Creating Trillions out of Thin Air

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markap

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Probably important to remember a few things...Candidate Trump promised to eliminate the debt in less than 6 (I think) years. Instead he has added to it by at least a trillion. Cutting taxes and adding stimulus dollars are necessary during recessions but should be reversed during times of surplus to repay earlier expenditures. Didn’t happen. A huge portion of the last tax cut went to stock buybacks instead of payrolls or investments. Plans are a foot to make sure that it doesn’t happen this time

Trumps pushing of Powell over the past 3 years to lower the fed rate to keep his economy looking good has left the fed with no margin to work with now
 

LDM

Blackhawk
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"A billion here, a billion there. Pretty soon you're talking real money." Everett Dirkson.

Unfortunately we don't have real money. The only thing that backs up the dollar is the "good faith and credit" of the federal government. The thinking is that the feds have an infinite supply of credit and can keep racking up deficits.

My concern is if this "stimulus" fuels inflation, then we will have greater problems in the near future.
 

markap

Bearcat
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Bull Barrel said:
You don't need to increase taxes when things are good. People spend money which increases the amount of tax revenue.
If cutting taxes stimulates the economy why would you raise taxes?

Only if lower taxes stimulates spending instead of saving or stock buybacks, and to repay the debt incurred by the loss of tax revenues (which is what happened) . And so you have room to lower for the next recession
 

harley08

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Maybe the President's plan to give "bailouts" to ordinary Americans suffering due to the coronavirus crisis will work. People will certainly welcome a government check reaching them for $2,000 or whatever to help buy groceries, pay the rent, put gas in the car, etc. as they are sitting at home and wondering if their jobs even exist anymore. The reality that the government just creates this money is an interesting concept. I had learned in a basic economics class about a million years ago when I was in college that if the amount of money increases, chasing a fixed amount of goods, the cost of the goods will increase as a function of supply and demand, thus creating inflation. This was how it took wheelbarrows full of Reichmarks to buy a loaf of bread during the worst of the Depression in the late 1920's in Germany. But somehow we have gone from a national debt of a few trillion dollars to the current 23 trillion, with little apparent harm. Maybe this reflects the instability of the rest of the world's economies, so that the American system, even with the massive rising debt, was still trusted and seen as safe by most everyone, with people still happy to accept dollars in return for the goods and services that they were producing. But for whatever reason, our government has been adding trillions to the economy and so far we have seen very little inflation, if any at all. Maybe every American can receive a few thousand dollars, increasing the national debt by about $3 trillion, and no one will blink an eye. I hope that this is the case.

But when you think about it, it really is amazing how we accept dollars, or even just an electronic number showing our wealth in some bank or brokerage house or wherever, and accept it as something real. If suddenly a lot of people said "these pieces of green paper are just paper, and I am not willing to give you the crops that I worked so hard to grow and transport to you in return for this paper" or "my factory used labor and resources to produce the goods in front of you, and I am not sure I should give them to you in return for those green pieces of paper" then our entire system would collapse like a house of cards. The whole concept of money is strange and somewhat mystical, and is our reality only because we knowingly share in this mass delusion that money has some true value that will be exchangeable in the future for real "things".

This current virus crisis is already, only a short ways into the sacrifices being made, devastating whole industries and millions of people. How many restaurants will close and never re-open? How many people, now home from work, will be told shortly that the company they worked for no longer exists, and that not only will their paychecks be gone but there will be little hope for them to ever find a new job again? If added to this, people start to question whether the folding money in their wallet is real, or whether that balance in their bank account has any meaning whatsoever, we are in for a total collapse of our economy, and even of our whole society.

I am trying to be hopeful that we will, in fact, survive this pandemic and not see it become "the end of the world as we have known it" within the next few months. I am trying to be hopeful that images of a post apocalyptic world, with people killing each other for a can of beans is not what awaits us very shortly down the road. So I am starting to think that maybe the best way to handle this pandemic would be to do nothing. No shelter in place, no closings of stores and factories, no changes whatsoever. Maybe we should just go to work as usual, go to stores and restaurants as we were doing, and to let the virus run its course, treat as many sick people as possible, and accept two or three or four million American dead and then be left with a population not that much smaller than it is now and with virtually everyone now with antibodies protecting them from any re-infection by this virus. In effect, the economic impact of this virus might be worse for the nation than the health care impact, even at its worst.

