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These days I just assume that anybody driving focus to the "debt" and specifically "paying interest on the debt" has no idea what they're talking about. Write i

These days I just assume that anybody driving focus to the "debt" and specifically "paying interest on the debt" has no idea what they're talking about. Write it on the blackboard 50 times: the budget of a sovereign nation issuing a reserve currency is not analogous to household finances! As a follower of Austrian economics, monetary creation by the government most certainly does matter. But this myopic focus on "debt" completely hides the actual separate dynamics like domestic people/institutions parking their savings, foreign entities buying treasuries for longer term stability, or the political martingale of accounting for legislative monetary creation as paper "debt" to the Federal Reserve. The current cries about government spending are basically aiming at killing the goose that lays golden eggs because some people got frustrated by having to spend some of the proceeds of selling the eggs on the goose's own feed.

bpt3 2y ago
Are you aware of the percentage of all federal spending that is consumed by interest on the debt, and more importantly the forward looking projections for that metric? If so, how can you claim said debt is meaningless?
- mindslight 2y ago
  What do you mean "consumed" ? Government spending is only hard-limited by keeping up this Federal Reserve dog and pony show that seeks to handicap the government's own monetary sovereignty. What you're actually talking about is the risk-free interest rate given out to entities that park their money in Treasuries, which is itself set by the government! This is most certainly not to say that the government could just create an unlimited amount of money and expect there to be no repercussions! Rather the overall point is that it's specious to analyze a government budget in terms of "debt", especially while giving a pass to all of the monetary creation that happens outside of the legislative (loans issued/bought by the Fed).
WalterBright 2y ago
The problem with the debt is interest is paid on it. Keep adding to the debt, and the interest payments will cause a doom loop ending in fiscal catastrophe. If the government instead switched to simply printing more money, we'd have runaway inflation, and history tells us what happens next (Weimar Republic).
- mindslight 2y ago
  The elephant in the room is the continual creation of new money by the Fed by dumping it into the financial industry, while the legislative government itself has been hamstrung (and is now being killed) by this "debt" narrative (eg a good chunk of that debt is just to the Fed itself!). The consumer price inflation from the first Trump term caused the first spate of fiscal responsibility the Fed (and thus the government as a whole) has had for the past several decades. Going forward, the productive path is to tamp down on the monetary creation being done by the Fed, let the asset bubbles cool down, and be comfortable with the legislative government spending newly-created money for deliberate goals.

bpt3 2y ago

Are you aware of the percentage of all federal spending that is consumed by interest on the debt, and more importantly the forward looking projections for that metric? If so, how can you claim said debt is meaningless?

mindslight 2y ago
What do you mean "consumed" ? Government spending is only hard-limited by keeping up this Federal Reserve dog and pony show that seeks to handicap the government's own monetary sovereignty. What you're actually talking about is the risk-free interest rate given out to entities that park their money in Treasuries, which is itself set by the government! This is most certainly not to say that the government could just create an unlimited amount of money and expect there to be no repercussions! Rather the overall point is that it's specious to analyze a government budget in terms of "debt", especially while giving a pass to all of the monetary creation that happens outside of the legislative (loans issued/bought by the Fed).

WalterBright 2y ago

The problem with the debt is interest is paid on it. Keep adding to the debt, and the interest payments will cause a doom loop ending in fiscal catastrophe. If the government instead switched to simply printing more money, we'd have runaway inflation, and history tells us what happens next (Weimar Republic).

mindslight 2y ago
The elephant in the room is the continual creation of new money by the Fed by dumping it into the financial industry, while the legislative government itself has been hamstrung (and is now being killed) by this "debt" narrative (eg a good chunk of that debt is just to the Fed itself!). The consumer price inflation from the first Trump term caused the first spate of fiscal responsibility the Fed (and thus the government as a whole) has had for the past several decades. Going forward, the productive path is to tamp down on the monetary creation being done by the Fed, let the asset bubbles cool down, and be comfortable with the legislative government spending newly-created money for deliberate goals.