U.S. spending on interest tops national defense, Medicare
- Thread starter 2012Bearcat
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I actually wish we would pump more money into the economy and establish a universal income. Participation decreases, wages increase, my business prints money.
Deficits are just a measure of how much money you borrow from the future to pay for the present. Its not bad for those in the present. In fact its made the baby boomers a whole lot of money. Too bad today's generations are paying for that. And what did it get them? Higher inflation which drives further separation between the upper class (whom own appreciative assets) and the lower class (who doesn't). And its not a coincidence that as deficit spending has increased, the concentration of wealth to the 1% has increased.
Let me phrase it a different way: Do you have any children? If so, ask them if they are happy that they'll be paying higher taxes for the rest of their life in order to pay for the government's spending today. Because its their tax receipts that we're borrowing from.
But according to those who promote MMT deficits do no matter. I'm sure our children and the following generations will appreciate the lack of common sense.
Money isn't being borrowed from the future it is being borrowed from savers.
Ahh there you have it. The doom is always just around the corner sometime in the indefinite future.
Almost all assets including human capital increase in value due to inflation (Or a better way to put it in maintain their real value). The only assets that don't maintain their real value as prices inflated are financial assets especially fixed income. The flip side of the coin is that the real value of fixed liabilities also are reduced. Now ask yourself, who has more financial assets as a percentage of total wealth (including human capital) the rich or the poor? Who has more financial liabilities?
This whole bit about inflation being good for the wealthy and bad for the poor is completely reversed. Did wealth inequality increase more during the high inflation 70s or the low inflation 2010s?
You are getting the causality of this dynamic completely reversed.
It's incredible to me that the Republican take on wealth inequality has gone from "actually it's good" to "it's just a natural part of how society works" to "the solution to inequality is to enact my policy preferences from back when I was saying inequality is good/natural"
My children are actually smart so they know that none of this has any bearing on what their taxes are.
Stop for a second and make a good faith effort at answering this (no hand waving, no yada yadaing) How do financial deficits today affect real consumption in the future?
Let's use a little common sense to address what is obviously a brain buster for leftist. As government requires additional taxes to pay interest on the debt, people will have less disposable income to consume, which in turn reduces real consumption.
Think a little bit harder. Who does the government pay the interest to, and what happens to their disposable income? Do these taxes and interest payments affect the productive capacity of the economy? Where does that production go if it isn't consumed.
I am glad we were able to move on from the conceit that MMT has been discredited by present day situation and we are back to the good old days of how it will be a disaster for the children (which the usual suspects have been saying since I was a child)
Yea let's think harder, who does the government pay interest to? Is it the middleclass, is it those living in poverty?
Yes, government deficits can affect the economy in the future by reducing national saving and the funds available for private investment. This can lead to lower revenue in the following year, and economists often describe deficits as placing a burden on future generations.
It's bondholders, or maybe we can call them present day savers. and keep in mind that government bonds are the lowest yielding asset and actually yield less than nominal GDP growth so those interest payments are going to those who's share of the economic pie is shrinking in relative terms.
This is exactly wrong. Financially, the deficit mechanistically adds to the very profit pools that are used for making investments. In real terms the productivity of society remains the same and of that production everything that isn't consumed is definitionally invested, how the government finances itself has no impact. You are going to have to Google harder
LMAO, be sure to tell your family you fully supported running up trillions of dollars in deficit spending for them to deal with. Will be the perfect legacy for you to leave your future generations.
No. The money being borrowed is supplied by the savers. But you are borrowing based on your future ability to repay that debt based on future tax receipts.
The doom is here. There's a reason you now need a six figure salary to even buy a starter home these days. There's a reason kids need to be on their parent's health insurance plans until they are 26. There's a reason why there are stories across the media (even on your leftist sites) that talk about how today's generation is putting off things like marriage, kids, and home ownership. That's the doom we are bringing about with our government's financial malfeasance.
Two misnomers here:
First is that you think the poor has fixed liabilities. Their liabilities are expenses and are subject to that same inflation. So higher inflation means they fall further behind. Rent isn't a fixed liability. Insurance isn't a fixed liability. The only fixed liability that most of the poor have is a car payment, and that's associated to a depreciating asset.
