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| Guest |
 Posted: Fri Oct 28, 2005 12:28 am |
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On Fri, 28 Oct 2005 03:24:49 GMT, Les Cargill <lNOcargill@cfl.Arr.com>
wrote:
[quote:a9edd48a5e]royls@telus.net wrote:
On Wed, 26 Oct 2005 10:17:16 -0700, William F Hummel
wfhummel@comcast.net> wrote:
The net financial wealth of the private sector refers to the
_aggregate_ wealth of the private sector or, if you prefer, to the net
financial wealth of the "collection of individuals" comprising it. It
is equal to the total financial liabilities of the government, which
include Fed liabilities (the monetary base) and Treasury liabilities
(bills, notes, and bonds). In other words:
Government deficit == non-government surplus
I have exposed this nonsense many times, and Hummel has never been
able to answer. What he calls "net financial wealth" is mere sleight
of hand: the private bondholder's asset is recorded, but the private
taxpayer's corresponding liability isn't. So "net financial wealth"
is just the debt that taxpayers owe to bondholders.
Government debt tends to roll over a whole lot more than private
debt.
[/quote:a9edd48a5e]
Irrelevant. Government just has a longer life expectancy than human
debtors.
[quote:a9edd48a5e]The taxpayers may "owe" it, but the chances of the note being
called (per increment of time) are much lower.
[/quote:a9edd48a5e]
Again, that is totally irrelevant.
-- Roy L |
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| tonyp |
| Posted: Fri Oct 28, 2005 12:41 am |
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"Les Cargill" <lNOcargill@cfl.Arr.com> wrote
[quote:c0b32fb499]Government debt tends to roll over a whole lot more than private
debt. The taxpayers may "owe" it, but the chances of the note being
called (per increment of time) are much lower.
[/quote:c0b32fb499]
True, but somewhat beside the point. The bondholders may never call upon
the taxpayers to pay off the debt, but they do insist on collecting interest
on it.
We can use contrived definitions and terms of art to obscure the reality,
but there's nonetheless a real transfer of money going on: the IRS collects
real money from the set "taxpayers", and the Treasury hands it over to the
set "bondholders" to service the debt.
As the two sets are overlapping but _not_ congruent, the existence of a
national debt equates to a net flow of money from taxpayers to bondholders.
Nothing immoral about that.
What _is_ objectionable is the pretense that borrowing from the rich rather
than taxing the rich, in order to help the poor, somehow represents a gift
from the Republicans to the middle class.
-- TP |
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| Guest |
| Posted: Fri Oct 28, 2005 7:42 am |
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On Thu, 27 Oct 2005 09:55:19 -0700, William F Hummel
<wfhummel@comcast.net> wrote:
[quote:08385f52a1]On Thu, 27 Oct 2005 06:36:43 GMT, royls@telus.net wrote:
On Wed, 26 Oct 2005 10:17:16 -0700, William F Hummel
wfhummel@comcast.net> wrote:
The net financial wealth of the private sector refers to the
_aggregate_ wealth of the private sector or, if you prefer, to the net
financial wealth of the "collection of individuals" comprising it. It
is equal to the total financial liabilities of the government, which
include Fed liabilities (the monetary base) and Treasury liabilities
(bills, notes, and bonds). In other words:
Government deficit == non-government surplus
I have exposed this nonsense many times, and Hummel has never been
able to answer. What he calls "net financial wealth" is mere sleight
of hand: the private bondholder's asset is recorded, but the private
taxpayer's corresponding liability isn't. So "net financial wealth"
is just the debt that taxpayers owe to bondholders.
Roy once again makes the mistake of treating government debt as
equivalent to private debt.
[/quote:08385f52a1]
No, that is false. Private debtors cannot just tax others or print
money to pay their debts.
[quote:08385f52a1]That mistake is widespread because of the
misleading term "debt" in regard to the securities the government
offers.
[/quote:08385f52a1]
?? ROTFL!! And I suppose those who lend their money to government do
so without any expectation of being repaid?
[quote:08385f52a1]Note that those securities include paper dollars as well as
Treasury bonds.
[/quote:08385f52a1]
Paper dollars are not debt, as they will never be "repaid" in anything
but the same number of new paper dollars when the old ones wear out.
[quote:08385f52a1]They are what the private sector uses for "money",
using the broad definition that Coburn prefers.
[/quote:08385f52a1]
I would prefer not to call debt "money."
[quote:08385f52a1]Together they
represent the net financial wealth of private sector.
