Who Bears the Burden of Government Debt? | Robert P. Murphy

Recorded at the Mises Institute in Auburn, Alabama, on July 18, 2018.
Mises University is the world's leading instructional program in the Austrian School of economics, and is the essential training ground for economists who are looking beyond the mainstream.

[@fabriziofer1994]

"The most popular of these doctrines is crystallized in the phrase: A public debt is no burden because we owe it to ourselves. If this were true, then the wholesale obliteration of the public debt would be an innocuous operation, a mere act of bookkeeping and accountancy. The fact is that the public debt embodies claims of people who have in the past entrusted funds to the government against all those who are daily producing new wealth. It burdens the producing strata for the benefit of another part of the people. " von Mises, Ludwig. Human Action: Scholar's Edition (LvMI) . Ludwig von Mises Institute. Edizione del Kindle.

[@fusion9619]

Okay, I give in, I'll read that book. Very good quote!

[@dyingalive]

fantastic. Now how to get even 10% of the population to understand this!

[@dyingalive]

Smashinbedrock don't be comprehensible. I'm sharing this information and trying to imagine a world where this video has 1 million views in an hour. It isn't rocket science but there can be more done in publicizing this message and finding ways for people to at least listen. I think you take any given 1000 people and they actually sit and follow this lecture wouldn't 10% get it?

[@mklawson83]

dyingalive, you don't. You adapt. I don't know what else to say. I think about this too. 59 views, and how much of that was for "extra credit."

[@mklawson83]

If it makes you cry read more Spooner and Horton.

[@dannyduchamp]

I didn't really follow until I got some pieces of paper and some coins and played it out on my bedroom floor. It's not an intuitive concept. I think there might be a clearer way to explain it, though, and I'm sure we'll figure that out at some point. Remember, lots of things which were once ground-breaking advancements in academic thought are now taught at the high-school level because the concept was gradually distilled to its basics (and the communication of the concept improved) via constant discussion.

[@dyingalive]

Danny, you may be correct, I have been listening to them for a while. Ill have podcasts going as i exercise, or videos playing as I design things, but with this one I gave it fullscreen attention and it made sense on the first listen through. How much of that previous 'repetition' got my mental muscles able to accept the instruction I do not know. I should remind myself to not assume it just takes being literate in the language rather than setting up of a... whats a good term? Robert Sapowlsky had these lectures speaking about buckets of knowledge. Maybe im already used to this bucket so water added is something i can carry but other people may only have a bottle-cap worth of space for the content of this talk.

[@SquareNoggin]

I love Bob Murphy man. For real he's one of my favorite people. I'm not usually one to want to meet my intellectual heroes, mostly because they intimidate me and as a blue collar layman I doubt if I could really engage with them in any meaningful way. But with Bob it's different. He's absolutely brilliant, he explains things in a way that speaks to me, he's given me more of those "aha!" moments than any other modern thinkers, and he's just the right amount of dork to make him really endearing.

[@donha475]

Ludwig Hazlitt he converted me to ancap in late 2016 with his lecture on private law and order... that was the nail in the coffin

[@rachimbaskin6559]

I feel the same about Murphy - no airs, fair to his opponents, and clarity.

[@ProlificThreadworm]

@V J how can you say something with market value is worthless?

[@obviouslykaleb7998]

ProlificThreadworm The issue with bitcoin is that it is too volatile to be treated as currency. I’m not going to sign up to a job based on bitcoin, who knows what each paycheck’s wage would be in real dollars?

[@rameshacharya6941]

Excellent elaboration even a layman can understand the monopoly of govt over money and manipulation !

[@TheSpicyLeg]

The key when looking into government debt is that someone paid to the government when the debt was first issued. Even if the first debt was issued in 1800 and bought by your ancestor, and rolled over continually since then, your family is “worth” that much less. Always remember that first payment. People instinctively understand that you cant have as much as your started with if you have to pay interest, regardless of the term. Statist economists have been very good at obscuring the process and convincing people to ignore their instincts.

[@zigoter2185]

"We owe it to ourselves."

[@DimitrisAndreou]

I love how elegant the last example is. This is some powerful abstraction going on, retaining only the necessary to tease out the point out of all the distracting complications. Reminds me of similarly powerful abstractions by Mises ("evenly rotating economy" etc), the method of "catallactics" as he used to call it, if I understand it correctly.

