Why do governments get into debt?

That's kinda like asking why people climb mountains.

Also, some people make a lot of moola from the debt.

[video=youtube;Ll3uipTO-4A]http://www.youtube.com/watch?v=Ll3uipTO-4A[/video]

Dat taxpayer dime is one huge mutha(*)(*)(*)(*)in' roll!

 

Exact same thing applies to tax cuts, which have been pandered by politicians who gutted revenues, driving up deficits and debt.

 

Maybe you need to stop by my place an observe how I collect money in my business then I pay a portion of that money in taxation.

Of course legal tender is provided by the government except for those who are still bartering...

 

A few years ago ALL Americans received 'temporary' income tax rate reductions, however, when it came time to stop those reductions and return the reduced rates to former rates, most everyone screamed like little babies! They didn't give a crap how much debt was being created...all they cared about was themselves...

 

Why?
To correct your errors?

Sorry, that was uncalled for...
But in all seriousness I assume that your business collects payments & settles tax obligations in much the same way as any other business.

 

The Federal Budget should always be the aim of policy, except in the event of war, or a national crisis.

Inflating the dollar to avoid paying back a debt in current dollars, is simply another form of default. In other words, restructuring debt, and intentional inflation, both equal bankruptcy.

The US can't simply lower wages. If the minimum wage were lowered today, by half, that would not mean my income would drop. Highly unlikely in fact.

It would simply allow those people whose market value is lower than the minimum wage, who are currently unemployed, would now have more opportunity to make an income, because jobs would start to exist to make use of their lower worth... which in turn would give them the skills and experience to advance up the income ladder.

You claim that 70% of peoples income is gone before they purchase goods and services. Housing and education, is a good and a service.

Further, you don't have to buy an expensive home, or an expensive education. There are cheaper alternatives.

As for taxes, I agree. Stop demanding government blow tons of money on programs, that take money away from workers, and shockingly they will have more money.

Housing and Debt burden have nothing to do with workers being competitive. Nothing.

Further, if public spending is what makes business competitive, then Europe should be leading the entire planet. Instead they are nearly in a crisis, with a European Unemployment rate of 13%, and many countries with massive public infrastructure, doing far worse than the rest. By your theory they should be running circles around us.

So if you write a book, and I copy it and sell it, and give you not a penny, this is what you want? Great way to make the rich richer, and poor poorer.

Patents, I basically agree. The system needs at a minimum, overhauled, if not eliminated.

So the people who create all the jobs, shouldn't have rights, thus eliminating all jobs? Brilliant.

So the companies that create most of the wealth, and most of the jobs, should be eliminating, thus eliminating both wealth and jobs. Brilliant.

As I have said millions of times, I am completely against any time the government takes money from any group, and gives it to another. So I'm against subsidies for Green Energy, for Electric Cars, Cash for Clunkers, Solydra, Research Grants, Wind Mills, for Welfare, Food Stamps, for Housing subsidies, for Health Care, for Medicaid, for Social Security, for Rich people making Ethanol.............

All of it. All of that should be eliminated.

Not sure about limited liability.

 

No that's wrong. The trade deficit is not a net negative. The only time a trade deficit is bad, is when it buys US savings bonds, with the money, instead of investments which grow the economy.

But it doesn't matter if a foreign guy buys US Bonds instead of investments, as opposed to a US guy buying US Bonds instead of investments, both are negatives. Investments by both are positives.

 

You people act like government taking money is a neutral economic effect.

Every dollar sucked out of the private economy, harms the private economy, killing jobs, and ruining growth.

Every dollar kept in the private economy, grows wealth, and creates jobs.

On the opposite side, every dollar government gets, is used to harm the economy from that end, by giving incentive to people to not be productive. This can either be by paying people to stay at home instead of work a job, or by paying large companies to make bad products like Ethanol or Solydra to build bad solar panels people don't want. In either case, government spending is always a net negative.

