Our debt isn't the problem (Why worry about balancing the federal budget at all?)

NewEconPerspectives ^ | January 1, 2013 | Stephanie Kelton

[gunsequalfreedom]

"Instead of butting heads over whose taxes to raise and which programs to cut, lawmakers should be haggling over how to use the tool of a federal deficit to boost incomes, employment and growth."

[Drill Thrawl]

Oh my. The Stupid is strong with this one.

[gunsequalfreedom]

I’ve been in a debate with a relative visiting for the holidays over this one.

[Matthew10]

All it is paper, it is backed by nothing, it is simply and easy way to carry around what you want to trade for something of value. All the fed needs do is print more of the stuff, no country on earth has paper money backed by anything, the value is in the thing you trade the money for.

All this fiscal cliff stuff is nothing but a smoke screen, same with the national debt. It is being used as a distraction, a distraction against what is the question.

Opps planes fueled, gotta go.

[holyscroller]

The whole issue is phoney. Obambi spends money like a drunken sailor (sorry sailors), and then screams about obstructionist Republicans who won’t pay his bills. If he hadn’t spent money he didn’t have (and R’s didn’t want spent), there wouldn’t be a problem. The only REAL problem is Obama and his Socialist spending.

[Kickass Conservative]

Let me guess, this guy has a side business selling Wheelbarrows.

[roadcat]

Let me guess, this guy has a side business selling Wheelbarrows.

Yeah, and some of us will get rich selling rope to hang politicians. CWII is coming.

[familyop]

"The public has been badly misinformed. We do not have a debt crisis,...the U.S. government is an issuer of currency. It can never run out of its own money or face the kinds of problems we face when our books don’t balance."

LOL! After the default conclusion, maybe she'll learn to iron shirts.

[shove_it]

The unemployment rate is like a macroeconomic thermometer — when it registers a high rate, it’s an indication that the deficit is too small.

That's the problem - our deficit is too small. Facepalm. This is modern economic theory from an expert in the field.

[familyop]

"Let me guess, this guy has a side business selling Wheelbarrows."

Nope. Imagine a writer with a little less brain weight, then read comment #9.

[Red Dog #1]

The author is demostrbably wrong wrt to the Gingrich/Clinton surplus not being followed by a recession.

http://en.wikipedia.org/wiki/Early_2000s_recession

But to answer the authors premise, why not just keeping running (largely) domestically funded debt? Of course as long as we can print money there will be no default. Which is the reason...it leads to monetary collapse and inflation.

[Bishop_Malachi]

Whoever wrote this article is guilty of some very sloppy research. Economic data compiled by the National Bureau of Economic Research doesn’t even begin until the mid 1800s. There are only two time periods that are generally considered depressions (and even these are very debatable as data is unreliable/incomplete)...from 1807-1810, and from 1815-1821. There are numerous recessionary periods but the vast majority last one-two years (with very few lasting 3 years). The author has an agenda.

[Bishop_Malachi]

Exactly. I mean why do we even need savings and capital markets? In fact, why do we even need taxes? Just monetize all government expenditures through the central bank. Would this make voters ultra-happy? Don’t tax anyone and just hand them freshly-printed cash.

[csmusaret]

Guy sounds like Krugman...We owe more than $16 Trillion, but everything would be peachy keen if only we owed $20 Trillion.

[Bishop_Malachi]

I went to the website where this article was posted. It’s full of MMTers (Modern Monetary Theorists). This “movement”, if you will, is almost cult-like in its devotion. They think that government debt/deficits have no significant, negative consequences. Therefore, they should be used with impunity to stimulate the economy.

[gunsequalfreedom]

Let me guess, this guy has a side business selling Wheelbarrows.

That was what I said to my relative who is promoting this person.

[ctdonath2]

When interest payments exceed revenue, the system stops.

[gunsequalfreedom]

When interest payments exceed revenue, the system stops.

In the mean time, those interest payments represent very non-productive expenditures.

I'm trying to remember where I read the stages of the actual stopping point. It comes before the point interest payments exceed revenue. It was a thread here on FR. At the point interest payments severely impact ability to fund basic government functions.

[ctdonath2]

Yes, it stops somewhere before then. It is at least a hard line which nobody can argue beyond. It’s a reality check for idiots.