CNN/Money with an interesting deficit quiz . . .

Warning: This is marred by their usual click whoring approach to saying in 30 pages what can be easily done in 3

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click for quiz

Category: Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Deficit Quiz”

  1. That got old and extremely depressing at about question 5. On the positive side, when we finally jail the central bankers maybe we can use that as torture to make them talk

    Hey Barry check this out. This is a whole lotta Teddy’s

    23,000 teddy’s in a teddy bear toss. An annual junior hockey tradition:

    http://ca.sports.yahoo.com/nhl/blog/puck_daddy/post/Video-Watch-23-096-stuffed-animals-bombard-a-ho?urn=nhl-296981

    Considering those arenas usually hold only about 20,000 people we are looking at some sort of metaphysical teddydential, bearical, multiplicationary, expansionating…..or somebody could have brought extras

  2. pcurve says:

    An important tip for the quiz:

    Don’t have too much faith in your government and you will do very well.

  3. Detroit Dan says:

    Wow! CNN is entirely clueless, as are the two commenters above. Anyone who thinks a balanced budget, at the sovereign level, is something to be desired, and that the “national debt” is something bad, has no idea how the monetary system works.

    Sorry folks…

  4. cfischer says:

    Dan, apparently I’m clueless as well. Can you explain how national debt is a good thing?

  5. Lugnut says:

    National Debt = good

    Really huge National Debt = Great!

  6. Bankruptcy must be heaven

    Public debt is theft from children.

    That is how I like to phrase it

  7. roger erickson says:

    cfischer Says:
    “Dan, apparently I’m clueless as well. Can you explain how national debt is a good thing?”

    cf, you have to start with simple operations, before trying to define situational awareness:

    1) currency ISSUERS manage real goods & real capabilities budgets, and issue currency only for internal bookkeeping & records mgt (ps: issuers can’t run out of their own currency, hence no such thing as real debt denominated in their own currency)

    2) currency USERS manage a currency budget as an accurate proxy for local real g/c budgets

    3) conflating management of group reality vs local metrics guarantees a nation will fail to track an unpredictable path
    (preventive group tuning is way cheaper than personal extrapolation followed by extreme course corrections)

    If this is all new, start with these currency kindergarten texts:

    http://moslereconomics.com/2009/12/10/7-deadly-innocent-frauds/
    we need more operations, less politics, and less ideology

    The beginning of US currency:
    A sovereign government can be tricked into pretending to borrow “money’ instead of creating it?
    [Yes. Ours was] http://www.monetary.org/briefusmonetaryhistory.htm

    Lesson of Going off the historically brief Gold Std Domestically – & winning WWII:
    see 1946 article by then NY Fed Chairman Beardsley Ruml, in American Affairs, “Taxes for Revenue Are Obsolete” http://tinyurl.com/y3dkda3

    “Almost everybody talks about budget deficits. Almost everybody seems in principle to be against them. And almost no one, literally, knows what [they are] talking about.” [Robert Eisner, The Misunderstood Economy, p.90]
    http://books.google.com/books [search by author]

    How real is the federal deficit? [Robert Eisner]
    http://books.google.com/books

    Teaching the Fallacy of Composition: The Federal Budget Deficit
    http://www.cfeps.org/pubs/pn-pdf/PolicyNote2006-1.pdf

    http://neweconomicperspectives.blogspot.com/2009/06/professor-l-randall-wray-responds-to.html

    JJ Lando on Quantitative Easing
    http://www.moslereconomics.com/2009/11/04/short-rate-thoughts-deflation-radical-thesis-turnaround/

    there are plenty more, but those should open the floodgates

  8. roger erickson says:

    another addition to perspective on issuer/user currency supply, debt and deficit

    from Brad Lewis:
    1)’…only four countries (Britain, the U.S., France, and Germany) had what the author calls a “true” gold standard. Somehow a number of others that were moving up in economic importance seemed to have gotten along without one.’
    2) ‘There is a section on “cashless” payments like bills of exchange. Is it a coincidence that they’re mentioned below as having originated in Italy with its relatively vibrant city states?’ (and history of high public currency “deficits”; i.e. growing economy = growing currency supply = currency creation = records keeping numerals = currency “deficit” = public “debt”)

    Handbook of World Exchange Rates, 1590-1914
    http://www.eh.net/book_reviews/handbook-world-exchange-rates-1590-1914

    Anyone fixated on public “deficits” & losing track of inflation is falling into the bankers hands. Bankers snatching public-defeat from the jaws of total victory?

    I don’t suppose that adaptive groups, from Alexander the Great to Genghis Khan to the British Navy & on to von Moltke & Gen. Patton cared about reference standards, only the return on coordination

    Why is it that electorates sometime get soft & start placing accountants in mgt instead of just in records keeping?

    In the end, it’s eerily reminiscent to University Department committees trying to manage tenure decisions by publication records alone, and losing track of impact on community and economy.

    Just another statistical example of institutional confusion? Another signal lost in the “fog of context”?

  9. inquiringmind says:

    cfischer,

    a shorter answer than Roger’s would be:

    Looking at the economy as a whole, basic accounting requires that the private sector & the government sector net to zero. (consider the foreign sector as part of the private sector for simplicity). This accounting truth means that when the Government is spending more than it earns (deficit spending), it is sending money into the private sector allowing the private sector to run a surplus. Thus, Government deficits allow private savings.

    When the Government is running a surplus that means it is taxing the private sector more than it is spending. The accounting of this situation means that the Government is removing money from the private sector. The private sector will be forced to sell assets (ie, dip into savings) in order to pay the taxes.

    If you chart US Federal deficits vs private net savings, you can see the relationship.

    This monetary relationship is counter-intuitive & not generally acknowledged because textbooks & the people who teach from them were largely created/educated in the pre-1973 gold-standard era. The pure fiat money system changes the game by turning the old relationships on their head.

    Roger’s links give a more detailed explanation of the above.

    IM