What drives up deficits.... is spending money you don't have. The government could double it's tax revenue, and still more than double it's spending, driving up deficits. This is what happened in the 80s. Tax revenue nearly doubled, but it didn't make any difference, because government spending, doubled even more than the revenue.

 

How does a dollar that would e sucked out of a billionaire's offshore account and instead is spent into the economy creating demand and jobs ruining growth?

How does a dollar sitting in a billionaire's offshore account create jobs?

How does money the Govt spends, even on investments that don't work out like Solydra, give people incentive not to be productive when they otherwise would be standing in the unemployment line? How is the money that people receive from the government and spending in the economy creating demand and jobs a net negative?

Can you how spend money you have when you cut taxes so that billionaires can stick more trillions in their offshore accounts?

You people act like giving more trillions to billionaires to stick in their offshore accounts somehow is going to create more demand and jobs in the economy.

If that were the case, we'd have no unemployment right now because we've already given the 1% double the share of the nation's income (from 10% to 20%) and double the share of the nation's wealth (from 20% to 40%) over the past 30 years.

Where are the damn jobs?

 

Why should the government force me to give you money? Maybe there's a good reason but it's still government intervention.

My point was that corporations, being creatures of law & state, only exist because of government intervention.
In addition they are granted privileges that include corporate person-hood, limited liability, tax benefits & many other special privileges due to government intervention.

Then you're in luck because the Federal Government doesn't take money from one group & give it to another.

Federal Government spending does not require funding from taxes or borrowing.
Federal spending occurs by issuing new currency into the economy, adding to private income.

The government doesn't give your tax dollars to anyone.
Federal taxes regulate aggregate demand & ensures currency demand.

 

First off, the entire premise of your post is false.

Most billionaires do not keep their money in off shore accounts. Even those that do, it would be a small fraction of their total assets. Further, even if by some chance you were to find a billionaire that kept all his money in off shore accounts, that wouldn't change anything about it's economic benefit... I'll explain that in a second.

Most billionaires do not have cash. When you see Warren Buffets net worth, that's not in money. Now they assign a dollar number to it, because that is how society judges wealth. But in reality, that number is largely stocks and assets and bonds. Not money. He has INVESTMENTS that are worth $60 Billion. Not a bank account with $60 billion in it.

http://usatoday30.usatoday.com/money/economy/2009-03-11-forbes-billionaires_N.htm

How could they accidentally misplace $2 Trillion dollars? Well they didn't. They never had it to begin with. It was tied up in assets, investments, which all declined in value during the recession.

So there is no billions in off shore accounts. Just not true. (unless you mean the combined total of all rich people in the entire country. That could be a billion. But each individually billionaire does not have billions sitting in off shore accounts)

Second, no matter what you do with money, it's always beneficial with the exception of burning it, or giving it to the government.

What do people do with money? There is only three things. You can spend it. You can save it. Or you can invest it.

Obviously spending it, and buying stuff, is useful in the economy. You can invest it, either in your own company, such as Warren Buffet investing in Berkshire Hathaway, or you can invest it into stocks and bonds of another company, which they use to expand or grow.

Or lastly you can save it, in an account at a bank. In the long term, this is beneficial because you generally save up to invest, or buy, something larger later. In the short term, what does the bank do with it? Well..... a bank does the same thing with money that we do. It can save, spend or invest. The bank may lend the money to a company. Or it may invest in bonds or stocks. Or it may purchase a new location to open another branch.

In the end, the money will end up either invested or spent on something. Savings, just passes the money to a bank which does the same. Even an off shore bank, can only spend or invest the money, or save it with another bank, that will either spend or invest the money.

Thirdly, and finally, why are there no jobs?

Well first off, there are jobs. Millions of jobs. And I would say that nearly none of them would exist without investment and rich people.

Now granted we have a 7.5% unemployment rate, but obviously that means 92.5% of the population is employed.... which means obviously there are jobs.

