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 I owe everyone an apology for writing a diary earlier today that was wrong in what I was claiming. I offer no excuse other than thinking I understood the deficit when I clearly

When I write about anything,I have books in front of me that I can check my statement
If I feel the need. When your my age.I can write about people I have met,Vietnam,and ancient history. I am THAT OLD!I also have the good fortune of knowing many very smart
people in many fields. I wanted to wait until I talked with someone I know who is very smart in understanding the deficit before I wrote one more word on this subject.

The rate of increase on our debt is slowing down.Obama inherited a  budget deeply in debt thanks to two wars and de-regulation of the banks that put our Nation to near financial collapse. My friend who is in the financial field says the 1% crowd raped
this country and we almost lost the banking system as we know it.

The Affordable Care Act and the aging of  our baby boomers could see the deficit rise.
The Republicans already have "gutted" social programs. They seem to want the 1% to be just fine but screw us. He said "stop trying to get into deficits" you can argue
them many ways. Jobs are needed. More revenue. I am a Republican my friend said
and he lays the deficit right at the feet of George Bush And Bill Clinton.Clinton allowed
Glass-Steagall to expire. That allowed banks to make risky deals with depositors money.

I stand by my feeling that we need to be pro-active a million years before the election
of 2014. If unemployment stays over 7%,Republicans will use that as a weapon.From now on, Republicans will fight our President harder in Congress. They want the Senate
and to keep the House.

Think how to sell a Republican world to anyone unemployed,on Social Security,Welfare,
Medicare,Medicade,etc.Openings on the Supreme Court will decide if Roe survives.
An effort will go forward to impeach our President if Republicans win the Senate.

My friend tells me fights  are in our future as to how to deal with our deficit. The Republicans want us to give up much of our safety net. I think the 1% should become
part of this Country and stop bleeding it dry. Loopholes should be closed, punish
companies that have overseas operations that allows them to legally cheat on taxes.

I feel better now, I know how to fight THOSE fights. I am just one person,join the fight.

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Comment Preferences

  •  Tip Jar (10+ / 0-)

    Social activist, nutrition and exercise advice,long distance runner, Writer.

    by Vet63 on Sun Dec 15, 2013 at 07:48:09 PM PST

  •  Well done! I like what you said, (4+ / 0-)

    and you got the paragraph breaks right :)

    Shop indie 4 the holidays! Visit my Handmade Gallery on Zibbet & check out Kos Katalogue

    by jan4insight on Sun Dec 15, 2013 at 07:59:03 PM PST

  •  Yeah, tax giveaways just kill the Middle Class. (6+ / 0-)

    Remember who the real enemy is....

    We've been hit repeatedly with tax giveaways to the .01%. The list is short and sweet:

    -- Reagan's two tax giveaways mainly helped the top 2%.
    -- Clinton halved the capital gains tax from 30% to 15%.
    -- Clinton signed the "carry interest" abomination that allows 100% of fees from investment advisor contracts to be taxed as capital gains (not just the appreciation.)
    -- Bush had two tax rate giveaways that mainly helped the top 2%.

    That's more than half of the income redistribution. There is one more 800-pounder:

    -- The Fed is pumping out $85,000,000,000 a month to the big banks.

    That starts with Treasury bonds and goes to cash in the tills with "quantitative easing" and no restriction of performance standards. (You own or operate a big bank ??? Neither do I.)

    External damage:

    -- China has 350,000,000 "Long Distance Commuters." These are adults who have been forced by changes to  pricing policies for staples to leave their families and go to virtual prisons to keep everyone fed.
    -- They get between $1.50 and $3.50 an hour.
    -- These 700,000,000 busy hands are applied at the coastal export platforms. Quality of life... from Hell.
    -- Local projects, infrastructure, education are slighted. So of course China has a remarkable competitive advantage in world manufacturing markets.

    Similar situation to England during the first Industrial Revolution. The bottom third lived like dogs.

    Also, while we're at it for the 800-pound gorillas, why did Democrats just save the Republican Party from Teabagger suicide ?

    -- The Bircher Wing of the GOP is committed to vastly unpopular government shutdowns.
    -- The loons have been promising to make every budget milepost a voter-screwing disaster.

    The GOP was looking to set to ride teabagger theatrics to a 40- or 50-seat loss in the House come 2014.

    So WTF? Democrats save these holes from cratering with the 2-year budget deal and get nothing for their constituents.

    No unemployment benefits. No rise to the minimum wage. No reductions to the military and intel. Nothing for reproductive protections. Nothing to limit NSA. Nothing to tighten restraints on the JPMC/Goldmans of the world. Nothing to halt or reverse the giveaways. Upward redistribution continues apace.

    Remember who the real enemy is................

