MarvinSussman

Q1: Is our so-called “national debt” really a serious debt, an interest-bearing burden that we must repay?
A1: No, It lacks the two essential qualities of a really serious debt. It’s a “Debt In Name Only”, a “DINO” -

1. A really serious debt is a burden. Our DINO is not now and never will be a burden for taxpayers.

Our DINO is the total value of all issued and still maturing treasuries. Who pays for the redemption of mature treasuries? Not the taxpayers! The buyers of newly-issued treasuries pay for the redemption of mature treasuries. It’s equivalent to a simple bond rollover done every day. In every auction, more bonds are demanded than are available from the supply of new issues. Auction winners get the safest, most liquid US dollar instruments; the losers are stuck with bank risk. If it were ever necessary, the Fed could even create an artificial demand for US Treasury bonds by buying large quantities of them in the open market with a few cost-free keystrokes. Where’s the taxpayers’ burden?

Our Treasury does not borrow money like a home-buyer taking a mortgage. It is rather a custodian of funds, like a bank accepting money offered for certificates of deposit. While a bank with too many bad loans can certainly have too many maturing CDs, our non-lending, fiat Treasury cannot have too many maturing bonds unless its deficit spending is causing harmful inflation. And that happens ONLY in a war or emergency requiring rationing. It NEVER happens during a recession. During prosperity, banks are ALWAYS the sole cause of inflation, creating over $6 of credit for every $1 of deficit spending. To curb inflation, don’t restrict infrastructure spending for the future! Regulate the banks!

The Treasury auctions bonds only because Congress requires that the proceeds finance the annual budget deficit. This requirement, now a relic of the former gold standard regime, was suspended during World War II, followed by 35 years of strong economic growth without harmful inflation. Now, under our fiat currency regime, Congress can again finance deficits out of thin air without auctions, the same way your corner bank financed your home mortgage.

Calling our DINO “unsustainable”, Wall Street con artists have panicked the public and many ignorant journalists and politicians in Congress and in the White House. It’s a hoax meant to yield a fortune in commissions by privatizing Social Security and Medicare. And, by bribing Congress into austerity, the Wall Street charlatans are nursing a huge army of unemployed labor to suppress middle class wages and working conditions. As our rotting infrastructure renders our industry incompetent, it is that growing army of unemployed labor that will become “unsustainable”.

2. A really serious debt must be repaid. Our DINO will never be repaid and should never be repaid.

Only a budget surplus can reduce our DINO. Since dropping the gold standard in1971, we have rarely had even a modest budget surplus. None is now in sight. To supply enough treasuries, the ONLY risk-free instruments used for trade collateral, insurance, pensions, bank reserves, etc., our Dino must continue to grow along with our economy. In fact, deflation and then depression will hit us hard unless big budget deficits replace the cash now flowing into China.

Q2: Could savers make a “run” on Treasury bonds?
A2: Yes, when savers can get risk-free returns from the Wall Street casino or from GM bonds, Illinois bonds, or Detroit bonds. Safety is not everything. Safety is the ONLY thing! That’s why the whole world relies on US bonds.

Q3. Could savers stop buying Treasury bonds?
A3. Sure, when nobody needs risk-free interest for insurance, pensions, trade collateral, bank reserves, etc., etc.

Q4: Could savers prefer foreign sovereign bonds?
A4: Yes, indeed! So far, almost two thirds of the world’s reserve currencies are in US dollars and half of all US Treasury bonds are held by foreigners. But if China’s infrastructure (and so, its productivity) becomes better than ours, its sovereign bonds could become safer than ours. But that could happen only if US voters worry more about our DINO than they worry about our falling bridges, failing schools, leaking sewers, aging power grids, etc., etc. Q:

Q5: Won’t we need higher tax rates to pay for infrastructure?
A5: Congress does not use or need our taxes for spending. The IRS repossesses enough federal spending to prevent harmful inflation and then destroys every cent of it. (Cash payments are shred and the pulp is sold). For spending, Congress creates new money out of thin air, deposits it in the Treasury, writes checks, and makes the Treasury auction bonds to finance the deficit, which is limited only by Congress and not by the availability of tax revenue.