[/quote:08385f52a1]
Paper dollars are net financial wealth for the private sector, because
they are not an obligation of the private sector to pay anything.
Government debt, OTOH, is not net wealth for the private sector,
because government can only redeem it by either getting more money
_from_ the private sector, or by printing more paper dollars
(monetizing it). So government debt is only net financial wealth for
the private sector to the extent that it will be monetized.
But monetizing debt is the same as reducing the purchasing power of
existing paper dollars and dollar-denominated obligations. why would
anyone lend money to the government if they did not expect at some
point to get _all_ their purchasing power back again, with interest?
To the extent that they expect the debt to be monetized, they will
just demand more interest.
You delude yourself into thinking that government debt is net
financial wealth for the private sector merely because it appears as a
private sector asset, but not a private sector liability. But it does
not appear as a private sector liability only because the identity of
those who will repay it (with interest) by being taxed in the event
that it is not monetized is not known. But that does not mean no one
will ever be taxed to pay it.
I have explained this for you many times, William.
[quote:08385f52a1]The government is the very source of the currency the private sector
uses for its money.
[/quote:08385f52a1]
But those who lend money to government don't care about the currency.
What they demand, and government must give them if it hopes to borrow
from them, is more purchasing power back than what they lend. And it
is the productive private sector that is the source of that additional
purchasing power (goods and services), not government. That is what
you always refuse to know.
[quote:08385f52a1]It therefore has unlimited ability to redeem its
securities as they mature.
[/quote:08385f52a1]
No, it is limited by society's tolerance for inflation.
[quote:08385f52a1]Roy's error is based on the implicit
assumption that the government must some day eliminate the "debt"
entirely.
[/quote:08385f52a1]
Nope. Flat wrong. It is based on the fact that people are not going
to lend their money to government except on the basis that they will
get more purchasing power back, and that it is not the government that
is the source of that purchasing power, but the productive private
sector itself.
[quote:08385f52a1]It will be a cold day in hell before that happens, indeed
it would be hell if it did.
[/quote:08385f52a1]
It is a fact that governments are also mortal, and all their debts
will eventually either be repaid (by either taxation or printing
currency) or defaulted. History is very clear on this point.
[quote:08385f52a1]That so-called debt is the major part of
the financial savings of the private sector.
[/quote:08385f52a1]
And what good are such "savings" to the private sector? Why, only
that they are claims on the goods and services to be produced _by_ the
private sector! Hello? To call such instruments of wealth transfer
"net wealth" because the recipients' identities are known but the
payers' identities are not is nothing but sleight of hand, if not
willful ignorance.
[quote:08385f52a1]How those savings are
distributed within the private sector is not the issue here.
[/quote:08385f52a1]
Yes, it very much _is_ the issue here, because it is precisely those
who have nothing better to do with their money than lend it to
government to spend who should be paying the _taxes_, _not_ the
productive. Yet by borrowing from such people instead of taxing them,
government effects an even _greater_ transfer of wealth from those who
have their own productive uses for it to those who do not.
[quote:08385f52a1]The government can and does roll over its "debt," and will continue to
do so indefinitely.
[/quote:08385f52a1]
So do many private debtors. People are just mortal on a shorter and
(especially) more definite time scale than most governments.
[quote:08385f52a1]In contrast, an individual who borrows has no
source of money to pay off his debt other than his own income. Since
he cannot create dollars himself, he can go bankrupt if he cannot
generate sufficient income. The government has no such problem. It
will never face involuntary default on its securities as long as they
are denominated in its own currency.
[/quote:08385f52a1]
Government is the source of paper currency, but what is the source of
the purchasing power government's creditors expect to get back (with
interest) when government borrows from them? Blank out.
Certainly to the extent that government debt is monetized it will
become net financial wealth of the privte sector. But to the extent
that it is _not_ monetized, it is nothing but a claim by the
bondholders (i.e., those who have nothing better to do with their
money than let government spend it) on the rightful earnings of the
productive.
-- Roy L |
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| William F Hummel |
| Posted: Fri Oct 28, 2005 9:06 am |
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Guest
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On Fri, 28 Oct 2005 02:41:06 -0400, "tonyp" <tonyp@world.std.com>
wrote:
[quote:e7c0c0eb41]
"Les Cargill" <lNOcargill@cfl.Arr.com> wrote
Government debt tends to roll over a whole lot more than private
debt. The taxpayers may "owe" it, but the chances of the note being
called (per increment of time) are much lower.
True, but somewhat beside the point. The bondholders may never call upon
the taxpayers to pay off the debt, but they do insist on collecting interest
on it.
