Trump's tax plan

[fskimospy]

You seem to be confused. The fed is not part of the government. It was created by the government, but is not a part of it. The federal government is in debt, the fed creates debt.

The fed could buy up all the debt in the world, sure, but that wouldn't do anything to relieve the US Federal Government of it's debts. It would just owe money to the fed instead of to whoever currently owns the debt.

Moving around debt isn't the same as paying it off.

No, I'm not confused at all, but it appears that you are. The Fed does not NEED to create debt to create money, although that is how they do it now.

If the Fed felt like it they could simply credit the US government $20 trillion dollars and wipe out all existing government debt. This would be a terrible plan, but it's certainly one they could employ if they wanted to. As Milton Friedman famously mentioned if the Fed wanted to they could print wads of bank notes and fly around dropping bags of them on the populace. This would be a simple, straightforward increase in the money supply with no additional debt attached to it. The only problem with this is once you do it you can't take it back if inflation goes nuts, which is one reason (of many) that we don't generally do that.

Can you point me to what source told you that the only way money can be created is through debt?

 

[fskimospy]

I'm ignoring nothing. I clarified my post with the opening statement "under the current system". Sure, the US government could change/twist/abuse the law and mint a coin and call it a 100000 trillion dollar coin and deposit it to immediately pay off all debt and create a huge surplus at the same time, but that wouldn't be "under the current system". If you are going to argue about what is theoretically possible given a change of current laws and police, sure, ANYTHING is possible, and it's rather pointless to speculate.

So wait, you're saying that there's no problem with creating a new alternate currency to cancel US debts but when talking about modifying how we enact monetary policy any changes are off the table and it's pointless to speculate?

There are not enough eye rolls.

 

[Enigmoid]

Hard to see how that's relevant. The statement was that it's impossible to pay off our debt without a whole bunch of crazy things happening. I was simply pointing out that history directly contradicts that statement.

Not to mention sheer screaming nonsense of the idea that we could suddenly issue "Bollars" instead of "Dollars" and that everything would be fine after some modest adjustments.

Ever heard of the Post-War Boom?

Then you know exactly what I mean. The economy was booming, practically everyone was employed, wages were growing, and things were good. New technologies were introduced into sectors; for instance the Green Revolution. It was no issue for a booming, quickly growing economy to pay off its debts.

Compare that to today. There is no booming economy. Jobs are shipped to China and elsewhere when possible. The government puts tons of money into programs that cannot feasibly be cut (once its introduced its 1000x times harder to get rid of it). There is nothing big in the works to fix this either.

In short, its not just how large the debt is that determines whether it will be paid off, but also the condition of the country paying off the debt. And the US is in a worse position to pay off large debts now than it was ofter WWII.

 

[Fern]

I wouldn't but some would.

After all how many bankruptcies has Trump been in on?

People keep lining up for the next one....


.

I don't think Trump has ever personally been in bankruptcy.

I believe 4 of his properties were (likely held in LLC's). So that's 4 bankruptcies.

Fern

 

[fskimospy]

Ever heard of the Post-War Boom?

Then you know exactly what I mean. The economy was booming, practically everyone was employed, wages were growing, and things were good. New technologies were introduced into sectors; for instance the Green Revolution. It was no issue for a booming, quickly growing economy to pay off its debts.

Compare that to today. There is no booming economy. Jobs are shipped to China and elsewhere when possible. The government puts tons of money into programs that cannot feasibly be cut (once its introduced its 1000x times harder to get rid of it). There is nothing big in the works to fix this either.

In short, its not just how large the debt is that determines whether it will be paid off, but also the condition of the country paying off the debt. And the US is in a worse position to pay off large debts now than it was ofter WWII.

It's called debt to GDP ratio, which has been the whole point.

 

[Chiropteran]

So wait, you're saying that there's no problem with creating a new alternate currency to cancel US debts but when talking about modifying how we enact monetary policy any changes are off the table and it's pointless to speculate?

There are not enough eye rolls.

See, you don't seem to have a clue what you are talking about.

If the laws were changed and any of your suggestions became true (for example, effectively printing 20 trillion dollars backed by nothing to pay off the debt at once) faith in the dollar would instantly vanish, and while the US government could force some continued local use of it, it's value overseas would plummet and overall the world economy would suffer greatly. The wealthy and smart Americans would quickly divest themselves of USD in favor of gold, stock, real estate, or bitcoin.