Every spent federal dollar not repossessed by the IRS is saved by the private sector. Our annual budget deficit is exactly equal to the annual increase in private sector savings. YES! DEFICITS = SAVINGS! No deficits, no savings! A tax deficit is a savings surplus. It is money left on the table for the savers by Uncle Sam because he didn’t need it to prevent harmful inflation and because consumers need it to consume. We do not have a “national debt”. We have a “national savings”. The bad “Debt Clock” is really the good “Savings Clock”. How can we have too much savings?

Since bank loans must be repaid with interest and hard cash is moving to China, budget deficits (surpluses!) are the ONLY savings source that can sustain our economy. We need to DOUBLE our DINO / savings to return it to the World War II level that was followed by 35 years of prosperity without harmful inflation, even with very high tax rates. Our (DINO + total bank deposits) / GDP ratio is less than half of the comparable figure for China. Our M2 (money supply) / GDP ratio is half of Switzerland’s ratio and one quarter of Hong Kong’s ratio. Too much savings?

permafrost Loc: Minnesota

Interesting article, all of the youngsters on this forum should pay very close attention and work for the solution they see as best..For what is worth, when I was 30 something, I didn`t think it would be around for me either...Now if I didn`t have I would starve..

Constitutional libertarian Loc: St Croix National Scenic River Way

What happens when the Chinese stop buying American bonds ?

bahmer

I am waiting for him to list a book on how to spend yourself rich and then have a list in the back of the book of all the multimillionaires that have spent themselves rich. I will also bet that a list that would be a multimillion times longer would be the list of those that spent themselves broke and into bankruptcy. Dealing with the likes of MarvinSussman is dealing in circular logic as in his mind and that of the liberals is that they are always right no matter what you say. They don't deal in logic as you and I know it they deal in ideals and there is no proof only theory and anyone elses theory or facts are irrelevant because they are the only ones that really know anything at all.

alex Loc: michigan now imperial beach californa

if you post a lie enough tines some will believe it

bmac32 Loc: West Florida

No such thing as DINO all debt is paid one way or another.

US bonds are being sold at an alarming rate any most countries have stopped or have slowed way down buy them.
http://www.streetsmartreport.com/U.S.%20Treasury%20Bonds%20Are%20Oversold.html

Double down, what a nice thought but only good if you win.
http://www.economicvoice.com/us-national-debt-to-double-from-17-0-trillion-to-34-0-trillion/

MarvinSussman

I get some of my education from these "foreign" books (about $10 at Amazon.)

* Frank N. Newman, former Deputy Secretary of the US Treasury, recipient of the Treasury’s annual “Alexander Hamilton” award, author of “Freedom from National Debt” (Two Harbors Press)

* Francis X. Cavanaugh, US Treasury economist for over 30 years, author of “The Truth about the National Debt”: Five Myths and One Reality” (Harvard Business School Press)

*Warren Mosler, economist, author of “Seven Deadly Frauds of Economic Policy” (Oxford U. Press)

*Marc Blyth, Brown University professor of international political economics and author of “Austerity” (Oxford University Press)

And an internet blog:
*Dr. Stephanie Kelton, Chair of the UMKC Economics Department, at NewEconomicPerspectives.org

Maybe you should read some foreign books. You might learn something you can't get from Rush Limbaugh.

MarvinSussman

Q1: Is our so-called “national debt” really a serious debt, an interest-bearing burden that we must repay?
A1: No, It lacks the two essential qualities of a really serious debt. It’s a “Debt In Name Only”, a “DINO” -

1. A really serious debt is a burden. Our DINO is not now and never will be a burden for taxpayers.

Our DINO is the total value of all issued and still maturing treasuries. Who pays for the redemption of mature treasuries? Not the taxpayers! The buyers of newly-issued treasuries pay for the redemption of mature treasuries. It’s equivalent to a simple bond rollover done every day. In every auction, more bonds are demanded than are available from the supply of new issues. Auction winners get the safest, most liquid US dollar instruments; the losers are stuck with bank risk. If it were ever necessary, the Fed could even create an artificial demand for US Treasury bonds by buying large quantities of them in the open market with a few cost-free keystrokes. Where’s the taxpayers’ burden?

