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Debt Explodes, Deficit-Hawk Arguments Disappear

Donald Trump promised to balance the federal budget and reduce the federal debt. He originally said “We’ve got to get rid of the $19 trillion in debt,” but even he recognized within a month on the 2016 campaign trail that that promise was too big of a fiscal whopper, even for him.

Those promises were dead with Trump’s first budget; coronavirus has put a stake through their cold heart:

The national debt rose above $26 trillion for the first time this week, as the U.S. government spends at a historic pace while pumping trillions into coronavirus relief.

The debt has been climbing upward at a startling pace. According to data released by the Treasury Department, the national debt hit $24 trillion on April 7 and $25 trillion on May 5.

Meanwhile, the government recorded a budget deficit of $1.88 trillion for the first eight months of this budget year, larger than any annual shortfalls in U.S. history. The deficit for the October-May period was more than double the $738.6 billion for the same period last year, according to Treasury Department numbers released Wednesday.

The Congressional Budget Office is forecasting that this year’s deficit will hit $3.7 trillion, which would be more than double the record $1.4 trillion deficit set in 2009 [Evie Fordham, “National Debt Tops $26T, Record Deficit Reported as Coronavirus Relief Spending Goes into Overdrive,” Fox News, 2020.06.11].

Eight years of Obama budgets added $8.588 trillion to the national debt. That’s $1.07 trillion a year. Two and two thirds years of Trump budgets have added $5.652 trillion to the national debt. That’s $2.12 trillion per year.


But hey, Latin readers, tremble not! We’re using deficit spending for its best purpose: investing in shoring up the economy (and all the people who comprise it) when the free market can’t:

Economists say that borrowing money to prevent economic collapse is a good investment, and if done right can lead to both better economic outcomes and lower debt levels than austerity measures in a crisis. For example, nearly a fifth of the spending in the 2020 fiscal year, which began in October, went toward income security [Niv Elis, “Annual Deficit Hits $1.9 Trillion in Just Eight Months,” The Hill, 2020.06.10].

Modern Monetary Theory says we don’t have to worry much about fiscal or economic consequences to the Trump debt:

In 2020, Congress has been showing us — in practice if not in its rhetoric — exactly how MMT works: It committed trillions of dollars this spring that in the conventional economic sense it did not “have.” It didn’t raise taxes or borrow from China to come up with dollars to support our ailing economy. Instead, lawmakers simply voted to pass spending bills, which effectively ordered up trillions of dollars from the government’s bank, the Federal Reserve. In reality, that’s how all government spending is paid for.

MMT simply describes how our monetary system actually works. Its explanatory power doesn’t depend on ideology or political party. Rather, the theory clarifies what is economically possible and shifts the terrain of policy debates currently hamstrung by nagging questions of so-called pay-fors: Instead of worrying about the number that falls out of the budget box at the end of each fiscal year, MMT asks us to focus on the limits that matter.

At any point in time, every economy faces a sort of speed limit, regulated by the availability of its real productive resources — the state of technology and the quantity and quality of its land, workers, factories, machines and other materials. If any government tries to spend too much into an economy that’s already running at full speed, inflation will accelerate. So there are limits. However, the limits are not in our government’s ability to spend money or to sustain large deficits. What MMT does is distinguish the real limits from wrongheaded, self-imposed constraints.

An understanding of Modern Monetary Theory matters greatly now. It could free policymakers not only to act boldly amid crises but also to invest boldly in times of more stability. It matters because to lift America out of its current economic crisis, Congress does not need to “find the money,” as many say, in order to spend more. It just needs to find the votes and the political will [Stephanie Kelton, “Learn to Love Trillion-Dollar Deficits,” Minneapolis Star Tribune, 2020.06.11].

So for every reason—to acknowledge the hypocrisy of Trump, Rounds, Thune, Noem, and every other past fake Republican deficit hawk, and to acknowledge the reality of how modern economies and governments work—let’s look forward to a big election year in which nobody tries to bring up the national debt as a voting issue.


  1. Moses6 2020-06-12 12:37

    Which trumper here believes that tax cuts will pay for themselves.Hook line and sinker thanks slick Mike, and photo op.

  2. jerry 2020-06-12 13:03

    The deficit or the deceit of it, which is really the truth, will not be an issue until after trump gets his arse kicked in November. Then the republican trolls like EB5 Short Rounds (if he wins), Thune and Dirty Johnson will start wailing about how high the debt is.

    We have 40 million people without work, 115,000 killed in action with Covid19 and no Payroll Protection Plan. Department of Homeland Security has sent 15,000 furlough letters out and the Wall Street crooks and liars are raking in the loot. We had better get more than one helicopter out to shower the money just to keep up with the crooks of Wall Street fat with taxpayer money.

