So what do yall think the new currency is going to be?

[Elihu]

https://www.usdebtclock.org

36 Trillion around Christmas I'm guessing?

[Elvis]

https://www.usdebtclock.org

36 Trillion around Christmas I'm guessing?

And? So?

Why is that a problem?

The "Debt Clock" is a joke—on us. It should be called the National Savings Clock.

[Elihu]

And? So?

i think christmas is a little early but not much. then 37 by the end of the year and 39 or 40 by succeeding year's end and on and on faster and faster ever after. it means, number go up

Why is that a problem?

no objection, just a pecadillo. it's borrowing. that's what it is. everything fine long as borrowing go on.

[Elihu]

everything fine long as borrowing go on.

wrong in the literal sense. Quite the opposite. things worse while borrowing grows.

[Elvis]

it's borrowing. that's what it is. everything fine long as borrowing go on.

It's not really "borrowing"; the government provides the dollars used to buy Treasury bonds. Govt bond sales sequester bank reserves from the banking system to optimize bank reserve levels—not because it needs the money.

"If the government issues its own money, then why does it 'borrow'?" — a great question, seldom asked, and that most economists cannot answer:


https://www.youtube.com/watch?v=5WvrQDQDKns

[Elihu]

will spare you the posting and redacting of most of the irrelevance
https://www.zerohedge.com/markets/it-be ... -emergency
but:

The UK already exceeds the 90% debt-to-GDP threshold that Carmen Reinhart and Ken Rogoff famously (or infamously) estimated to be the point at which the Keynesian multiplier falls below one. In layman’s terms, this means that for every extra dollar that the government spends GDP increases by less than one dollar, thereby rendering borrow and spend stimulus measures self-defeating as debt grows faster than GDP.

How to escape this economic doom loop? The options are default or retrenchment (austerity). We can rule out austerity as something that no government is brave (or foolhardy) enough to seriously propose after previous attempts by George Osborne and Wolfgang Schauble severely frayed the social contract. On the default side of the menu, countries that have no power over the issuance of their own currency are constrained to hard default (think Greece), whereas sovereign currency-issuing governments have the luxury of defaulting sneakily by debasing the coinage of the realm.

This is the financial repression scenario where bondholders are the patsies, financing fiscal profligacy by holding securities that yield negative real returns. Under this scenario, the smart money gets out of bonds and holds real assets that provide an inflation hedge. With the S&P500 up more than 22% YTD and long yields rising, is this the future that markets are now envisaging in what is beginning to look like a debt emergency?

most won't say so, yet, but it is a world-wide debt emergency. imo

[Elvis]

The "debt-to-GDP threshold" is, in layman'as terms, a made-up bullshit metric that has little or no meaning in real world outcomes.

The "borrow and spend" framing is more bullshit. The government provides the dollars that it "borrows" from the private sector.

"There is no good reason to use the term 'debt' when referring to outstanding Treasury securities. The expression 'national debt' is really 100 years out of date for America, and does not reflect the modern U.S. financial system."

—Frank N. Newman, former Deputy Secretary of the Treasury

Frank Newman book001.jpg

The notion that the "options are default or retrenchment (austerity)" is more and more bullshit.

First, there is no reason for the federal government to default. It's bullshit. As I have repeatedly pointed out, just last year alone, the US Treasury redeemed ("paid back") a total of $140 trillion in maturing Treasury bonds, bills & notes. This is an automatic process that happens while we sleep. See the Treasury report:

Treasury redemptions 2023 US 140T.jpg

Second, austerity is a political choice with no sound economic justification. The perceived need for federal "balanced budgets" is purely symbolic, ignoring the real need for private surpluses—which can only come from untaxed federal spending.

"Debasing the coinage of the realm" is medieval thinking, more bullshit based on Zerohedge's backwards framing of government "debt."

The government (US, UK, Japan, Australia, etc. etc.) don't have to sell bonds in order to spend beyiond what it collects back in taxes. Selling bonds is a monetary operation, not a funding source. (Watch again Jared Bernstein struggle to explain it.)

