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Old 02-10-2014, 11:37 AM   #21
Act of God
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I would assume that the debt ceiling wasn't an issue during the Dubya years because it was never a fight. It isn't like the democrats were going to oppose it. Most people probably didn't even know a debt ceiling even existed until the GOP made a stink about it.
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Old 02-10-2014, 05:35 PM   #22
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Precisely, nor during the Bush I administration nor the Reagan administration.

Now, suddenly, despite Chaney's assertion to the contrary, it is suddenly a mortal threat, even if much/most of it is either a result of Bush era policies and the desperate measures necessary to salvage the economy from the Great Bush Financial Meltdown/Recession, which, fortunately, was prevented from flat-lining into the Great Depression II. The economic ICU is not cheap, but the patient survived its grievous injuries and is making a slow, steady recovery.
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Old 02-11-2014, 01:35 PM   #23
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Update: GOP looses nerve on taking hostages anymore, Boehner announces vote on clean bill raising debt ceiling limit.
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Old 02-11-2014, 01:53 PM   #24
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Update: GOP looses nerve on taking hostages anymore, Boehner announces vote on clean bill raising debt ceiling limit.
^^I have trouble taking anyone seriously who can't get this right. ^^
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Old 02-11-2014, 03:14 PM   #25
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^^I have trouble taking anyone seriously who can't get this right. ^^
Guess you're right.

Correction: Boehner announces 50% cut in debt limit, Departments of Education, Interior, HHS, SSA, EPA and PBS funding eliminated. Defense spending and oil and corporate subsidies all doubled. All taxes for those earning $250+k eliminated because "job creators" and just plain worthy.

Dang, too lazy to use spell check and now look what happened...
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Old 02-11-2014, 04:02 PM   #26
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Guess you're right.

Correction: Boehner announces 50% cut in debt limit, Departments of Education, Interior, HHS, SSA, EPA and PBS funding eliminated. Defense spending and oil and corporate subsidies all doubled. All taxes for those earning $250+k eliminated because "job creators" and just plain worthy.

Dang, too lazy to use spell check and now look what happened...
Sorry, that one is a pet peeve of mine though

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Old 02-11-2014, 04:06 PM   #27
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I can never get looses/loses right, never...
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Old 02-11-2014, 04:18 PM   #28
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Precisely, nor during the Bush I administration nor the Reagan administration.

Now, suddenly, despite Chaney's assertion to the contrary, it is suddenly a mortal threat, even if much/most of it is either a result of Bush era policies and the desperate measures necessary to salvage the economy from the Great Bush Financial Meltdown/Recession, which, fortunately, was prevented from flat-lining into the Great Depression II. The economic ICU is not cheap, but the patient survived its grievous injuries and is making a slow, steady recovery.
Well the fact that the public was unaware of it, does not mean that it is not a threat or very bad thing. They pull the wool over our eyes on many things. Keeping issues like this on the hush hush is good for government, period, regardless of affiliation.
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Old 02-11-2014, 04:27 PM   #29
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Well the fact that the public was unaware of it, does not mean that it is not a threat or very bad thing. They pull the wool over our eyes on many things. Keeping issues like this on the hush hush is good for government, period, regardless of affiliation.
You mean like how the government fools people like busa, badfast and liar so they cannot understand that by increasing debt, the federal government is actually taxing us? I'll just leave this here...

http://forum.e46fanatics.com/showpos...&postcount=186

Another source, much longer so I only quote one section that is directly on point:

