Ted Cruz as a presidential candidate

[doodle]

So here's an example of something...

Let's say the government has all these technicians in the military building robots of war to go overseas and kill people. They could just as easily redirect the spending into these programs towards a civilian use like making robots that pick and process fruits and vegetables. This technology could eliminate millions of back breaking jobs and free up millions of people to study and increase their capabilities....creating a virtuous cycle.

I feel that when we start get too much morality involved in these discussions of money and spending we lose sight of the immense capability we have to improve our lives. Money is not an end in and of itself, it is a tool that facilitates the creation of real economic wealth.

[Pointedstick]

So here's an example of something...

Let's say the government has all these technicians in the military building robots of war to go overseas and kill people. They could just as easily redirect the spending into these programs towards a civilian use like making robots that pick and process fruits and vegetables. This technology could eliminate millions of back breaking jobs and free up millions of people to study and increase their capabilities....creating a virtuous cycle.

Or render their labor worthless and put them on the welfare rolls. 

On the other hand, it would probably reduce immigration a lot.

[MediumTex]

So here's an example of something...

Let's say the government has all these technicians in the military building robots of war to go overseas and kill people. They could just as easily redirect the spending into these programs towards a civilian use like making robots that pick and process fruits and vegetables. This technology could eliminate millions of back breaking jobs and free up millions of people to study and increase their capabilities....creating a virtuous cycle.

Or render their labor worthless and put them on the welfare rolls. 

On the other hand, it would probably reduce immigration a lot.

There was a great movie from a few years ago based on the premise that such robots were built, but they needed virtual operators, and remote control operating centers were built in Mexico that employed people who would have otherwise illegally emigrated to the U.S.

The movie was really, really good.  I don't remember its title, but it touched on a lot of interesting topics, including the surveillance state, monopoly ownership of natural resources by the private sector, and the dehumanizing aspects of turning humans into components for a robotic device.

[doodle]

So here's an example of something...

Let's say the government has all these technicians in the military building robots of war to go overseas and kill people. They could just as easily redirect the spending into these programs towards a civilian use like making robots that pick and process fruits and vegetables. This technology could eliminate millions of back breaking jobs and free up millions of people to study and increase their capabilities....creating a virtuous cycle.

Or render their labor worthless and put them on the welfare rolls. 

On the other hand, it would probably reduce immigration a lot.

Unemployment is not a problem...it is the natural state of a technologically advanced society. Would you want to be bent over backwards in 100 degree fields picking pesticide laced strawberries with your children making 7 dollars an hour? If not, then why is there any problem if robots do it?

[Mdraf]

Ok I'll re-phrase the question: how come the "right amount" is always more?

Well if you subscribe to the modern economic idea that is popular on this forum that the government doesn't need to tax in order to spend, then government spending that doesn't cause inflation should simply be a way of keeping the economy running at full capacity. Granted, certain things like a massive military IMHO are a misdirection of resources that could be put into more socially productive and beneficial areas. So its not just about spending, its about spending intelligently.

I certainly don't subscribe to that idea  as I have argued against it in several threads.  The idea that government debt is the private sector asset is one of the most ridiculous economic  ideas of all times. What I don't understand is how all the very intelligent members of this forum can possibly believe it.

[doodle]

Ok I'll re-phrase the question: how come the "right amount" is always more?

Well if you subscribe to the modern economic idea that is popular on this forum that the government doesn't need to tax in order to spend, then government spending that doesn't cause inflation should simply be a way of keeping the economy running at full capacity. Granted, certain things like a massive military IMHO are a misdirection of resources that could be put into more socially productive and beneficial areas. So its not just about spending, its about spending intelligently.

I certainly don't subscribe to that idea  as I have argued against it in several threads.  The idea that government debt is the private sector asset is one of the most ridiculous economic  ideas of all times. What I don't understand is how all the very intelligent members of this forum can possibly believe it.

If you own the PP, then 50% of your assets are government debt. No?

[Pointedstick]

I certainly don't subscribe to that idea  as I have argued against it in several threads.  The idea that government debt is the private sector asset is one of the most ridiculous economic  ideas of all times. What I don't understand is how all the very intelligent members of this forum can possibly believe it.

Here's how I see it:

1. The government goes into debt to the tune of 100 billion dollars.
2. The government spends those dollars on military hardware made in America, to blow up foreigners with.
3. The American defense industry is now $100 billion richer.

It's not so much the act of going into debt that makes government spending become a private-sector asset, it's the act of spending money in the private sector. If the government printed treasury notes (not FRNs) with no debt attached to them and then bought the same missiles and bombs, the same effect happens.

