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Will the new Treasury Sec. have to raise taxes to cover new bonds that he might create?

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I’m wondering if we’re going to need to raise the roof in 2017?

“[W]e’ll look at potentially extending the maturity of the debt because eventually we are going to have higher interest rates and that is something this country is going to need to deal with. … [the] refinancing” government debt and “locking in” low rates.” Treasury Secretary Steven Mnuchin.

But Uncle Sam and the Fed hold the majority of the current treasuries that have those long maturities that he wants to refi. Who is he trying to help is my question?

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    Posted by Dennis
    Posted on 12/02/2016 6:24 PM
    127 views
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    Why would they have to raise taxes?

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    Cullen Roche Posted by Cullen Roche
    Answered on 12/03/2016 1:41 PM
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      They don’t I guess. You’re always correct. “T-Bills move based on inflation expectations and Fed policy.” We’re supposed to have yuuuge deficits going forward, and the so-called “National Debt” limit will have to be raised. The Treasury / Fed has to market a lot more bonds. On the secondary market, all the bonds should come down in price. The resulting higher interest rates are not controlled by the Fed, but by then the Fed will be fighting inflation by raising the Fed interest rate, as well as that paid on the newly issued bonds.

      Where is that moolah going to come from? Not from companies or from the rich folks, that’s for sure. More bonds, lots more bonds.

      AND They will raise “taxes” in the form of no more loop-holes for the middle class. This means no more mortgage deduction, elimination of help with health care, privatize Social Security and Medicare, e.g. basically removing the deduction page from our IRS 1040. Also, payroll taxes will need to be raised so the “privatized SS” will be profitable. The bonds now held by the SS and Medicare will be absconded by the “privatizers”.

      For the rich folks, getting rid inheritance taxes is a yuuuge one, also lowering cap gains and dividend taxes — sorry here is where the taxes are lowered.

      Data: http://www.ontheissues.org/2016/Donald_Trump_Budget_+_Economy.htm

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      Posted by Dennis
      Answered on 12/03/2016 4:01 PM
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        Hi Dennis,

        You may be interested in this article about forms of public and private partnerships.
        https://ppp.worldbank.org/public-private-partnership/agreements/concessions-bots-dbos

        I believe that Trump will use either concessions or BOT way to build up infrastructure.
        The key principle of either concessions or BOT is that whoever using to-be-built infrastructure have to pay the fee.
        It is not fair to use the tax money from all citizen for financing infrastructure projects.

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        Posted by pliu412
        Answered on 12/04/2016 3:23 PM
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          Thank you pliu412. “Build-Operate-Transfer (BOT) and Design-Build-Operate (DBO)” These are concepts that have considerable advantages. (1) The projects would be chosen because of a clearly identified need, and not because of political rewards, pork, or gaining votes. (2) The projects would be carried out efficiently since the “profit” motive would be built in. (3) The design of the project would be practical since the expensive esthetics would take a back seat. (4) This has worked well for counties and states where they have used BOT for a few projects. (5) The lack of bond issuance means the profits would be garnered by the private companies that built and/or maintain the projects (some local), rather than banks and bondholders.

          On the other hand. (1) The need for a profit costs money. (2) The fees required to build and maintain these projects would need to be passed on to the users, a seriously regressive tax on the middle class. (3) Our national government has plenty of fiat currency to build what is badly needed, and these funds can be passed on the local governments to cover the infrastructure’s costs. (4) I think it IS fair to use the tax money from all citizen for financing infrastructure projects since it makes our entire capitalist economy more productive. We all benefit yuuugly with a solid time-saving infrastructure.

          But there is no need to raise tax money from American citizens to do this infrastructure building. This is possible because we have a strong economy that has high-value fiat currency, a currency that would get even more respect from the currency traders because we could have the most efficient infrastructure in the world. There is no better currency to hold because, versus the other fiat currencies, our economy would become more and more efficient and powerful.

          At the National level, there is no reason in my mind, to add these infrastructure costs to the so-called “National Debt”. The fiat currency spent on these projects has been turned into real items that exist right here in the USA. Instead of adding to the so-called “National Debt”, the items should be counted as assets, with appraisals updated yearly. If this were the case, and our assets counted against the so-called “National Debt”, we wouldn’t even have a so-called “National Debt”.

