The fallacy's of government debt.
January, 26th 2019, Howard Schultz of Starbucks bucks announced he is running for president as an independent. He says the “national" debt it is the biggest threat to America. His proclamation, made me laugh and prompted me to comment on the fallacy's of "our national" debt.
Schultz would never get my vote but his candidacy is a predictable and good consequence of Donald Trump election.
Trump's election has changed many things, but there is one thing that will long transcend his time in office. Trump's election has changed where some of our future leaders will find political traction. Thanks to DJT a new way to power, far away from the squalor of academia, has come to fruition . . . Success in the private sector has once again become a valued virtue. Wow, what a paradigm shift!
The fallacy's of the “National” debt.
The first of three debt fallacy's; Conventional wisdom insinuates that "we the people" and the Federal government are one in the same. They are not the same. The governed and the government are distinct and separate entities. An obligation made by the latter is not an obligation made by the former. No man and no government has standing to enter into an obligation that directly obligates me to pay for.
The second fallacy: The national debt is a national obligation. It is a misnomer to call the Federal Government debt the "national" debt, it is intentionally misleading. The Federal Government borrows money and thereby goes into debt. Their debt is theirs alone, it is in no sense of the word a “national” debt. The debt is owed to and owned by those who purchase the debt, no one else. The debt is the sole obligation of the Federal Government, the governed have made no agreement to pay that debt. I've signed nothing.
Only about 50 percent of citizens pay any federal income tax and none of that money goes toward the debt and rarely does any tax money pay interest on the debt.
Government debt will never be paid off, because the elected officials who control the taxes and spending would never dare ask their constituents to pay. Any elected official that tries to get their constituents to pay would not complete a full term in office. And while it is counter intuitive, this is a good thing. A very good thing!
The third fallacy; Another intentional misnomer is, “printing money”. The Federal Government has never created any money. The federal Government prints money but they do not get any of it! They do not create and or get any benefit from the printing of the dollar. Dollars are created by the Federal Reserve Bank with an entry on an account.
The assets of the Federal Government are massive. At market prices today, the Federal Government could feasible pay off “their” debt by selling their assets. But tax revenues are finite.
https://www.investopedia.com/terms/l/laffercurve.asp
The persons/entities who will eventually pay the debt will be the last ones holding the debt as the USA citizen will never volunteer payment. There are significant numbers of the governed who won't even pay their own debt, let alone a cold lifeless bureaucracy's debt.
How will it all end?
The most likely scenario is that the Federal Reserve will be cajoled into purchasing the risky debt and then the Federal Government will default on the debt. This scenario can only happen at a time where the Federal Government can no longer borrow at or below market rates.
A quick exercise of the gray matter that is fun.
The Federal Government spends roughly 10 percent of their revenue for interest cost on the federal debt.
Question: Would it be better or worse for us, the governed, if our Federal Government paid 30 percent of their revenue toward the interest on their debt?
I say better. If the Federal Government spent 30 percent of their revenue doing no harm, the Federal Government would be 20 percent better than it is today.
January, 26th 2019, Howard Schultz of Starbucks bucks announced he is running for president as an independent. He says the “national" debt it is the biggest threat to America. His proclamation, made me laugh and prompted me to comment on the fallacy's of "our national" debt.
Schultz would never get my vote but his candidacy is a predictable and good consequence of Donald Trump election.
Trump's election has changed many things, but there is one thing that will long transcend his time in office. Trump's election has changed where some of our future leaders will find political traction. Thanks to DJT a new way to power, far away from the squalor of academia, has come to fruition . . . Success in the private sector has once again become a valued virtue. Wow, what a paradigm shift!
The fallacy's of the “National” debt.
The first of three debt fallacy's; Conventional wisdom insinuates that "we the people" and the Federal government are one in the same. They are not the same. The governed and the government are distinct and separate entities. An obligation made by the latter is not an obligation made by the former. No man and no government has standing to enter into an obligation that directly obligates me to pay for.
The second fallacy: The national debt is a national obligation. It is a misnomer to call the Federal Government debt the "national" debt, it is intentionally misleading. The Federal Government borrows money and thereby goes into debt. Their debt is theirs alone, it is in no sense of the word a “national” debt. The debt is owed to and owned by those who purchase the debt, no one else. The debt is the sole obligation of the Federal Government, the governed have made no agreement to pay that debt. I've signed nothing.
Only about 50 percent of citizens pay any federal income tax and none of that money goes toward the debt and rarely does any tax money pay interest on the debt.
Government debt will never be paid off, because the elected officials who control the taxes and spending would never dare ask their constituents to pay. Any elected official that tries to get their constituents to pay would not complete a full term in office. And while it is counter intuitive, this is a good thing. A very good thing!
The third fallacy; Another intentional misnomer is, “printing money”. The Federal Government has never created any money. The federal Government prints money but they do not get any of it! They do not create and or get any benefit from the printing of the dollar. Dollars are created by the Federal Reserve Bank with an entry on an account.
The assets of the Federal Government are massive. At market prices today, the Federal Government could feasible pay off “their” debt by selling their assets. But tax revenues are finite.
https://www.investopedia.com/terms/l/laffercurve.asp
The persons/entities who will eventually pay the debt will be the last ones holding the debt as the USA citizen will never volunteer payment. There are significant numbers of the governed who won't even pay their own debt, let alone a cold lifeless bureaucracy's debt.
How will it all end?
The most likely scenario is that the Federal Reserve will be cajoled into purchasing the risky debt and then the Federal Government will default on the debt. This scenario can only happen at a time where the Federal Government can no longer borrow at or below market rates.
A quick exercise of the gray matter that is fun.
The Federal Government spends roughly 10 percent of their revenue for interest cost on the federal debt.
Question: Would it be better or worse for us, the governed, if our Federal Government paid 30 percent of their revenue toward the interest on their debt?
I say better. If the Federal Government spent 30 percent of their revenue doing no harm, the Federal Government would be 20 percent better than it is today.
