The political, social networking site that integrates politics with popular culture.
The political, social networking site that integrates politics with popular culture.

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Steve Ja @sdj54321

@tklist Much closer to the reality. And when the avg American makes 50,000 a year. The govt is spending over 60% of the avg Americans earnings per year on a wide range of services.

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TKList @tklist

@sdj54321 Now how do I delete the other post?

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Gary @grand-vizier

@tklist
@twocents
What’s really funny is that my generation has buried the younger generations in debt they will likely never be able to pay and then passed a healthcare bill to further support the older people who have benefitted from all the spending that created the debt , and then sold the idea to the younger generation to the point they keep voting for the folks that buried them in debt.
The Liberals have persuaded the Millennials they are protecting them from those mean old Conservatives even as they steal them blind.
Not sure the millennial generation can add and subtract?
Maybe they are the Sheep generation.

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Peter T. Burke @peter-t-burke

@tklist

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@grand-vizier
@sdj54321

Currency is the circulating medium of exchange – be that paper banknotes, gold coins, rare shells, or bullets.

Money is the relative accumulation of wealth. If you have money you exchange that money for goods and services through the exchange of currency.

Money measured in units of currency is stored value.

Debt is incurred when your obligations are in the form of money owed to some other entity.

The US currency is a Federal Reserve Note which is in turn backed by the honesty of the politicians who authorized the exchange of a currency with an intrinsic value for a fiat currency that is nothing more than a unsecured promissory note that has no maturity date and does not carry an interest rate.
The US Federal Reserve Note is basically Monopoly Money that is used to facilitate the exchange of goods and services but does not have a secure future value so it does not represent stored value. It needs to be spent (exchanged for goods or services of value) before it evaporates.

A stored pound of sugar has a future value that exceeds the present cost to acquire that pound of sugar. Land and houses represents stored value to be expended in the future.

The philosophy of the US Government is “I’d rather owe to you than cheat you out of it.”

The “debts” are just created money, not units of value. So what difference does how much we “owe” make as long as we individually are accumulating the means of storing future value?

A man makes $ 7.35 an hour and milk costs $ 3.69 a gallon. The price of the man’s labor rises to $14.70 an hour and milk rises to $7.30 a gallon. In fact the man has gained because the effective price of the milk has fallen relative to the man’s earnings.

We “owe” China, and numerous other geopolitical entities, umpteen bazillion units of money measured in Federal Reserve Notes. So what? What are they going to do with their factory production if they decide to stop dumping it on us?

The US imports all sorts of junk from China and runs up a debt in Monopoly Money. China imports scrap metal and agricultural products from the US and runs up a debt in Monopoly Money.

Two European counties (pick a couple – it doesn’t make any difference which ones) currently have debts in Monopoly Money that are due and owing to the US. These European debts equal the amount of the US debt to China.

The US transfers the European obligation to China in exchange for the discharge of the US obligation.

Done!

It would be different if we were incurring secured debt that is payable in a monetized currency backed by something of material value.

It is important to recognized that the US debt is;

1. unsecured (not backed by anything other than a politicians promise)

2. continuing (no maturity date on the debt)

3. effectively non-interest bearing (stated interest rates are offset by inflation)

So… if I am your biggest debtor and I owe you more than your total annual income, but the debt is unsecured and actually just based on my verbal promise to pay you –

Exactly what do you think you would be willing to do to me that might piss me off?

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TKList @tklist

The National debt is real, it is a politicians’ promise backed by part of your and your children’s future labor (taxes). Interest payments on that debt are payed for by part of your labor (taxes).

When bonds and treasuries mature and redeemed it is fulfilled with part of your labor (taxes). Fiat money debt is real to you and every American. It is backed by your labor (taxes).

Inflation will erode some of the principle of long term debt, but that does not mean it does not cost you nothing, in the terms of portion of labor (taxes) it definitely is something.

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TKList @tklist

@peter-t-burke

The National debt is real, it is a politicians’ promise backed by part of your and your children’s future labor (taxes). Interest payments on that debt are payed for by part of your labor (taxes).

When bonds and treasuries mature and redeemed it is fulfilled with part of your labor (taxes). Fiat money debt is real to you and every American. It is backed by your labor (taxes).

Inflation will erode some of the principle of long term debt, but that does not mean it costs you nothing, in the terms of portion of labor (taxes) it definitely is something.

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Peter T. Burke @peter-t-burke

@tklist

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@grand-vizier
@sdj54321

What do you mean when you say that the National Debt is “real”? Real to whom?

Taxes are just a part of overhead and nothing more than a component of “cost of goods sold”. Taxes are a device to shift money from a source to a recipient. As costs increase so does my retail price to the buyer.

All government exists to “tax and spend”. All Liberepublicrats are “tax and spend” politicians. As long as there is government of any type there is an overhead burden to the governed.

I only pay taxes if I can’t find someway to circumvent them. So far in the past 67 years I have always found that accountants and tax attorneys can significantly lower my overhead in the area of taxes.

I “owe” $100,000 in taxes. I find a tax accountant + tax attorney who lower my tax obligation to $30,000 and charge me $10,000 to do that. My new tax obligation is effectively $40,000 which I pay with US Federal Reserve Monopoly Money that I got from selling something of value to somebody else at an elevated price that includes the previously calculated future effective tax burden.