"Creating" an alternative currency wouldn't work so well either- this is where you must be confused, because I didn't suggest such a thing- pay attention to the little name in the box to the left of the post, if it's not my name than it isn't something I said. Burn me once, shame on you- why would anyone trust USD 2.0 after 1.0 is abandoned and value is lost? It would essentially be the same as the above scenario, overseas nations would reject the new currency and it would never take the place of the current dollar because of this.

However, switching to a currency already in existence which has properties that prevent future manipulation- such as something backed by gold or other precious metal, bitcoin, or some other pre-existing cryptocurrency- could work on some level, because of the fact that the currency could not be manipulated and abused like the USD has been. Still, I never suggested this previously in the thread, you really pay attention before you start throwing out false suggestions.

 

[Chiropteran]

No, I'm not confused at all, but it appears that you are. The Fed does not NEED to create debt to create money, although that is how they do it now.

If the Fed felt like it they could simply credit the US government $20 trillion dollars and wipe out all existing government debt.

Well sure. The debt owners could also all simultaneously decide to forgive the federal government of it's debt, and the debt could be paid off that way too. Neither one is going to happen. The Fed makes it's own decisions, and doesn't have to do what congress or the president wants.
http://www.federalreserve.gov/faqs/about_14986.htm

As the nation's central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.

The exception, of course, is if a law is passed saying the Fed must do *x*, then that becomes true. But this is rather pointless to argue about, because this is absolutely true of everything in existence. If a law is passed, slavery could be made legal again. If a law is passed for it, the official currency could change to marshmallows. If a law is passed for it, posting as eskimospy could be punishable by death. If a law is passed for it, the US federal government could require all debtors to forgive the US government or face military action- any of the above are just as likely to occur as your suggestion that the government could "force" the fed to give them 20 trillion dollars.

 

[Vic]

No, I'm not confused at all, but it appears that you are. The Fed does not NEED to create debt to create money, although that is how they do it now.

If the Fed felt like it they could simply credit the US government $20 trillion dollars and wipe out all existing government debt. This would be a terrible plan, but it's certainly one they could employ if they wanted to. As Milton Friedman famously mentioned if the Fed wanted to they could print wads of bank notes and fly around dropping bags of them on the populace. This would be a simple, straightforward increase in the money supply with no additional debt attached to it. The only problem with this is once you do it you can't take it back if inflation goes nuts, which is one reason (of many) that we don't generally do that.

Can you point me to what source told you that the only way money can be created is through debt?

Well yeah, of course the Fed could do that, but then they'd be the obligor of all that debt and why would they do that?

Look, these morons don't know shit and remember less. Why do you bother?

 

[alcoholbob]

Ever heard of the Post-War Boom?

Then you know exactly what I mean. The economy was booming, practically everyone was employed, wages were growing, and things were good. New technologies were introduced into sectors; for instance the Green Revolution. It was no issue for a booming, quickly growing economy to pay off its debts.

Compare that to today. There is no booming economy. Jobs are shipped to China and elsewhere when possible. The government puts tons of money into programs that cannot feasibly be cut (once its introduced its 1000x times harder to get rid of it). There is nothing big in the works to fix this either.

In short, its not just how large the debt is that determines whether it will be paid off, but also the condition of the country paying off the debt. And the US is in a worse position to pay off large debts now than it was ofter WWII.

Not to mention the end of WWII meant an end to the massive spending of combat operations. It's easy to pay off debt when you go from arming, clothing, logistics of 16 million Americans in combat operations to suddenly cutting down to 3-4 million with no daily combat operations. It's an immediate cessation of a large amount of spending which was piling up the debt. Also a large amount of WWII spending was on real stuff, construction of military equipment which ended up being sold to other countries so we were able to liquidate and get some money back for the stuff that was built. Most surplus WWII gear ended up being refurbished and serving militaries in Asia or South America for the next 3-4 decades.

It's the complete opposite of the United States currently, which is legally locked into 9 % annual health and welfare spending increases which is eating up into other areas of government spending, all while the debt is becoming harder to harder to service. We also don't have a convenient "off switch" like the end of a World War where we can just cut government spending overnight.

In addition the capital was there for a large post-war boom. We already had the factories--the US had been the world's largest manufacturer for over 70 years prior to WWII. The shipyards and assembly lines simply had to be retooled and we were back in business. This time we've already shipped our capital overseas, over 60,000 factories since 1990, and manufacturing is still in decline in the United States, so there's not much opportunity for growth, only widening trade deficits at least in the short term future.

 

[fskimospy]

See, you don't seem to have a clue what you are talking about.