But why is unemployment up at 7.5% if we have all this investment money?

Because although you absolutely must have investment money to create jobs, that's not the *only* thing needed. Another thing that you need is something worth investing into. So what does that mean?

Well if you had a million dollars, and there was no investment project that could make a ROI, Return On Investment, would you do it?

We're going to sell cars that seat one, operate on spring power, and you have wind them up by hand, and only go 10 miles each winding. Chances are you'll lose all your money, but you'll create dozens of jobs! So how much would you like to invest with us?

Well of course you are not going to invest with that. You are going to either keep your money in the bank, or you are going to invest somewhere else, perhaps in another country.

You have to have something profitable to invest in, in order to invest.

Same is true of our economy. Government has made investing less profitable, by increasing costs and taxation. As a result, even though there is money to invest, less investment is taking place, because the ROI is lower.

Additionally, specifically the government has increased the minimum wage. That has made it unprofitable to hire low skilled workers. This is why people with college educations and direct work experience, are not having as hard a time finding work, as those who are low skilled with limited work experience.

And lastly, government programs have created incentives that reward people to not work. Research has shown that people who have government assistance, often do not take jobs, as often as those who don't. People make difference choices, when they don't have a check from the government. Which is another way of saying, that people are choosing to remain unemployed as long as they have an unemployment check coming. Granted not all of them.... but many.

 

It's your work. You wrote the book. I stole your work, and I'm making money off of it. Meanwhile, you who wrote the book get nothing.

This is fair in your world? Really?

But it's exactly because of those benefits, that allow corporations to produce so much wealth to the entire country, and produce millions of jobs, both directly, and indirectly. A massive chunk of the entire economy would be absolutely ruined by the elimination of corporations.

Medicaid. Moving on.

False. You are wrong.

 

If you stole something from me shouldn't I be missing something?

If you spent the time, effort & money to print & sell the book wouldn't you be "making money" off your own labour?

Whatever this is, it is profoundly different from stealing.

Whatever one thinks of patents, copyrights & intellectual property laws, they undeniably involve government intervention that takes money from one party & gives it to another.
I'm not expressing an opinion for or against only describing what they are.

I don't disagree.
Again, I wasn't expressing a position but stating a description.

Just because its something you approve of, doesn't make it not government intervention.
If you say you are against government intervention how can one justify supporting it in these cases.
Or are you only against that government intervention you disagree with?

 

I don't think you know what you are talking about.
A trade deficit means the nation bought more goods than it sold, more USD went out than went in.

If the Private Sector is to net save (surplus) then given a trade deficit, the Public Sector must run a larger deficit..
If the Foreign Sector runs a $100 surplus & we want the Private Sector to have net savings of $100 (surplus) then the Public Sector must run a deficit of $200
Public Sector (-200) + Private Sector(+100) + Foreign Sector(+100) = 0

A trade deficit means the nation got more than it gave.
Why is that a bad thing?

 

Of course...it's the law

 

As far as I know, the only legal way to place money off-shore is to first earn the money in the USA, then pay taxes on it, then the remainder is theirs to do what they wish...

 

No, I do not.

You are looking for an absolute that does not exist. Socialist and Capitalist are not universal labels, that you can slap down on a country, and say "this is now a socialist country"... or "this is now a capitalist country"..... and then assume that every economic activity inside the now labeled country, as being part of that label.

The USSR for example, had if I remember right, 90% of all farms owned and controlled by the government, but the other 10% were all privately run, capitalist farms. Does that mean Socialism include Capitalist run farms? The government farms were runs so poorly, that even though 90% of farms were government run, 1/3rd of all food came from Capitalist farms. Without Capitalist Farms in Socialist USSR, the entire system would have starved to death decades before.

The point is, there is no such thing as a 100% pure whatever. Even the most Capitalist based system, have some element of Socialism. And the most pure Socialists systems, have some element of Capitalism.