    When do they look at Social Security to rob? Sooner than you think.

  3. Tim Higgins 2020-06-12 16:08

    You can always send your COVID-19 stimulus payment back to the US treasury.

  4. Joe 2020-06-12 18:08

    Deficits only matter when D’s are in power. /s

  5. Bill Adamson 2020-06-12 19:42

    This article seems to confuse monetary policy with fiscal policy. Fiscal policy is the use of government expenditures, taxes and transfer payments to stimulate (or contract) the economy. Monetary policy is the expansion (or contraction) of bank reserves in the banking system to lower (or increase) interest rates. This is accomplished by using open market operations (OMO) where the Fed purchases (sells) US government securities to increase (decrease) interest rates. The Federal Reserve-Treasury Accord (1951) established the rule that the Fed doesn’t purchase US government securities to accommodate the Treasury’s borrowing to finance to budget deficit.

    The Fed conducts open market operations primarily to achieve its growth target for the money stock (M2). If it were forced to accommodate the Treasury by puchasing all the debt issued by the Treasury, the money stock would exceed the target and an inflationary spiral would occur. In the long-run (vs. a short-run stimulus), modern monetary policy (MMP) is no different than the old 1970s policy of monetizing the debt. If you want see what MMP portends for the future, just look at carnage it caused in Brazil and Argentina, or more recently Greece.

    The current covid-19 pandemic has caused a recessionary gap on par with the Great Depression. We will need a substantial fiscal stimulus to recover from this deep recession, especially transfer payments to stabilize household income to increase consumption which is 70% of GDP (and more importantly, prevent a collapse in consumption spending which would deepen the recession).

    When we recover from the current recession, we will have return to a balanced budget to lower our debt-to-GDP ratio like we did after WWII. As the economy grows relative to a static or relatively small deficit, the ratio of debt-to-GDP declines. There is a LIMIT to the amount of debt that an economy can sustatain. Interest payments on the national debt must be paid, or investors will dump US government securities, crash the US dollar and put the US in a recession that would take at least a generation to recover from. The current interest payment is 8.7% of the federal budget. This is when interest rates are at historic lows. If short-term interest rates rise to 2% and long-term rates are at 5% or higher (this would be the approximate range for an economy at full-employment), the interest on the debt would likely double. With interest payments around 20% of the budget, it would begin to crowd-out government services and social programs. Taxes would have to be increased to cover the increasing interest payments. At some point, it becomes unsustainable and the country goes into a debt crisis and an ensuing economic collapse. This is what happened to Greece. MMP is not a panacea to our problems and will only accelerate our decline. We need to return to sound fiscal practices of balanced or nearly balanced budgets that were prevalent after WWII. We need to invest in education, scientific research and technologies which were the drivers of the phenomenal economic growth and rising standards of living we experienced post-WWII. This is the most desirable course for our future, not some disproven policy like MMP.

  6. jerry 2020-06-12 23:21

    We need to invest in testing, masks, along with the rest of the PPE. Instead, we are doing something that is weird. Aren’t deficit hawks a pheasant predator that should be trapped and have their tail feathers removed?

    “A nursing home worker in New Jersey cut a deal for gowns in a parking lot. A clinic director in Florida awaited midnight deliveries of tens of thousands of masks. A South Carolina cardiologist tried to buy ingredients from Lithuania to mix his own hand sanitizer.

    Medical shortages in the face of the coronavirus pandemic, have left many healthcare workers in a desperate hunt for medical supplies. Community clinics, nursing homes and independent doctors, in particular, find themselves on the fringe of the supply chain for masks, gowns, gloves and ventilators. Desperate administrators wire money to offshore banks to acquire supplies.”

    When you’re in the ER on a gurney and the doc says, “son, sorry but we don’t have a mask to protect you from the Covid19, but that broken leg of your’s will soon be set.” Would you really give a hoot if there is a deficit? Or would you want the doctor and the nurse to be protected so they could protect you? Tough call, but I think the masks and PPE would be more important for everyone in the room.

  7. Debbo 2020-06-13 00:05


  8. Richard Schriever 2020-06-13 05:24

    Here’s the crux of the matter from that long ramble posted by Mr. Adamson: “Taxes would (will) have to be increased…..” (on those who have the money.)

  9. Donald Pay 2020-06-13 09:06

    I think along the same lines as Bill Adamson. I would add another part to it, though. It’s not just whether you use taxing and spending policy correctly that’s important. What you spend money on and how you tax is important.

