Sequestration: Yea or Nay?

[choff]

What I'm saying is, cut out the middle man, no more government borrowing, altogether, period!

Understand that with compound interest the government is constantly borrowing more money over each and every year just to cover the previous years borrowing charges. All that borrowing means the banks create more money every year expanding the money supply and deflating the currency. If the government can print the money, why in hell should they loan it out so they can borrow it back again. Just print it and spend it as needed, you create less money and hence less currency deflation because there is no compound interest charge to repay.

Do you want to see all fusion research cancelled in the name of austerity. What little they achieve in cutting spending will only cause a drop in consumption, weaken revenue even more and accomplish nothing. That's the Henry Hazmat/Hazlit economic theory that caused the central banks to promote his career. Right now they're pushing the John Maniac/Maynard Keynes economic theorey that if you incur even more debt via borrowing you can spend your way out of recession. That makes the banks even more rich while the new government debt burdens the economy further, also accomplishing nothing.

But don't despair, the banks also pushed the career of Lunatic/Ludwig Von Mises that we should all go on a gold standard. Except its these same banks that have all the gold, and they'll get the government or the mob to take yours away from you for their own. Then when the gold standard is declared they have all the money and make all the rules which are just like the old rules. Except now when the government wants to borrow it has to borrow gold and pay back the loan with the same amount of gold plus even more gold in compound interest. Only the supply of gold can't compound like fiat money so you end up with endless economic deflation and no economic growth.

Do the private banks get stuck without being able to screw the taxpayer with borrowing charges, yes, and they deserve it. Screw the Fed, they are not the solution, they are the problem. Entire economies are being cannibalized just to prop up these bankrupt private central banks, they are totally not needed. President Andrew Jackson considered it his crowning achievement that he killed off the private central bank. Roll the Fed into Treasury and the debt problem is solved overnight. Did you know that according to one poll over 80% of Americans want the Fed scrapped, but that Dept. of Homeland Security is being told that anybody who opposes the Fed is a terrorist!

[palladin9479]

Around here the federal guys are being advised to take any leave they have saved up instead of going on furlough. It's been announced 21 days furlough for each GS. Contractors being private employees aren't directly effected, the government must honor it's contractual obligations (mandatory spending) though new services or products (discretionary spending) may be dramatically scaled back.

[KitemanSA]

No future contract spending is mandatory. Contracts can be canceled at any time.

[Maui]

Here's a question I have about the sequester:

It was supposed to be a way to force congress to enact long term cuts. But in reality won't the next budget just override it on Oct 1? Even if it is supposed to be applied on top of all future budgets, won't it be the case that congress will end up adding in extra spending to counteract it? Or does the sequester cap for all future years what spending can be?

[Maui]

What I'm saying is, cut out the middle man, no more government borrowing, altogether, period!

I'm not outright opposed to something like this. And at least it's better than the nonsensical argument that we should just "stop compounding" in general.

I do feel it would be best if the goverment could borrow to ward off recession/depression... but the problem is, how do you force that debt to be paid off again in full when the economy turns around?

[choff]

If the government can print bonds and sell them to raise capital it can also print money. Lincoln needed money to pay for the civil war, the banks offered him loans at between 24% and 36% interest, he printed greenbacks interest free and crushed the south instead. The confederacy did exactly the same thing, only being smaller, they lost. Why go through the unnecessary step of printing and selling bonds at interest when you don't have to.

Put it another way, you can loan me all your American money at 1% interest, and I'll loan an equal amount of Canadian monopoly money back to you at 4%, makes perfect sense of course. That way you can use your new Canadian money at the local store for groceries, won't that be fun.

[Maui]

Yeah, if you want to see compounding, just watch the gov try to print $16T. Inflation would compound like mad.

[Skipjack]

So it seems like Commercial crew will be severely harmed by this. I am sure Wolf, Hutchinson and Shelby are jumpng in joy over this. Congrats, I have names to call these people and it is hard to resist spitting them out!

[Teahive]

Yeah, if you want to see compounding, just watch the gov try to print $16T. Inflation would compound like mad.

No need to that far. The government would "only" have to cover the budget deficit, including debt service. Print money instead of new Treasuries.

[choff]

Where it would get fun, if the government only has to cover the debt with printed money, is when all the other countries try to continue with money creation by selling bonds with interest attached, they deflate their currency by a far greater porportion with compounding interest. So your countries currency will naturally rise in value because there's less of it to go around compared to every other country, you can maintain the equalibrium with other currencies by then printing even more. You can apply that extra currency to retiring old debt, stimulus spending, or tax reduction, it becomes a positive feedback cycle.

[hanelyp]

The printing would have to be more than deficit, including debt service. One it becomes apparent the government is paying with funny money, the interest rate demanded on government bonds will grow, making the currently manageable debt service balloon out of control, unless the $16T debt is converted to new fiat currency as the bonds come due.

Instant ~26% inflation rate (what's the term on most outstanding government bonds these days? I'm guessing 5 year.) That's before accounting for economic contraction under the weight of ongoing government enabled theft.

[choff]

Interest rates on bonds would rise only if the government were printing more bonds, instead, the government would stop printing bonds altogether. Revenue shortfalls would be covered with printed money, as would existing bond payments as they come due. As government bonds in circulation decline to zero over time as the deficit would shrink to zero with them. You would create progressively less currency than the current model where debt and bond issuance is compounding on itself, as is currency creation.

Just for fun.



http://dominicfrisby.com/films/debt-bomb-2

[choff]

As to the concern of inflation at 26%, we have a tool for controlling that problem called the fractional reserve rate for banks, currently sitting at all time lows, we can raise that up to 100% if need be, and make them bullet proof against runs.

[Stubby]

US military spending = 711 billion.
Next 14 countries combined = 681 billion
Number 2 = 119 billion

[ladajo]

Penus Envy from north of the border?

Bluntly, that is the difference between the real superpower, and the rest. No matter how cuddly the left wants us to appear, for now , the US can crush any other, and most conceivable combinations there-of, at will.

The truer metrics are percent of total government budget on Military Spending, as well as percent of GDP, not the useless drivel you posted.

And for fun, where do you think the world would be today if the US had not lead the world militarily since the 1940s? I am willing to bet not in a better place at all.
The problem with folks that target military spending, is mostly that they do not target military spending for the other guys. You can be as unmilitary and pacifist as you like, but eventually some guy is going to come to your home with a big stick and take what he wants, which is probably something you don't want to give him. You know, the basic reason there are wars.