Libertarian view

The hysterical circus of the Democrats

Taxcutageddon

AS TRUMP’S tax-reduction package makes its way to his desk for the sealing signature, the loons of the left are in a state of meltdown.

What particularly has them in hysterics is the part that reduces corporate taxes. The United States currently has the highest corporate tax rate in the developed world. This is silly, since it hinders economic development and job growth.*

And the legislation also reduces taxes on the working stiffs.

The Trump presidency continues to keep a smile on my face.

For a funny look at Trump Derangement Syndrome (TDS) by the lovely Candace Owens, I point you toward this previous post.

* * * *

* The unemployment rate has fallen significantly since the rootin’, tootin’, raspberry shootin’, New York Golden Boy was inaugurated.

(Tip of the sombrero to Jonolan for bringing this cartoon to my attention.)

64 thoughts on “The hysterical circus of the Democrats

  1. Well, gosh golly gee, I hope us unfortunates NOB live through this Golden Boy guy. I like what he’s doing, wishing for more for Christmas. Leaning more right suits me. The lunacy of both extremes does not suit me at all.

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    1. Ricardo: Alas, even calm moderates (i.e. people like you and me) are regarded as right-wing fanatics by the leftists/Democrat Party these days. Such is life.

      In the meantime, hooray for Trump!

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      1. I agree that the Dems have gone nuts. However, you don’t seem to recall which party brought us the Great Recession and the Great Depression. Those were the results of conservative economic theory.

        Liked by 1 person

    1. Brent: Great shirt. I doubt I could get one down here, however. I bought a Trump coffee cup on eBay after the election, and had it sent to me, but the guys and gals at Mexican Customs broke it into shards, replaced it in the box, and sent it on to me. But maybe they would not understand the T-shirt.

      Wear it proudly.

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  2. Yes, I remember your broken Trump cup. I still haven’t received the shirt yet, so hopefully it hasn’t run into a Hillary-supporting postal worker.

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    1. Brent: I took what remained of the Trump cup, taped a cardboard bottom on it, and it now serves precisely as I first intended, a pen/pencil holder atop my desk. Perhaps it’s even better than it would have been since it serves as a daily reminder of the broken dreams of Hillary-ites.

      Life is good. Trump is great.

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  3. Felipe: The way you keep harping on Trump, I think YOU might be the one who’s sounding a little hysterical. As for the tax cuts, unless you’re a multi-gazillionaire hiding in Pátzcuaro, don’t go spending that money yet. Neither will I. I doubt middle-class schlubs like us are going to see any extra money out of that deal, or see any leveling out of the class disparities in the U.S.

    What I expect is “sugar high” on the economy, like the one we had under Clinton and W. followed by Judgment Day, when the trillion-dollar deficit comes due. Sort of getting a Final Notice from MasterCard.

    So let me give you a tip: Keep an close eye on whatever investment you have in the U.S. and be ready to bail on short notice when the stuff hits the fan.

    And whatever you do, calm down. I’ll be joining the 70+ Club at the end of the month and coots like us can’t handle too much excitement.

    Happy Holidays. I’d wish you a Merry Christmas, as Trump would like me too, except you’re a hardcore Pagan.

    al

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    1. Señor Lanier: Your belief that the tax reform will not add money to the pockets of the middle class, which is not correct, no doubt is based on something you read in the NYT, which is akin to asking Michael Moore or Ellen Degeneres. The plan does reduce taxes for just about everyone, from what I have read in reliable sources.

      As for investments in the U.S., I am currently more than halfway through a six-year plan to get my investments out of the U.S., but not because of Trump. Other reasons. But since you mentioned it, the stock market is doing spectacularly well since Trump won the election. U.S. investments are a great place to be right now, money-wise.

      Felíz Navidad to you too. By the way, I am no pagan. Neither am I a Christian nor a Jew, but I heartily support the Judeo-Christian tradition which made the Western World the greatest place to be.