  10. jerry 2020-06-13 09:26

    As long as the American dollar is the reserve currency, there is no such thing as a deficit. We can wring our hands and wail at the moon about how far we are in debt, but at the end of the day, the treasury (whatever the hell that is now) just makes sure the cash registers are able to make change. Money for nothing and the chicks are free.

    Have you ever thought of how small the bank vaults are? If there supposed to be filled with everyone’s money, you would think they would be bigger than a walk in cooler.

  11. leslie 2020-06-13 09:35

    The big money tax avoidance industry hides in SD politicians’ pockets. They do it to snuggle up to snake charmer trump and real billionaires (400 in US but they want ‘em all, worldwide). (C) jerry.

    The nxt big thing. Tax avoidance!

  12. jerry 2020-06-13 09:38

    Exactly mfi, that’s why the stock market is way up. Our right hand is paying our left hand to impress the girls with our wealth. At the end of the day, we still don’t have a decent stretch of road that is safe. Bridges, well they are really a leap of faith when you think about it, carry a life vest when you go over a river.

  13. Cory Allen Heidelberger Post author | 2020-06-13 09:38

    Tim, why would I want to put that money back in a corrupt fascist government’s pocket instead of spending it to sustain my local business community?

  14. Steve Higgins 2020-06-13 11:05

    That’s rich…a rabid democratic terrorist supporter throwing the fascist accusation out there.

  15. jerry 2020-06-13 12:09

    What’s really rich is that Steve Higgins finally agrees that trump is a fascist. Hell hath frozen over.

  16. leslie 2020-06-13 12:14

    The upside down universe of republicans.

  17. Tim Higgins 2020-06-13 12:16

    Cory, just seems hypocritical, you criticize the increased deficit and then accept payment thus increasing the deficit.
    Jerry, I believe the reference to be figuratively, not relatively.

  18. leslie 2020-06-13 12:18

    Definition: exalts nation and often race above the individual

    and that stands for a centralized autocratic government headed by a dictatorial leader,

    severe economic and social regimentation,

    and forcible suppression of opposition.

  19. leslie 2020-06-13 12:22

    Steve, Tim: u guys are funny.

    Are u uneducated ill informed red neck racists?

    Or sophisticated republicans just struggling to save face?

  20. leslie 2020-06-13 12:24

    Sorry, so far i just meant deplorables, not racists, yet:)

  21. Tim Higgins 2020-06-13 12:25

    Leslie typical leftist has to make it personal

  22. jerry 2020-06-13 12:34

    There is no deficit Tim. None whatsoever. The United States has the reserve currency that the whole world uses. The deficit is what the world buys called debt. So what does all of it mean? Not a thing when you have the reserve currency that sets the rates for the rest of the world. Just push a button and the money appears, ask Wall Street. Money for nothing.

    Deficits don’t matter a thing, they are about as worrying as a cloudy day. In fact, the only time when deficits matter are when we want to spend money on social good, like infrastructure. That one is a tough one as it is so much easier to start a cold war with China than to fix a damn road or gwaaad help us, a bridge. We would like to spend another trillion or two to add more warships and even a draft conscription than to improve dams, water systems, airports the list goes on.

  23. Steve Higgins 2020-06-13 14:09

    No jerry….do not agree President Trump is a fascist.

    Leslie….how about some specific, concrete examples. Not imaginary examples that you are so noted for but real example of what has been done.

  24. mike from iowa 2020-06-13 15:43

    Tim Higgins thinks drumpf is a typical libby? He makes every tweet personal, usually lies about himslf.

  25. Bill Adamson 2020-06-13 18:18

    Jerry, I have tried to follow your aguments in previous posts. Many of your points are logically flawed and defy economic reality. You first post about the need to invest in PPE. I noted that we are dealing with a pandemic and a recession that is on scale with the Great Depression. We are in a crisis similar to what we faced during the 1930s and 1940s, a serious recession combined with a global war. The covid-19 pandemic is a global threat to public health and safety and the federal government must provide the resources necessary to defeat the pandemic. This includes PPE, a covid testing and contact tracing and developing a vaccine (which is ultimately the solution to defeating the pandemic). The biggest failures of the current Administration is not using the Defense Production Act to domestically produce PPE (forcing medical providers to competitively bid for PPE), and not instituting a national testing and contact tracing program which would have limited the degree the economy had to be shutdown to implement social distancing.