[/quote:e7c0c0eb41]
Of course. But interest payments are simply a part of the income
stream that comprises a part of the present value, which is precisely
what the buyers _paid_ for the bonds. They don't get something for
nothing. What's your point?
[quote:e7c0c0eb41]
We can use contrived definitions and terms of art to obscure the reality,
but there's nonetheless a real transfer of money going on: the IRS collects
real money from the set "taxpayers", and the Treasury hands it over to the
set "bondholders" to service the debt.
[/quote:e7c0c0eb41]
Yes indeed, all government payments redistribute financial wealth.
Nothing new there. But the contrived definitions and the art here is
in the use of the loaded terms "taxpayers" and "bondholders" to engage
the emotions rather than the intellect.
[quote:e7c0c0eb41]
As the two sets are overlapping but _not_ congruent, the existence of a
national debt equates to a net flow of money from taxpayers to bondholders.
Nothing immoral about that.
[/quote:e7c0c0eb41]
Correct.
[quote:e7c0c0eb41]
What _is_ objectionable is the pretense that borrowing from the rich rather
than taxing the rich, in order to help the poor, somehow represents a gift
from the Republicans to the middle class.
And where did you see this?[/quote:e7c0c0eb41] |
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| William F Hummel |
| Posted: Fri Oct 28, 2005 11:27 am |
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On Fri, 28 Oct 2005 13:42:19 GMT, royls@telus.net wrote:
[quote:5690392f40]On Thu, 27 Oct 2005 09:55:19 -0700, William F Hummel
wfhummel@comcast.net> wrote:
Note that those securities include paper dollars as well as
Treasury bonds.
Paper dollars are not debt, as they will never be "repaid" in anything
but the same number of new paper dollars when the old ones wear out.
[/quote:5690392f40]
Paper dollars are credits for the holder and therefore debts of the
issuer.
[quote:5690392f40]
Together they
represent the net financial wealth of private sector.
Paper dollars are net financial wealth for the private sector, because
they are not an obligation of the private sector to pay anything.
Government debt, OTOH, is not net wealth for the private sector,
because government can only redeem it by either getting more money
_from_ the private sector, or by printing more paper dollars
(monetizing it). So government debt is only net financial wealth for
the private sector to the extent that it will be monetized.
[/quote:5690392f40]
Liabilities of the government sector are assets of the non-government
sector, a simple identity.
[quote:5690392f40]
But monetizing debt is the same as reducing the purchasing power of
existing paper dollars and dollar-denominated obligations.
[/quote:5690392f40]
Nonsense. The quantity of paper dollars bears little relation to
their purchasing power in goods and services.
[quote:5690392f40]why would
anyone lend money to the government if they did not expect at some
point to get _all_ their purchasing power back again, with interest?
To the extent that they expect the debt to be monetized, they will
just demand more interest.
[/quote:5690392f40]
More of the same.
[quote:5690392f40]
You delude yourself into thinking that government debt is net
financial wealth for the private sector merely because it appears as a
private sector asset, but not a private sector liability.
[/quote:5690392f40]
No, because government securities are government liabilities, and
therefore non-government assets.
[quote:5690392f40]But it does
not appear as a private sector liability only because the identity of
those who will repay it (with interest) by being taxed in the event
that it is not monetized is not known.
[/quote:5690392f40]
The issue has nothing to do with the (unknown) identity of Treasury
bond buyers.
[quote:5690392f40]The government is the very source of the currency the private sector
uses for its money.
But those who lend money to government don't care about the currency.
What they demand, and government must give them if it hopes to borrow
from them, is more purchasing power back than what they lend. And it
is the productive private sector that is the source of that additional
purchasing power (goods and services), not government. That is what
you always refuse to know.
[/quote:5690392f40]
The value of the currency is dependent on the power to tax, and the
government's monopoly on the issue of that currency. That is a
sufficient condition for the currency to have value in trade.
[quote:5690392f40]
It therefore has unlimited ability to redeem its
securities as they mature.
No, it is limited by society's tolerance for inflation.
[/quote:5690392f40]
This is a common error. Inflation is not correlated with the size of
government debt.
[quote:5690392f40]
Roy's error is based on the implicit
assumption that the government must some day eliminate the "debt"
entirely.
It will be a cold day in hell before that happens, indeed
it would be hell if it did.
It is a fact that governments are also mortal, and all their debts
will eventually either be repaid (by either taxation or printing
currency) or defaulted. History is very clear on this point.
