....and/or deficits].

    next......

    But the government does NOT do that in MMT. (I will defer to your insistence it is not your premise....)

    next...

    Since you are insisting that "(Government) making loads of money available for borrowing", is not a (or your) premise, indeed I don't know how to respond...….

    Meanwhile we both agree government spending stimulates the economy. No controversy there.

    OTOH, your fixed, false belief (the definition of delusion), consistent with these widely held beliefs, namely:

    1. governments must tax (or borrow) in order to spend:
    2. governments like households must balance their budgets.

    IS the point of contention.
     
    Last edited: Mar 16, 2020
  16. Giftedone

    Giftedone Well-Known Member Past Donor

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    You are talking nonsense. Gov'ts must tax or borrow in order to spend - sans printing money and giving it away :) Its not complicated.
     
  17. a better world

    a better world Well-Known Member

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    So you are not interested in learning about MMT?
    You obviously didn't even bother to have a look at a short Kelton youtube presentation.

    1. "Printing money"* (to use your terminology) for specific public policy purposes, consistent with available resources and the nation's productive capacity is not "giving it away"......though indeed this is apparently exactly what congress is currently considering,.... and I suppose they just intend to pile more debt onto the deficit, which will be good for bond holders - if the financial industry doesn't also collapse - and disastrous for taxpayers.

    Still waiting for your solution to the looming collapse in GLOBAL employment, please.

    2. Indeed it's not complicated, and yet you are stuck with your delusional beliefs about government budgets, deficits, and taxation.

    *re "printing money": it's exactly what private banks do when they write loans - create deposits - for creditworthy customers.
     
    Last edited: Mar 16, 2020
  18. Giftedone

    Giftedone Well-Known Member Past Donor

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    1) dude - we went down this road and you failed to make your case - and you also failed to address my comments in a coherent fashion - or what your youtube vid has to say in a coherent fashion on this issue.

    Money does not grow on trees - 10 youtube video's will not change this
    Gov't spending is done on the basis of mostly taxes and borrowing - this is a fact.

    What is likely is that if I did watch your video I would find that either you did not understand the video - or the person in the video does not understand the subject matter.
     
  19. a better world

    a better world Well-Known Member

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    Addressing your post in reverse again:

    To be clear: yes, that appears to be the case at present, but:

    "Taxes aren’t about (government) getting money to spend, they are about regulating our (private sector) spending power, to make sure we don’t have too much (spending power) and cause inflation, or too little which causes unemployment and recessions". Warren Mosler. (Mosler previously explains how central banks "change numbers in bank accounts" to fund specific government programs).

    Quite so, but it can be created ex nihilo by the currency issuing governement, alongside money creation ex nihilo in commercial (private sector) banks, consistent with available real resources and productive capacity of the economy (which is the totality of the public and private sectors).






     

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