    You have this mistaken belief that the US can run an unlimited budget deficit (and hence an unbounded national debt to GDP ratio). This couldn’t be further from the truth. Reserve currencies are foreign exchange held by central banks to facilitate international transactions. The fact is that the US dollar is one of five major reserve currencies (US dollar, euro, Japanese yen, British pound sterling and Chinese yuan). The Swiss franc and Canadian dollar are also commonly used reserve currencies. The US dollar is the most widely held currency central bank foreign exchange reserves. The US dollar has only been the most widely held reserve currency post-WWII. The Dutch glider was the dominant currency in the 17th and 18th century. The British pound sterling was the dominant currency in the 19th century until WWll. The dominant currency is usually the currency of the country that dominates international trade. After WWI, the US eclipsed the UK as the world’s largest economy. After WWII, the US dominated international trade (the US economy was about 25% of world GDP and its productive capacity was not destroyed in WWII).

    Central banks not only hold US currency, they also hold US government securities. Both the dollar and US securities are demanded for its perceived stability as well as scale. As we continue to run large deficits and the debt-to-GDP ratio moves north of 100%, the stability of the dollar and US securities will come into question. If cental banks become worried about the stability of the dollar, the US will lose its dominant currency reserve status. The resulting dollar crisis will cause inlationary spirals, increasing real interest rates and our economy will crash. There are already global concerns about a long-run depreciation of the dollar due to our persistent trade deficits. Large trade deficits are linked to large budget deficits because we have to import foreign capital finance the budget deficit. The large accumulation of US dollars from the trade deficit causes the dollar to depriciate. There already are movements to replace the US dollar with a weighted currency basket. Your argument that deficits don’t matter, and we can sustain unlimited social spending without raising taxes to balance the budget is no different than Republicans claim that deficits that deficits don’t matter, and we can run unlimited deficits to finance unlimited tax cuts. Both policies will result in the economic decline of the US.

    Note: deficit financing of tax cuts (and unfunded wars) are the drivers of the rise in the debt to GDP ratio from about 40% to over 100% since 1980 (or the Reagan Revolution of fiscal instability).

  26. jerry 2020-06-13 19:15

    Tell me Bill Adamson, besides the arithmetic difference, what is the difference from a 20 trillion deficit and a 22 trillion deficit? There really is no difference and why would that be? The ruling elite of America should go back “For tax years 1944 through 1951, the highest marginal tax rate for individuals was 91%, increasing to 92% for 1952 and 1953, and reverting to 91% for tax years 1954 through 1963. For the 1964 tax year, the top marginal tax rate for individuals was lowered to 77%, and then to 70% for tax years 1965 through 1981.” Talk about putting trillions back into the economy, here it is. I guess that was when America was great, you can count on that not happening.

    When you have the reserve currency you have “The Exorbitant Privilege”

    “The “Exorbitant Privilege”
    This special role for the dollar has long made other countries jealous. In the 1960s, French Minister of Finance Valéry Giscard d’Estaing coined a special term for their contempt: The dollar, he said, had an “exorbitant privilege.”

    The United States is privileged in a few important ways under this system. Dollars and dollar-backed securities like U.S. Treasury bonds — which is how the government issues debt — are much more attractive. Many countries, for instance, save by buying U.S. debt. China holds over a trillion dollars of it!

    “Now if another country really, really wants to hold your debt, that means it’s very easy for you to issue debt,” Greg Kaplan, an economist at the University of Chicago, told us on the South Veranda of the hotel, which has a scenic view of a mountain pass known as Crawford Notch. “Here in the U.S. we have this privilege of being able to issue debt at much lower rates than other countries,” he says. This reduces the pain of deficit spending.”

    So if China holds 2 trillion dollars of our debt, and they suddenly decide to remove that 2 trillion, will the sky fall? Nope, they will get their 2 trillion with interest and we still have a deficit.

    Don’t worry about it. We had better pump in about 3 more trillion into the economy with the PPP for the working folks so we can keep the economy going. We need to finance city, county and state governments as well as injecting billions into a failed healthcare system. It’s all good…if the senate does it’s job and puts those trillions into the economy, not wall street. Debt is good man, that is what you market to the world.

    Check out the Suez crisis in 1956 to see what Eisenhower did to solidify the dollar and boot the pound sterling to the curb to make the dollar the king of the hill. Eisenhower had to lend a billion to keep what was left of the British Empire afloat. We don’t use metal to back up our currency, we use debt, otherwise knows as deficit.

  27. Richard Schriever 2020-06-13 19:36

    jerry – one of several redundant digital back-ups of all the “bank vaults” in the US is in the SW corner of the junctions of I-29 and I-90. It is actually quite substantial in physical size and contains lots and lots and lots of computers, routers, and so on filled with and moving about the bits and bytes that are – substantially – what “real” currency looks like now-a-days.