      I pray that one day you will recognize the error of your ways.

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        1. Señor Lanier: There are countless famous people, many in showbiz, I could have chosen to represent the leftist viewpoint. I landed on Michael Moore and Ellen Degenerate (sic) because I find both of them particularly disagreeable, likely the smug Degenerate more even than Moore, and that’s saying something. I truly do not see much difference between citing the NYT as “proof” of something and citing Moore or Degenerate.

          And that’s how she got mixed up in this. I mixed her!

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  4. Quote from some famous unknown talking head: “Is the tax cut more important than the Russians meddling with our election?” said in a frantically dramatic voice.

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      1. Yes the Russian meddling is a fading liberal dream and your idea of Trump economics has just as much substance as that. The flourishing stock market is no indication of anything except how much they love deregulation. And deregulation gave us the Great Recession. Plus do you think your sources on the tax scheme have studied its 500-plus pages? Dream on with the liberals. Dream on.

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  5. As a liberal who understands a bit about money, I’m not freaking out about the tax bill. On the other hand, I don’t see the value of giving a trillion and a half dollars to corporations and billionaires who already have so much money they can’t think of anything better to do with it than stuff it in a bank in the Cayman Islands.

    David Hume made this observation in 1752 (Of Money); “If the coin be locked up in
    chests [or Cayman Island banks], it is the same thing…as if it were annihilated”

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    1. Creigh: Thanks for the input and for the fact that it’s polite, always appreciated. However, your thinking the tax bill is about giving trillions to corporations and billionaires is, I contend, a very limited point of view. It lowers the tax bite for most people, including corporations. That will give the Regular Joe more spending cash, and it will provide corporations with more money to expand, etc., whatever. Successful corporations are job-creators. That’s a good thing.

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      1. Businesses will definitely invest more in their businesses, capital spending and employees, which is good for many people beyond their corporate identity.

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      2. Do you really think that most of these megacorporations have been responsibly paying at their tax rate and therefore needed a tax break? Really?

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        1. Rox: I sent an email to the address you provided, but it came back as nonexistent. Tsk, tsk.

          No matter. What I wanted to know is do you reside in Northern California? You sound very much like someone I knew long ago. A birdie was chirping in my ear.

          Inquiring minds…

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  6. The Social Security Administration has also approved a 2% cost of living adjustment. That will result in the average retired worker getting an extra $27 per month. There was no change in 2016.

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      1. Well I have already pointed out that trickle down brought us the Recession and Depression. Insanity is keeping on with what never works.
        And did you notice that the last administration brought the economy back from the trickle down disaster of W? That wild Democrat before Trump saved the world from the conservative who preceded him. But what do facts matter?

        Liked by 1 person

        1. Rox, PS: You did not “point out” that trickle-down caused the Depression and Recession. You claimed it did. That’s different. By the way, though it’s sadly common to refer to leftists as “liberal,” it is incorrect. They are not progressive either. To quote the great Dennis Prager:

          The usurpation of the word “liberal” by the left has been a catastrophe.

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    1. Now that you mention it, Mr. Stigaard, the deficit is through the roof (how did THAT happen?) and we can no longer afford these “entitlements.”

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      1. Creigh: I can answer that one. The deficit is through the roof, and who did that? Both Republicans and Democrats. Since the nation is swimming in a sea of red ink, you are quite correct that the entitlements are not viable and have not been for a long time. And yet they continue to be paid, and the sea of red ink grows and grows.

        By the way, I really prefer that comments be directed at me and not to other commenters. Just a little quirk of mine. Thanks for the cooperation.