  •  For one thing ... (9+ / 0-)

    Stop yammering about the deficit.

    The national budget is not like your kitchen budget.
    The national budget is not like your kitchen budget.
    The national budget is not like your kitchen budget.

    On the national scene, you can spend yourself to prosperity and save yourself into penury.  

    It's a whole different kind of animal and getting mixed up with Randians and gold standard idiots is the wrong way to go.

    "Our problem is not that the glass is half empty or half full, but that the 1% claims that it is their glass." ---Stolen from a post on Daily Kos

    by jestbill on Sun Dec 15, 2013 at 08:23:22 PM PST

    •  I agree competely with what you're saying but (1+ / 0-)
      Recommended by:

      "yammering" seems like it might be meant to express contempt. Maybe that's not what you had in mind?

      •  I just threw the writer in with (0+ / 0-)

        the others.
        Getting real tired of listening (40+ years) to people claiming to have common sense who do not.

        Even if the debt and deficit were stacks of gold, we should remember the old rule:

        If you owe the bank $1000, they own you.  If you owe the bank $1,000,000 you own them.  Update the numbers for inflation and the fact that these are not private but national numbers and the "Debt" problem just goes away.

        The real enemy is whoever changes the subject away from the depredations of the 1%.

        "Our problem is not that the glass is half empty or half full, but that the 1% claims that it is their glass." ---Stolen from a post on Daily Kos

        by jestbill on Sun Dec 15, 2013 at 11:20:17 PM PST

        [ Parent ]

      •  Another Grizzle (0+ / 0-)

        A little harsh maybe, i am afraid of apathy.not from us,from the people we know. I don't see the same thing this year.
        "A house divided cannot stand".

        Social activist, nutrition and exercise advice,long distance runner, Writer.

        by Vet63 on Mon Dec 16, 2013 at 06:36:23 AM PST

        [ Parent ]

    •  jestbill (0+ / 0-)

      I agree with you and love the quote.
      Thanks for the message.

      Social activist, nutrition and exercise advice,long distance runner, Writer.

      by Vet63 on Mon Dec 16, 2013 at 06:32:07 AM PST

      [ Parent ]

  •  Four points (2+ / 0-)
    Recommended by:
    Calamity Jean, sydneyluv

    One, the projected national debt, as a percentage of GDP, going out the next 30+ years, is pretty stable.  We have no problem there, any long term budget cuts or revenue increases that were needed have already been made.  

    Two, it's debateable whether deficits or debt really needed to be cut in the first place, at least at this time.   When interest rates are really low, as they are right now, governments should borrow rather than tax.  That's the sound financing move, it's actually a good deal for taxpayers.  

    Three, how much the government spends should be decided mainly by how much spending the economy needs in order to get to near full employment.  Borrow all of those private dollars that are sitting idle out there driving down interest rates, and put them to work employing people.

    Four, once you have a robust economy with low unemploiyment and wages increasing due to worker shortages, that's when you are supposed to cut government spending or raise taxes to get some of those dollars out of the economy.  So that's when you should be reducing the debt and deficits, in order to extend a recovery.

    •  Zimbabwe!! Socializm! (1+ / 0-)
      Recommended by:

      "Our problem is not that the glass is half empty or half full, but that the 1% claims that it is their glass." ---Stolen from a post on Daily Kos

      by jestbill on Sun Dec 15, 2013 at 11:21:42 PM PST

      [ Parent ]

    •  The deficit = Private Sector savings..... (2+ / 0-)
      Recommended by:
      acerimusdux, Vet63

      1) We deficit spend dollars into existence.

      2)  Now the private sector has dollars.

      3)  Now the fed gov can either tax or borrow those dollars.

      We first create dollars out of thin air, then "borrow" back what we just created out of thin air.

      Interest on T Bonds just adds more dollars to the private sector.

      We pay interest on T Bonds by creating dollars out of thin air.

      Since we create T Bonds and dollars out of thin air so we can borrow back the dollars we create out of thin air, it's obvious the T Bonds are not actually necessary to fund the fed gov .

      As the fed gov creates dollars out of thin air :)

      T Bonds are an archaic hold over from the gold standard.  And now merely provide a free lunch to bond holders.

      The total deficit is merely the mirror image of private savings:

      •  Mostly agree (1+ / 0-)
        Recommended by:

        Yes, public deficits just means there are private surplusses.  And public debts just means there is private savings.  

        And in theory you could finance the government without having bonds at all.  I don't think bonds are archaic though, since most of the time conventional monetary policy alone (substituting debt for dollars), has real economic impacts.  

        So not needed to finance the government, but needed as an effective tool for regulating aggregate demand.

        •  acxerimusdu (0+ / 0-)

          I am in school learning from you.I will just read.
          Thanks for the lesson.

