Friday, September 05, 2014

Fix the Debt

Fix the Debt Petition!

Sign here.

Herb Stein said "If something cannot go on forever, it will stop."  The debt can go on forever.  Can the debt increase forever?  Yes, as long as the Euro is dripping with Greece.  But people's willingness to hold dollar-denominated U.S. sovereign debt has some limit.  Things could change quickly.

1 comment:

Chance_Nation said...

"Any USD government deficit exactly EQUALS the total net increase in the holdings USD financial assets of the rest of us- businesses and households, residents and non residents- what’s called the ‘non government’ sector.

So, for example, if the government deficit was $500 billion last year, it means the net increase in savings for everyone else combined was exactly $500 billion. To the penny."

- Warren Mosler

Deficits are NOT future taxes (at the federal level, that statement is true at the state and local level). US federal government spending and subsequent deficits are not "paid for" or constrained by tax revenues (present, future or otherwise).

Under fixed exchange rates, "Deficits are future taxes" would apply, but not under the floating exchange rates that have been in place since the early 70's.

There will always be a demand for US dollars unless the USG stops enforcing tax collection.