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> The United States Government prints money all the time. This money has value because there is a world-wide consensus that it has value. No the Government bor

> The United States Government prints money all the time. This money has value because there is a world-wide consensus that it has value. No the Government borrows against future taxes (consider that an accounts receivable), the borrowed money doesn’t have value because of consensus it has value because it is backed by future tax revenue. If the government did as you say and borrowed a trillion per taxpayer the system would breakdown but not because of some “consensus” but because the account receivable (future taxes) is insufficient to payback the borrowed money.

octo_t 6y ago
For most countries, this is true. The US is in a unique position because it is the global currency.
minikites 6y ago
Government budgets are not the same as corporate budgets.
jfengel 6y ago
It is rather astonishing that rational people continue to believe that there is enough future tax revenue to justify this. It's entering dotcom-boom territory, where even the most optimistic future profitability can't justify this level of backing. Part of it, I imagine, is that the US government is likely to benefit from future tech booms, as it has in the past (despite tax shenanigans from the tech companies themselves). It gets a piece of stock market profits -- a stock market whose own levels are also currently out of keeping with rational revenue expectation.
- catsdanxe 6y ago
  So what would a rational person do? Stockpile guns and food? Invest in gold?
  - inetknght 6y ago
    Those seem like something someone with wealth might want to do. But for those without wealth... protests are pretty much the top of the short list of options they can take.
  - atemerev 6y ago
    Brace for impact. If and when the shit hits the fan, there will be no strategy _at all_ to keep the same economic levels. Everybody will suffer.
    - jessaustin 6y ago
      The assholes keep telling us this. If they believed it, one suspects they'd change their behavior.
- throwaway_jobs 6y ago
  It’s never getting paid back, there is so much number fudging to hide the reality of debt and guaranteed payments for future liabilities...we pretend we are $26T in debt (but when you add in the future liabilities We are over $148T in debt). To your point being rational doesn’t really give insights into these issues, but talk to any government budget officer and the can give you a sobering reality of the situation.
  - jfengel 6y ago
    I wouldn't expect to pay it back in the sense of reducing the debt to zero. A government is (nominally) eternal, and can continue to revolve its debt indefinitely. It doesn't retire or die the way a person does. As long as it pays its interest, it can just borrow again every time a debt comes due. But it's not reasonable for that debt to grow without limit. It has to be able to pay the interest on the debt, for which it requires revenue. We take in only around $3T a year in total. That's still a large fraction of that $26T debt, but we're also supposed to pay our actual obligations out of that -- which at the moment are over $4T. Eventually the debt service is going to be larger than our revenue, and I just don't see investors being willing to just let that amount ride as new debt. And yet people will loan us money for 10 years at well under 1% interest. That keeps the interest burden down -- and yet with the debt growing at over $1T per year it can't last forever.
Diederich 6y ago
The current US federal debt is roughly 110% of GDP. In a few weeks, I'm going to borrow about 350% of my yearly income in the form of a home loan. I'm currently paying about 30% of my pre-tax income on rent, and this future mortgage will be about 22% of my pre-tax income, so on that basis alone it makes a lot of sense. Less than 10% of the total federal budget goes into debt payments. The absolute numbers don't really matter, but the percentages do. Trends also matter, as long as they're considered carefully.
- atemerev 6y ago
  Of GDP in the largest economic boom, enabled by past borrowings.
  - Diederich 6y ago
    Yup, all true. I'm not necessarily defending past or present fiscal policy. I'm pretty concerned about this stuff as well.
    - baxtr 6y ago
      What exactly are you concerned about?
      - Diederich 6y ago
        I'm fine with the US Government printing money when it makes sense to, such as during an economic downturn. However, since 2016, generally regressive federal tax policies without commensurate spending cuts during an economic boom have un-necessarily increased the national debt. (To be clear: I don't think we should have been cutting social spending. But we definitely should not have been giving huge tax breaks to the most wealthy.)
        baxtr 6y ago
        Got it thanks. And you think that’s something to be concerned about because the ability to print money is reduced by every bill printed and thus should be used modestly / wisely?
ethbro 6y ago
> No the Government borrows against future taxes (consider that an accounts receivable), the borrowed money doesn’t have value because of consensus it has value because it is backed by future tax revenue. This is one of two reasons it has value. As other comments mention, the other reason is because it's by far the leading global reserve currency. Which is to say it's an attractive mix of liquid, stable, and available, compared to alternatives. Furthermore, there are certain commodities (e.g. oil), for which dollars are required. As a result, other countries / parties may believe the dollar is overvalued, but they will still have to acquire them, at the market rate, to execute transactions. As a result of that ongoing demand, the dollar will tend to be valued both on its future tax revenue value AND as a result of a substantial, continuous demand.
jessaustin 6y ago
Where do dollars come from? Many observers say that the Federal Bureau of Engraving and Printing manufactures them. These manufactured dollars are then distributed to banks and through banks to other firms and to the public. They are manufactured in the quantities necessary for efficient settlement of loans and other financial instruments. In particular, attention is paid to current goals for purchase of "Treasury" notes. These instruments are also manufactured by the USA government. Obviously, an individual human can't operate like this. The USA government can, and has for decades. Remember the Gospels' admonition to "render unto Caesar."