[/quote:5690392f40]
Mortality is no argument. Government debt will never be repaid in its
entirety. History is very clear on this point.
[quote:5690392f40]
That so-called debt is the major part of
the financial savings of the private sector.
And what good are such "savings" to the private sector? Why, only
that they are claims on the goods and services to be produced _by_ the
private sector!
[/quote:5690392f40]
Of course, that's what financial savings are all about -- future
claims on real wealth. And your point is?
[quote:5690392f40]To call such instruments of wealth transfer
"net wealth" because the recipients' identities are known but the
payers' identities are not is nothing but sleight of hand, if not
willful ignorance.
[/quote:5690392f40]
Again, the identity of savers is totally irrelevant.
[quote:5690392f40]
How those savings are
distributed within the private sector is not the issue here.
Yes, it very much _is_ the issue here, because it is precisely those
who have nothing better to do with their money than lend it to
government to spend who should be paying the _taxes_, _not_ the
productive. Yet by borrowing from such people instead of taxing them,
government effects an even _greater_ transfer of wealth from those who
have their own productive uses for it to those who do not.
[/quote:5690392f40]
Ah, now we see the real reason for your objections. You want those
who have earned and saved enough to buy government bonds to instead
pay more taxes. Got it!
[quote:5690392f40]
In contrast, an individual who borrows has no
source of money to pay off his debt other than his own income. Since
he cannot create dollars himself, he can go bankrupt if he cannot
generate sufficient income. The government has no such problem. It
will never face involuntary default on its securities as long as they
are denominated in its own currency.
Government is the source of paper currency, but what is the source of
the purchasing power government's creditors expect to get back (with
interest) when government borrows from them? Blank out.
Certainly to the extent that government debt is monetized it will
become net financial wealth of the privte sector. But to the extent
that it is _not_ monetized, it is nothing but a claim by the
bondholders (i.e., those who have nothing better to do with their
money than let government spend it) on the rightful earnings of the
productive.
[/quote:5690392f40]
According to this nonsensical argument, anyone who buys financial
assets like corporate bonds and stocks is a claim on the "rightful
earnings of the productive." |
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| Ron Peterson |
| Posted: Fri Oct 28, 2005 12:36 pm |
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William F Hummel wrote:
[quote:0661ba41c0]This is a common error. Inflation is not correlated with the size of
government debt.
[/quote:0661ba41c0]
It seems that if the government debt exceeded the value of public and
private assets by a reasonable factor, that inflation would result.
--
Ron |
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| Les Cargill |
| Posted: Fri Oct 28, 2005 12:57 pm |
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tonyp wrote:
[quote:3a88854e96]"Les Cargill" <lNOcargill@cfl.Arr.com> wrote
Government debt tends to roll over a whole lot more than private
debt. The taxpayers may "owe" it, but the chances of the note being
called (per increment of time) are much lower.
True, but somewhat beside the point. The bondholders may never call upon
the taxpayers to pay off the debt, but they do insist on collecting interest
on it.
We can use contrived definitions and terms of art to obscure the reality,
but there's nonetheless a real transfer of money going on: the IRS collects
real money from the set "taxpayers", and the Treasury hands it over to the
set "bondholders" to service the debt.
[/quote:3a88854e96]
No, they don't. That's the point. The "wavefunction doesn't
collapse" on the bonds. No check is cut. These are paper
liabilities.
Inflation pretty much wipes out the advantage of the bondholders
(who just use these as collateral instruments, anyway ).
I just see this as a means of providing a return flow in
our already government-intensive economy.
[quote:3a88854e96]As the two sets are overlapping but _not_ congruent, the existence of a
national debt equates to a net flow of money from taxpayers to bondholders.
Nothing immoral about that.
What _is_ objectionable is the pretense that borrowing from the rich rather
than taxing the rich, in order to help the poor, somehow represents a gift
from the Republicans to the middle class.
[/quote:3a88854e96]
That, I will agree with.
[quote:3a88854e96]-- TP
--[/quote:3a88854e96]
Les Cargill |
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| William F Hummel |
| Posted: Fri Oct 28, 2005 1:35 pm |
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On 28 Oct 2005 11:36:51 -0700, "Ron Peterson" <ron@shell.core.com>
wrote:
[quote:9434b05ed6]
William F Hummel wrote:
This is a common error. Inflation is not correlated with the size of
government debt.
It seems that if the government debt exceeded the value of public and
private assets by a reasonable factor, that inflation would result.