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  7. I’m of mixed feelings about the tax bill. (I can’t call it “reform” as it actually makes the tax code more byzantine.) On the one hand, yes, the corporate tax rate was non-competitive and needed to be addressed. And the corporate tax doesn’t bring much money into the treasury, maybe 10-15% of receipts. On the other hand, having spent a career studying corporations as a securities analyst and professional investor, I’m going to be very surprised if most of this money doesn’t end up just going into more share buybacks. The fact of the matter is that if there were tons of investment opportunities in the USA, the old tax code would not have kept corporations from pursuing them. Also it’s possible that this tax reform could well reduce the number of jobs if corporations take their overseas funds and uses them to do acquisitions, something else that the trend and historical record supports as a likely use of funds.

    And of course, my biggest issue of all is the sheer deception of the whole “letting you keep more of your own money” meme. If instead of taxing me, the gov’t simply borrows in my name and puts me on the hook for the spending plus interest, how exactly am I “keeping” more of my “own” money? Seems like it’ll end up costing more, not less. Only magical thinking that believes that somehow treasury debt never needs to “really” be paid would countenance such an idea.

    Add to that Trump’s ambitious plans to spend much more money on the military, rebuild infrastructure, and do other projects, and you have to wonder about cutting revenue at this juncture. Not to mention that we are at or very close to the top of the business cycle when the economy hardly needs more stimulus. And yes, we are already at a point in the cycle where we shouldn’t have any deficits at all, yet they remain large.

    Really, I’d feel much better about this tax cut if they would make a concomitant cut in spending. Instead, I think they are just enlarging the debt bomb that is going to go off sooner or later, spreading considerable misery in the process.

    So yeah, a political win for the Rs, a successful attack on blue states, but not much more. And certainly an aggravation of an existing debt problem that the R’s have fulminated about every time they are out of power.

    Saludos,

    Kim G
    Redding, CA
    Where the bondholders’ claim on “my” money amounts to something around a cool $170,000.00 as of now.

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    1. Kim: Certainly, a big cut in spending needs to be done. That, I think, would prove a far greater challenge, a virtual impossibility. So yes, a tax cut could worsen the overall picture.

      I favor a flat tax and immense reduction in spending. Ain’t gonna happen though.

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      1. “Flat tax” as in single-bracket? What’s the point of that? The complexity in the tax code comes from all the tax-specific accounting rules, e.g., tax breaks, preferences, loopholes, etc., not the bracket structure. If you want simplicity, it would be far better to start with GAAP accounting, and then go from there. That would also take a lot of the swampiness out of the tax code as the FASB would set the accounting rules, and they wouldn’t be changing them all the time.

        I think a progressive tax code (higher brackets for higher incomes) makes sense, but all the ridiculous tax-specific accounting rules could be thrown out IMHO.

        By the way, if you believe that spending cuts are impossible, and support some kind of fiscal responsibility, does it make sense to support tax cuts? I personally would like to shrink the Pentagon’s budget to $300 billion or so, close most overseas bases, and also raise the Social Security and Medicare eligibility ages to the mid-70s. This would close a lot, if not all, of the budget deficit. And then maybe we could start to whittle down the 20 trillion in debt.

        I’d also favor a constitutional amendment to require a super-majority of Congress to pass a spending bill that exceeds revenues. That would still allow for deficit spending during recessions, but would considerably raise the bar for doing so year in and year out.

        Saludos

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        1. Kim: I am firmly convinced that meaningful spending cuts are impossible, so tax reduction makes no sense, does it? No matter. I like the sound of it, logic aside. I am Mexican. Hear me roar irrationally.

          Raise Social Security eligibility to the mid-70s? Good Lord, man, I’d still be toiling away at the Houston Chronicle. Let’s not go overboard.

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              1. Felipe, after reading the “how stuff works” article, I’m left with a question. These dollars that the Treasury is supposed to be borrowing, where did they originate? The article says individuals, banks, foreign governments, etc. buy Treasury securities with dollars but none of these entities can create dollars, they have to get them from somewhere else. Where did they come from?

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                1. Surely so. But here’s the thing: if you or I could print money, as the Federal Government certainly can and does, we wouldn’t bother to go out and “borrow” more. Something here doesn’t make sense the way the article describes it.

