Posted on 04/08/2020 4:55:29 AM PDT by Kaslin
Two weeks ago, President Donald Trump signed the largest stimulus bill in U.S. history: more than $2 trillion.
For once, both Republicans and Democrats agreed. The Senate voted 96-0. The House didn't even bother with a formal vote.
At the White House, a reporter asked the president, pointing out that the bill includes $25 million for the Kennedy Center, "Shouldn't that money be going to masks?"
"The Kennedy Center has suffered greatly because nobody can go there," Trump responded. "They do need some funding. And look -- that was a Democrat request. That was not my request. But you got to give them something."
"Something" they got. The bill includes $25 million for Congressional salaries, $50 million for an Institute of Museum and Library Services and lots of other wasteful things.
Only a few politicians were wary. Rep. Thomas Massie complained that he wasn't even allowed to speak against the bill.
Rep. Alex Mooney asked: "How do you pay for it? Borrow it from China, borrow it from Russia? Are we going to print the money?"
Those are good questions.
Our national debt is already $24 trillion. Now it will jump, percentage-wise, to where Greece's debt was shortly before unemployment there hit 27%.
Greece was bailed out by the European Union. But the United States can't be bailed out by others.
How will we pay off our debt? That's the topic of my new video.
There are really three options:
1. Raise taxes.
2. Print money.
3. Default.
Let's consider each:
1. Raising taxes on rich people is popular. Even Michael Bloomberg wants "higher taxes on billionaires" like him.
But raising taxes on the rich often kills the wealth and jobs some rich people create. And it won't solve our debt problem. Even if we took all the billionaires' wealth -- reducing their net worth to zero -- it would cover only an eighth of our debt.
2. Some on the left now say, "Don't worry about debt, just print money!"
This belief, called Modern Monetary Theory, destroys lives.
Zimbabwe's dictator tried it. Eager to spend more money on wars, higher salaries for government officials and luxury for himself, he had his government print more money. But that meant more money pursued the same goods. That caused explosive inflation. Soon, a $2 bag of onions cost $30 million Zimbabwean dollars.
The more money the government printed, the more inflation there was. They eventually even issued 100 trillion dollar bills. Today those 100 trillion bills are worth about 40 cents.
Inflation wrecked lives in 1920s Germany, Argentina and Russia, and in modern-day Venezuela, too.
3. America could simply refuse to pay our debt. But that would betray everyone who invested in America, and bankrupt Americans who bought Treasury Bonds.
Defaulting on your debt wrecks economies, too. When Argentina defaulted, unemployment rose to 21%.
Once you're deep in debt, no option is good.
How did we get to this point?
Presidents have talked about the dangers of debt for decades. But they didn't deal with it; they just talked about it.
"We have piled deficit upon deficit, mortgaging our future and our children's future," warned Ronald Reagan. "We must act today to preserve tomorrow."
Bill Clinton said, "We've got to deal with this big long term debt problem."
Barack Obama called driving up the national debt "irresponsible" and then proceeded to do exactly that.
Donald Trump complained that Obama "doubled" the nation's debt. But now, under Trump's presidency and the new CARES Act, our debt will grow even faster.
This will not end well.
So far, the deficit spending hasn't done enormous harm. But it will. You can stretch a rubber band only so far, until it breaks.
Our debt will wreck our children's lives.
Yet, today politicians mostly talk about spending more.
You can always tell a libertarian but you can’t tell him much.
I think default is inevitable.
People act like it is “impossible” to default because its so drastic. Well, it’s “impossible” to pay $24T in debt.
The system of debt that the central banks have created is a bad system. Time to sweep it away.
Yeah, I am not good with it. I feel as though the government is buying us. What ever happened to bonds? Didn’t we fight WWII on war bonds?
1. Raise taxes.
2. Print money.
3. Default.
...
Or grow the economy.
Stossel likes to whine and play the ideological Libertarian every now and then.
Yes, the debt is too high, but the most important thing is to make sure the economy can make a quick recovery, and Trump did that. He had to make deal with the devils in the Democrat party, but there was no choice. One good thing is that interest rates are low.
The worst possible action would have been to play the austere ideological Libertarian or Conservative and let the economy sink into a deep depression.
Finance it at near 0% interest rates. And refinance more of the debt at near 0% interest rates.
Get back to growing the economy and pay it off over time.
No need to raise taxes in the short run, doing so would be counter productive.
To the extent the stimulus is loans that get paid back, you pay it off when the loan is collected.
Monetary policy can be reversed at the appropriate time.
What ever happened to bonds?
...
The government will be issuing bonds to cover the cost.
The national debt is a huge problem. We will eventually pay the price.
But the author forgot another option:
4: Rev up the Economy
The debt is very large, but if the economy revs up and we stop spending (annual “deficit” goes negative), we will eventually pay off the debt.
This approach allows us to absorb the pain over a long period of time.
But I don’t hold out hope that our politicians will do it. They can’t campaign on “tightening our belts.”
Finance it at near 0% interest rates. And refinance more of the debt at near 0% interest rates.
Get back to growing the economy and pay it off over time.
...
You’ve got it.
CLOWARD-PIVEN on Steroids!
Based on the information we had at the time, what other options were there?
The purpose of selling war bonds was to get people to give up their excess cash during the war, for the purpose of stifling black market activity for materials that were needed for the war effort.
Anyone who writes an article like this that only focuses on the threat of inflation is missing half the point. A detailed explanation of DEFLATION is warranted in an article like this ... to explain the real reason for the massive government intervention in our economy right now.
Growing the economy only works if you aren’t also growing the deficit with it.
Look at the last 3 years. We’ve evolved the greatest economy in world history and yet instead of taking advantage of it to chip away at our debt we spent, and spent, and spent.
It’s no longer Democrat vs. Republican in politics. It’s now Globalist vs. Nationalist, which explains why it’s so easy to envision GOP dopes like Romney or Kasich in a Biden cabinet ... and why Donald Trump is likely to get a lot of votes from Bernie Sanders supporters in November.
Federal debt is not demand debt. It's not a mortgage where you can find someone else to lend you money at a lower interest rate so you can pay off your current mortgage which has a higher rate. Federal debt - be it bills, notes, or bonds - is traded on the financial markets, and the only way for the government to retire it early is to buy it back. If you're buying back debt that has a higher interest rate than the current rates then you're going to pay a premium for it. If you want to buy back $1 trillion in debt that is paying 3% for example then it's going to cost you more than $1 trillion to do it. So if you're borrowing money at a lower rate but increasing the federal debt by 10% or 15% or 20% to do it then are you really better off?
Okay
Who buys a bond or T-Bill that pays 0% interest?
Even if inflation is 3% it is still eating your lunch.
Why would anyone invest in a bond that is guaranteed to lose money.
Some places in Europe have *negative* interest rates.
I love it. Damned if you do, damned if you don't. If Trump didn't do the stimulus...people would rail on him. Trump moves on stimulus and people start this nonsense.
Our government is waaaaaaaay past caring about the freakin debt. In fact, I've even heard back in the Obozo days, then a week or so ago in regards to minting a couple of Platinum coins and denominating them in the trillions...lol
Ho hum...life goes on.
That is not the rate on Treasury Bonds or Bills which is the way governments borrow money.
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