[/quote:9434b05ed6]
There is a psychological factor, known as the "wealth effect" that
could cause an excess of demand in certain types of goods or financial
assets, and drive up their prices. A good example is the housing
market today, at least in some localities. However that is better
described as a "speculative bubble" rather than "inflation."
Hopefully it will not become as severe as the Japanese real estate
bubble in the 1980s, which finally burst with some of the remnants
still plaguing their economy.
I don't think the size of the US national debt has created much of the
wealth effect psychology, in part because so much of that debt is held
overseas. Note that during the twelve years of Reagan and Bush1,
government debt held by the public quadrupled even as the inflation
rate had a downward trend -- a negative correlation. |
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| Guest |
| Posted: Sat Oct 29, 2005 12:11 pm |
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On Fri, 28 Oct 2005 08:06:54 -0700, William F Hummel
<wfhummel@comcast.net> wrote:
[quote:0c88350e30]On Fri, 28 Oct 2005 02:41:06 -0400, "tonyp" <tonyp@world.std.com
wrote:
"Les Cargill" <lNOcargill@cfl.Arr.com> wrote
Government debt tends to roll over a whole lot more than private
debt. The taxpayers may "owe" it, but the chances of the note being
called (per increment of time) are much lower.
True, but somewhat beside the point. The bondholders may never call upon
the taxpayers to pay off the debt, but they do insist on collecting interest
on it.
Of course. But interest payments are simply a part of the income
stream that comprises a part of the present value, which is precisely
what the buyers _paid_ for the bonds. They don't get something for
nothing.
[/quote:0c88350e30]
What?!? Of course they get something for nothing! To the extent that
they lend government their money at interest rather than being taxed
as working people are, they are getting the benefit of government
services for nothing. Duh. And as we have proved here so often,
those who have lots of money to lend to government are very much the
specific kind of people who are typically getting _much_much_more_ net
benefit from government services than the productive working people
who pay almost all the taxes.
However, these are all facts that you refuse to know.
[quote:0c88350e30]We can use contrived definitions and terms of art to obscure the reality,
but there's nonetheless a real transfer of money going on: the IRS collects
real money from the set "taxpayers", and the Treasury hands it over to the
set "bondholders" to service the debt.
Yes indeed, all government payments redistribute financial wealth.
[/quote:0c88350e30]
But debt repayments, specifically, redistribute financial wealth from
those who have earned it and have good uses for it to those who
haven't and don't.
[quote:0c88350e30]Nothing new there. But the contrived definitions and the art here is
in the use of the loaded terms "taxpayers" and "bondholders" to engage
the emotions rather than the intellect.
[/quote:0c88350e30]
Garbage. Those terms are not loaded in the least. They are simply
accurate. You are the one who is trying to pretend that no one will
ever be taxed to pay off the bonds, or their interest. That is the
only possible intent behind your claim that government debt increases
the net financial wealth of the private sector.
[quote:0c88350e30]As the two sets are overlapping but _not_ congruent, the existence of a
national debt equates to a net flow of money from taxpayers to bondholders.
Nothing immoral about that.
Correct.
[/quote:0c88350e30]
I would say that is definitely _in_correct.
[quote:0c88350e30]What _is_ objectionable is the pretense that borrowing from the rich rather
than taxing the rich, in order to help the poor, somehow represents a gift
from the Republicans to the middle class.
And where did you see this?
[/quote:0c88350e30]
From you, sunshine. Paraphrasing: Who are the bigger government debt
guys? Bush and the Republicans who control all three branches of the
federal government, plus the Fed. What does bigger government debt
mean? More net financial wealth for the private sector. Why is that
a good thing? "The people" want more "savings" vehicles.
Sound familiar? It should.
-- Roy L |
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| Guest |
| Posted: Sat Oct 29, 2005 10:16 pm |
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On Fri, 28 Oct 2005 10:27:09 -0700, William F Hummel
<wfhummel@comcast.net> wrote:
[quote:54b3474d1c]On Fri, 28 Oct 2005 13:42:19 GMT, royls@telus.net wrote:
On Thu, 27 Oct 2005 09:55:19 -0700, William F Hummel
wfhummel@comcast.net> wrote:
Note that those securities include paper dollars as well as
Treasury bonds.
Paper dollars are not debt, as they will never be "repaid" in anything
but the same number of new paper dollars when the old ones wear out.
Paper dollars are credits for the holder and therefore debts of the
issuer.