          Social activist, nutrition and exercise advice,long distance runner, Writer.

          by Vet63 on Mon Dec 16, 2013 at 12:48:09 PM PST

          [ Parent ]

        •  Aggregate demand by paying more or less interest (0+ / 0-)

          on reserves.

          Bonds don't seem to me to be necessary.

          •  Reserves are more like money (1+ / 0-)
            Recommended by:

            Reserves are overnight, very short term.  And if they don't leave the banking system, they don't impact the private economy.  Right now they are a lot like bonds, because monetary policy through bond purchases also has little effect right now (and maybe also ends up just increasing excess reserves).  

            But consider more normal times, when you don't want banks holding excess reserves, and you need to be able to tighten to prevent the economy from overheating.  

            In theory you could do this without bonds with a sufficiently flexible tax system.  You could absorb excess money simply by increasing tax rates.  But we don't have a system where we can adjust tax rates daily, weekly, monthly, etc.  The same can be said of adjusting government spending.

            That being the case, having the ability to sell long term treasuries and soak up dollars from the private sector becomes useful.  It has significant impacts for inflation control when you are able to pursuade private sector actors to tie their money up in longer term government bonds, where it can't be easily spent, rather than holding some form of cash or money, which can.  

            •  Yes, it would require people understanding (0+ / 0-)

              what money is, how it works, and what taxes do :)

            •  If you pay high enough interest rates on reserves (0+ / 0-)

              wouldn't that also have the effect of sequestering money?

              Isn't T Bonds just a ransom because they pay interest?

              •  In theory... (1+ / 0-)
                Recommended by:

                You could probably slow an overheating economy by hiking interest rates by increasing the interest paid on reserves, and since excess demand is the main cause of inflation, you could probably contain inflation that way as well.  

                What would be unusual here would be you would be forcing banks to run large reserve balances even in normal times, or even when the economy is overheating, by essentially substituing reserve balances for long term bonds as a financing mechanism.  

                One objection to this is that, while inflation is mostly due to excess demand, it can also occur to a loss of confidence in a currency.  We know that a government with debts in it's own fiat currency can't go bankrupt, but that doesn't mean the currency's value can't fall.  A less sound financing basis may lead to less confidence in the currency.  The counter to this is, if you want a sounder basis for financing your spending than relying on excess reserves, you can always raise taxes rather than issue bonds.  

                So ultimately, I agree you don't need bond financing,  but I think it's probably still a good idea mainly because:

                a> it's actually usually a good deal for taxpayers, as mentioned above
                b> I'm uncertain (partly because it hasn't been tried yet) whether you would be able to maintain the same degree of stability in  inflation and exchange rates.  

                On point a, consider that usually you run larger deficits during a recession, when the economy needs stimulus.  If you borrow $500B in long term debt for a stimulus package for example during a downturn, when rates are low, typically interest rates will rise when the economy recovers, and you might well be able to buy that debt back in a few years for only $300B.   That ends up being a better deal for taxpayers than financing either through taxes or through reserves.  

                On point b, consider that the way Fed operations work currently, buying and selling government debt for stabilization purposes, also tends to be profitable (partly because it also tends to be countercyclical).

                Moreover, interest income has risen significantly more than interest expense and, as a result, remittances to the Treasury have grown substantially in recent years, from roughly $25 billion per year, on average, from 2001 to 2007, to almost $80 billion in 2010 and 2011, and to nearly $90 billion in 2012, as shown in Figure 3. And, although some attention has been focused on the change in the balance sheet and the potential interest rate risk that the Federal Reserve has incurred, in fact, the Federal Reserve's securities portfolio currently has an unrealized gain position of roughly $249 billion as of September 2012.


                So I think you could probably do away with federal debt altogether, but I'm not convinced that it would be beneficial.  
      •  katiec (0+ / 0-)

        where do you see our Nation headed in 3 years if the Republicans win both houses of Congress? I mean from an Economic point of view.

        Social activist, nutrition and exercise advice,long distance runner, Writer.

        by Vet63 on Mon Dec 16, 2013 at 03:05:59 PM PST

        [ Parent ]

        •  More Oligarchy faster. But the faster is the (0+ / 0-)

          important part in my opinion.

          Dems are going down the same road.  Only a bit more slowly.

          Remember, Obama has overseen the greatest inequality in American history, with the top 1% gaining 80% (or more) of all new income.

    •  Re (0+ / 0-)
      When interest rates are really low, as they are right now, governments should borrow rather than tax.
      That's what Greece said when Greek government bonds were trading at 4% in November 2009.

