Another two trillion from the economic ignoramus

It’s Modern Monetary Theory in action: https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory

Living in Pax Americana, the US in theory can issue an infinite amount of debt as wealth. Not sure the ride will end anytime soon either.

looks like you copied and pasted from a 1986 Business Finance book. the real world does not operate very close to this example.

that same text book told you government deficits would sink the economy.. the dollar would weaken, nobody would buy our Bonds, inflation would spiral, stagflation would follow.

instead, interest rates are at historic LOWS, employment at historic HIGHS, the US is THE place to buy Bonds, all while the deficit has spiraled to outrageous heights!

but as I have told you (and maybe one or two of you grudgingly sort of believe me), deficits don't matter. Originally Posted by Chung Tran

Textbook my ass. I never took a class in finance. That's from the school of hard knocks, buying shares in companies with great free cash flow. Instead of using the extra cash to pay dividends, management invests it in expansion and acquisitions and investments that don't make sense.

I like dividends a lot more than buybacks. But because of peculiarities of the American tax system and because of the way stock options are awarded, buybacks are often preferred. And they're better than leaving the money with the company and having it used inefficiently.

In any event, history has shown time and time again that free markets allocate capital better than governments. Mao Tse Tung and leaders of the USSR tried doing it the other way, and it doesn't work.

As to your second point, which you've made several times here, you undoubtedly have a stronger academic background in economics than I do. LustyLad has pointed out to you a couple of times that the reason we're not seeing high inflation is because the velocity of money has slowed. That makes sense to me, and you haven't come up with anything to refute it. If people (and governments, institutions and businesses) stop hoarding dollars, and the velocity of money returns to past levels, all hell may break loose. Look for high inflation and devaluation of the dollar.

From a layman's perspective, you, Donald Trump, and the majority of Congressmen are hyperfocused on the recent history of the USA. By ignoring other countries and the longer term, you're missing the bigger picture. Except for Japan, I can't think of a single example of a country where government debt has gotten way out of control and you didn't see inflation and currency devaluation. And Japan may be a special situation. Japanese, not foreigners, hold the government debt, and they appear to be content to leave it invested in government bonds that yield close to "0", or even below "0". That may change, as they move more into foreign investments. While I can't find the numbers to prove it, the personal savings rate in Japan is probably a lot higher than in the U.S., and, again, a huge amount of those savings are invested in Japanese government debt.

The USA over the last few decades has been considered a safe haven. When the shit hits the fan people want dollars. So you have money pouring into U.S. dollars and U.S. debt, more than enough to make up for our trade deficits, and enough to keep interest rates low. What happens when sentiment changes? Go back to Jimmy Carter's presidency. It's not a pretty picture.

Right now, U.S. government net debt, which I believe is about 80% of GDP, isn't way out of control. Other countries like Argentina and Indonesia have experienced high inflation and massive currency devaluation at lower levels, but they had more foreign debt and people didn't have confidence in the governments. But that won't matter. If we keep adding to the national debt at the current rate, and also keep running up personal and corporate debt, there will be hell to pay at some point IMHO.

The debt to GDP is 104% and these are relatively good times.
With this new budget the spending that Trump approved isn't conservative in any way shape or form. When times get toughI hate to think about the old Carter days and the misery index.

We have nobody in Gumment that wants a fiscally responsible agenda.
I hear that big deficits are good...BULLSHIT. We can't spend our way to prosperity...I would like ANYONE to tell me what country has.

I won't be alive to see when the amount owed is more that the revenue taken by the Gumment...this is going to be a huge burden to the kid that aren't even born yet. Taxation the likes we can only have nightmare about.

https://www.macrotrends.net/1381/deb...storical-chart

The debt to GDP is 104% and these are relatively good times.
With this new budget the spending that Trump approved isn't conservative in any way shape or form. When times get toughI hate to think about the old Carter days and the misery index.

We have nobody in Gumment that wants a fiscally responsible agenda.
I hear that big deficits are good...BULLSHIT. We can't spend our way to prosperity...I would like ANYONE to tell me what country has.