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          Posted by Dennis
          Answered on 12/04/2016 5:38 PM
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            Further, climate change is absolutely POUNDING our infrastructure. It is not just coastal cities that are being majorly damaged by storm surges and hurricanes, it is “hundred year storms” happening every year, flooding hundreds of cities and towns. Other areas are being burnt up in forest fires in areas of extreme drought and water shortages happening where they never had a problem before. The only way to even halfway meet these issues is infrastructure spending that we all must shoulder. Uncle Sam, please spend the money, otherwise, our infrastructure will fail us and then we all LOSE.
            http://www.investopedia.com/financial-edge/0412/the-basics-of-currency-trading.aspx

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            Posted by Dennis
            Answered on 12/04/2016 5:59 PM
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              Taxes don’t have to go up just because the govt decides to spend more. In fact, we’d hope that when the govt spends more today that this adds to future growth that will allow the deficit to be that much smaller in the future. Saying that the govt has to charge more taxes in the future to cover bonds is like saying that a corporation has to charge higher prices because it issues bonds. That’s categorically false. The corporation doesn’t have to charge higher prices at all. In fact, it might even benefit by charging lower prices. This could spur growth that will help them repay or maintain a low debt to equity ratio in the future which could make their entity MORE valuable….The US govt isn’t a corporation, but the same general thinking applies in this example.

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              Cullen Roche Posted by Cullen Roche
              Answered on 12/05/2016 5:05 PM
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                You’re correct, as always: “Saying that the govt has to charge more taxes in the future to cover bonds is like saying that a corporation has to charge higher prices because it issues bonds. That’s categorically false.” I didn’t actually mean to say this. It is the title of my question, however. Sorry about that. But aren’t the interest payment outlays one of the Republican’s major stories, e.g. that our kids are on the “hook” for this moolah and that will cause a raise in taxes to impossible levels in the future?

                I also asked: “I’m wondering if we’re going to need to raise the roof in 2017?” (e.g. debt ceiling)

                Congress is hell bent (IMHO) not to raise the so-called “National Debt”. Issuing bonds necessarily does that. Now buying the bonds back via the Fed and passing the interest payments to our Treasury, should lower the ceiling, but it doesn’t — by law I guess. Also what about my idea of counting our assets that Uncle Sam built, and subtracting this value from the so-called “National Debt”, thus removing this “National debt” completely?

                Is it not the case, (as you have pointed out, I think), that the fictitious “National Debt” is a nationwide problem of our laws that need not exist for many logical reasons? The argument, that this would cause inflation via some sort of imaginary fiat currency dilution is impossible now because the FOREX controls dollar value, not the amount of currency in circulation.

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                Posted by Dennis
                Answered on 12/06/2016 4:24 PM
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                  I have reviewed this terrific discussion. I guess I’m not typing about what you call MR. I’m typing about a “fix”, that may never come, but is sorely needed. I think we’re going to have a “Trumpster yuuuuge” inflation problem that could be avoided. http://www.pragcap.com/ama/what-are-taxes-used-for-if-they-do-not-fund-government-spending/#answer-5104

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                  Posted by Dennis
                  Answered on 12/06/2016 6:33 PM
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                    Dennis,

                    Here is what Trump team is thinking of sources of funding for infrastructure without tax hiking.

                    “… of as much as $140 billion in tax credits to support $1 trillion in infrastructure investment, which would offset the credits through tax revenue from the projects’ labor wages and business profits….”

                    See details
                    http://www.bloomberg.com/politics/articles/2016-11-16/trump-team-explores-infrastructure-bank-that-campaign-derided

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                    Posted by pliu412
                    Answered on 12/07/2016 2:58 PM
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                      Thank you again pliu412. I didn’t know that the Trumpster had also changed his position on the Infrastructure bank. This accomplishes the same thing as I want to see. The infrastructure loans create deposits in this Uncle Sam bank. A bank the people own, not the profiteers (which we also want to have, but not for public projects). The private banks are perfect for private projects, but for public projects, we want a National Public Bank, owned and operated for our Fed/Treasury by “public bankers”. This bank must be limited to public projects, and not for private companies. I don’t know if Cullen has commented on this idea since it is not MR at this time. http://www.publicbankinginstitute.org/

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                      Posted by Dennis
                      Answered on 12/07/2016 4:58 PM
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                        Thank you again pliu412. I didn’t know that the Trumpster had also changed his position on the Infrastructure bank. This accomplishes the same thing as I want to see. The infrastructure loans create deposits in this Uncle Sam bank. A bank the people own, not the profiteers (which we also want to have, but not for public projects). The private banks are perfect for private projects, but for public projects, we want a National Public Bank, owned and operated for our Fed/Treasury by “public bankers”. This bank must be limited to public projects, and not for private companies. I don’t know if Cullen has commented on this idea since it is not MR at this time. http://www.publicbankinginstitute.org/

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                        Posted by Dennis
                        Answered on 12/07/2016 4:58 PM
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