[Mdraf]

Well if you subscribe to the modern economic idea that is popular on this forum that the government doesn't need to tax in order to spend, then government spending that doesn't cause inflation should simply be a way of keeping the economy running at full capacity. Granted, certain things like a massive military IMHO are a misdirection of resources that could be put into more socially productive and beneficial areas. So its not just about spending, its about spending intelligently.

I certainly don't subscribe to that idea  as I have argued against it in several threads.  The idea that government debt is the private sector asset is one of the most ridiculous economic  ideas of all times. What I don't understand is how all the very intelligent members of this forum can possibly believe it.

If you own the PP, then 50% of your assets are government debt. No?

That's right, and it is not contradictory as you imply. There is nothing wrong with government debt. What is wrong is unsustainable government debt.

[Mdraf]

I certainly don't subscribe to that idea  as I have argued against it in several threads.  The idea that government debt is the private sector asset is one of the most ridiculous economic  ideas of all times. What I don't understand is how all the very intelligent members of this forum can possibly believe it.

Here's how I see it:

1. The government goes into debt to the tune of 100 billion dollars.
2. The government spends those dollars on military hardware made in America, to blow up foreigners with.
3. The American defense industry is now $100 billion richer.

It's not so much the act of going into debt that makes government spending become a private-sector asset, it's the act of spending money in the private sector. If the government printed treasury notes (not FRNs) with no debt attached to them and then bought the same missiles and bombs, the same effect happens.

You left out:

4.  The defense companies, their employees (and their children) will have to pay taxes equivalent to that $100 billion

[Pointedstick]

You left out:

4.  The defense companies, their employees (and their children) will have to pay taxes equivalent to that $100 billion

They receive $100 billion and have to pay $100 billion in taxes?

[Mdraf]

The idea that government debt is the private sector asset is one of the most ridiculous economic  ideas of all times.

It isn't even what I would call an economic idea. 

As doodle's example illustrates, it is simply an accounting identity.

It's faulty accounting because it leaves out the private sector's liability for the government debt.

[Mdraf]

You left out:

4.  The defense companies, their employees (and their children) will have to pay taxes equivalent to that $100 billion

They receive $100 billion and have to pay $100 billion in taxes?

Of course they will - in the future. How else will the government pay back the bonds? And don't say by just issuing more bonds. That is simply a deferral.

today's deferral rests on the back of yesterdays deferral..... in MT it's "deferral all the way down"

imaginary fiat dollars seem to operate much like imaginary giant tortoises..

[doodle]

You left out:

4.  The defense companies, their employees (and their children) will have to pay taxes equivalent to that $100 billion

They receive $100 billion and have to pay $100 billion in taxes?

Of course they will - in the future. How else will the government pay back the bonds? And don't say by just issuing more bonds. That is simply a deferral.

Bonds are just government savings accounts. They could simply print the money necessary to pay off the interest on all outstanding bonds and then tell investors to park their cash somewhere else. This would eliminate all government debt overnight.

[doodle]

mdraf,

Im not being dismissive. I made all the same arguments on this forum that you are making. And I defended these traditional money ideas tooth and nail...but overwhelming logic and evidence eventually won me over. If one lets go of one's preconceived ideas of what money "should be" and instead just focuses on what it really is in a modern fiat system, taking this all in is a lot easier.

[Mdraf]

mdraf,

Im not being dismissive. I made all the same arguments on this forum that you are making. And I defended these traditional money ideas tooth and nail...but overwhelming logic and evidence eventually won me over. If one lets go of one's preconceived ideas of what money "should be" and instead just focuses on what it really is in a modern fiat system, taking this all in is a lot easier.

You are just repeating stuff written by Cullen Roche which is nonsense.  He tries to deflect critical arguments which he cannot explain and defend by claiming to describe something as "difficult for you to understand".  This is a high school level debating tactic.

[doodle]

Mdraf,

Is it not true that 50% of your personal "private sector" assets are presently sitting in government debt? If the government paid off all the debt...what would you then do with this 50% of your assets that are sitting in cash?

[Mdraf]

It isn't even what I would call an economic idea. 

As doodle's example illustrates, it is simply an accounting identity.

It's faulty accounting because it leaves out the private sector's liability for the government debt.

Huh? That isn't the way accounting works.

If I take out a $20k loan to buy a car, the bank has $20k asset, and I have a $20k liability (and a car).  The only way I will be able to pay back the $20k is if other people/entities give me $20k.  By your logic, the public at large also has a $20k liability for my loan.

This doesn't make sense.

No. You would work and earn $20K to pay the bank.  If you totaled the car and died in the accident the bank's $20K asset would now be worth $0. This means that the bank's asset of $20K is only as good as your ability to repay it.

