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Pragmatic Capitalism

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Yes, get rid of the “debt ceiling” because it is fake. Don’t we also need to get rid of the so-called “National Debt” because we a not in debt?

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Cullen your post of 04/11/2012 “https://www.pragcap.com/its-time-to-eliminate-the-debt-ceiling/” points out that we have the richest country in the world, we are not “in debt”. “There’s no need for us to keep having recurring “debt ceiling crises” just because policy makers have failed to update the legal system to match our evolving monetary system.” The reasoning behind your post is more completely explained in this little book from 2013. You should add this to your reading list.

“Freedom from National Debt” – May 2, 2013
by Frank N. Newman

“America is unjustly worried about ”national debt,” believing it can no longer do the many things that mark it as a great nation. Discussions of national undertakings–including infrastructure repair, jobs programs, military modernization, and disease prevention–have all been stifled through fear of insolvency. America has convinced itself that it can no longer afford, as a nation, to do many of the productive things that it has done so well over its history.

That’s a great shame, because America remains a nation of tremendous resources in every sense, and the underlying assumptions about U.S. government financial instruments are not correct. America can never face the debt problems of nations like Greece, thanks to its fundamentally different financial system.

This short book explains why such fears should not hold back America, and why even the expression ”national debt” is neither meaningful nor appropriate for the United States.”

https://www.amazon.com/dp/1626520380/ref=rdr_ext_tmb

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Posted by Dennis
Posted on 09/07/2017 6:22 PM
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Government bonds are debt by definition. To not call it debt is just being logically inconsistent. It means your assumptions are wrong.

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Posted by Suvy Boyina
Answered on 09/07/2017 8:44 PM
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    Call them whatever you want. If the US govt issues it then it’s their liability. Call it a bond or call it a banana. No matter what anyone says the accounting is the same. The fact is, the USA is unique in that it can tax the most output in the world and thereby has the highest quality reserve currency on the planet. This means the USA has unusual flexibility funding their liabilities and that matters enormously.

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    Cullen Roche Posted by Cullen Roche
    Answered on 09/07/2017 9:59 PM
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      Suvy, Uncle Sam should not be required to issue bonds to cover deficit spending. Adding fiat currency into the economy is supposed to cause currency dilution according to the bankers, pundits and politicians. https://www.thebalance.com/deficit-spending-causes-why-it-s-out-of-control-3306289

      By not issuing bonds to “cover” the deficit spending we will not add to the “debt” or “push up the ceiling”. The fact is that the relative value of our fiat currency is controlled by currency traders. Currency dilution is impossible for the USA because we have so much value in our country and as you clearly know, >95% of the money in our economy comes from Banks, not deficit spending. The USA has no “debt”. We have issued too many bonds for no logical reason. These are “word games” that you are playing. There is no need to do that Suvy.

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      Posted by Dennis
      Answered on 09/12/2017 3:41 PM
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        Dennis,

        I think the key point to remember is that the USA has to issue liabilities one way or another. They could just print up the dollars and spend them or they can print up bonds to finance the spending. In either case they’re issuing liabilities and they have to find willing holders of those liabilities. We don’t consider cash issued by the US Treasury to be “debt” but it mostly certainly is a liability of the US government. So I think we’re dancing around a moot point. Any issuer of financial assets has a corresponding liability that must be “financed” in one way or another by finding willing holders of their liabilities. We can make the argument that bonds are an antiquated way of funding US govt spending, but that doesn’t mean they won’t issue debt or liabilities.

        Make sense?

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        Cullen Roche Posted by Cullen Roche
        Answered on 09/12/2017 3:48 PM
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          I understand Cullen. Thanks. These folks have proposed 5 ways to reduce the deficit spending and thus interest payments on our liabilities. https://www.thebalance.com/interest-on-the-national-debt-4119024

          Then they say that none of these will happen for various reasons and so I guess they are typing that we will go into the dumpster buried in interest payments. No solution is given.

          I’m suggesting a 6th way to reduce these interest payments. Don’t issue so many bonds! Just deficit spend and see the economy grow and the value of our “traded” fiat currency will increase with the growth of the economy. It can not be impacted by dilution. We will not see “currency dilution” because that can no longer happen since we are “off the gold standard”. The value of our currency relative to the others “floats” driven only by the productivity of our economy. More productivity more value in our “floating” fiat currency.

          What is wrong with my thought experiment and

          https://www.amazon.com/dp/1626520380/ref=rdr_ext_tmb ?

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          Posted by Dennis
          Answered on 09/12/2017 4:11 PM
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            I get it that “cash” is a liability issued by the USA into a yuuuuuge pool! That pool is a bit empty world wide these days. We have too much debt payments due, and not enough productivity to pay it back.

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            Posted by Dennis
            Answered on 09/12/2017 4:22 PM
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