Ted Cruz as a presidential candidate

[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.

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.

Yes.  In a democracy this "coercion" is created and agreed upon by the population.  The people have elected a government which redistributes income in a manner that's acceptable to the population (as a whole).  It is merely a "pass-though" entity. 

[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.

Whatever.

In any case, you neglected to address the kernel of my point, which, simply stated, is that you skew the accounting identities to fit your own view of how the world should operate.

First you say "earn shmearn" and then you say "whatever".  Please be more specific as to what "accounting identities" I am distorting. I think I answered your question factually. I repeat: the $20K you have to repay the bank would have to be earned by you working for a salary, or making investment profits.

[MediumTex]

That's why the higher the debt, the higher the interest, the more the private sector will have to pay in taxes

Are you sure?

[MediumTex]

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.

Whatever.

In any case, you neglected to address the kernel of my point, which, simply stated, is that you skew the accounting identities to fit your own view of how the world should operate.

First you say "earn shmearn" and then you say "whatever".  Please be more specific as to what "accounting identities" I am distorting. I think I answered your question factually. I repeat: the $20K you have to repay the bank would have to be earned by you working for a salary, or making investment profits.

Would it?

Couldn't you pay for it out of your savings?  Or have a rich uncle pay it off for you?  Or wreck it and have your insurance company pay for it?

[Mdraf]

Whatever.

In any case, you neglected to address the kernel of my point, which, simply stated, is that you skew the accounting identities to fit your own view of how the world should operate.

First you say "earn shmearn" and then you say "whatever".  Please be more specific as to what "accounting identities" I am distorting. I think I answered your question factually. I repeat: the $20K you have to repay the bank would have to be earned by you working for a salary, or making investment profits.

Would it?

Couldn't you pay for it out of your savings?  Or have a rich uncle pay it off for you?  Or wreck it and have your insurance company pay for it?

Savings = previous earnings
Rich uncle =  uncle's  earnings
Insurance = investment earning (invested insurance premium)
Lottery ticket= investment earning (a good one!)

[MediumTex]

Savings = previous earnings
Rich uncle =  uncle's  earnings
Insurance = investment earning (invested insurance premium)
Lottery ticket= investment earning (a good one!)

Okay, right.  Every dollar that is sitting in a private account was earned one way or another by someone at some point.

[Mdraf]

MT as for your graphs this is why interest rates are going down. And considering the GDP numbers include government spending who knows how bad it really is ?
Debt expansion has gone exponential in order to salvage the weak growth in GDP.

[Mdraf]

Savings = previous earnings
Rich uncle =  uncle's  earnings
Insurance = investment earning (invested insurance premium)
Lottery ticket= investment earning (a good one!)

Okay, right.  Every dollar that is sitting in a private account was earned one way or another by someone at some point.

No. Some of it is borrowed. Debt allows economic expansion as long as it can be serviced.

[Mdraf]

I quote your guru Cullen Roche (which I found on a posting on SeekingAlpha):

quote
" Do government deficits equal private surpluses? The answer is actually rather simple. When the government runs a deficit (spends more than it taxes) they sell a T-bond to Peter who supplies his bank deposits to the government who then spends those bank deposits into Paul's account. The deposits get redistributed and the T-bond is a new financial asset for the non-government sector. That T-bond is technically a liability of the US Treasury so the US Treasury's new liability is the owner's asset (the Treasury has a new liability and Paul owns the T-bond which is an asset). Said differently, the government's deficit results in surplus for the non-government (some of this surplus could be held by the foreign sector or even the Fed so we really shouldn't say "government deficits equal private surpluses" or the accounting nerds will have our necks!). This is a net financial asset (NFA) because there is no private sector corresponding liability."
unquote

Yes there is. The private sector has to pay future taxes to back up that government debt. That's a liability.

He fails to note that Peter, Paul,  and their grandchildren will have to pay for that government liability. So that supposed "surplus" asset of the private sector is negated by the corresponding liability.

[MediumTex]

The private sector has to pay future taxes to back up that government debt. That's a liability.

Are future taxes the only place the government can get the money to pay off today's government debt?

Are higher taxes being used today to pay off the debt run up during the Reagan administration?

[Mdraf]

Are future taxes the only place the government can get the money to pay off today's government debt?

I suppose so unless we invade another country and loot it. The Iraqi oil would have been nice

Are higher taxes being used today to pay off the debt run up during the Reagan administration?

I don't know the numbers but would say probably.

[MediumTex]

Are higher taxes being used today to pay off the debt run up during the Reagan administration?

I don't know the numbers but would say probably.

But taxes are lower today than they were then.

[Mdraf]

That graph shows top marginal rates but that isn't an indication of actual revenue.

And since I have been requested not to bother responding any more I guess I should comply.

[MediumTex]

That graph shows top marginal rates but that isn't an indication of actual revenue.

And since I have been requested not to bother responding any more I guess I should comply.

But actual revenue is irrelevant to the issue of whether we are paying higher taxes today for crazy spending in the past.

If it's true that reckless government spending today means higher taxes tomorrow, why do you think that we haven't seen an increase in tax rates in recent years as a result of all of the reckless government spending that occurred in the 1980s and 1990s?

It appears to me that we are NOT paying higher taxes today as a result of the insane accumulation of government debt that started in the 1980s.  This seems like prima facie evidence that the cause/effect relationship you are suggesting between government spending and future tax rates may not exist.

[moda0306]

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.

Yes.  In a democracy this "coercion" is created and agreed upon by the population.  The people have elected a government which redistributes income in a manner that's acceptable to the population (as a whole).  It is merely a "pass-though" entity.

Mdraf,

If government is a pass through entity, then let's take that to its logical conclusion...

- The government has debts (treasury bills/bonds, reserves, and federal reserve notes), but to the extent these debts are assets of the "owners," they are a wash against each other.

- The government also has assets, which are effectively "owned" by the partners.

So the domestically held cash, reserves and debts are a wash, foreign held debts are our liabilities (though we as shareholders control the currency that they are denominated in), and all the government's assets are ours.

Doesn't sound like such a bad deal.

[Mdraf]

And since I have been requested not to bother responding any more I guess I should comply.

Hey, I only meant responding to me.  And, actually, I ought not have said that, and apologize for doing so.  So respond away!

Accepted and thank you.  Let's continue tomorrow. Enough for one day, no?