Just a few weeks ago I was somewhat dismissive of this entire issue, saying it was more political than health care. But now I am starting to get quite frightened about what the future holds for us, and the future means a month or two from right now. Or maybe its just a bad day here on a cold, rainy day while I am stuck indoors and worried about my kids and my grandkids. End of rant.
Buy guns and lots of ammo - When the poop hits the fan, you will be able to barter or take what you need!
 
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Buy guns and lots of ammo - When the poop hits the fan, you will be able to barter or take what you need!

I said that on a different forum once and almost got booted off...... then one of the 'good' internet lawyers on that forum re-wrote it as, : will be able to get what I need." as in you can use the ammo and guns to trade for food and such... not just take it. Which is a much more moral way to look at it.

then again years ago my father and some friends bought into a bulk purchase of SKS rifles and each got a case of 1200 rounds of ammo with one... a guy bought 600 rounds from my father and as he was leaving asked him if he would be okay with just the 600 left and my father replied, " if I need more and I can't get it with the 600 I have then I really won't need anymore....." It's one of the things I learned in Ranger training.... you take what you might need from the dead and wounded.....

Alexander Hamilton believed in growing the economy by spending borrowed money and being in debt.... the crazy thing is he was right.
 

Huskerguy72

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Probably important to remember a few things...Candidate Trump promised to eliminate the debt in less than 6 (I think) years. Instead he has added to it by at least a trillion. Cutting taxes and adding stimulus dollars are necessary during recessions but should be reversed during times of surplus to repay earlier expenditures. Didn’t happen. A huge portion of the last tax cut went to stock buybacks instead of payrolls or investments. Plans are a foot to make sure that it doesn’t happen this time

Trumps pushing of Powell over the past 3 years to lower the fed rate to keep his economy looking good has left the fed with no margin to work with now
I don't remember Trump saying he was going to eliminate the debt. Can you provide a link for that?

The current economy is based on debt. People have to borrow and pay for this to work. It was formerly on a gold standard which is being proposed to return to but won't. The more debt, the better as long as it gets paid back.

I am going to guess that many people wouldn't have a problem returning the Trump 1-2% inflation days. Inflation is a magical tool that keeps on giving. The government prints more money and puts it into the economy which deflates the value of what exists. Look at it this way, if all of a sudden a bunch and I mean trillions of primers and firearms were thrust onto the market, what would happen? Prices would go down. Now workers and businesses react by rasing prices for goods so they can give raises to employees who are struggling. The endless chain continues and this one could be epic. Stayed tuned.
 

txramfan

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Candidate Trump in April of 2016 in an interview with the Washington Post did discuss eliminating the Federal debt.....in 8 years.

I can't link the story, found it in 90 seconds on the net.
 

pyth0n

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IMO we're on our way to Digital money, Star Trekian credits. Backed by air.
 
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Selena

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Candidate Trump in April of 2016 in an interview with the Washington Post did discuss eliminating the Federal debt.....in 8 years.

I can't link the story, found it in 90 seconds on the net.
Oh... you could link the story but since the sources are so unreliable you see the wisdom in not doing so. Thanks for playing.
 

txramfan

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Oh... you could link the story but since the sources are so unreliable you see the wisdom in not doing so. Thanks for playing.
Uh no I haven't learned how to link from the tablet I'm using.
Newsweek, had the info they cited the Washington Post, and it was found in 90 seconds.

It was said, you can find it if you want to.

Edit....tis disrespectful to infer a person is lying.
I guess I should use my PC upstairs and supply the link if it was that important to you.
 

Cholo

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Here's the Newsweek article. Let me say this: Anyone who says there's a fertilizer shortage in the world hasn't read Newsweek. See for yourself LOL

 
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