octo_t 6y ago

For most countries, this is true. The US is in a unique position because it is the global currency.

minikites 6y ago

Government budgets are not the same as corporate budgets.

jfengel 6y ago

It is rather astonishing that rational people continue to believe that there is enough future tax revenue to justify this. It's entering dotcom-boom territory, where even the most optimistic future profitability can't justify this level of backing. Part of it, I imagine, is that the US government is likely to benefit from future tech booms, as it has in the past (despite tax shenanigans from the tech companies themselves). It gets a piece of stock market profits -- a stock market whose own levels are also currently out of keeping with rational revenue expectation.

catsdanxe 6y ago
So what would a rational person do? Stockpile guns and food? Invest in gold?
- inetknght 6y ago
  Those seem like something someone with wealth might want to do. But for those without wealth... protests are pretty much the top of the short list of options they can take.
- atemerev 6y ago
  Brace for impact. If and when the shit hits the fan, there will be no strategy _at all_ to keep the same economic levels. Everybody will suffer.
  - jessaustin 6y ago
    The assholes keep telling us this. If they believed it, one suspects they'd change their behavior.
throwaway_jobs 6y ago
It’s never getting paid back, there is so much number fudging to hide the reality of debt and guaranteed payments for future liabilities...we pretend we are $26T in debt (but when you add in the future liabilities We are over $148T in debt). To your point being rational doesn’t really give insights into these issues, but talk to any government budget officer and the can give you a sobering reality of the situation.
- jfengel 6y ago
  I wouldn't expect to pay it back in the sense of reducing the debt to zero. A government is (nominally) eternal, and can continue to revolve its debt indefinitely. It doesn't retire or die the way a person does. As long as it pays its interest, it can just borrow again every time a debt comes due. But it's not reasonable for that debt to grow without limit. It has to be able to pay the interest on the debt, for which it requires revenue. We take in only around $3T a year in total. That's still a large fraction of that $26T debt, but we're also supposed to pay our actual obligations out of that -- which at the moment are over $4T. Eventually the debt service is going to be larger than our revenue, and I just don't see investors being willing to just let that amount ride as new debt. And yet people will loan us money for 10 years at well under 1% interest. That keeps the interest burden down -- and yet with the debt growing at over $1T per year it can't last forever.

Diederich 6y ago

The current US federal debt is roughly 110% of GDP. In a few weeks, I'm going to borrow about 350% of my yearly income in the form of a home loan. I'm currently paying about 30% of my pre-tax income on rent, and this future mortgage will be about 22% of my pre-tax income, so on that basis alone it makes a lot of sense. Less than 10% of the total federal budget goes into debt payments. The absolute numbers don't really matter, but the percentages do. Trends also matter, as long as they're considered carefully.

atemerev 6y ago
Of GDP in the largest economic boom, enabled by past borrowings.
- Diederich 6y ago
  Yup, all true. I'm not necessarily defending past or present fiscal policy. I'm pretty concerned about this stuff as well.
  - baxtr 6y ago
    What exactly are you concerned about?
    - Diederich 6y ago
      I'm fine with the US Government printing money when it makes sense to, such as during an economic downturn. However, since 2016, generally regressive federal tax policies without commensurate spending cuts during an economic boom have un-necessarily increased the national debt. (To be clear: I don't think we should have been cutting social spending. But we definitely should not have been giving huge tax breaks to the most wealthy.)
      - baxtr 6y ago
        Got it thanks. And you think that’s something to be concerned about because the ability to print money is reduced by every bill printed and thus should be used modestly / wisely?

ethbro 6y ago

> No the Government borrows against future taxes (consider that an accounts receivable), the borrowed money doesn’t have value because of consensus it has value because it is backed by future tax revenue. This is one of two reasons it has value. As other comments mention, the other reason is because it's by far the leading global reserve currency. Which is to say it's an attractive mix of liquid, stable, and available, compared to alternatives. Furthermore, there are certain commodities (e.g. oil), for which dollars are required. As a result, other countries / parties may believe the dollar is overvalued, but they will still have to acquire them, at the market rate, to execute transactions. As a result of that ongoing demand, the dollar will tend to be valued both on its future tax revenue value AND as a result of a substantial, continuous demand.

jessaustin 6y ago

Where do dollars come from? Many observers say that the Federal Bureau of Engraving and Printing manufactures them. These manufactured dollars are then distributed to banks and through banks to other firms and to the public. They are manufactured in the quantities necessary for efficient settlement of loans and other financial instruments. In particular, attention is paid to current goals for purchase of "Treasury" notes. These instruments are also manufactured by the USA government. Obviously, an individual human can't operate like this. The USA government can, and has for decades. Remember the Gospels' admonition to "render unto Caesar."