[/quote:54b3474d1c]
No, that is flat false. The issuer of paper dollars owes the holder
exactly nothing, and the dollars are therefore not a debt of the
issuer. That is the whole point of fiat currency: the issuer can
spend it, and not tax to get it.
If you think paper dollars are debts of the issuer, you should be able
to say exactly what is owed to the holder, other than the dollars
themselves, which the holder already has.
I'm waiting.
[quote:54b3474d1c]Together they
represent the net financial wealth of private sector.
Paper dollars are net financial wealth for the private sector, because
they are not an obligation of the private sector to pay anything.
Government debt, OTOH, is not net wealth for the private sector,
because government can only redeem it by either getting more money
_from_ the private sector, or by printing more paper dollars
(monetizing it). So government debt is only net financial wealth for
the private sector to the extent that it will be monetized.
Liabilities of the government sector are assets of the non-government
sector, a simple identity.
[/quote:54b3474d1c]
A simple but deceitful identity, because it carefully elides the fact
that government gets all its money (other than the small fraction that
it prints) _from_ the private sector. As I have explained for you
many times, and you still refuse to know, the fact that future
taxpayers' liabilities are not recorded anywhere as such does not,
repeat, _not_ mean that no one in the private sector will ever be
required to pay any more taxes in order to repay government debt or
the interest thereon. Contrary to your claims.
[quote:54b3474d1c]But monetizing debt is the same as reducing the purchasing power of
existing paper dollars and dollar-denominated obligations.
Nonsense.
[/quote:54b3474d1c]
Fact.
[quote:54b3474d1c]The quantity of paper dollars bears little relation to
their purchasing power in goods and services.
[/quote:54b3474d1c]
?? ROTFL!! Do you know _anything_at_all_ about the history of fiat
money inflations? _Anything_???
Draw youself a chart of the amount of US currency in circulation vs
its purchasing power in average US labor or any reasonable basket of
readily available commodities over the last 100 years. The great big
"X" that chart makes is what's known as a virtually perfect negative
correlation.
You are destroyed.
[quote:54b3474d1c]why would
anyone lend money to the government if they did not expect at some
point to get _all_ their purchasing power back again, with interest?
To the extent that they expect the debt to be monetized, they will
just demand more interest.
More of the same.
[/quote:54b3474d1c]
Right. Purchasing power. Unlike you, bond buyers know better than to
mistake paper dollars for wealth.
[quote:54b3474d1c]You delude yourself into thinking that government debt is net
financial wealth for the private sector merely because it appears as a
private sector asset, but not a private sector liability.
No, because government securities are government liabilities, and
therefore non-government assets.
[/quote:54b3474d1c]
But to the extent that government liabilities are not simply
monetized, they will be extracted _from_ the private sector; you allow
yourself to be deceived by the fact that that liability is not
recorded anywhere, because the parts of the private sector that will
bear it are unidentified until they actually have to pay.
[quote:54b3474d1c]But it does
not appear as a private sector liability only because the identity of
those who will repay it (with interest) by being taxed in the event
that it is not monetized is not known.
The issue has nothing to do with the (unknown) identity of Treasury
bond buyers.
[/quote:54b3474d1c]
?? What are you talking about? The identities of treasury bond
buyers are most certainly known. They are the ones who have the
assets -- the "net financial wealth" you falsely believe (or at any
rate disingenuously claim) is not accompanied by any private sector
obligation to pay additional taxes. It is the future _taxpayers'_
identities that are not known, and that very much _is_ the issue.
[quote:54b3474d1c]The government is the very source of the currency the private sector
uses for its money.
But those who lend money to government don't care about the currency.
What they demand, and government must give them if it hopes to borrow
from them, is more purchasing power back than what they lend. And it
is the productive private sector that is the source of that additional
purchasing power (goods and services), not government. That is what
you always refuse to know.
The value of the currency is dependent on the power to tax, and the
government's monopoly on the issue of that currency.
[/quote:54b3474d1c]
Flat false. If that were the case, the ruble would never have
crashed. In order for the currency to have value, the government must
not only have a monopoly on its issue, but must use that monopoly
responsibly to curb the amount it issues.
[quote:54b3474d1c]That is a
sufficient condition for the currency to have value in trade.
[/quote:54b3474d1c]
Nope. Rubles. 1922 marks. 'Nuff said.
[quote:54b3474d1c]It therefore has unlimited ability to redeem its
securities as they mature.
No, it is limited by society's tolerance for inflation.
This is a common error.
[/quote:54b3474d1c]
It is not an error at all. It is fact.
[quote:54b3474d1c]Inflation is not correlated with the size of
government debt.
