LOL this person flubbed one answer three times. That clip was so painful to watch. Reminds me of Trevor Berbick trying to pick himself up off the canvas after Mike Tyson knocked him out. It was that bad. The worst part was he seemed to not be taking the question seriously and then he realized “damn, they got me.”
That isn't correct. The government is different from persons and other entities. It prints the money that is legal tender. This speaks to restrictions on spending. It doesn't speak to why the federal government borrows against itself for authorized spending. I imagine we all agree in the abstract that printing too much money leads to inflation. But can anybody say with total certainty where that line is? How many trillions in "debt" are we? Yet, our economy continues roaring along. The Economy 101 textbook may explain what you just said, but none of that answers the question posed, despite your impotent posturing. When I borrow from a bank to purchase a home, the bank is withdrawing money it has to transfer it to me, and I then transfer it to the homeowner. That all makes perfect sense in terms of how to account for that. When the federal government runs a deficit and borrows from itself, where does that money come from? They're not literally taking money out of some physical social security fund, right? So why are we pretending as if that's the case? That is the question, as I understand it. I'm still waiting for a clear answer. That it would cause inflation doesn't exactly get us there because the spending and deficit are still happening regardless.
If the department of defense borrows from social security, it pays it back like any other loan. I am sure you are aware of the term Federal budget. If expenses exceed income, the federal government borrows the money. The Federal Reserve determines whether to print more money or not. The Fed is in charge of monetary policy and making sure inflation and interest rates are low. If there’s no control, then the market will crash. When inflation increases, the FED tightens the money supply by increasing interest rates. When inflation is low, then the FED increases money supply by lowering interest rates. It seems to believe there’s an unlimited supply of money. There’s not. It’s a delicate balance of maintaining stability in the economy. Without it, we become like Argentina where inflation soars and the market crashes. One reason why we have high inflation right now is all of the money given out in COVID relief. Maybe temporarily, it helped but it still has a lasting effect. There’s too much money in the market right now, which is why the FED has attempted to decrease the money supply by increasing interest rates. Depending on what indicators you look at, it’s going to be awhile before Inflation and interest rates come down. One thing that may change that, is if unemployment and layoffs soar. That’s another discussion in itself. Really not sure what answer you are looking for. It’s certainly better than Biden’s economic advisor.
I assume if this person was such an idiot there’d be a ton of such videos?? Maybe there are? Idk. Ps- look up which administration accumulated more debt since everyone cares so much these days lol. I’ll wait.
They borrow it by issuing bonds. Some of those bonds are held to the SS Trust fund, the rest are held by the private sector or other governments.
Economy under Trump was just fine until Covid came along and shut much of it down. Hard to compare them based on that. In addition Biden’s economy was heavily fueled by various stimulus, ultra low rates and an injection of almost 5 trillion into the economy, that takes time to filter through and fade.
Because they have excess cash, the social security trust fund has been running a surplus. How the government borrows from Social Security trust funds | verifythis.com
Not arguing your points at all, just adding to the discussion The Fed also affects money supply with QE or QT by selling or buying Gov backed securities. Currently they have been drawing down their balance sheet. Current toy down about 1.4 trillion since April of 2022. It was about 4 trillion prior to covid and ballooned to almost 9 trillion in early 2022.
Yep, as designed in the 80s. And they do it that way to misrepresent the fiscal situation to justify tax cuts for the wealthy and to justify cutting SS and create a false impression as to its solvency. That said, neither the fiscal situation or SS are that bad. And borrowing in your own currency is not like anyone else. That's a simplistic point.
Since they are both borrowing and spending money, I don't think it changes the money supply. ( I am only talking about when they borrow from the SS trust fund.)
That's what I'm asking. Is the point of "borrowing" the money to offset the deficit spending in order to avoid increasing the money supply?
Intragovernmental debt is traditionally (with limited exception) not considered part of the available money supply. If the government borrows from external borrowers, there are corresponding entries that create available money that can circulate. This is hopelessly oversimplified
Looks like Fed funds averaged lower under Trump than Biden. And you also neglect to mention that the Trump economy was fueled by deficit funded fiscal stimulus.....despite the inherited unemployment rate being 4.8% and on a downward trajectory.
Fed funds under Trump only were ultra low near zero from Spring of 2020 to the end of his term about 9 months. They were near zero for far longer under Biden. Furthermore Biden has trillions of deficit spending under his belt as well. Even though FY federal deficit was 1.86 Trillion 2.15 trillion was added to the national debt, all with a strong economy and UE around 4%.
Just look at the graph. Funds were near 0 for almost as long under Trump as under Biden. And they clearly averaged lower for Trump's presidency than Biden's. Please don't state something untrue, then try to tell us that our eyes deceive us.
So how exactly does the fed setting interest rates affect govt revenue? Hint: it doesn’t. It does affect government interest expense expenditures. When they say the government prints money they aren’t talking about literally printing money. They are talking either about government borrowing money, or some sort of other federal reserve intervention. But yes, if they literally just printed more money, which isn’t what happens you’d have more money chasing the same goods, which would caused inflation. Deficit accounting is different than trust fund accounting. When the government runs a deficit, it is the net amount of spending over all revenues, including social security and other entitlements. Within that construct, the general fund is borrowing from the social security fund (although that has reversed in recent years ) but from a total deficit perspective that is all irrelevant. True.
I understand supply chain issues and other factors were a part of the issue, perhaps even a majority of the issue. But in my mind the government increasing spending played a part, which is essentially what MMT is calling for. Just spend what you need now, ask questions later. The government borrowed and spent more money to make up for lack of demand. The problem is they created more money to offset demand, but to a large degree supply was constrained. If you are going to create more money to chase a constrained amount of supply, you are going to create inflation. if the inflation was totally just supply chain issues, when the supply chain issues corrected prices would have fallen. But they didn’t. That because lots of excess liquidity was injected into the system chasing a constrained amount of goods. first you need to ignore the intra government accounting between the general fund and the social security trust fund. When the govt runs a deficit, it is the net amount of those. the government doesn’t really literally “print” money. When it spends more than it takes in, it borrows it. If it literally just printed the money, or just created it electronically, that would likely create immediate inflation. More money chasing the same amount of goods creates inflation. this is the problem. We see 1 minute of probably an extended conversation. We don’t really know what the trajectory of the conversation was.