If the laws were changed and any of your suggestions became true (for example, effectively printing 20 trillion dollars backed by nothing to pay off the debt at once) faith in the dollar would instantly vanish, and while the US government could force some continued local use of it, it's value overseas would plummet and overall the world economy would suffer greatly. The wealthy and smart Americans would quickly divest themselves of USD in favor of gold, stock, real estate, or bitcoin.

"Creating" an alternative currency wouldn't work so well either- this is where you must be confused, because I didn't suggest such a thing- pay attention to the little name in the box to the left of the post, if it's not my name than it isn't something I said. Burn me once, shame on you- why would anyone trust USD 2.0 after 1.0 is abandoned and value is lost? It would essentially be the same as the above scenario, overseas nations would reject the new currency and it would never take the place of the current dollar because of this.

However, switching to a currency already in existence which has properties that prevent future manipulation- such as something backed by gold or other precious metal, bitcoin, or some other pre-existing cryptocurrency- could work on some level, because of the fact that the currency could not be manipulated and abused like the USD has been. Still, I never suggested this previously in the thread, you really pay attention before you start throwing out false suggestions.

It seems you need to read more closely too. I never suggested we do that, I was simply telling you how your idea that the federal debt could never be done away with was nonsense.

 

[fskimospy]

Well yeah, of course the Fed could do that, but then they'd be the obligor of all that debt and why would they do that?

Look, these morons don't know shit and remember less. Why do you bother?

I wonder what it is about monetary policy that brings out the cranks. Lingering effects of Ron Paul craziness?

 

[Enigmoid]

It's called debt to GDP ratio, which has been the whole point.

This is an extreme oversimplification.

Alcoholbob has done a good idea explaining why.

 

[DCal430]

I have already come up with a good and fair tax, that will bring greater wealth equality to this country. We need a wealth tax, time to stop the rich from hoarding all of the wealth.

I proposed 1% Net wealth tax on all net wealth between 1M and 10M
Then 5% Net wealth tax on all wealth between 10M and 50M
Next a 10% Net wealth tax on 50M to 100M
finally a 20% Net wealth tax on all net wealth over 100M

This tax will occur each and every year. It won't be long before the 1% is put back in their place, were they belong.

 

[Hugo Drax]

We also have the coin seigniorage option as a last resort weapon. We are not Greece We can print to infinity.

 

[Skyclad1uhm1]

Maybe Trump has some Greek blood in there somewhere

I'm assuming his plan is to totally privatise healthcare, cancel all unemployment- and other social benefits (if you cannot work due to illness or disability or cannot find a job that's your problem), and maybe also privatise the military (cut down costs by modernising it so you can simply nuke everything that's not part of the US with drones and thus not having to spent that much on other equipment).

Either that or he's planning on using the proven Republican method: Don't cut expenses, raise them actually by starting wars, lose the next elections, and then blame the Democrats for raising taxes again to pay for the mess you left.

 

[Chiropteran]

It seems you need to read more closely too. I never suggested we do that, I was simply telling you how your idea that the federal debt could never be done away with was nonsense.

Under the current system. Your continual forgetfulness of critical words in my post doesn't make your statement true.

 

[Black Octagon]

http://www.taxjusticeblog.org/archive/2015/06/donald_trumps_regressive_and_r.php#.VcbxS4pXfCQ

 

[Chaotic0ne]

It's called debt to GDP ratio, which has been the whole point.

You're right when it comes to debt to GDP ratio, but that's irrelevant when looked at in greater context. The US economy is way worse off than post WW2 up to the 60s. We've been bleeding our manufacturing base and are transitioning into a consumer based economy. We're in no position to repay this debt based on current economic and political trends. Comparing the past to now is apples and oranges. My grandfather worked in a steel mill. He made enough money to have a stay at home wife, raise 5 kids, both him and his wife had newer model vehicles, and he even had a boat. When he retired he was able to buy 600 acres of land, 2 houses on the property, and a home in an upper middle class neighborhood. You'd need to be making 6 figures to do that today. That lifestyle used to be attainable for people working in steel mills with no HS education. That's how much the US economy has sunk. The "American dream" is a thing of the past. Now a lot of people working in the few manufacturing jobs that are left are gonna need food stamps and wic to support 5 kids, even if both parents work. And they'll be living paycheck to paycheck in a trailer park driving a 15-20 year old car.

At some point we're likely to not have a choice but to default on this debt. If the current trends continue for another couple decades, the entire global economy is going to crash without the US establishing a new currency. When that happens we'll have no choice but to do that.