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View Diary: Dick Durbin Insults Everyone Else's Intelligence About Social Security (85 comments)

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  •  A balanced budget is absolute death to the (2+ / 0-)
    Recommended by:
    psyched, aliasalias

    domestic private economy, especially with a trade deficit.  Sure, raise taxes on the really, really wealthy, but unless that is offset by even greater spending increases, or tax cuts for working and middle class folks, it will be a net negative event for the economy.  7 periods of sustained budget surpluses in US history were followed by 7 periods of depressions.  The deficit is necessary for the growth and stability of an economy with growing productivity and population.  This is the point we keep trying to make.  Deficits are good, not bad.

    MMT = Reality

    "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

    by Auburn Parks on Tue Oct 22, 2013 at 08:54:40 AM PDT

    [ Parent ]

    •  Hey, we *need* to increase spending. A lot. (0+ / 0-)

      I get that deficits enable the domestic private economy, but obviously deficits alone don't fix the economy; if they did, we'd have been in clover since Bush created his trillion-dollar deficit.

      Secondly, the working people of this country have been paying more than their share of taxes for over twenty-five years. I think it's time we increased spending and cut taxes--on them.

      I tried to go online to find a similar bear head...but when I searched “Big Bear Head” it gave me a San Diego craigslist ad entitled “Big Bear needs some quick head now” and then I just decided to never go on the internet again.--Jenny Lawson

      by SouthernLiberalinMD on Tue Oct 22, 2013 at 09:45:04 AM PDT

      [ Parent ]

      •  I most definitely agree with this line: (1+ / 0-)
        Recommended by:
        aliasalias

        "Secondly, the working people of this country have been paying more than their share of taxes for over twenty-five years. I think it's time we increased spending and cut taxes--on them."

        To the first point you made.  No, deficits alone can't fix the economy.  That would be much too simplistic.  It depends on where all that newly created money goes.  Suspending FICA is great, but IMO spending $100 billion a year on NASA is also great.  Free college and post grad education for every American might be a better way to spend that money than a FICA tax cut.  There are so many dynamics at play.  So the size of the deficit is hugely important, but where that money goes is equally as important.

        As for this line: "but obviously deficits alone don't fix the economy; if they did, we'd have been in clover since Bush created his trillion-dollar deficit."

        We need some context there.  Why hasn't the $6 trillion in new money created and spent by the Govt in the last 5 years been enough to get us back to full employment.  Thats because $1 trillion deficits every year may sound like alot of new money, the amount of new money = debt the private sector creates each year has been much larger over the last 2 decades+.

        Check out the nominal growth in total debt = money in the country since 1980:

        http://research.stlouisfed.org/...

        If you look at the time period between 1998 and 2008, the total number of credit market instruments (the broadest measure of the money supply) rose by about $26 Trillion, or $2.6 Trillion per year.  And remember that the average Govt deficit = contribution to the growth in money only averaged only $157 Billion per year (a total of $1.57 Trillion for the period).  Thats breaks down as far as contribution, to 6% Govt created money and 94% private sector created money.

        http://www.taxpolicycenter.org/...

        Since 2008, we had only about $ 4 Trillion worth of new money created in 6 years, which is around $800 billion in new money each year.  Thats a drop of almost $2 trillion in new money every year on average.  So while the Govt has created $6 Trillion ($1.2 Trillion per year) in new money since 2008, the private sector has net destroyed $2 trillion in debt = money ($500 Billion per year on average).

        This gives you some sense in the scale of these matters.  Again, $6 trillion may sound like a lot, but in order to have kept the money creation pace the same as the 1998 to 2008 time period, the Govt's deficit = contribution would've had to have been around $17.6 Trillion (a doubling in the number of T-bonds outstanding).  

        $17.6 T - $2 T (the private sector destroyed) = $15.6 Trillion in new money / by 6 years = $2.6 Trillion average in total new money created each year since 2008.

        And thats why the $1 trillion deficits have only been sufficient to barely keep us afloat.

        P.S. There is plenty of room for adjustment in all these numbers as its all been done on a constant dollar basis coming from the Fed, plus there are obviously many other financial factors in play, like that the $26 trillion in new debt between 1998 and 2008 wasn't all put to productive use and consumer goods and services, it was a lot of paper wealth in derivatives, inflated asset prices that was essentially wiped out.  But as a general framework for understanding the scale and macro data, it works and is worth remembering.

        MMT = Reality

        "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

        by Auburn Parks on Tue Oct 22, 2013 at 10:15:08 AM PDT

        [ Parent ]

        •  Well, yeah, and I'm aware globalization (0+ / 0-)

          also plays a role. It's really unhappy-making that the defense spending of WWII did a hell of a lot more for us than the defense spending of today!

          I'm about to run out of battery, but will definitely respond to your comment in greater depth later!
          thanks for responding to mine in such depth.

          I tried to go online to find a similar bear head...but when I searched “Big Bear Head” it gave me a San Diego craigslist ad entitled “Big Bear needs some quick head now” and then I just decided to never go on the internet again.--Jenny Lawson

          by SouthernLiberalinMD on Tue Oct 22, 2013 at 10:20:43 AM PDT

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          •  look forward to it (0+ / 0-)

            "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

            by Auburn Parks on Tue Oct 22, 2013 at 10:32:20 AM PDT

            [ Parent ]

          •  oops this line should be made clearer (0+ / 0-)

            "Since 2008, we had only about $ 4 Trillion worth of new money created in 6 years, which is around $800 billion in new money each year."

            That should be understood to be $4 trillion in NET NET NET new money created in 6 years.  Otherwise it doesn't make sense.

            MMT = Reality

            "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

            by Auburn Parks on Tue Oct 22, 2013 at 10:36:16 AM PDT

            [ Parent ]

        •  Good comment (1+ / 0-)
          Recommended by:
          psyched

          I won't check your arithmetic. But the general point is very sound.

    •  What I was responding to is that even in (1+ / 0-)
      Recommended by:
      aliasalias

      their own terms, they are such rank hypocrites and liars that in a civilized society, they'd be thrown out of the conversation altogether.

      I tried to go online to find a similar bear head...but when I searched “Big Bear Head” it gave me a San Diego craigslist ad entitled “Big Bear needs some quick head now” and then I just decided to never go on the internet again.--Jenny Lawson

      by SouthernLiberalinMD on Tue Oct 22, 2013 at 09:46:08 AM PDT

      [ Parent ]

      •  There is no denying that the hypocrisy is rampant (2+ / 0-)
        Recommended by:
        SouthernLiberalinMD, aliasalias

        among the right wing, and in the political and media class alike.

        MMT = Reality

        "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

        by Auburn Parks on Tue Oct 22, 2013 at 10:15:58 AM PDT

        [ Parent ]

    •  Deficits are contributions (2+ / 0-)
      Recommended by:
      Auburn Parks, psyched

      to the private sector. That's what we need to emphasize.

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