Second, human capital hasn't increased in value at the rate of inflation. Simply put, wages, particularly on the unskilled and low-skilled portions of the spectrum haven't kept up with inflation as our technology growth has increased the supply and reduced the demand for low-skilled labor.
Ironically, those companies who've bought technological assets to offset human labor get to double-dip here, as they need fewer resources from a larger pool of candidates (thus driving wages lower) and the self-checkout kiosk was likely purchased using a fixed liability whose real cost is reduced by inflation.
Everyone hear that. Pilt says that high inflation is good for the poor. No wonder you support Bidenomics.
The latter because we had more deficit spending in the latter. But inflation isn't a single variable game. The inflation rate under Obama would have been Carter-esque if not for the global expansion of trade to China and the advent of the dot.com era. That's why we have the inflation today. The same monetary policy that gave Obama his victories only work as long as productivity gains match, which is no longer occurring. And hence we have significantly higher inflation. BTW, the proof of this is in home values. Following the financial crisis, average home values from 2011 to 2016 increased by 50%. That's a REAL inflation number and that's not 'low inflation'.
I must have missed the "actually its good" portion. I agree its a natural part of how society works. Those who provide more value to the system will accumulate more wealth. That's simply capitalism. You know equality of opportunity but not equality of outcome. But extremism isn't good. And the wealth imbalance is quickly becoming extreme thanks to the governments reckless deficit spending.
I feel for your kids then, because 15% of our tax base today is going to debt servicing costs, and that % is only going higher. Right now that 15% is coming off the borrowing of future tax receipts for your kids' kids. But that's not sustainable to perpetuity.
And yet here we are with all time high debts and nothing but tax cuts.
Certainly those are all related to government malfeasance, but not financial malfeasance. I would challenge you explicitly link any of those to the deficit.
They do!
Loan payments do not go up with inflation!
Mortgages, student loans, car payments, consumer credit of all sorts. You are very out of touch with poor people.
Yes it has. Show me any data that shows real wages/salaries that are lower than late 2019.
A) factually that is not true.
B) you just said the causation was technology not inflation or deficits.
A) again your causation here is productivity enhancing technology, unless the argument you are trying to make is that deficits lead to productivity enhancing technology (which I am more than happy to grant 😉)
B) the higher productivity check out operation makes the labor of all the other employees higher value and increases their pay. Has any labor savings technology made people worse off in the long run?
It's true and the data supports it.
Lol inflation apparently doesn't cause wealth inequality, it's imagined woulda coulda shoulda inflation that causes it.
Now do home values from 2007 to 2011. You know we have actual inflation data for that period that includes prices for goods and services that didn't just undergo world historical dislocation
It motivates the poor. The rich deserve it as a reward for their merit. Etc. etc.
Lol
Really? My taxes haven't gone up.
Prove it. How long have you and people like you been saying that? When must it stop. Prove it. Put some numbers to it.
There's no such thing as tax cuts. Its a misnomer. The government specifies the rules in which it applies to each citizen to specify how much they owe in taxes. The government then writes the rules in whatever manner they choose to incentivize the behaviors they choose. And by the way, we've technically had two 'tax cuts' in the last 15 years. 2023 was a tax cut year (we went from 4.9T to 4.44T in tax receipts) and 2020, where we went from 3.46T to 3.42T in tax receipts. Every other year since 2009 the government has grown its taxes.
Poor don't have mortgages, as I noted. Some of the middle class does, but most of the bottom 20% are renters. I'll give you student loans. Consumer credit sort of qualifies, except most consumer credit is credit card based, so while the real value of the loan itself decreased, the increase in interest rates offsets that, so its likely a wash.
The real value of unskilled labor wages has not kept up with inflation. Even you can't argue that.
And clearly you can't keep up. Technology is deflationary. It increases production which offsets inflation. As a business owner, if my material costs go up by 5% due to inflation, but I can save 5% by using technology then I can maintain my prices at par and inflation is 0. This is simply economics, please try to keep up.
Technology is deflationary. If technology gains were the byproduct of the deficit spending, then you would offset the inflationary impact of that deficit spending. Unfortunately, that's not what we're buying with our 1.7T in deficit spending, and hence we're getting inflation.