Pure Socialism would instantly collapse in economic ruin. Pure Capitalism, would not have a police, judicial, or military force, and result in chaos and/or hostile take over.

Thus there is no "pure" system, that you could simply apply the magic "Capitalist" or "Socialist" label to.

Therefore, when I suggest a country is going socialist, I don't mean to imply that 100% everything in that country is socialist. Nor when I suggest a country is Capitalist, do I mean to imply there is no government.

I'm looking at trends. Which way is the country headed? What policies are they pushing? Are they treading toward greater government control, greater regulations, greater government ownership? Or are they headed towards less control, less regulations, less government ownership?

How open are they to private enterprise, and private capital, and profitable business? What is their economic freedom level, relative to the past, and the rest of the world? Is it trending up, or trending down?

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You are using logic and rational thinking. You might damage this leftist. Be careful. You might end up paying taxes, for his Obama-Care.

 

If you are ok with that, with you doing all the work and ending up impoverished and broke, while I doing none of the work, end up filthy rich off your work.... ok.

Granted, I wager you have created nothing of any value in your life, and thus have an easy time supporting this argument. I wager your attitude would be different if you had.

Printing a book.... is actually very very cheap, and very very easy. Coming up with a book worth reading, that people are willing to pay for.... not so much. That's the hard part. I know because I have spent months working on my own book. The fact is, it's not easy.

We agree to disagree. To me there is a massive difference between Copyrights, and those others. The other stuff, I agree. That is a problem. But copyright, no no. So you are saying that I can buy something you make, slap my name on it, and sell it cheaper than you, and drive you out of business with your own product? No no no. Sorry. You are wrong on this.

Well of course. Everyone does. If I stole your stuff, and you called police, you are demanding that the government intervene.

Absolutely, I am in favor of government intervention in matters of Justice. I consider stealing my copyrighted book, to be just as much a matter of justice, as stealing my car.

Of course me building a house on my own property, is not a matter of justice, and I think the government should have no intervention in the matter.

 

I'm not sure, but it seems neither of us is understanding the other.

From your last statement, I assume you are saying that a trade deficit is not a bad thing.... which is what I'm saying. In other words, we agree.

 

First off, the entire premise of your statement is false.

A new report finds that around the world the extremely wealthy have accumulated at least $21 trillion in secretive offshore accounts.
http://www.forbes.com/sites/frederi...er-rich-hide-21-trillion-offshore-study-says/

Some $32 trillion has been hidden in small island banking hubs which host a bevy of trust funds, shell corporations and other tax havens, the Tax Justice Network estimates.
http://moneymorning.com/2013/05/01/check-out-whos-hiding-32-trillion-in-offshore-accounts/

(Reuters) - Rich individuals and their families have as much as $32 trillion of hidden financial assets in offshore tax havens, representing up to $280 billion in lost income tax revenues, according to research published on Sunday.
http://www.reuters.com/article/2012/07/22/us-offshore-wealth-idUSBRE86L03U20120722

So what? I never said that all of Warren Buffet's assets were in cash.

OK.

Correct. There are not billions in offshore accounts. There are trillions.

Second, the premise of this statement is also false.

Money sitting in offshore accounts does not help the economy like the Govt spending it does, which distributes cash into the economy to people who spend it, creating demand for goods and services and jobs.

We don't need billionaires saving more of the national income in offshore accounts.

We don't need billionaires investing more. There are trillions of dollars in capital available. We do not have a shortage of investment capital.

What we have is a shortage of demand -- a shortage of people spending.

And that is in part because proportionate to GDP and compared to 30 years ago, approximately $1.3 trillion per year is going to the 1% who aren't spending it instead of the middle classes who would.

Red herring. Despite the promise of job creation and economic growth with the Bush tax cuts and "trickle down" policies, job creation over the past 15 years has been extremely weak and we have 11 million unemployed.

