Category: Taxes and Policy, Video

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.

6 Responses to “Interest On The Debt”

  1. Nuggz says:

    “the majority of Americans don’t want the debt ceiling raised”

    The majority of Americans can’t balance a checkbook.

    The majority of Americans believe in an imaginary sky friend.

    The majority of Americans have a total of 69,000 dollars in savings @ the age of 65.

    Furthermore, if Americans are so very worried about debt, why are they piling back in to credit cards?

  2. klhoughton says:

    Nuggz – The majority of Americans have $69K in savings at age 65? Are you counting the PV of their SocSec Trust Fund annuity?

    Ex-housing, I’ve got the “under” for that as the median–you’re talking about 1.6x annual median earnings–even before the market debacle.

  3. anemone says:

    These “percentage of GDP” discussions seem like a conveniently obfuscating layer of abstraction. How would all this look if the interest payments on the debt were discussed as a percentage of tax revenue? And they’re not even discussing paying down the principal. All this with a huge bolus of short-term debt in a zero-percent interest rate environment, where higher rates are discussed only as something that “might” ever happen again. Strikes me as the teaser-rate mentality redux (“what’s my monthly payment?”).

  4. anemone,

    Federal taxes don’t pay for federal interest. Actually, federal taxes don’t pay for anything as they are completely unrelated to federal spending (in a Monetarily Sovereign nation). Were taxes to be lowered to $0 or raised to $10 trillion, neither act would affect by even one dollar the federal government’s ability to spend.

    Contrary to popular wisdom, federal taxes are not saved in a vault or even used for anything. They are destroyed upon receipt. (This is different for state and local taxes, which are stored and used.)

    As for “paying down the principal,” who cares? The so-called “principal” is just the total of outstanding T-bills, which were created out of thin air, then exchanged for dollars which previously were created out of thin air. These dollars are destroyed during the exchange.

    To “pay down” principal, the federal government merely reverses the process; it creates dollars out of thin air, then exchanges them for T-securities, which are destroyed in the process. “Paying down” is no more difficult for the federal government than was creating the T-securities in the first place. One click of a computer key could “pay down” all federal debt.

    This is counterintuitive only because federal finance is not at all like personal finance, and Monetary Sovereignty is not at all like monetary non-sovereignty.

    Rodger Malcolm Mitchell

  5. Greg0658 says:

    hi Rodger .. I’d buy your stick if the FedRes was the primary bank – they are the graphic arts print shop (with super-perks) … now 2 these banks come to mind:
    JPMorgan Chase w/Jamie Dimon
    Citibank w/Vikram Pandit & John Gerspach & Douglas Peterson

    I am sure when you wrote “federal taxes are not saved in a vault or even used for anything. They are destroyed upon receipt” is NOT true. The real primary banks do not destroy the cash > they buy advertising, promote stuff purchases via credit cards (that beget interest) .. there’s 2 for starters.
    And that new cash generated needs to do something (besides request more paper printed at the print shop) .. it goes looking for opportunity in emerging markets to suck another person into this pathetic exercise of human interaction …. now excuse me, I think theres a Tshirt design in there somewhere (since I don’t get to print money) .. best wishes yourself, on the next book.

  6. Greg0658

    The Treasury creates money by crediting checking accounts; destroys money by debiting checking accounts. Federal taxes are debits to checking accounts and credits to Treasury accounts. No tax dollars are saved, used or needed, as the U.S. Treasury already has the infinite power to credit checking accounts.