                  What the Government does is “sell bonds.” Is this really “borrowing” and why do they do it, instead of just printing more money? Both the money and the bonds are financial assets of the private sector, and financial liabilities of the Government. What would be different if they just printed more money, instead of selling bonds?

                  An even deeper question: The Government says to people “If you come work for me, or sell me that product you’ve made, I’ll give you some of these financial assets I’ve just printed up.” What kind of fool would even agree to that? What is this money stuff anyway?

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                2. Creigh: I am hardly well-versed in those matters, but selling bonds is borrowing. The bond seller asks for the loan, and the bond is a promise to pay it back, ¿no? It’s an IOU.

                  As for printing more money, isn’t that highly inflationary? I think that’s why it’s a bad idea.

                  As for what kind of fools are walking around, and what this money stuff is, God knows.

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                3. Right, a bond is an IOU, let’s call it a promissory note, but so is a dollar. Used to be, the Government promised you could either exchange your dollar for gold, or pay taxes with it. Now they only promise you can pay taxes with it (but that promise is still what gives it value). The point being that a bond sale is just a swap of one kind of Government promissory note for another kind of Government promissory note. It’s only “borrowing” if you only look at the currency side. It’s just as valid to say that the Government is “lending” the bondholder a bond. It’s a wash as far as total liabilities for the Gov and total assets for the private sector.

                  I was thinking about my last question, what would happen if the Government didn’t sell bonds. We pretty much did that after 2009 during QE. The Federal Reserve bought about $4 trillion worth of Treasury bonds, which is functionally equivalent to the Treasury not selling them. (The private sector now held $4T less bonds and $4T more currency than they otherwise would have.) What happened was not inflation – that barely budged – but the Fed Funds interest rate dropped to zero. All that extra currency didn’t push up prices, but it did depress interest rates.

                  We’re straying pretty far from our original topic, and I appreciate your indulgence. But I’ve become convinced of three things over the past few years: most people misunderstand money, if you don’t understand money you don’t understand economics, and if you don’t understand economics you will be taken advantage of by people who do, or who can convince you that they do.

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                4. Where do your dollars come from? Your work and earnings are where they come from. And if you buy treasury bonds (or any other investment) they come from deferred consumption, e.g., savings.

                  That said, the Fed has created 4 trillion of new USD over the past 10 years. That’s what’s making this $20 trillion in debt supportable for the time being. However, that’s a free lunch that isn’t going to last forever.

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            1. The debt is the result of accumulated deficits. If the gov’t spends more than it takes in, it borrows the balance. That’s the deficit. Add up all the borrowing and that’s the debt. It must be serviced from day one, and when the bonds mature, they must be paid off. Typically the Treasury issues more debt to pay maturing debt, so it never really gets paid off. It’s simply rolled over. Some day the rollover will either be at terrible terms or won’t be possible, unless the gov’t gets its financial act together.

              Just because we’ve gotten away with this gig for a generation doesn’t mean we can get away with it forever, especially since we are reliant on foreign capital. In contrast, the Japanese are tapping domestic savers and they have an entirely different situation.

              Look to the Greeks for what happens when you’ve borrowed too much and you can no longer get money on agreeable terms. It’s not nice, and yes, this could happen to America, though it’d take a different form since we are issuing debt in a currency we control.

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          1. I agree with you about the political impossibility of meaningful spending cuts. At least as of now. However, some day, either taxes will need to be raised or spending cut. It’s pure math. And if the Fed simply prints away the difference, then we’ll become Venezuela on a scale that the world has never seen. I wish it were otherwise, but it’s not.

            See my reply to Creigh. If anyone can demonstrate that debt doesn’t matter, I’ll join him/her in a crusade to have all taxes repealed. After all, if debt doesn’t matter, then why are we paying taxes at all?