Exactly. And the reason there is less to invest in is not because of you silly analogy that people want to make wind up cars. It is because there is inadequate demand for goods and services.

And there is inadequate demand for goods and service because the folks that spend their money on such things, the middle class, the great engine of spending, doesn't have the resources or income to spend because our "trickle down" policies have trickled it up to the 1% where a bunch of it goes into their offshore accounts instead of being spent in the economy.

1% apologetic nonsense. Investment tax laws were at 15%, among the lowest rates in history, until just last year when they went to 20%, still half the rate of tax on earned income.

There is too much incentive to invest and not enough incentive for production and not enough income and resources going into spending.

More 1% apologist claptrap. The only reason it is unprofitable to hire more workers is because there isn't enough demand for product and services. Minimum wages in real terms are half what they were decades ago.

"It's all the lazy workers' fault." This is more 1% apologist bull(*)(*)(*)(*).

People don't take jobs because there aren't jobs for them to take, OK?

Your whole premise is false. The 1% have twice the share of the nation's income (20%) and nation's wealth (40%) as they did 30 years ago. We've deregulated, gutted unions, cut worker's income, and redistributed and are redistributed a much large chunk of the nation's income and wealth to the 1%. And the economy is suffering for it because the 1% don't proportionally spend that money like the middle class does.

It's not about "wind up cars". It's about insufficient demand resulting in low increases in production, and low hiring. Simple as that.

 

I never said it was illegal. What is your point? If they wish to take the proportionately extra $1.3 trillion a year the 1% is getting instead of the middle classes compared to 30 years ago and stick it in their offshore accounts, they can do that and do do that.

That's the point. Instead of that money being spent into the economy, creating demand for products and services and jobs, it is going into offshore accounts or savings or investments were it is doing little good for an economy that is struggling for lack of demand.

What we need is more spending in the economy. Giving even more tax cuts to the 1%, and cutting incomes of workers even more, and firing more government workers, and gutting more government programs, and cutting government spending even more, so the 1% can get even more of the nation's wealth and income is not going to generate demand that makes the economy grow robustly.

Trickle down hasn't work. The money has just trickled up. We need to reverse trickle down and start worrying about the middle class instead of the 1%.

 

It takes a special kind of person, to post a link which proves my point, and then not be bright enough to realize it.

Ok, so the first link leads to this page, which leads to this PDF. Warning... this is PDF.

What does the PDF say?

Now what did I just say in my prior post?

Unless you mean the combined total of all rich people.... This $21 to 32 Trillion, is the combined total, of not just American wealthy, but all wealthy globally.

In other words, *YOUR* link, prove *MY* statement right.

Further, it really just makes an "estimate" of off shore assets.

Right. It's in investments. Investment is good. That's a positive thing for the economy. We want that.

You fail again. You just said it wasn't money. And money, as in cold hard cash, is not in off shore accounts.

Back to your own link, and the PDF.

Notice, assets... not money. ASSETS are investments. Notice, Investor Portfolio... not money. Investments are good. We want those.

Now, you'll notice that they have several models, and estimates. Interestingly, the models are based on estimates. Which are based on IMF, and World Bank models and estimates.

I especially like the sources-and-uses model, which is effectively says that we have an estimated source of money, and an estimated use of money, which gives us an estimated difference, which we guess must be estimated offshore wealth, because we don't know what it is.

Not only do we not know what it is, or where it is, we don't even know if.... it is. It's all estimations. By the way, all of those IMF and World Bank models, based on the IMF World Bank estimates, are based on the numbers that local 3rd world governments give them. When have the 3rd world governments ever been reliable?

You don't know what they are doing. You have estimates built on estimates, that are made into guesses. You don't know jack squat. At best you have a bunch of assumptions.

More is always better.

Which can't be fixed without investment.

Yes they are. Your own link shows they are investing the money.

Unemployment declined every year after 2003, until 2008, when we raised the minimum wage.