I won't be alive to see when the amount owed is more that the revenue taken by the Gumment...this is going to be a huge burden to the kid that aren't even born yet. Taxation the likes we can only have nightmare about.

https://www.macrotrends.net/1381/deb...storical-chart Originally Posted by bb1961

Great post bb

Corporations that do well are, in general, going to pay their employees more and hire more employees than corporations that do poorly. Compare Amazon and Sears for example. Amazon can afford to pay $15 an hour and is growing. Sears can't and is not. You'd like to see capital migrate from the companies that are doing poorly to the ones that are doing well. Share buybacks and dividends are one way this happens. And, OK, Sears may not be the best example, because it can't afford to pay for dividends or buybacks. But I think you should get the idea.

Anyway, a corporation can do three things with its net income or cash flow,

1. Reinvest it in the business
2. Pay dividends to shareholders
3. Buy back corporate stock

Reinvesting makes sense, both for the business and the American economy, only if the corporation is going to receive an adequate return on the investment. If it's, only, say, a 2% or 3% per year return, or negative, you'd rather see the corporation pay dividends or buy back stock.

Shareholders receive cash as a result of dividends and buybacks. Most of this cash is reinvested. If everything's working the way it should, the return on those new investments is greater than the return that the corporation would have made on that cash if it had kept it.

Here's an example. You have shares in a newspaper company. Its business is declining, as advertising dollars migrate to the web, but it's still generating good cash flow. The newspaper takes its excess cash and buys back shares. You sell your shares and thus get money from the buyback. You take that money and invest it in an IPO for some tech company with good prospects. The tech company achieves a 20% return on its capital. It takes your money, grows, hires more employees, and through the years pays a lot of money in taxes.
Everybody wins. Originally Posted by Tiny

ONLY the house wins, in the end, when you gamble. Because the house, or company, will put itself first above the employees. When employees get the direct benefits of tax breaks or higher wages, or no medical bills - then everybody wins.

Right, but simplifying the tax system and lowering rates did work. Even far left economists are going to agree with the Laffer curve. The question is about the shape of the curve. Lefties like Krugman and Saez will tell you that government will collect less taxes once you boost rates beyond about 75%. I think the number is a lot lower.

Maybe if they'd tried it with real strippers and real money it would have worked. Money spent on cocaine and hairdressers makes more sense than bridges to nowhere and a war in Iraq. Originally Posted by Tiny

We live in a false economy. That's why they print money and make up the rules as they go along. Nothing is what it seems.

We live in a false economy. That's why they print money and make up the rules as they go along. Nothing is what it seems. Originally Posted by Levianon17

Are we getting into a philosophical discussion now.
I liked Monty Python the meaning of life...

ONLY the house wins, in the end, when you gamble. Because the house, or company, will put itself first above the employees. When employees get the direct benefits of tax breaks or higher wages, or no medical bills - then everybody wins. Originally Posted by eccieuser9500

I'm all for higher wages, lower tax rates, and lower medical expenses for everyone. The best way to do this is by generating good jobs and growing the economy. And free markets combined with good government policy are the best way to make that happen. After a long period of low wage growth, we're finally seeing decent numbers, as a result of low unemployment and a good economy.

As to tax breaks, federal income tax rates for the majority of people are reasonable. If you and your wife make $165,000 a year, your effective federal income tax rate is 16%. The effective federal rate for $70,000, married filing jointly, is 9%. It's the higher income earners who get screwed by the feds.

Are we getting into a philosophical discussion now.
I liked Monty Python the meaning of life... Originally Posted by bb1961

Not intentionally, no.

you shoulda known better dilbert .. this is what ya get when you feed the trolls. .. Originally Posted by The_Waco_Kid

it was on the 3rd page. it had no love.




I figured I'd get a response on the stockman angle.



now who's trolling whom....????

The Feds read "FED UP " by Danielle Booth , and you may understand how Ignorant the feds are

There’s always a commentator who knows the truth.