Depends on the people. Its been great for the billionaire class. Probably not so great for the 8M Americans who have to work multiple jobs just to get by.
Someone needs to tell Feeding America this. They'll be so relieved that all this inflation is good for the poor it feeds.
I'm sorry that a math equation with more than 2 variables confuses you.
You asked for the 2010s and I gave it to you. You want me to review the home value rise from 2000-present? Even with the mortgage banking fallout, it significantly outpaces inflation over the same period.
It would motivate the poor if our economic policies hadn't driven inflation to the point that wealth is no longer attainable. The ability to transition oneself from out of the lower economic class has never been tougher.
Lol
But you get less for the same taxes. Longer waits with the IRS. Longer lines with TSA. Slower permit processes for government approvals. Less road maintenance. Reduced social safety net. Reduced VA benefits. $1T of taxes collected this year is going to loan servicing instead of into those services.
I have proven it but here's the numbers:
US Debt interest payments (the cost of servicing our debt) in FY 2023 = $659B (projected to pass $1T in 2024)
US Tax collections for FY2023 = 4.4T (referenced below)
$659B/4.4T= .149 or 14.9%.
As an aside, this might be why we don't promote financial literacy to children in school. Start teaching real economics to kids and they might figure out how bad the government has F'd their future.
Source for tax revenue numbers:
U.S. Federal Government Tax Revenue
The federal government generates tax revenue through sources like income and corporate taxes. Learn how much tax revenue the U.S. generates each year.
Pilt - champion of the working man until it doesn’t help his argument.
I can't contend with such nonsense.
You guys love 💕 to leave out the denominator.
Lots of poor people have mortgages.
46% of low income households own their home.
It has. Real wages on the lower end have gone up faster than on the higher end. Inflation has been the hardest on the professional managerial class.
I am afraid you are the one that can't keep up. You gave the example of a technology shock negatively impacting workers. We are discussing deficits' impact on workers not technology's impact on workers, though again I'll concede that deficits do increase technological developments and I contend that's a good thing.
It's a matter of degree, and timing. Deficits can command enough productive resources that their inflationary effects swamp their technological effects. Also it takes technological development a whole to catch up to increased deficits.
Imagine if there were no jobs for those people that need multiple jobs.
I'm sure they know.
What's the second variable besides your imagination?
No I want you to consider the inflation rate, not the price level of an asset class during one of its most volatile periods.
Lots of things go up in price faster than inflation, while other things go down in price faster than inflation. I am not really sure what your point is.
Like I said, the opinions on wealth inequality are ever changing, but the policy proposal remain the same.
No actually my tax dollar goes further than ever thanks to deficit spending.
That's so far from proving that we can't stay on the current path in perpetuity that it's not even in the same state.
When does this ****ed future ever arrive? You have been spewing this drivel for literal decades and yet here we are in an age of unprecedented prosperity, an American golden age.
Always a champion of the working man. I love it when they have jobs and get raises. I hate it when some asshole pretends to care and then raises their rent.
You expect landlords to eat the rising costs caused by higher taxes, insurance, repair cost and other expenses?
For those that keep insisting inflation is bad for low income workers
Let me make sure I understand you. It's your position business/business people do not care about the working class unless they eat the rising costs their business suffer?
He's a communist. You bet your ass he believes that.
Obviously some business people have a fiduciary obligation to shareholders that they can't get around. But in your particular case yeah, I know you don't care about the working class.
"What about how hard inflation is hitting the poor and working class?"
"I don't know is it really hitting them that hard."
"Oh yeah I jacked the rent on all my tenants last month, let me tell you, they are hurting bad."
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Completely reasonable, but they need admit they aren't defending poor people from inflation.
got it, leftist expect people like me to pay for their policy fvck ups. How very typical of leftist.
Oh by the way my rentals are below market rates. I’m sure people like you demand top market rates for your income.
I merely expect you not to lie about caring about poor people.
Below market rate out of charity I'm sure.
I keep rents below market in order to keep good renters. It's beneficial for both of us, you know the way good business is supposed to be. And yes I do care about the middleclass, they are the backbone of this country.
Ah below market rates, because it is good for you. What a saint.