All the demand in the world, won't create a single car of any kind, unless you have investors who have the money to build the car, and hire the people to make it.

Venezuela had a rich middle class. Today the economy is in a tailspin, because of lack of investment, because of bad government policies making investment unprofitable.

Socialist ignorant dogma. The specific tax on investment, is important, but not what I was referring to. First you have to have an investment worth investing into. If government regulations and minimum wage, and so on, all make it unprofitable to build a new fast food restaurant, then one will not be built, no matter how low or high investment taxes are.

Not enough incentive for production. Correct. That's my point. You can have all the incentive to invest in the world, lower capital gains taxes to 1%, but if you push Obama Care, and minimum wage, and unemployment comp, and SS taxes, and on and on and on, then no one is going to build anything worth investing into.

You have to have both.

More brainless socialist babbling. Take a pill or something.

Just not true. There are fewer jobs, and that's due to socialist crap policies. But there are jobs.

 

Totally wrong. You clearly have no idea how off shoring even works.

David Copley in 2007 bought a $33 Million dollar yacht. I order to avoid taxes, he had the yacht registered in the Marshal Islands.

The yacht was still built in the US, by US workers, at a US company. The yacht was still serviced in the US, by US mechanics. The Yacht was still piloted by a US captain, and had US crew. Most of the supplies for the Yacht were purchased by US retailers.

Most off shore assets are similar to this. For example, the purchase of stocks and bonds, would benefit American markets. However, if those stocks and bonds were loaded into off shore accounts to avoid taxes, that wouldn't change the benefits of those assets.

And again, even if real US Dollars were sent to off shore banks.... what exactly do you think the banks would do with them? The same thing everyone does. Can a bank in Ireland use US dollars to pay employees? Or buy buildings? Or pay Ireland taxes?

No, they can only invest or spend those dollars here in the US.

Regardless, it would still be used to benefit the US economy.

 

My point is you, me, and every American, can place THEIR personal cash anywhere we wish...this is 100% yours, mine, and all Americans choice.

Maybe you should ask another more critical question; why isn't all of this supposed off-shore cash finding a place to invest in the USA?

How do you propose your 1% spend $1.3 trillion into the economy? Are you demanding they buy more houses, more cars, larger jets? Perhaps there is no longer an incentive to invest cash in the USA?

There are no tax cuts for the wealthy?? No one is cutting incomes of workers?? No one is firing government workers??

For the umpteenth time...when a penny is spent into the private US economy, that spending TRICKLES up, down, left and right, and energizes the economy. It makes no difference who is doing the spending...

 

To the contrary. It proves my point. Billionaires stick a large portion of their income in offshore accounts as opposed to spending it in the economy where it creates demand and jobs.

Further, it really just makes an "estimate" of off shore assets.So what?

We don't need investment capital. There are trillions sitting around in banks and offshore accounts. What we need is demand.

I never said it was in cash. Straw man failure.

[/quote]

So what? By its nature offshore money is secretive. The point is that there is a lot out there. The point is that unlike the middle class, billionaires spend only a portion of their money.

No when it comes at the cost of gutting spending.

Of course it can. Get more money to the people who actually spend it.

Job creation since the Bush tax cuts has sucked.

We don't have a shortage of investment money. If there is more demand, there will be more opportunity to invest it.

We don't have that problem. We have a lack of demand because a share of wealth and income that used to go to the middle classes is now going to the 1%. Who don't spend it in the same proportion.

You're not going to have anything worth investing in if there isn't demand.

When you have a tax code that roughly doubles the tax on earning and production it should be no surprise that you have a surplus of investment.

And after thirty years of trickle down economics we have insufficient demand because so much more of the nation's income and wealth are going to folks who proportionately don't spend it.

Ad hom argument fail.

Nonsense. We had decades low unemployment with those policies.

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How much did David Copley make in 2007 and how much did he spend?