[Pointedstick]

No. You would work and earn $20K to pay the bank.  If you totaled the car and died in the accident the bank's $20K asset would now be worth $0. This means that the bank's asset of $20K is only as good as your ability to repay it.

Sure. Now let us imagine that you are a counterfeiter and have a perfect printing press and can print the money you need to pay off the loan whenever you feel like it.

Does that change anything?

[Mdraf]

No. You would work and earn $20K to pay the bank.  If you totaled the car and died in the accident the bank's $20K asset would now be worth $0. This means that the bank's asset of $20K is only as good as your ability to repay it.

Sure. Now let us imagine that you are a counterfeiter and have a perfect printing press and can print the money you need to pay off the loan whenever you feel like it.

Does that change anything?

What you are saying is that government can issue money at will.  And that's exactly my point. Government debt is ok as long as it is sustainable but once they let the printing presses go wild the currency is devalued etc etc.

In TennPA's example he would earn money to pay off the $20K loan. But government doesn't earn anything. It only redistributes wealth.

To  say that government debt is the private sector's asset leaves out that very important part: the private sector's liability for that government debt.

[doodle]

No. You would work and earn $20K to pay the bank.  If you totaled the car and died in the accident the bank's $20K asset would now be worth $0. This means that the bank's asset of $20K is only as good as your ability to repay it.

Sure. Now let us imagine that you are a counterfeiter and have a perfect printing press and can print the money you need to pay off the loan whenever you feel like it.

Does that change anything?

What you are saying is that government can issue money at will.  And that's exactly my point. Government debt is ok as long as it is sustainable but once they let the printing presses go wild the currency is devalued etc etc.

In TennPA's example he would earn money to pay off the $20K loan. But government doesn't earn anything. It only redistributes wealth.

To  say that government debt is the private sector's asset leaves out that very important part: the private sector's liability for that government debt.

Just a question....

When he earns the money to pay back the loan...where does the additional interest come from? How does that additional money get added into the system? If it doesn't, then the loan + interest cant be paid back. 

[moda0306]

The government doesn't just destroy and redistribute wealth.

A lot of times it's doing things to significantly facilitate the creation of wealth, whether it means infrastructure, educating people, social insurance, military protection, or legal and private property recognition systems.

And looking at government debt as a liability, but FRN's as something fundamentally dissimilar is a huge mistake.  Both are liabilities of the government.  But in the end it's a fiat liability so the true liability isn't financial, but functional.

The government just needs to continue to do those wealth-facilitating functions in a relatively productive manner to "service" it's debts.

[Mdraf]

Sure. Now let us imagine that you are a counterfeiter and have a perfect printing press and can print the money you need to pay off the loan whenever you feel like it.

Does that change anything?

What you are saying is that government can issue money at will.  And that's exactly my point. Government debt is ok as long as it is sustainable but once they let the printing presses go wild the currency is devalued etc etc.

In TennPA's example he would earn money to pay off the $20K loan. But government doesn't earn anything. It only redistributes wealth.

To  say that government debt is the private sector's asset leaves out that very important part: the private sector's liability for that government debt.

Just a question....

When he earns the money to pay back the loan...where does the additional interest come from? How does that additional money get added into the system? If it doesn't, then the loan + interest cant be paid back.

It would also come from private sector paying taxes. That's why the higher the debt, the higher the interest, the more the private sector will have to pay in taxes

[Mdraf]

Earn is a judgement-laden word.

No it isn't. That's your moral relativism coming into the discussion. Earn means putting labor and/or capital to produce more than the the amount put in.

[Mdraf]

A lot of times it's doing things to significantly facilitate the creation of wealth, whether it means infrastructure, educating people, social insurance, military protection, or legal and private property recognition systems.

That is true but it is not earning. That is spending. Spending the private sector's earnings collected as taxes.

[moda0306]

A lot of times it's doing things to significantly facilitate the creation of wealth, whether it means infrastructure, educating people, social insurance, military protection, or legal and private property recognition systems.

That is true but it is not earning. That is spending. Spending the private sector's earnings collected as taxes.

Yes, Mdraf... we'll acknowledge that government is a coercive entity.  That doesn't mean, however, that this coercion can't go to massively facilitate the creation of wealth in ways the private sector alone simply wouldn't engineer (not because it "can't," but because it's not inclined to in an organized fashion).  If the government lays the groundwork for wealth creation, then there's not going to be a fiscal crisis, because that means the government is in a balance with the private sector in terms of resource usage.

So the government doesn't have to "earn" the resources they acquire from the private sector... they simply have to employ them in ways that will continue to induce the private sector to grow.