Treasury To Pay Part of Natl. Debt. -- Can someone please explain this?

[Jhhnn]

It is quite interesting how in the entirety of everything else in life, when things are too good to be true, it's an indication that something bad will happen at some point (before, during, after) the deal. But, never for the Gov. The Gov apperently has a system that quite literally is assumed to make money in perpetuity. People will always buy our debt. Never ever will times change. Fascinating...

Except no one has argued that...

Well, yeh, but having no argument, he needs to construct a strawman, attack that.

The feds paying off part of the debt is like me paying off the Visa card while owing on the mortgage...

 

[chucky2]

No, it's like you paying off part of the mortgage before you have to knowing you won't have cash to actually live off of in a few months.

 

[Fern]

Think about it: You're wrong

The average person has their taxes withheld from their paycheck monthly. Very few people owe taxes, most people get taxes back.

Your forgetting about corporations and self-employed individuals etc all of whom must make estimated tax payments. There is no withholding. The 1st estimated tax payment is due April 15th.

Fern

 

[Fern]

http://finance.yahoo.com/news/treasury-pay-down-debt-first-232000698.html

Can someone please explain to me -- how when we are in a negative loss... as in still losing money... how we are paying down debt? What are we having a circle jerk of paying debt with debt?

Honest question, since I'm no expert on the Fed and how our debt system works - so as much as I wouldn't mind putting it in ATOT I figured it would lead here.

There are two separate issues here. One is budgeting - for us this means a deficit. The other is cash flow. The two have nothing to do with each other. This temporary repayment of debt is about cash flow.

Federal revenue is not collected equally throughout the year. Nor is spending done equally throughout the year. Some months are higher, some lower.

At this point in time our revenues are exceeding what we need for spending.

Later, when spending exceeds collections we'll borrow more.

This kind of short term repayment and borrowing smooths out uneven cash flows.

Fern

 

[dullard]

Can someone please explain to me -- how when we are in a negative loss... as in still losing money... how we are paying down debt? What are we having a circle jerk of paying debt with debt?

The answer was already stated: in April, when many small buinesses pay their yearly taxes and/or quarterly taxes, the revenues are quite high compared to other months while expenses are roughly flat from month to month.

But I pose to you a question related to your question:

Suppose I owe $60000 at 5% interest over a 10 year period ($636.39 in monthly payments, which includes $250 in monthly interest). Suppose my monthly income is $5000. Suppose in total (including all expenses) I spend 5% more than I take in each month ($5250 spent) so each month I borrow $250 more debt to help pay my old debt (at 5% interest and over 10 years). Does my debt total increase or decrease each month?

Answer: total debt goes down. The "circle jerk" tactic works in this case. Why? Because I paid down $386.39 in old debt but only added $250 in new debt. You can easily spend more than you earn and still get out of debt.

 

[Jhhnn]

No, it's like you paying off part of the mortgage before you have to knowing you won't have cash to actually live off of in a few months.

Heh. So you're predicting financial collapse in a few months? Really?

If the govt pays off debt today only to borrow down the road, it means they're not paying interest on the money they paid back.... until they borrow more.

What else are they supposed to do with a slight temporary surplus, anyway? Hoard it until they need it while paying interest they could avoid?

 

[JEDIYoda]

http://finance.yahoo.com/news/treasury-pay-down-debt-first-232000698.html

Can someone please explain to me -- how when we are in a negative loss... as in still losing money... how we are paying down debt? What are we having a circle jerk of paying debt with debt?

Honest question, since I'm no expert on the Fed and how our debt system works - so as much as I wouldn't mind putting it in ATOT I figured it would lead here.

Not very smart are you....

 

[dank69]

they ought to just repudiate the debt or apportionate it to the States based upon representation and let the States decide.

Then the Federal govt could sell all of its land, its gold, and its weapons and the nightmare would end.

The creditors have no inherent right to get paid back since not every tax payer agreed to accumulate the debt. it would be painful for people who are in debt themselves, who have a lot of savings in U.S. dollars, or are employed by a business in debt, as well as those who got hurt in the short term chaos that would ensue but there would be a recovery and the States would be in better shape than it is now within 4 years from ending the U.S. govt.