Our Treasury does not borrow money like a home-buyer taking a mortgage. It is rather a custodian of funds, like a bank accepting money offered for certificates of deposit. While a bank with too many bad loans can certainly have too many maturing CDs, our non-lending, fiat Treasury cannot have too many maturing bonds unless its deficit spending is causing harmful inflation. And that happens ONLY in a war or emergency requiring rationing. It NEVER happens during a recession. During prosperity, banks are ALWAYS the sole cause of inflation, creating over $6 of credit for every $1 of deficit spending. To curb inflation, don’t restrict infrastructure spending for the future! Regulate the banks!

The Treasury auctions bonds only because Congress requires that the proceeds finance the annual budget deficit. This requirement, now a relic of the former gold standard regime, was suspended during World War II, followed by 35 years of strong economic growth without harmful inflation. Now, under our fiat currency regime, Congress can again finance deficits out of thin air without auctions, the same way your corner bank financed your home mortgage.

Calling our DINO “unsustainable”, Wall Street con artists have panicked the public and many ignorant journalists and politicians in Congress and in the White House. It’s a hoax meant to yield a fortune in commissions by privatizing Social Security and Medicare. And, by bribing Congress into austerity, the Wall Street charlatans are nursing a huge army of unemployed labor to suppress middle class wages and working conditions. As our rotting infrastructure renders our industry incompetent, it is that growing army of unemployed labor that will become “unsustainable”.

2. A really serious debt must be repaid. Our DINO will never be repaid and should never be repaid.

Only a budget surplus can reduce our DINO. Since dropping the gold standard in1971, we have rarely had even a modest budget surplus. None is now in sight. To supply enough treasuries, the ONLY risk-free instruments used for trade collateral, insurance, pensions, bank reserves, etc., our Dino must continue to grow along with our economy. In fact, deflation and then depression will hit us hard unless big budget deficits replace the cash now flowing into China.

Q2: Could savers make a “run” on Treasury bonds?
A2: Yes, when savers can get risk-free returns from the Wall Street casino or from GM bonds, Illinois bonds, or Detroit bonds. Safety is not everything. Safety is the ONLY thing! That’s why the whole world relies on US bonds.

Q3. Could savers stop buying Treasury bonds?
A3. Sure, when nobody needs risk-free interest for insurance, pensions, trade collateral, bank reserves, etc., etc.

Q4: Could savers prefer foreign sovereign bonds?
A4: Yes, indeed! So far, almost two thirds of the world’s reserve currencies are in US dollars and half of all US Treasury bonds are held by foreigners. But if China’s infrastructure (and so, its productivity) becomes better than ours, its sovereign bonds could become safer than ours. But that could happen only if US voters worry more about our DINO than they worry about our falling bridges, failing schools, leaking sewers, aging power grids, etc., etc.

Q5: Won’t we need higher tax rates to pay for infrastructure?
A5: Congress does not use or need our taxes for spending. The IRS repossesses enough federal spending to prevent harmful inflation and then destroys every cent of it. (Cash payments are shred and the pulp is sold). For spending, Congress creates new money out of thin air, deposits it in the Treasury, writes checks, and makes the Treasury auction bonds to finance the deficit, which is limited only by Congress and not by the availability of tax revenue.

Every spent federal dollar not repossessed by the IRS is saved by the private sector. Our annual budget deficit is exactly equal to the annual increase in private sector savings. YES! DEFICITS = SAVINGS! No deficits, no savings! A tax deficit is a savings surplus. It is money left on the table for the savers by Uncle Sam because he didn’t need it to prevent harmful inflation and because consumers need it to consume. We do not have a “national debt”. We have a “national savings”. The bad “Debt Clock” is really the good “Savings Clock”. How can we have too much savings?

