5 ms·

Who is going to be paying the taxes needed to pay off those bonds?

by jimmyk 10y ago

mywittyname 10y ago
No one need pay taxes to pay off the bonds. The Fed can buy the bonds and hold them in perpetuity.
- jimmyk 10y ago
  >The Fed can buy the bonds and hold them in perpetuity. And what cash will they give to the SSA in exchange for those bonds? Where will that come from?
  - mywittyname 10y ago
    > Where will that come from? The same place cash comes from now when the Fed buys t-bonds in order to manipulate the interest rate: nowhere. The Federal Reserve has the authority to create money to redeem any US government security.
    - jimmyk 10y ago
      >The Federal Reserve has the authority to create money to redeem any US government security. We're all aware. Whether the money is taken from the next generation or from the federal reserve is irrelevant. The point is that it's not yours until the government takes it from them and gives it to you.
    - portent 10y ago
      I don't think that is right. The federal reserve can create new US dollars, and it can buy US Treasuries - but this is not the same as redeeming them. The fed becomes just another bondholder that needs paying by the treasury dept. The money goes to the person who previously held the bond as payment for the bond. Also there is about $20 trillion outstanding public debt, and only $3.3 trillion in the whole money supply, so there is a big gap in money creation needed to pay off the debt. Would tank the currency and kill the economy (think hyperinflation). https://www.treasurydirect.gov/NP/debt/current https://www.treasurydirect.gov/NP/debt/current http://www.tradingeconomics.com/united-states/money-supply-m1 http://www.tradingeconomics.com/united-states/money-supply-m...
      - hx87 10y ago
        > The fed becomes just another bondholder that needs paying by the treasury dept. The Fed does not get paid. It doesn't need to get paid, since the Federal Reserve by law has infinite liquidity.
        portent 10y ago
        all bondholders are paid - it doesn't matter who owns the bond. https://www.quora.com/What-happens-to-all-the-bonds-that-the-Federal-Reserve-bought-during-QE-when-they-reach-their-maturity-dates https://www.quora.com/What-happens-to-all-the-bonds-that-the...
    - deleted 10y ago
      [deleted]
guelo 10y ago
Ideally the same people whose taxes Reagan lowered https://upload.wikimedia.org/wikipedia/commons/8/8c/Historical_Marginal_Tax_Rate_for_Highest_and_Lowest_Income_Earners.jpg https://upload.wikimedia.org/wikipedia/commons/8/8c/Historic...
- pc86 10y ago
  A little off topic but if you were well into that top marginal bracket at the time I bet that drop from 90% to 70% felt really good.
  - nickff 10y ago
    Almost nobody was actually paying that rate; those high marginal tax rates only benefited the accountants who could figure out how not to pay, and the politicians who could show how how much money they were pretending to take from the rich.
- WalterBright 10y ago
  It's often overlooked that the deal Reagan made to get the lower tax rates was to eliminate all kinds of investment tax shelters. I.e. few were actually paying those rates, the rates were more for show and are not comparable to the tax system today.
  - vkou 10y ago
    There are ways besides cutting their rates, to deal with people who refuse to pay their taxes. Hangings, imprisonment, seizure of property... And what a surprise - rates today are much lower, yet tax evasion continues to be a problem.
- jimmyk 10y ago
  Do they not count as "our children" if they're rich?

Who is going to be paying the taxes needed to pay off those bonds?

by jimmyk 10y ago

Who is going to be paying the taxes needed to pay off those bonds?

mywittyname 10y ago

No one need pay taxes to pay off the bonds. The Fed can buy the bonds and hold them in perpetuity.

jimmyk 10y ago
>The Fed can buy the bonds and hold them in perpetuity. And what cash will they give to the SSA in exchange for those bonds? Where will that come from?
- mywittyname 10y ago
  > Where will that come from? The same place cash comes from now when the Fed buys t-bonds in order to manipulate the interest rate: nowhere. The Federal Reserve has the authority to create money to redeem any US government security.
  - jimmyk 10y ago
    >The Federal Reserve has the authority to create money to redeem any US government security. We're all aware. Whether the money is taken from the next generation or from the federal reserve is irrelevant. The point is that it's not yours until the government takes it from them and gives it to you.
  - portent 10y ago
    I don't think that is right. The federal reserve can create new US dollars, and it can buy US Treasuries - but this is not the same as redeeming them. The fed becomes just another bondholder that needs paying by the treasury dept. The money goes to the person who previously held the bond as payment for the bond. Also there is about $20 trillion outstanding public debt, and only $3.3 trillion in the whole money supply, so there is a big gap in money creation needed to pay off the debt. Would tank the currency and kill the economy (think hyperinflation). https://www.treasurydirect.gov/NP/debt/current https://www.treasurydirect.gov/NP/debt/current http://www.tradingeconomics.com/united-states/money-supply-m1 http://www.tradingeconomics.com/united-states/money-supply-m...
    - hx87 10y ago
      > The fed becomes just another bondholder that needs paying by the treasury dept. The Fed does not get paid. It doesn't need to get paid, since the Federal Reserve by law has infinite liquidity.
      - portent 10y ago
        all bondholders are paid - it doesn't matter who owns the bond. https://www.quora.com/What-happens-to-all-the-bonds-that-the-Federal-Reserve-bought-during-QE-when-they-reach-their-maturity-dates https://www.quora.com/What-happens-to-all-the-bonds-that-the...
  - deleted 10y ago
    [deleted]

guelo 10y ago

Ideally the same people whose taxes Reagan lowered https://upload.wikimedia.org/wikipedia/commons/8/8c/Historical_Marginal_Tax_Rate_for_Highest_and_Lowest_Income_Earners.jpg https://upload.wikimedia.org/wikipedia/commons/8/8c/Historic...

pc86 10y ago
A little off topic but if you were well into that top marginal bracket at the time I bet that drop from 90% to 70% felt really good.
- nickff 10y ago
  Almost nobody was actually paying that rate; those high marginal tax rates only benefited the accountants who could figure out how not to pay, and the politicians who could show how how much money they were pretending to take from the rich.
WalterBright 10y ago
It's often overlooked that the deal Reagan made to get the lower tax rates was to eliminate all kinds of investment tax shelters. I.e. few were actually paying those rates, the rates were more for show and are not comparable to the tax system today.
- vkou 10y ago
  There are ways besides cutting their rates, to deal with people who refuse to pay their taxes. Hangings, imprisonment, seizure of property... And what a surprise - rates today are much lower, yet tax evasion continues to be a problem.
jimmyk 10y ago
Do they not count as "our children" if they're rich?