[/quote:54b3474d1c]
?? Again, you are trying to divert attention from what you yourself
claimed above. The government's "unlimited ability to redeem its
securities" (look up about 15 lines. Yep. There it is.) is not the
ability to issue more debt but the ability to issue currency. And
issuing currency most definitely _is_ correlated with inflation.
[quote:54b3474d1c]Roy's error is based on the implicit
assumption that the government must some day eliminate the "debt"
entirely.
It will be a cold day in hell before that happens, indeed
it would be hell if it did.
It is a fact that governments are also mortal, and all their debts
will eventually either be repaid (by either taxation or printing
currency) or defaulted. History is very clear on this point.
Mortality is no argument.
[/quote:54b3474d1c]
Yes, it is, and it refutes your claim that my implicit assumption that
government debt will eventually be eliminated is false. In fact, it
is true, precisely because the issuing government is mortal, and its
debts will eventually be eliminated by either repayment or default.
[quote:54b3474d1c]Government debt will never be repaid in its
entirety. History is very clear on this point.
[/quote:54b3474d1c]
ROTFL! To make a claim like that stick, you would need to prove that
_no_ government in history, not even the smallest village council, has
_ever_ repaid all its debts. Good luck.
[quote:54b3474d1c]That so-called debt is the major part of
the financial savings of the private sector.
And what good are such "savings" to the private sector? Why, only
that they are claims on the goods and services to be produced _by_ the
private sector!
Of course, that's what financial savings are all about -- future
claims on real wealth. And your point is?
[/quote:54b3474d1c]
My point is exactly the fact that up until now you have refused to
admit: the real wealth that financial savings in the form of
government debt will act as claims on will be coming precisely _from_
the private sector, but is not yet recorded anywhere as a liability to
the private sector because those who will be forced to render that
real wealth to bondholders in an unrequited transfer (tax payment) are
as yet unidentified. Your claim that government debt is net financial
wealth for the private sector is therefore exposed as nothing but a
deceitful sleight-of-hand.
[quote:54b3474d1c]To call such instruments of wealth transfer
"net wealth" because the recipients' identities are known but the
payers' identities are not is nothing but sleight of hand, if not
willful ignorance.
Again, the identity of savers is totally irrelevant.
[/quote:54b3474d1c]
Wrong. The fact that bondholders' identities are known and future
taxpayers' identities are not known is the _only_ thing that makes
government debt "net financial wealth of the private sector." If
taxpayers' identities were known, that net financial wealth would
vanish, except for the small fraction to be monetized, because it
would be balanced by private sector liabilities.
[quote:54b3474d1c]How those savings are
distributed within the private sector is not the issue here.
Yes, it very much _is_ the issue here, because it is precisely those
who have nothing better to do with their money than lend it to
government to spend who should be paying the _taxes_, _not_ the
productive. Yet by borrowing from such people instead of taxing them,
government effects an even _greater_ transfer of wealth from those who
have their own productive uses for it to those who do not.
Ah, now we see the real reason for your objections. You want those
who have earned and saved enough to buy government bonds to instead
pay more taxes. Got it!
[/quote:54b3474d1c]
<sigh> Now you are just lying again. I want those who happen to own
(but have in almost no case earned or saved) large amounts of money
_that_they_have_no_better_use_for_than_lending_it_to_government_ to
instead pay more taxes. They by definition have the ability to pay,
and they are the primary ultimate true beneficiaries of government
spending, so increasing their tax liabilities would be a good way to
implement the two most fundamental and widely accepted principles of
sound taxation policy: ability to pay and beneficiary pay.
Unlike you, William, I am willing to know the fact that those who have
the idle money lying around to buy government bonds typically haven't
earned or saved a penny of it, because if they were the type that earn
and save, they'd have better uses for the dough than letting
government spend it. And in any case they are definitely getting more
benefit from government than those who do not have so much more money
than they have any good use for; and therefore, yes, they _should_ be
paying more taxes instead of lending their money to government at
interest.
[quote:54b3474d1c]In contrast, an individual who borrows has no
source of money to pay off his debt other than his own income. Since
he cannot create dollars himself, he can go bankrupt if he cannot
generate sufficient income. The government has no such problem. It
will never face involuntary default on its securities as long as they
are denominated in its own currency.
Government is the source of paper currency, but what is the source of
the purchasing power government's creditors expect to get back (with
interest) when government borrows from them? Blank out.