Completely absent from the Zerohedge analysis is any acknowledgement of pricing power of large firms with outsize market control. The value of the currency is manifested in prices and prices are set by large firms with market power. There is no Pricing Fairy.

Of course, outsize market power for big firms, and especially Big Finance, is a goal and a consequence of the "trickle-down" economic theories & ideology (it's ideology) that have failed so badly for 50 years, and which clueless(?) commentators like Zerohedge perpetuate.

Did I mention that Zerohedge is a bad joke?

will spare you the posting and redacting of all the irrelevance
https://www.zerohedge.com/markets/it-be ... -emergency
but:

The UK already exceeds the 90% debt-to-GDP threshold that Carmen Reinhart and Ken Rogoff famously (or infamously) estimated to be the point at which the Keynesian multiplier falls below one. In layman’s terms, this means that for every extra dollar that the government spends GDP increases by less than one dollar, thereby rendering borrow and spend stimulus measures self-defeating as debt grows faster than GDP.

How to escape this economic doom loop? The options are default or retrenchment (austerity). We can rule out austerity as something that no government is brave (or foolhardy) enough to seriously propose after previous attempts by George Osborne and Wolfgang Schauble severely frayed the social contract. On the default side of the menu, countries that have no power over the issuance of their own currency are constrained to hard default (think Greece), whereas sovereign currency-issuing governments have the luxury of defaulting sneakily by debasing the coinage of the realm.

This is the financial repression scenario where bondholders are the patsies, financing fiscal profligacy by holding securities that yield negative real returns. Under this scenario, the smart money gets out of bonds and holds real assets that provide an inflation hedge. With the S&P500 up more than 22% YTD and long yields rising, is this the future that markets are now envisaging in what is beginning to look like a debt emergency?

most won't say so, yet, but it is a world-wide debt emergency. imo

[Elihu]

Update
March was 7 months ago.

That 35, from what I understand, is growing by one trillion every six months, or 90 days? or something like that.

today it is 35.965, so it is really more like a trillion every nine months but obviously never getting slower, haha

What's gonna happen? war? aliens? CBDC's? Yall ready?

I'm feelin
1war
2aliens
3germs
4each other

[Elvis]

"Do not go beyond!"

1936 debt cartoon.jpg

1941 debt limit scare.jpg

Wm Vickrey on deficits.png

We are not going to get out of the economic doldrums as long as we continue to be obsessed with the unreasoned ideological goal of reducing the so-called deficit. The ‘deficit’ is not an economic sin but an economic necessity.

—William Vickrey,
Nobel in economics 1966

[Elihu]

"Do not go beyond!"

you might be right

[Elvis]

The US has 99 probems but the "national debt" isn't one of them.

[Elihu]

The US has 99 probems but the "national debt" isn't one of them

now that i'm not so sure of. this number that go up, it bids defiance to science

[Elvis]

Science? What science?

"Mathematics brought rigor to Economics. Unfortunately, it also brought mortis."

-Kenneth E. Boulding

What is it that will happen if the number gets bigger?

The US has 99 probems but the "national debt" isn't one of them

now that i'm not so sure of. this number that go up, it bids defiance to science

[Elihu]

What is it that will happen if the number gets bigger?

1.4 Trillion, the number biggest outlay of this entity that keeps on borrowing"Errrrrr, mmt-ing " the economy. interest outlay gets bigger toward infinity, everything else gets smaller, toward zero, because 100%=100%. you get nothing for interest payments and the gov, presuming it runs on money, will freeze. untenable. and second, the reported accumulation, trillion upon trillion, is going to "hyper-inflate". computers could keep up with its size increase but it will become meaningless to humans, assuming they need money to run. we either have to pretend this doesn't exist or admit it has a terminus. even if it is a long way off what are the implications?

[Elihu]

but recall you said: "Do not go beyond!"
to which i said: "you might be right"

i'm looking at

usfedgov entity gets for itself tax money, spends more, conjures the difference (the debt). this is the cause of this strange ticking number that is destined for infinity. i admit that assumption might be false. not that the number won't go toward infinity, but that this Bs is how the fedgov-entity funds itself at all. if that's not true then the infinity number will simply get yanked like the charlie brown football. but if it is true...