http://www.econlib.org/library/Enc/G...dDeficits.html


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To see what is at issue, consider a simple example. Suppose that every year the government buys $100 billion worth of goods and services and pays for them entirely by collecting taxes. Households pay the government $100 billion in tax revenue, and the government uses the revenue to buy goods and services. Revenue equals expenditure, so the government's budget is balanced. Suppose the government suddenly decides to change the way it finances its expenditures, but not the amount spent. In the first year, the government reduces taxes by $10 billion and replaces the lost revenue by selling $10 billion worth of bonds that mature in one year and carry an interest rate of 10 percent a year. In the second year, the bonds mature, and the government pays the $10 billion principal and the $1 billion of interest. Taxes in the first year are $10 billion lower, but in the second year they are $11 billion higher. How does this temporal rearrangement of tax collections affect people? In the first year, people hand over the same revenue to the government as they did when they paid taxes; the difference is that $10 billion of it is now in the form of a loan that will be repaid in the second year with an extra $1 billion in interest. On this account, people may feel richer because they seem to be paying less in total taxes over the two periods. When the second year arrives, however, people will find that they have nothing extra at all because, to pay the $11 billion in principal and interest, the government must raise taxes by exactly $11 billion, which cancels the payment of the principal and interest. The government giveth with one hand and taketh away with the other. The net result is that people do not get back the $10 billion they lent the government, and the loan is equivalent to having paid the $10 billion in taxes in the first year. This same result emerges from any maturity of debt, whether it is a one-year bond, as in the previous example, a ten-year bond, or even a perpetuity.

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Old 02-11-2014, 05:15 PM   #30
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This fig newton is a tax.
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Old 02-11-2014, 10:25 PM   #31
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You mean like how the government fools people like busa, badfast and liar so they cannot understand that by increasing debt, the federal government is actually taxing us? I'll just leave this here...

http://forum.e46fanatics.com/showpos...&postcount=186

Another source, much longer so I only quote one section that is directly on point:

http://www.econlib.org/library/Enc/G...dDeficits.html
Yet salvaging what was a cratering economy, circa 2008-9, to actually have a viable economic future and in due time, address the debts of recovery by not wallowing in a Great Depression II.
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Old 02-12-2014, 12:37 AM   #32
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You mean like how the government fools people like busa, badfast and liar so they cannot understand that by increasing debt, the federal government is actually taxing us? I'll just leave this here...

http://forum.e46fanatics.com/showpos...&postcount=186

Another source, much longer so I only quote one section that is directly on point:

http://www.econlib.org/library/Enc/G...dDeficits.html
Unfortunately, for the purposes of illustrating a point, the example wildly overstates the effect that borrowing currently has on the Federal fisc.

Here's an example closer to real world situation:

Federal government plans to borrow 10 dollars in 2014. It issues a 1 year bill at a .1% yield.

2015 rolls around and now the debt is due. The Federal government simply issues another 10 dollar .1% Treasury bill and asks Joe Taxpayer to chip in 1 cent to cover the cost of borrowing the money.

I usually like econlib, but that writing is intellectually dishonest to an extraordinary degree. Unlike individuals, huge organizations like the Federal government can roll over their debt indefinitely. The only cost incurred is the interest.

In a negative real interest rate environment like the one we're currently in, the Federal government essentially gets paid to borrow money. For any money borrowed with a maturity date of 5 years or less, the US government actually profits from borrowing money.

And that is a fact.
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Old 02-12-2014, 08:24 AM   #33
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Amazing how much posters here take statements out of context and use them as absolutes. Also amazing how one-sided the remembrance of history can be. Some people can't see the forest thru the trees.....


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Old 02-12-2014, 09:02 AM   #34
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Unfortunately, for the purposes of illustrating a point, the example wildly overstates the effect that borrowing currently has on the Federal fisc.

Here's an example closer to real world situation:

Federal government plans to borrow 10 dollars in 2014. It issues a 1 year bill at a .1% yield.

2015 rolls around and now the debt is due. The Federal government simply issues another 10 dollar .1% Treasury bill and asks Joe Taxpayer to chip in 1 cent to cover the cost of borrowing the money.

I usually like econlib, but that writing is intellectually dishonest to an extraordinary degree. Unlike individuals, huge organizations like the Federal government can roll over their debt indefinitely. The only cost incurred is the interest.

In a negative real interest rate environment like the one we're currently in, the Federal government essentially gets paid to borrow money. For any money borrowed with a maturity date of 5 years or less, the US government actually profits from borrowing money.