Since bank loans must be repaid with interest and hard cash is moving to China, budget deficits (surpluses!) are the ONLY savings source that can sustain our economy. We need to DOUBLE our DINO / savings to return it to the World War II level that was followed by 35 years of prosperity without harmful inflation, even with very high tax rates. Our (DINO + total bank deposits) / GDP ratio is less than half of the comparable figure for China. Our M2 (money supply) / GDP ratio is half of Switzerland’s ratio and one quarter of Hong Kong’s ratio. Too much savings?

MarvinSussman

You are incapable of disputing a single sentence I wrote because you have neither the required knowledge nor the IQ to acquire the knowledge. All you have for an answer is a slur.

By their fruits shall ye know them. Matthew 7:20

MarvinSussman

So far, almost two thirds of the world’s reserve currencies are in US dollars and half of all US Treasury bonds are held by foreigners. But if China’s infrastructure (and so, its productivity) becomes better than ours, its sovereign bonds could become safer than ours. But that could happen only if US voters worry more about our "national debt" than they worry about our falling bridges, failing schools, leaking sewers, aging power grids, etc., etc.

MarvinSussman

Q: “I have to balance my budget. Why doesn’t Congress balance its budget?”

A: If you could legally print money in your attic, why would you balance your budget? Congress only needs to balance full employment against harmful inflation. Why is something so simple so hard to see?

Exactly half of US voters have below-average intelligence and can’t easily digest simple facts and logic.

The rest of us have to put up with them.

MarvinSussman

Too bad you didn't read all of the article. Low-interest bonds are being sold in expectation of higher interest rates. But the Fed has no reason to raise interest rates.

Japan has had low interest rates for 20 years and has no intention of raising them on the horizon.

We are headed in the same direction unless we get invaded by aliens from Mars and we have to spend like WW II.

Half of all adults have below-average IQ and can't digest facts and logic. The rest of us have to put up with them.

MarvinSussman

Yes, the Debt In Name Only - DINO - will double and quadruple even if we don't live long enough to see it. The DINO began at zero under George Washington and has risen under every President. Nothing will stop it. The world wants risk-free securities and we are the only source. The people that want them pay for them, not the taxpayer. DINO is good for the economy. The bigger the better!

Calling our DINO “unsustainable”, Wall Street con artists have panicked the public and many ignorant journalists and politicians in Congress and in the White House. It’s a hoax meant to yield a fortune in commissions by privatizing Social Security and Medicare. And, by bribing Congress into austerity, the Wall Street charlatans are nursing a huge army of unemployed labor to suppress middle class wages and working conditions. As our rotting infrastructure renders our industry incompetent, it is that growing army of unemployed labor that will become “unsustainable”.

A really serious debt must be repaid. Our DINO will never be repaid and should never be repaid.

Only a budget surplus can reduce our DINO. Since dropping the gold standard in1971, we have rarely had even a modest budget surplus. None is now in sight. To supply enough treasuries, the ONLY risk-free instruments used for trade collateral, insurance, pensions, bank reserves, etc., our Dino must continue to grow along with our economy.

In fact, inflation and depression will hit us hard unless big budget deficits replace the cash now flowing into China.

oldroy Loc: Western Kansas (No longer in hiding)

What is the average IQ of which you speak Marvin? Since half of us are below that average I have to wonder if our scores are included in the numbers you use to determine the average. Again, I have to question your logic and the way you reason.

oldroy Loc: Western Kansas (No longer in hiding)

Poor Marvin, one of your authors of those five books has fed you a real pile of Pelosi. I say that because until the two world wars and the depression the United States government was not a debtor nation. Nope, even after WWI they were very near zero debt. You better check up on some of your sources because they have taken advantage of you.

Maybe you should avail yourself of the words in this link to see some about debt that you don't seem to understand. http://www.nytimes.com/1985/09/17/business/us-turns-into-debtor-nation.html