      (-5.50,-6.67): Left Libertarian
      Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

      by Sparhawk on Mon Dec 16, 2013 at 06:10:08 AM PST

      [ Parent ]

      •  Greece is not a monetary sovereign. It gave that (1+ / 0-)
        Recommended by:

        up when it decided to rent the Euro, in effect using a foreign currency.

        The US, in contrast, is a monetary sovereign of a fiat currency with floating exchange rates.

        The US creates dollars out of thin air, owes all it's obligations in it's own unit of account - the dollar, which it creates out of thin air - and sets it's own interest rates, not the bond vigilantes.

        Greece and the US are in no way similar.

        Just as households are in no way similar to the US fed gov.

        Please learn the difference between a currency  USER - you, businesses, US individual states, and Greece and the rest of the Euro countries, and sovereign currency  ISSUERS - The US, Britain, Japan, China, and others.

      •  Not when inflation had already fallen below 1% (0+ / 0-)

        Greece was alreay in trouble by late 2008, as it's 10-year rate approached 6%, while inflation dropped to near 2% and GDP stalled.  They needed to raise taxes then.  But the economy was sliding into recession and also needed stimulus, normally a bad time to raise taxes.  

        Problem is, with no sovereign currency and with free capital flows, Greece has no ability to conduct independent monetary or fiscal policy.  They end up requiring foreign financing.

        The US doesn't have this problem, as it has the ability to print money (which lowers interest rates) when stimulus is desired and interest rates are too high.  

        I think it would take much higher debt levels to raise serious doubts about the US government's ability to raise taxes when needed.

      •  Sparhawk (0+ / 0-)

        Leadership should mean learn,get educated on a subject.

        Social activist, nutrition and exercise advice,long distance runner, Writer.

        by Vet63 on Mon Dec 16, 2013 at 12:50:42 PM PST

        [ Parent ]

    •  acerimusdux (0+ / 0-)

      I asked if we should HAVE  a national debt. I was told yes we should. I think you and my friend went to the same class.
      I show these comments to him. He read your words and nodded approval.
      I am still learning.
      Thanks for your comment.

      Social activist, nutrition and exercise advice,long distance runner, Writer.

      by Vet63 on Mon Dec 16, 2013 at 12:45:41 PM PST

      [ Parent ]

  •  We don't owe $52,966.000 (0+ / 0-)

    The fed gov issues a fiat currency out of thin air so the private sector has dollars to use as their incomes.

    At the fed level, dollars are merely a unit of account, like inches are a unit of measure.

    You never owe inches, you merely use them to measure.

    The fed gov is like the bowling alley, issuing points to the players

    The total deficit is an accounting (a score) of how many dollars are in the private sector.

    The total deficit   =  how many dollars are in the private sector being used, to a penny:

    If you reduced the total deficit to $0, you'd have $0 dollars in the private sector.

    That would suck.

    Every dollar is both a public liability and private asset:

    Public -1  =  Private +1

    Public - 17T  =  Private + 17T

    The Private Sector is divided into both the domestic private and foreign trade, which is in deficit:

    Public -1  =  (Domestic +1/2) - (Foreign +1/2)

    As you can see, the domestic private sector fund the foreign trade sector if the fed gov does not.

    Add a public sector surplus:

    Public +1  =  (Domestic -2)  -  (Foreign +1)


    Saying the total deficit is too large  =  saying there are too many dollars in the private sector.

    Since most people have too few dollars, not too many, and since we have idle capacity, it's difficult to imagine there are too many dollars running around.

    How large should the total deficit be?

    How many dollars does the private sector need to work at full capacity?

    The deficit should simply float against the real economy, taking into account the desire of the private sector to save, as well as the fact we run large trade deficits.

  •  Your previous diary could have easily been (0+ / 0-)

    salvaged by replacing "debt" with "deficit" in 2 or 3 key places.

    That aside, the idea that the National Debt is not important (which seems to be an idea that resonates with many DailyKossers) seems misguided to me because it only serves to enrich the "1%ers" in 2 key ways:

    First, the debt itself is to an appreciable extent due to large tax cuts given to the very wealthy.

    Second, the very wealthy disproportionately own the national debt, therefore paying it back, with interest, constitutes yet another (and powerful) mechanism with a long reach into the future to transfer wealth upwards.

    IOW, a double whammy to the average person out there (I could easily make it into a triple whammy, but don't have time for long posts right now).

    •  Roadbed guy (1+ / 0-)
      Recommended by:
      kathy in ga

      I now know from the inside, we can go along way if someone like Elizabeth Warren is turned loose and told to fix things. She is savvy enough to know how.
      thanks for your comment.

      Social activist, nutrition and exercise advice,long distance runner, Writer.

      by Vet63 on Mon Dec 16, 2013 at 03:13:31 PM PST

      [ Parent ]

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