And that is a fact.
So your point is that their example wildly overstates the problem because they used a higher interest rate in their example as compared to current fed borrowing rates? That strikes me as missing the primary point, which is the principal amount borrowed, not the interest rate. The interest rate is incredibly minor in this regard.

And I still disagree with any assertion that the US government can actually profit from borrowing money - that continues the mythical shell game.

I urge you to read up on the Ricardian Equivalence to understand this better. I didn't make this stuff up, and I am not aware of any research or academic theories to suggest the central premise of RE - which I am asserting here - isn't true. There have been criticisms about some of what I consider peripheral assumptions in RE, but I consider those to be of a similar magnitude as your interest rate point.
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Old 02-12-2014, 09:11 AM   #35
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Unlike individuals, huge organizations like the Federal government can roll over their debt indefinitely. The only cost incurred is the interest.
I forgot to respond to this statement. Were it true that the only cost to government debt is the interest, then why not eliminate all taxes and instead annually borrow the equivalent amount?

Perhaps that will be my platform if I run for president!
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Old 02-12-2014, 11:08 AM   #36
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So your point is that their example wildly overstates the problem because they used a higher interest rate in their example as compared to current fed borrowing rates? That strikes me as missing the primary point, which is the principal amount borrowed, not the interest rate. The interest rate is incredibly minor in this regard.

And I still disagree with any assertion that the US government can actually profit from borrowing money - that continues the mythical shell game.

I urge you to read up on the Ricardian Equivalence to understand this better. I didn't make this stuff up, and I am not aware of any research or academic theories to suggest the central premise of RE - which I am asserting here - isn't true. There have been criticisms about some of what I consider peripheral assumptions in RE, but I consider those to be of a similar magnitude as your interest rate point.
This would be true....if the Federal government is unable to roll over its debts. That is something Ricardo did not foresee, which is the bond market's insatiable demand for a riskless (or as close to riskless as you can get) financial instrument. Combine that with negative real interest rates, and... you have seigniorage. I suggest you look that one up.

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I forgot to respond to this statement. Were it true that the only cost to government debt is the interest, then why not eliminate all taxes and instead annually borrow the equivalent amount?

Perhaps that will be my platform if I run for president!
Bad argument. If the Federal government decides to finance all of its spending, bond markets will demand much higher interest rates.
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Old 02-12-2014, 11:17 AM   #37
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Now apparently Ted Cruz, yeah, that buffoon, is threatening to filibuster over this. Given how well this worked out the last time he tried this, I'm sure the Dems are esctatic as the GOP once again takes careful aim at its foot. And just when the GOP was entertaining a glimmer of hope of taking back the Senate...
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Old 02-12-2014, 01:13 PM   #38
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Now apparently Ted Cruz, yeah, that buffoon, is threatening to filibuster over this. Given how well this worked out the last time he tried this, I'm sure the Dems are esctatic as the GOP once again takes careful aim at its foot. And just when the GOP was entertaining a glimmer of hope of taking back the Senate...
In three months he'll claim he didn't do it, and republicans everywhere will believe him.
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Old 02-12-2014, 01:24 PM   #39
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This would be true....if the Federal government is unable to roll over its debts. That is something Ricardo did not foresee, which is the bond market's insatiable demand for a riskless (or as close to riskless as you can get) financial instrument. Combine that with negative real interest rates, and... you have seigniorage. I suggest you look that one up.


Bad argument. If the Federal government decides to finance all of its spending, bond markets will demand much higher interest rates.
I am quite familiar with seigniorage, thank you. And as for your second point, sorry, it is not a bad argument to your statement that the only cost of government debt is the interest expense. That may be true as it applies to the government, but it is a bad argument as it applies to the taxpayer, which was my original point.
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Old 02-12-2014, 02:43 PM   #40
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I am quite familiar with seigniorage, thank you. And as for your second point, sorry, it is not a bad argument to your statement that the only cost of government debt is the interest expense. That may be true as it applies to the government, but it is a bad argument as it applies to the taxpayer, which was my original point.
Do you know what "rolling over debt" means?
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