    There is no “brand” or name on that installation. Not really anything that would hint at what it is. One just needs to have been privy to the insider communiques about it’s existence (and the name and nature of the network it connects with other such big grey blocks of “currency”) to know what it is. Lucky me to have been in the right company at the right time to be one of those knowers. Not that it does me any good whatever.

  28. Richard Schriever 2020-06-13 19:39

    Tim Higgins – GYI – ALL MONEY is debt. Every single penny and part thereof is a debt instrument – an IOU – a “symbol” of actual wealth.

  29. leslie 2020-06-13 21:07

    I said u two r funny.

    1. Tim: “send your COVID-19 stimulus payment back to the US treasury.” At 11:05 yesterday. Seems personal.

    2. Then steve said: “a rabid democratic terrorist supporter….” At 16:05 today. Seems personal.

    So NOW U WANNA debate? See #1,3.

    3. Steve said; “Not imaginary examples that you are so noted for…” Seems personal.

    4. Tim said: “typical leftist has to make it personal….”

    Hypocrite much? You want ME to look up more evidence for you? You are aware of Republican obstruction since 2008? The SD billionaire trust tax avoidance havens? McConnell’s stolen SCOTUS seat, and predetermined impeachment and hidden evidence.

    Fox News and Rush Limbaugh don’t use “fascist” unless referring to Antifa. I kno upside down republicans as a result can be confused.

  30. jerry 2020-06-13 21:30

    Deficits don’t matter at all.

    “WASHINGTON: The Navy’s top priority — its new nuclear-powered Columbia-class submarine — has been struck by the COVID-19 virus. Workers’ absences at a critical supplier have delayed construction and welding of the boat’s missile tubes by several months a senior Navy official said today, and the service is scrambling to make that time up.

    While the service and its contractors are looking for ways to reclaim that time, the situation is something that Navy and Pentagon officials have most feared. Large-scale work on the first of the twelve planned Columbia submarines is slated to kick off in 2021, with deliveries starting in 2030 — just in time to begin replacing the Cold War-era Ohio-class subs as the Navy’s leg of the nation’s nuclear triad. The subs will carry 70 percent of the warheads allowed by the New Start treaty with Russia.”

    And for what? Who am I supposed to be afraid of that I will spend my last penny to a bloated military that gives it’s surplus to states. Like even an aircraft carrier for Wyoming. WTF

  31. Steven Higgins 2020-06-13 22:01

    Leslie….another leftist tactic, its called diversion. Not asking you to look up anything. This should be easy for you since it is so obvious. Tick tock.

  32. leslie 2020-06-13 22:11

    cute. tsk tsk. So you agree you started this personal business. so you short circuited the debate. I am glad you agree.

    fascist tactics are recognizable, consistent and dangerous. And once you use fascist tactics of division and hate to get into power, there is an enormous incentive to continue using those same tactics to maintain control, whatever your personal motivations. If you start out spreading conspiracy theories, like birtherism, you are likely to continue to lie and attack the press once you are in office. If you campaign by evoking a mythic past that has been undermined by foreign elements (“Make America Great Again”), you are probably going to try to maintain power by targeting immigrants and outsiders.

    we don’t have leftist “tactics. we respond in good faith as people of good conscience concerned about the LOG IN YOUR EYE. Do something about the spiraling GOP, Republican propaganda and real threats trump has created.

  33. Bill Adamson 2020-06-14 00:51

    Jerry, the difference is another $40 billion in annual interest payments. It is the interest payments as a percentage of the budget that constrains the size of the national debt. Debt is like your credit card. You buy more and more on your card and make minimum payments. After a few years, the minimum payment is so high you can’t afford your your living expenses, and you go into default. Your no longer a good credit risk and you can’t borrow to sustain your lifestyle beyond your means. The US government has the same constraint. Creditors will only buy US debt if they will be paid back. If US debt becomes more risky, debtors will dump US securities, the US dollar will depriciate and the dollar will no longer be a reserve currency. This why the US needs to be concerned about its debt levels. The dollar can only be a reserve currency if we are a good credit risk. The average interest rate on our debt is around 2%. If interest rates rise to 4%, then interest payments would rise to nearly 20% of the budget, and we would have difficulty maintaining our spending programs. This why we need to restore fiscal discipline. So that the US can remain a reserve currency country.

  34. jerry 2020-06-14 11:34

    40 billion on zero interest payment paid from the right hand to the left hand, who’s kidding who? This is nothing more than pocket pool. Push a button and add some zeros and that will take care of that. Do you know who decides if the US is a good credit risk…the US. Then the Munch and his moll don’t even bother to turn on the printing press, they just push a button with the zeros and whatever it is they want to send. No big deal. We do that in South Dakota with the Game Fish and Parks.