Certainly to the extent that government debt is monetized it will
become net financial wealth of the privte sector. But to the extent
that it is _not_ monetized, it is nothing but a claim by the
bondholders (i.e., those who have nothing better to do with their
money than let government spend it) on the rightful earnings of the
productive.
According to this nonsensical argument, anyone who buys financial
assets like corporate bonds and stocks is a claim on the "rightful
earnings of the productive."
[/quote:54b3474d1c]
No, that is a flat-out lie.
Corporate bonds are (theoretically) to be paid back as a result of the
_greater_productivity_ the investment of the bond proceeeds makes
possible. And this repayment will be made as a result of
_consensual_transactions_. By contrast, government bonds will be
repaid by _forcible_theft_ of wealth from taxpayers, the government
then giving the proceeds of that theft to the bondholders.
-- Roy L |
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| tonyp |
| Posted: Sun Oct 30, 2005 9:26 am |
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Guest
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"Les Cargill" <lNOcargill@cfl.Arr.com> wrote
[quote:e432f5482d]No, they don't. That's the point. The "wavefunction doesn't
collapse" on the bonds. No check is cut. These are paper
liabilities.
[/quote:e432f5482d]
C'mon, Les. Your home mortgage is a "paper liability". What liability is
_not_ simply "paper"? A handshake wager on your kid's Little League game,
maybe?
Do you own any government bonds? If yes, do you consider them nothing but
"paper"?
[quote:e432f5482d]I just see this as a means of providing a return flow in
our already government-intensive economy.
[/quote:e432f5482d]
Let's not get sloppy. It is government _spending_ which constitutes the
"return flow" back to the private sector.
-- TP |
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| Les Cargill |
| Posted: Sun Oct 30, 2005 1:07 pm |
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Guest
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tonyp wrote:
[quote:70df7bce29]"Les Cargill" <lNOcargill@cfl.Arr.com> wrote
No, they don't. That's the point. The "wavefunction doesn't
collapse" on the bonds. No check is cut. These are paper
liabilities.
C'mon, Les. Your home mortgage is a "paper liability". What liability is
_not_ simply "paper"? A handshake wager on your kid's Little League game,
maybe?
[/quote:70df7bce29]
The mortgage carries the very real possibility of foreclosure
if payments aren't made. If the mortgage was say, a balloon
instrument like developers use to build houses, then it would
be *closer* to a gov't bond, but still different by degree.
[quote:70df7bce29]Do you own any government bonds? If yes, do you consider them nothing but
"paper"?
[/quote:70df7bce29]
I own no government bonds.
[quote:70df7bce29]
I just see this as a means of providing a return flow in
our already government-intensive economy.
Let's not get sloppy. It is government _spending_ which constitutes the
"return flow" back to the private sector.
[/quote:70df7bce29]
Precisely.
[quote:70df7bce29]-- TP
--[/quote:70df7bce29]
Les Cargill |
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| tonyp |
| Posted: Sun Oct 30, 2005 3:52 pm |
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"Les Cargill" <lNOcargill@cfl.Arr.com> wrote
[quote:c1a0cf92e8]The mortgage carries the very real possibility of foreclosure
if payments aren't made.
[/quote:c1a0cf92e8]
Whereas if "payments aren't made" on the national debt,
_nothing_ happens, right?
-- TP |
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| Les Cargill |
| Posted: Sun Oct 30, 2005 8:41 pm |
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tonyp wrote:
[quote:7cf7e0aac4]"Les Cargill" <lNOcargill@cfl.Arr.com> wrote
The mortgage carries the very real possibility of foreclosure
if payments aren't made.
Whereas if "payments aren't made" on the national debt,
_nothing_ happens, right?
-- TP
[/quote:7cf7e0aac4]
In practice, nothing happens. The "payments are made" - the
value of the instrument accrues - but it rolls over, so...
--
Les Cargill |
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| tonyp |
| Posted: Mon Oct 31, 2005 10:47 am |
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"William F Hummel" <wfhummel@comcast.net> wrote
[quote:e3f0420644]The question itself Illustrates a fundamental misunderstanding about
the basics of national debt. The government can always redeem the
debt it has issued denominated in the very currency it creates.
Furthermore, if the public concluded that purchasing additional
interest-earning bonds from the government was a losing proposition,
that would imply that the non-interest earning currency it holds is
worthless -- an obvious inconsistency.
[/quote:e3f0420644]
Another name for the "currency it holds is worthless" is ... INFLATION. Are
you denying that inflation ever happens if "government can always redeem the
debt it has issued denominated in the very currency it creates"?
-- TP |
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