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            1. The budget balance is not irrelevant, because it is a tool to achieve full employment and stable prices. So we can’t say that deficits don’t matter. What we can say is that if you can achieve full employment and stable prices with a balanced budget, that’s fine. If you can achieve full employment and stable prices with a budget surplus or deficit, that’s fine too. Full employment and stable prices should be the goal, not some budget condition.

              If the amount of spending power in the economy, public and private combined, is too much, the extra spending power applied against a fixed (in the short term) amount of goods and services offered for sale will bid up prices, resulting in inflation. In that case, public spending should be cut or taxes raised to remove spending power from the private sector. Which is to be done is a political decision.

              If the amount of public and private spending power in the economy is too little, some of the goods and services offered for sale will go unsold. Unemployment will rise. In that case, public spending can be increased or taxes reduced to stimulate an increase in private spending.

              There are historical and logical reasons to believe that a deficit of 3-5% of GDP on an ongoing basis is necessary to thread the path between inflation and unemployment. In addition to past history of healthy growth with ongoing moderate deficits, it stands to reason that an economy growing due to population and productivity growth will need a commensurately growing money supply to continue operating efficiently. A deficit, and only a deficit, grows the private sector’s money supply; every dollar printed and spent by the Federal Government, and not taken away by taxation, is an addition to the private sector’s supply of dollars. This is simply a point of accounting logic. (A budget surplus takes more dollars out of the private sector than Federal spending adds. The result of a budget surplus is generally a slowdown of GDP, although increases in private debt can hold that off for a while.)

              So don’t repeal all taxes! The requirement that taxes be paid in US dollars is what gives the dollar its value. Anyone who is engaged in economic activity will almost certainly need to acquire dollars to pay taxes, or face some draconian penalties. For that reason, dollars are widely accepted as payment for goods and services in the private sector.

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    2. OK, let’s get serious. Republicans have shown over and over that they don’t care about the deficit. They only bring up the subject when it advances their anti-government agenda. And they are right not to worry about the deficit. The Holy Grail of economic policy, and the path to prosperity for current and future generations, is full employment and stable prices, not a specific balance in the Federal budget.

      A budget deficit or surplus happens when the Federal Government prints and spends one amount of money, and taxes a different amount. There’s really no more to it than that. It should be viewed only as a mechanism for making sure that total combined private and public spending is neither too much nor too little, thereby preventing either inflation on the one hand or unemployment on the other. A budget deficit will not burden future generations; it never has and it never will. It has no moral dimension and does not shift taxes onto future generations. The taxes that future generations will need to levy on themselves will be dictated only by the choices they make about public spending and their need to thread a path between inflation and unemployment.

      Our children and grandchildren will produce so many houses and cars and washing machines and cheeseburgers and a bunch of other stuff we haven’t even thought of yet. All of that stuff will be distributed among people who are alive at the time, and none of it will be sent into the past to pay for our deficits. What we must do for our descendants is give them the education and infrastructure—social as well as physical—that will enable them to create their own wealth and prosperity. Our failure to do that, and not our budget deficits, is what will make them poorer.

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        1. That’s exactly why things are worse than they appear. The Social Security surpluses are “invested” in non-tradeable Treasury debt. This means that either the gov’t fiscal position is materially worse than it appears, or Social Security isn’t nearly as well-funded as it would appear. In short, Americans have been tricked with an accounting ruse on Social Security, and it’s going to be ugly when they learn the truth.

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          1. Social Security benefits are payable in dollars. The US Government prints dollars. It can pay any debt or obligation that is payable in dollars, in any amount, today or forever, just by printing. All of this is unquestionable.

            But as it happens, money won’t take care of you when you get old, people will. People will grow the food you eat, build and maintain your housing, produce the energy that keeps you warm, and provide the medical care you will require. If the right people with the right education and infrastructure – again, social as well physical – are in place when we’re old, we’ll be fine. If not, money won’t help.

            What policymakers should be worrying about is people, not money. Worrying about money is just, to a large extent, a way to avoid the real policy problems.