    Put another 1 trillion for starters into the hands of the workers with another 1 trillion into city, county and state coffers to be followed by another 1 trillion into the infrastucture and healthcare. Follow China’s lead. They seem to be the smart ones.

    What is fiscal discipline? How many aircraft carriers? How many bombers? How many would you put into the field? How much would you pay farmers to ignore the fact that their markets got screwed? Deficits don’t matter when you are the big dog and you control the money. If we really get broke, we can raid the cookie jar in Sioux Falls for a few trillion in trust. Why do they trust South Dakota? What is the vig, the juice, we pay on those trillions in Sioux Falls?

  35. leslie 2020-06-14 12:25

    I kno this is a no-no. I dont have much to say about this source. But, Mitch “clucking” tsk tsk bears repeating here. I appreciate steve and dumber bro tim (though glib steve did persist-“should be easy for you since it is so obvious”) and erudite bill’s takedown of our effervescent jerry. I assume its just coffee (and experienced intuition) that makes him so outspoken. The family submariner reminded me of the $4B destroyer the Navy just received.

    Richard, i like knowing about “big grey blocks” of dark money. Rep Lust, esq would like to silence our CPA candidate for governor, Wismer. How much did ret SD Sup Ct chief say is hidden? Shhhh

  36. Tim Higgins 2020-06-14 20:42

    Leslie, I did not call Cory a redneck or racist, I simply suggested if he has a problem with the debt/deficit whatever you want to call it send the stimulus back. Just how is that personal?

  37. leslie 2020-06-15 00:19

    That’s the same as “simply” saying “if u don’t like it u can leave”, or “gotcha”; usually attributable either to dumb ill informed rednecks or Russian trolls. “Cory, just seems hypocritical, you…accept payment thus increasing the deficit.” 6.13. 20@12:16

    Accepting the $1200 check is increasing the deficit? Seems like you about covered Websters #3 above: “Severe economic and social regimentation,…” Seems severe. Seems pointedly personal. Seems deplorable considering the phenomenal damage the obstructionist GOP has wrought.

  38. Steve Higgins 2020-06-15 22:47

    Well….it’s been 2 days leslie….nothing?

  39. leslie 2020-06-15 23:44

    ball’s in your court afaik

  40. Clyde 2020-06-16 08:09

    Jerry I commend you. Plenty of zero’s added to the debt but the interest on the debt is never added. Everyone should be doing a little math on that and where you will end up. Seems that right now China, Russia and a few others are out to put a crimp in the “petro” dollar. We will see how our out for themselves private bankers do on this.

  41. Donald Pay 2020-06-16 09:03

    Some folks are “all debt is bad” fetishists. Others are “debt doesn’t matter” fetishists. I think the the truth is somewhere in between, although everyone argues on where the debt number turns from “OK” to “Awful.”

    In some ways it all depends on other matters. I think today’s debt is mostly bad debt. Most of today’s debt is the result of not taxing the wealthy and the well-connected. Rather than tax the people that buy our politicians, the politicians dump the costs of government the wealthy should be paying onto the future middle class and poor in the form of debt. The costs of financing the debt is low right now, and that fools some folks into thinking debt is no big deal. It is still a shift of economic responsibility from today’s rich and famous onto tomorrow’s poor and middle class.

  42. jerry 2020-06-16 09:32

    Debt makes money. There is not economic downturn from debt because it is bought and sold by investor country’s. That’s the whole idea of debt. The only reason it would hurt poor and middle class folks would be political malfeasance nothing to do economically. History has shown us the successful road map.

    If you want to raise capital, you simply raise interest and you get all kinds of investors
    coming out of the woodwork. With the US, investor’s feel secure in the “word” given by the US government that they will be paid at period certain. This beats what this couple of Americans did with banks in Lebanon.

    “BEIRUT: A Lebanese-American couple filed lawsuits in New York against three Lebanese banks and the Central Bank for allegedly refusing to transfer their $18 million deposits abroad.

    The plaintiffs demanded the three banks to pay $150 million in damages to the two couples which also cover the lawyers’ fees.

    “Plaintiffs Joseph A. Daou and Karen M. Daou are married United States citizens who deposited hard earned United States dollars (“USD”) in three Lebanese banks, only to be preyed upon by the Ponzi scheme that is the Lebanese banking system,” the United States District Court Southern District Court of New York said in the document filed in June 10, 2020.”

    Ponzi Scheme is not a pleasant way to describe banking, but it is what it is. Why do you think there is a limit on how much of your money is insured? Don’t worry about deficits, just worry about the powers to be continuing to push the buttons with the zeros on them directed to the right places. Citizens, healthcare, schools, city, county and state governments.