Basically, I buy something of value for $10. I figure in the overhead costs when I go to sell that item and then double the gross cost to arrive at my desired selling price and add a little for bargaining room.

Taxes are only paid by people who are end consumers and who refuse to participate in the monetary economy.

Underlying this is a second issue. I hire a professional at $X dollars price. The professional has the same issues of taxation I do. So if I offer to pay with a thing that has universal stored value, the professional will discount the price by the value of the item to the Professional. Pay with a gold coin and no exchange of receipts and get a 60% discount because the Professional’s income is not discoverable and the professional’s tax burden in absolute amount and tax percentage bracket is not increased but the Professional now has an item of stored value to hold for the future.

Fiat currencies always come to the same end. So far (in recorded history) no fiat currency has survived more than 75 years from its creation. Most fiat currencies evaporate between 40 and 60 years from their creation. The US has played with this issue before and was forced to redeem the “Greenback” (a fiat currency) with gold certificates. This was a very unfortunate time for US citizens who weren’t prepared for what was happening, but it happened nonetheless.

Generally most fiat currencies have evaporated in one of two ways;

1. The economy of the country collapses and the fiat currency is used for stuffing in shipping boxes when packing to leave the geopolitical area or,

2. The government devalues the issue by creating a new issue of national currency and declaring an official rate of valuation ( one new note is worth one hundred, thousand, million, etc old notes)

The US has never devalued its currency but it has debased it’s monetary system.

All you have to do to survive this is transfer value received in fiat currency to value in material wealth – land, houses, gold, silver, diamonds, etc..
Just think where you would be today if you had purchased a year’s income worth of gold coins when you were 21 and held them to today.

Another way to preserve the value is by exchanging the fiat currency for a fractional ownership in the companies that create the value of the fiat currency. Equity ownership allows you to put in fiat currency and get back increased value denominated in fiat currency. The value of my partial ownership in Ford Motor Company keeps pace with the increase in the cost of a family automobile – I gain from the inflation of the currency, the capital appreciation and dividend distributions along the way.

Taxes are just another cost of goods sold. Like shipping, storage, insurance, bribes, etc., taxes are nothing more than a cost to be reduced and passed on to the end consumer.

So if the US simply defaults on all national debt – so what? What are the creditors going to do – come over here and repossess the trash cans? They cannot replace the sources for the goods they buy from us and they have no other market to sell to.

I’d rather owe it to them than cheat them out of it.

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TKList @tklist

@peter-t-burke

Most of what you said is correct.

You are wrong on the “so what” part on default.

It matters because we do not deal with China in a vacuum.
Credibility matters.

Also you do not seem to take into account those you only have their labor to sell. They can not easily mark up the price of their labor or higher accountants to minimize their income tax. The majority of Americans fall into this group.

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Peter T. Burke @peter-t-burke

@tklist

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@grand-vizier
@sdj54321

There are no countries today who are not issuing fiat currency. We are on the same basis with every country in the world as we are with China. Their debt is everybody’s debt due to debt swaps and the US owes its debt to every country in the world for the same reason. There are no countries that do not hold US debt in some amount and no countries that the US does not hold their debt in some amount.

I use China as an example because they are in the same position as every country in the world.

The fact that Vietnamese Dong was interdicted in the US absolutely meaningless since Dong could be redeemed in France for Francs which were redeemable (and subsidized by the US government) in the US.

The East German Mark was a worthless fiat currency that was rapidly failing in the late 1980s. But (listen for the trumpets) West Germany redeemed the worthless East German Marks and the USA subsidized and redeemed the West German Marks which were also a fiat currency.

It is all just a ledger game played with monopoly money. Debts exist to offset assets.

You don’t sell your labor. You either sell your time doing what someone else either can’t do, or doesn’t want to do – or – you sell your talent to do something the buyer finds intrinsically valuable.

I pay someone to do menial personal tasks because I can earn roughly 15 times what I pay that person in the same amount of time. The person is intelligent, talented and pleasant to deal with. Given time that person will easily become as good at those tasks as I am and in many tasks begins at far more competent than I am.
This is a Quid Pro Quo arrangement between a willing seller and a willing buyer.

A person sells their time for what it is worth to them. If they place a low value on their time and spend it watching TV instead of increasing their skills and knowledge that is a personal choice which they are at liberty to make in the US.

Anyone who has a positive net tax liability can afford to hire an accountant. Only around 50% of the US working population has any net tax liability at all. Half of the US population are net tax consumers not net tax payers.
Net tax Payers (like myself) don’t receive any tax sourced benefits in the US.

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TKList @tklist

@peter-t-burke

Again you are correct on most of what you said.

Except payroll taxes count. The majority of people pay taxes. Most people pay 1/4 to 1/3 of their labor (time) to cover their tax liability.

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Gary @grand-vizier

@peter.t.burke
I think the debts will be” real “when the holders demand payment,as they will.
Then the Government will tax as required to pay off the debt or print enough currency to do so even if it becomes valueless.
Hard assets are only good if the Government doesn’t tax them away,as it has the power to do with a majority vote. I have hard assets but don’t for a minute think they can’t be taken.
Simply seizing assets is unconstituional .
Taxing them is apparently OK since that’s what is happening.
You explanations are excellent but someday they will be beside the point.

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