            Of course as an individual you’ll have a much more comfortable retirement if you personally save a million or two. I highly recommend it. Just don’t think that saving a bunch of money is the answer for society in general.

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      1. A budget deficit will not burden future generations; it never has and it never will. Tell that one to the Greeks.

        As for the need for education and infrastructure, no disagreement here. But the debt will need at least to be serviced, as whoever owns those treasuries now will pass them on to their heirs. So yes, future generations will be stuck with the financial albatross we’ve created in this one.

        I say this with respect, but I really wish you’d consider what you’ve asserted a bit more carefully. Debt is an agreement between borrower and lender, and the terms need to be met.

        Do you really believe there’s no limit to how much the gov’t can borrow? If so, then why are we paying taxes at all? And if not, then where’s the limit? I’d argue we are perilously close. Any material rise in interest rates (which will happen some day) will severely constrain US fiscal flexibility.

        Yes, debt comes with a price. If you can prove otherwise, I will join you in a movement to have all taxes repealed.

        Merry Christmas!

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      2. Creigh:

        By the way, as a comment to your last paragraph. No, goods and services won’t be sent to the past. But they will be sent to bondholders, both domestic and foreign. Wouldn’t you rather that we paid our own way now and let our kids enjoy the fruits of their own labors? That is really what’s at issue here, not some kind of ridiculous attempt at time travel.

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  8. Well, sir, you got the old pot stirred here, Felipe. Good on you. Maybe some new thoughts will enter those leftie brains. Never mind. Just wishful thinking.

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  9. Interesting discussion. I don’t know much about money except I think I have enough of it to live out the remainder of my life in comfort providing I stick to $10 red wine and don’t start a vintage car collection. But what’s to stop the government from declaring a currency reset ? Turn in your old $10 bill and we’ll give you $1 of the new currency ? They had everyone turn in their gold at one point. Governments can do anything the like…..except cut spending. That’s a tough one.

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    1. Felipe: don’t be so smug about “leftist” cluelessness. The fact of the matter is that whether left or right, people mostly don’t have a clue about federal fiscal policy or its implications. Sad, but true. What you are seeing above is more an example of tribalism than any genuine “thought” about what’s a good fiscal or tax policy. We all know that both sides hate each other, and this blindness keeps them from actually evaluating the substance of whatever policy is up for discussion. This is actually one of the bigger problems in the USA, and pretending otherwise doesn’t help.

      You know this as well as I do. So stop with the cheap shots, por favor!

      Saludos

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  10. @Creigh
    Addressing your question/comment above about money vs bonds, it’s more complicated than you think. Historically, when the USA was on a gold standard, paper money was a promise to pay a certain weight of gold. Hence it was a liability, which in theory was backed up by an appropriate quantity of gold which could be paid on demand. When Franklin Roosevelt took the USA off the gold standard, he partially cut the link between Federal REserve Notes and gold, at least for individuals. Note also that he changed the exchange rate from 20 USD to 1 oz of gold to 35 USD to 1 oz of gold (troy oz). That was a big devaluation. However, international trade was still settled in gold.

    In 1972, Nixon “closed the gold window” and stopped exchanging USD for ounces of gold. At that time, the USD became a pure fiat currency, which is to say completely unbacked by anything of value. However, the Fed’s balance sheet shows treasury bonds/notes as its assets and currency as its liability. But that doesn’t mean that the USD is convertible into anything else. Yes, you can buy all the treasury bonds/notes you want, so in that sense, the Federal Reserve Notes are still “convertible,” but you’ve just exchanged one form of liability for another. Neither Federal Reserve Notes nor treasury bonds/notes have any intrinsic value.

    So yeah, the abandonment of the gold standard was one of the biggest heists in history. And it has left the federal gov’t (and every other gov’t on the planet) unconstrained in its borrowing.

    And some day, this will matter greatly. Just because something has gone on for a generation doesn’t mean it’s sustainable. And thus is the situation with money and debt.

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