When you spend so many of your waking hours worrying about the federal government like you do, you will always be stuck in a "nightmare." Even if we did everything you think we should do and it worked out exactly the way you think it would, you would then be stuck worrying about your "nightmare" of a state government. So you have a choice. You can continue obsessing and worrying about things that you have absolutely no control over or you can let it all go and enjoy what little time remains of your life. I hear video games are pretty fun. Maybe try golfing. I hear sunshine is good for us. Couldn't hurt to get laid, either.

 

[Exterous]

Couldn't hurt to get laid, either.

Not if you're doing it right :sneaky:

 

[chucky2]

Heh. So you're predicting financial collapse in a few months? Really?

If the govt pays off debt today only to borrow down the road, it means they're not paying interest on the money they paid back.... until they borrow more.

What else are they supposed to do with a slight temporary surplus, anyway? Hoard it until they need it while paying interest they could avoid?

I would have thought this was obvious, but, No, I'm not predicting financial collapse. I am predicting (and I'm not even doing that, as it's a given) that in a few months, when the Gov has blown more than they're taking in, that they'll be deficit spending again and racking up the same or more debt than they just paid down.

Don't get me wrong: I'm all for the Gov paying down debt. But pretending they did something awesome here when we know they're still living way outside their means is highly disingenuous. Which is really the only reason the simple household examples are used.

The End.

Chuck

 

[ElFenix]

I would have thought this was obvious, but, No, I'm not predicting financial collapse. I am predicting (and I'm not even doing that, as it's a given) that in a few months, when the Gov has blown more than they're taking in, that they'll be deficit spending again and racking up the same or more debt than they just paid down.

Don't get me wrong: I'm all for the Gov paying down debt. But pretending they did something awesome here when we know they're still living way outside their means is highly disingenuous. Which is really the only reason the simple household examples are used.

The End.

Chuck

well, no, if there's news like 'government unexpectedly paying down debt during april quarter for the first time since 2007' then that is interesting and worthwhile information to have. no one except you seems to think there's any pretending involved. all your posts in this thread have been setting up fantasy strawmen for you to argue against.

 

[zephyrprime]

Think about it: You're wrong

The average person has their taxes withheld from their paycheck monthly. Very few people owe taxes, most people get taxes back.

I believe the gov saves money throughout the year to pay for tax refunds so that is why april is actually still a big income boosting month for the government. Also, only poor people and dumb people get tax refunds. Smart people and rich people either have to pay no taxes at all or they have to pay a bunch of taxes when they are due (which is quarterly, not yearly, for a lot of rich people so the point is actually kinda moot).

 

[chucky2]

well, no, if there's news like 'government unexpectedly paying down debt during april quarter for the first time since 2007' then that is interesting and worthwhile information to have. no one except you seems to think there's any pretending involved. all your posts in this thread have been setting up fantasy strawmen for you to argue against.

So when they expectedly deficit spend when they don't have the money to cover what they're blowing, is the same source going to report on it and the same people replying to me going to chastise the Gov? I guess time will tell...

 

[ElFenix]

So when they expectedly deficit spend when they don't have the money to cover what they're blowing, is the same source going to report on it and the same people replying to me going to chastise the Gov? I guess time will tell...

why would pointing out your strawmen require anyone to chastise the government?

 

[chucky2]

What strawmen?

 

[ElFenix]

What strawmen?

But pretending they did something awesome here when we know they're still living way outside their means is highly disingenuous.

It is quite interesting how in the entirety of everything else in life, when things are too good to be true, it's an indication that something bad will happen at some point (before, during, after) the deal. But, never for the Gov. The Gov apperently has a system that quite literally is assumed to make money in perpetuity. People will always buy our debt. Never ever will times change. Fascinating...

No, it's like you paying off part of the mortgage before you have to knowing you won't have cash to actually live off of in a few months.

Not sure about that. This is no different than a household receiving money for some reason that lets them enjoy a monthly income greater than their expenses. Rather than save that money to offset the credit card debt they're living on since they insist on living outside their means, they instead take this unexpected money and pay off some of their house and/or car principle.

Which is a good thing.

Until 2 months down the road they're back to racking up credit card debt by continuing to live outside their means. All the while though they can tell people that a couple of months ago they paid more than they planned of their home loan principle down.

Awesome.

 

[chucky2]

None of those are strawmen...

 

[ElFenix]

None of those are strawmen...

no, pretending that people are saying one thing and then arguing against it and setting up false analogies is not a strawman.