Greenspan: Deficits are OK

[Kidlicious]

Originally posted by MrBaggins
The deficit is the gap between the budgeted expense and the taxation income of the government.

The "Net Change in Public Debt Outstanding" is specific to treasury issued debt and includes both additional revenue AND refinancing of the interest of prior issued debt

The "Net Change in Public Debt Outstanding" (Both the additional revenue and the refinancing) are not covered by taxation... they are covered by increasing the money supply. That is solely inflation. Printing money is inflationary, period.

In table II of that document interest on treasury securities is itemized as a withdrawl. You are saying that is just reported that way? Why?

[Kidlicious]

Mr. Baggins,

I can't make any sense out of what you are saying, but you caught my interest so I did some research. I can't find anything to back up what you are saying. All I find is "The Total Public Debt Outstanding is a direct result of receipts and outlays. If the Treasury projects an increase in outlays, then it will issue Treasury securities to meet its obligations. This will result in an increase to the debt. If the Treasury projects an increase in receipts (e.g. taxes or other revenue), then it may not need to issue Treasury securities."

I'm on pain medication today, so maybe I just can't get what you are saying.

[MrBaggins]

Originally posted by Kidicious


In table II of that document interest on treasury securities is itemized as a withdrawl. You are saying that is just reported that way? Why?

Table 2 is for transfers from accounts to an operating cash account. Its an accounting process, because real money is actually paid to remit the redemption of the treasury security. The federal government has a somewhat byzantine accounting methodology.

(Federal accounts)

If you notice further down in the originally discussed table, you'll see a line item for Public Debt Cash Redemp.(III-B) which is the actual dispersement to investors.

[Frankychan]

This is the biggest bullsh** I've seen to date. How can having a deficit be "good"?

Granted, I'm not an economics major, but I always figured

Debt=bad.

[Kidlicious]

Mr. Baggins,

Is the reported debt an accumulation of the deficits as they are reported or is it an accumulation of the deficits plus the interest on the debt?

[Kidlicious]

Originally posted by MrBaggins
If you notice further down in the originally discussed table, you'll see a line item for Public Debt Cash Redemp.(III-B) which is the actual dispersement to investors.

How does this connect to interest? Can you to show me where interest is not added into the deficit, or where the actual deficit is reported smaller than it actually is.

[Kidlicious]

Originally posted by MrBaggins
Government repayment of accumulated interest of treasury issued debt requires increasing the money supply, without generating equivalent value in the economy.

This creates inflation, since every other dollar becomes less valuable, due to the increased money multiplier.

I know what is wrong with this now. The treasury retires the mature debt by issuing new debt. It doesn't monetize the debt, like you are saying. This doesn't increase the money supply.

[MrBaggins]

/me laughs

So you're saying that no money is created on remittance?

How do the government pay back the mature issues then? Its not taxes... they haven't paid a dimes worth of taxes towards treasury issues in years.

[Drake Tungsten]

Granted, I'm not an economics major

Why'd you feel the need to state this? It's implicit in your status as a communist...

[Kidlicious]

Originally posted by MrBaggins
* MrBaggins laughs

So you're saying that no money is created on remittance?

How do the government pay back the mature issues then? Its not taxes... they haven't paid a dimes worth of taxes towards treasury issues in years.

They issue new debt. If they paid it off in taxes it would be a surplus. If they printed money to pay it off it would be monetizing the debt.

[Kidlicious]

Originally posted by Drake Tungsten

Granted, I'm not an economics major

Why'd you feel the need to state this? It's implicit in your status as a communist...

Since when does your degree determine your ideology?

[Ned]

Originally posted by Kontiki
Well, Ned, MrBaggins is explaining it to you, so I don't feel the need to jump in and restate the same thing.

If you need more help, let's start here: Do you understand the mechanisms of monetary policy - that is, what actually happens behind the scenes that causes the end results?

Yes. And I think that inflation is or was caused in the 1970's by keeping the federal funds rate at or below the rate of inflation. It took a long time of monetary discipline to get inflation under control.

This is one of the reasons that I think that interest rates, in particular the Federal funds rate, is a primary cause of inflation when this rate is set below the rate of inflation.

Today the Fed conducts open-market operations to set the Federal funds rate, which is remarkably different from what they used to do in the 1970s. Today, monetary policy controls inflation, leaving the issue of stimulus to fiscal policy.

[Ned]

Originally posted by Frankychan
This is the biggest bullsh** I've seen to date. How can having a deficit be "good"?

Granted, I'm not an economics major, but I always figured

Debt=bad.

Debt = money

money = good

debt = good

[Imran Siddiqui]

Since when does your degree determine your ideology?

Just say the joke was funny / unfunny and leave it at that .

It took a long time of monetary discipline to get inflation under control.

Actually it took a short time to do it. Of course it caused a BIG recession from 80-83. Before then, the Fed was concerned about the high unemployment as well. Volker decided screw that, let's control inflation first.

You'll note that the Reagan tax cuts couldn't stop the big recession caused by the monetary policy... it wasn't until the rates were lowered again, did the economy roar.

Today, monetary policy controls inflation, leaving the issue of stimulus to fiscal policy.

You do realize that fiscal policy also has effects on inflation? The alternate monetary policy (to control inflation) would actually be going against the fiscal policy... to the point of almost negating it.

You can't argue that monetary policy should lower inflation while fiscal policy should increase employment/growth. They would counteract each other.

[Imran Siddiqui]

Debt = money

money = good

debt = good

Let me guess, you have $500,000 in debt to your name in credit cards bills?