    Food producers ability to put food on our tables are a lot more important than worrying about the deficit scheme. That rancher and farmer that got caught in a crossfire not of their own making, need to be able to keep producing. In order to do that they need those zeros so they can pay those zeros to the lender. There is no metal backed money that changes hands, just promises to pay. Let the scheme go forth to keep the economic engines running…worldwide.

  43. Dicta 2020-06-16 10:25


    24% of world GDP
    36% of world military spending


  44. Debbo 2020-06-16 13:34

    I like Barbara Lee.

  45. jerry 2020-06-16 18:26

    Deficits? To show what nothingness is, behold,

    “Asian shares and Wall Street futures rallied on Tuesday as the formal start of the United States Federal Reserve’s corporate bond-buying programme boosted global investor sentiment and calmed earlier worries about a second wave of coronavirus infections.

    MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2.2 percent, its biggest one-day gain since June 1. Australian stocks rose 3.0 percent, while shares in China rose 1.2 percent.”

    There ya go, deficits don’t matter. Never have and never will. Now, do the right thing and send some zeros to Americans who matter. Send the zeros to schools, healthcare, cities, counties and states. Put markets in place for the ag producers to make them right. We have zeros for markets around the world, lets put those zeros to good use right here.

  46. Bill Adamson 2020-06-17 21:17

    Jerry, just to enlighten you, I linked an article that dicusses the expected depreciation of the dollar due to persistent budget and trade deficits and the declining personal savings rates. If the dollar depreciates as predicted, the dollar will cease to be a reserve currency. The US stock markets will crash and interest rates will increase precipitously. Here’s a word for you to learn, stagflation.

  47. jerry 2020-06-17 22:32

    Thanks for the link. Where have I heard Morgan Stanley’s name before? Oh yeah, now I remember, TARP. Of course you remember that also correct? Why would I trust this guy to give any financial advise when the only thing he operated was a ponzi scheme that we had to bail him out for and he ripped us off with a bonus. Deficits didn’t matter then either and we had a war going full tilt bogey as well

    “Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. paid out a total of $18 billion in bonuses in 2008 while receiving a combined total of $45 billion in taxpayer dollars through TARP. Together, the three firms earned $9.6 billion last year, Cuomo said.” “,17%2C%202008

    I’m enlightened more to the point of the need for another 3 Trillion Dollars to be put into working people’s pockets. Education monies for how we are gonna get our schools up and running. Healthcare needs, Personal Protection Equipment, city, county and state funding. Deficits don’t matter a hill of beans in a pandemic. The PPP runs out here right quick like. We have 40 plus million out of work. We have businesses that will shutter without that PPP money. We need to get Wall Street off the sugar high and we need to put that money into the pockets of those that will spend it. Not complicated at all. Deficits don’t matter when you are the reserve currency that has just injected Asian and European markets with cash to help ward of a world wide depression.

    BTW, the only reason trump wants the dollar devalued is to lower his personal interest rates.

    Stagflation is not applicable at the present time.

    Stagflation, in this view, is caused by cost-push inflation. Cost-push inflation occurs when some force or condition increases the costs of production. This could be caused by government policies (such as taxes) or from purely external factors such as a shortage of natural resources or an act of war.”

    Our issues were not economic issues, they are caused from a pandemic. Nothing in the word that you just luckily found, relates to the cause or the fear of stagflation. We have plenty of natural resources and we are not at war any more that usual. Worry more about washing your hands and hope others do, wear that mask and hope others do too.

  48. jerry 2020-06-18 09:20

    Jobless claims for last week 1.5 million. tick tock, the workers need to be assured they will be able to pay their rent and put food in their belly’s. What about the school’s? We need money now.

  49. Bill Adamson 2020-06-19 02:55

    Jerry, Stephen Roach is anot academic and a respected Yale economist. He is the one predicting a dollar crash, not Morgan Stanley. As I pointed out, the Fed doesn’t buy all the US government securities issued by the Fed. Foreign investors buy a significant share. If the dollar begins a depreciation trend, foreign investors will be unwilling to lend the US money to finance the deficit and driving up interest rates. Worse, the depreciating dollar will cause investor to dump US stocks and bond. The rising interest rates will cause a financial crisis like in 2009. This will cause a demand shock recession. As the dollar depreciates, foreign produced goods will become more expensive. Imports are 15% of GDP, and much of what we import, we don’t produce. The will cause inflation and further depressing domestic demand. Resources critical to US production are priced in dollars, such as oil. As the dollar depreciates, these commodities will be priced in another currency like euros or a weighted currency basket. The spike in the US cost of these inputs in production will cause a supply shock resulting in inflation and higher unemployment, or stagflation. The effect a dollar crash will be similar to the 1975 recession only with double digit inflation and unemployment near depression levels. Even worse, because nobody will want to buy US government securities, it will be difficult to use the fiscal policy needed to stimulate the economy out of recession. We could be in recession for a decade.

