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So, waaaay back in the 90's Ross Perot basically ran on a platform decrying the federal deficit and how it would be disastrous if we kept going down the road of a massive government debt. President Trump also made a promise to balance the budget 'fairly quickly':

https://www.politifact.com/truth-o-mete ... y-quickly/

"I don't think he's kept to any definition of shrinking the deficit quickly," said Marc Goldwein, senior vice president and senior policy director for the Committee for a Responsible Federal Budget. "It's only gotten more out of balance. It was not completely his doing — it was already projected to rise — but a large share of the increase comes from what he signed into law."

This is clearly a bipartisan issue, since it seems both parties are colluding to balloon our deficit. I understand the arguments both for and against carrying a debt, however now that we're in what seems to be a quickly escalating debt scenario would anyone care to weigh in on the pros and cons of this issue? What would be the optimal scenario for you in regards to federal debt, and how would that impact our standard of living and by extension our republic?

- Doc

One of the very few things that I found attractive about a Trump ticket several years ago was his talk about dumping tons of money into infrastructure. But I now realize that Trump is about vanity. He wants to do new things so his name gets credit for them. Like moving the embassy to Jerusalem was more about being able to say he's the President who did this. And its got the PM of Israel to name a settlement after him in the Golan Heights called "Trump Heights." The whole space program thing was about him wanting his name on things. But just like his airplanes, casinos and hotels, anything with his name on it becomes toxic.

No one really believed a word he said about shrinking deficits and reducing the debt to zero. Well, maybe his idiot base.

As far as the debt goes, I'm not a big believer in the fear mongering about it. EA and I had a discussion about this some years ago, and we obviously disagree. I think it mattered more when most currency was circulating as hard currency dollars, but nowadays almost everything is electronic transfers. The government isn't literally "printing more money" to keep up with the debt as people say. I think that if $20 trillion in debt doesn't even begin to cause all the apocalyptic chaos as was predicted when it was just $3 trillion, then I doubt the predictions carry much water to begin with. Weren't we supposed to be stagflated and hyperinflated back in 2009? We've since doubled the debt and still no hint of it affecting inflation dramatically.

Kevin Graham wrote:As far as the debt goes, I'm not a big believer in the fear mongering about it. EA and I had a discussion about this some years ago, and we obviously disagree. I think it mattered more when most currency was circulating as hard currency dollars, but nowadays almost everything is electronic transfers. The government isn't literally "printing more money" to keep up with the debt as people say. I think that if $20 trillion in debt doesn't even begin to cause all the apocalyptic chaos as was predicted when it was just $3 trillion, then I doubt the predictions carry much water to begin with. Weren't we supposed to be stagflated and hyperinflated back in 2009? We've since doubled the debt and still no hint of it affecting inflation dramatically.

Kinda reminds me of the housing market a little over a decade ago.

I’ll apologize up front as I haven’t tried to find out the answer yet on my own, but I’ll ask this to the smarter folks here:

Setting aside the question of whether or not the Fed would or could simply print more dollars to throw at the debt, doesn’t a rising debt still imply that we must devote more dollars to servicing it, therefore it does have a ‘real’ (if not relatively small) impact on the overall budget and total dollars available for other expenditures?

canpakes wrote:I’ll apologize up front as I haven’t tried to find out the answer yet on my own, but I’ll ask this to the smarter folks here:

Setting aside the question of whether or not the Fed would or could simply print more dollars to throw at the debt, doesn’t a rising debt still imply that we must devote more dollars to servicing it, therefore it does have a ‘real’ (if not relatively small) impact on the overall budget and total dollars available for other expenditures?

The smarter folks are busy, but you’re correct. The impact has been blunted because the fed has been holding interest rates low. If interest rates rise, the debt service cost also increases.

Kevin is confusing the money supply with paper currency.

Res Ipsa wrote:

canpakes wrote:I’ll apologize up front as I haven’t tried to find out the answer yet on my own, but I’ll ask this to the smarter folks here:

Setting aside the question of whether or not the Fed would or could simply print more dollars to throw at the debt, doesn’t a rising debt still imply that we must devote more dollars to servicing it, therefore it does have a ‘real’ (if not relatively small) impact on the overall budget and total dollars available for other expenditures?

The smarter folks are busy, but you’re correct. The impact has been blunted because the fed has been holding interest rates low. If interest rates rise, the debt service cost also increases.

Kevin is confusing the money supply with paper currency.

Thanks. Your answer also touches on what would have been my second question, about what might possibly be the greater motivating factor for Trump to be all over the Fed for a rate cut. In other words, a rate cut would slow down the rate of debt increase (and reduce the amount required to service it), keeping the total debt situation looking slightly less hideous. I’d imagine that Trump worries more about that rather than a rate cut being ‘more beneficial’ to general consumers because there are more than a few folks within his hard core base who also freak out about debt ... and Trump will otherwise be perceived as pushing that to record high levels.

Doctor CamNC4Me wrote:So, waaaay back in the 90's Ross Perot basically ran on a platform decrying the federal deficit and how it would be disastrous if we kept going down the road of a massive government debt. President Trump also made a promise to balance the budget 'fairly quickly':

https://www.politifact.com/truth-o-mete ... y-quickly/

"I don't think he's kept to any definition of shrinking the deficit quickly," said Marc Goldwein, senior vice president and senior policy director for the Committee for a Responsible Federal Budget. "It's only gotten more out of balance. It was not completely his doing — it was already projected to rise — but a large share of the increase comes from what he signed into law."

This is clearly a bipartisan issue, since it seems both parties are colluding to balloon our deficit. I understand the arguments both for and against carrying a debt, however now that we're in what seems to be a quickly escalating debt scenario would anyone care to weigh in on the pros and cons of this issue? What would be the optimal scenario for you in regards to federal debt, and how would that impact our standard of living and by extension our republic?

- Doc

I don’t know what level of debt would be acceptable, but I would like to see the government have room to stimulate the economy in times of recession. The idea is that we can help minimize the impact of recessions by deficit spending to put people to work and jump start the economy. Then, when the economy is growing, recover the additional debt by running a surplus. Cutting taxes when the economy is doing well is exactly the wrong thing to do. So is cutting interest rates to near zero to try and hold off a recession. When the inevitable next recession hits, the government will have a reduced ability to help the economy recover.

canpakes wrote:Thanks. Your answer also touches on what would have been my second question, about what might possibly be the greater motivating factor for Trump to be all over the Fed for a rate cut. In other words, a rate cut would slow down the rate of debt increase (and reduce the amount required to service it), keeping the total debt situation looking slightly less hideous. I’d imagine that Trump worries more about that rather than a rate cut being ‘more beneficial’ to general consumers because there are more than a few folks within his hard core base who also freak out about debt ... and Trump will otherwise be perceived as pushing that to record high levels.

I think it’s a straight up political calculation. If the economy starts headed toward recession, his prospects for reelection get bleak. He’s leaning on the Fed to keep the economy from souring before next November. But the more he uses up the limited tools we have to stimulate the economy, the less our ability will be to affect the magnitude or duration of the recession when it hits. I fear our next recession will be long and painful.

I guess whoever refuses to kick the can down the road will get blamed for the economy and be voted out of office very quickly. Perhaps this is a weakness of our form of government that cannot be corrected.

ajax18 wrote:I guess whoever refuses to kick the can down the road will get blamed for the economy and be voted out of office very quickly. Perhaps this is a weakness of our form of government that cannot be corrected.

Whoever refuses? I think that you have that backwards.

In the meantime, your hero is doing his best to accelerate a rapid rise of debt. Thank you for having voted to help destroy America. o_O