    After reading your posts, you aren’t much different than the Trump-philes. You are anti-science and accuse economists of being establishment sellouts because they poke holes in the modern monetary policy hype. Your arguments are distorted by your confirmation bias because you reject any scientific analysis or verifiable facts that are inconsistent with your personal beliefs.

  50. jerry 2020-06-19 11:49

    Stephen Roach was the Morgan Stanley department head of it’s Asian division, Morgan Stanley took a huge TARP payout and your Guy took a huge TARP bonus from taxpayers and now, it seems, is respected by all who steal from taxpayers. Stephen Roach is a class member of the robber barons. Look Stephen Roach up, you can see how smart he is, smart enough to take taxpayers for a huge ride.

    I understand why you say “anti-science” is because I see the deficit as about as worrisome as a cloudy day. We need about 3 trillion to put into workers pocket, fund more teachers for smaller classrooms, bailout cities, county’s and state governments, provide funding for small businesses, a huge investment into healthcare and it’s delivery systems, working to provide markets for ag products that make sense, etc… Raise taxes on the wealthy to where they were in the 90% not that long ago, and cut defense in half.

    Nothing has even entered the fray about changing the status of reserve currency. As noted, the reserve currency injected billions into the Asian and European markets to level the issues with the Covid. I will repeat we are not in an economic meltdown, we are in a pandemic. The debt is still being purchased by other country’s as a safe investment or have you missed that? See, how it works is that if others have the confidence in the reserve currency, they buy it.

    Did you see the smiley face on the dollar bill in your link? That face devalued that dollar bill to some, but not to me.

    Pull up your big boy pants, wash your digits and wear a damn mask. Deficits don’t natter. Debt is good, we all have it, ask your banker. Oh, and pay your mortgage payment for the month. Thank gwaaad for debt or how would we be able to put a roof over our melon.

  51. o 2020-06-19 11:51

    Jerry, it seems that your position on debt not being harmful is based on the idea that it will never be repaid. What you describe then is an absolute collapse in the bond (the way we “sell” debt) market and a subsequent drying up of that very credit you know props up our economy.

    As to the point you make that debt is sold back and forth among investor countries, that debt is also held within the US government. Social Security is required to “invest” in US treasury bonds — debt. That is debt that must be liquidated/repaid to pay benefits at some point down the road.

  52. bearcreekbat 2020-06-19 12:03

    It seems reasonable to believe that debt must be repaid, but in reality that seems to overlook the very reason that creditors normally are willing to loan money. They don’t do it to be repaid, rather, they do it for the interest or as bookmakers call it, “the vig.” As long as interest is paid on a regular basis a creditor is likely happy that the loan has not yet been repaid.

  53. jerry 2020-06-19 12:10

    That is exactly true bcb! The “juice” is what greases the wheels.

  54. bearcreekbat 2020-06-19 12:55

    jerry, indeed & I suspect that is the reason people, countries and organizations buy govt savings bonds, i.e. loan the government money, – to see their money grow and to have interest income/growth available to cash in as needed.

  55. jerry 2020-06-19 13:07

    Agreed. I would like to see the Clinton bonds again, but will not see that with the huge military black hole of waste or in the beginning stages of an epidemic that is getting worse here instead of better. A tax increase would certainly help the deficit and begin to pay it down, though much higher than the Clinton increase. What we don’t want to see is what we did see in the Clinton Bonds, a reduction of the so called “entitlements”. In that regard those must be increased. First order of business is to get the existing failed economic team of crooks and liars out of power.

    We will still need the jack into the economy roughly 3 trillion dollars to stand down this pandemic while we wait for a vaccine. Soon, school will start and we simply are not ready for that to happen anywhere in this country, so the money will be needed to keep what we have functioning. My opinion of course.

  56. jerry 2020-06-21 13:34

    Donald J. trump owes 1BILLION for a personal cash loan from China. Now it’s due, when do we add that to the debt or has it already been added?

  57. mike from iowa 2020-07-06 18:49

    Howz this for peculiar? Grover norquist’s outfit received from 150-350k bucks from government stimulus moneies even though his Libertarian bent wants him to shrink government so it can be drowned in a bathtub.

    Furthermore, Ayn Rand Institute collected between 350k and a million bucks as well.

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