[@jsnadrian]

That example at the end is fantastic. Trying to think of a way to illustrate it to make the point even clearer - has anyone done that

[@eJuniorA2]

So debt is a pyramid scheme, who would have tought? *irony*

[@rachimbaskin6559]

He's so clear.

[@thomasd2444]

The "Debt" amount in currency units which is recorded with red ink on the ledger of the Government which issues, by spending & loaning, that currency into circulation & which then collects some currency, by tax, is NOTHING TO FEAR That "debt" calculated amount only checks the human adding & subtracting and reflects this simple equation : (Currency Units issued into circulation ) minus (Currency Units Collected as Tax) equals (Currency Units In Circulation)

[@sonofode902]

My notes, - 15:20 evaluation 1. Man on tje street : I'm not saying we shouldn't do it (loan), I'm only saying we should pay for it (debt), not somebody else, not our children. 2.Ricardian equivalence : the government gives you a big tax cut and then people save and relend that money to the government because it now has a deficit and in the long run it's a wash. Transfer to the next, just like the movie "the Ring". 3. Abba Lerner : "We owe it (borrow) from our self", "American owed it from Americans", its all internal. 4. James Buchanan : debt monger. Expedient. Assuming that the way they got their treasury bond was someone give it to them, but in reality they pay for them. A conceptual shift. Mises's Human Action. At the end, just like in "the ring" movie, the last person watched the video, the last person to pay the debt is the one who got screwed. At the end the one who is going to pay for the debt is not the person who made the debt. The third analysis, the Krugman, creates a dellusion because its a nation, nation owed to him self, but disregard, dismiss the fact of chronologically aspect. Again and and again, its the ISM. Violation of the second principle of GLOC. Gin,

[@6dawie9]

This is such a big needed ELI5 about the long term implication of government debt

[@homewall744]

You just have to call their bluff. If borrowing "from ourselves" is not a problem, then government should just borrow $330 trillion, give $1 million to each of the 330 million citizens so everyone is a millionaire and be done. No worry about the interest payments on $330 trillion or how it would ever be repaid (to avoid having to pay interest on $330 trillion year after year forever).

[@utkarshanand9706]

45:49 Amazing!

[@andrii5054]

This is when it clicked for me!

[@erict7867]

We the People did not decide to spend this ridiculous amount

[@thermionic1234567]

The problem is is that fewer apples will actually be produced as the apple producers will lie about the number produced and/or will be demotivated and not trim and fertilize the trees. Also, they may not be able to fix equipment that allows them to harvest the highest apples.

[@Rob-fx2dw]

In short :- Who bears the Burden of governmnet debt? - The answer is always those in the private sector alone. The private sector- This because debt is a financial instrument that allows government to buy resources from the privates sector producers and pay them with the debt instrument . The debt is created with out creation of goods and services at the time it is created. It is created by selling bonds which have interest payable on them and eventually mature and have to be paid out. Taxes must pay that debt and the interest. Taxes are Not paid by governemnt and the only way they are paid off is through taxes. They mature on a rolling basis through every year depending on the earlier issued bond's maturity date. It's obvious government cannot pay it's own taxes because it is an entity that is an abstract concept. Abstract concept can do no work. Only people can.

[@JPPAD52j]

Not always because the government leaders and workers will have to face the consequences of a fail economy by the people. War is most common way this event that will cause this change in a society. If you give up your freedom of independence for government programs or guaranty , then you will have to suffer to get it back. Private sector will needs support of a capitalist thinking people..

[@Rob-fx2dw]

@@JPPAD52j Agree. There needs to be mind shift in those cases to learn and apply the freedoms of capitalism rather than the top down monopolistic approach of totalitarian style government.

[@bobsmith2886]

Taxes do not pay for the government at the federal level. If you pay your taxes in cash at the IRS headquarters, they literally put it in the shredder. If you pay online, it is just numbers deleted off a computer screen. No money is transferred into some bank account that Congress/Treasury/Fed owns, no such bank accounts or mechanisms exists.

[@Rob-fx2dw]

@@bobsmith2886 Firstly virtually nobody pays cash for taxes. Almost all get their taxes paid in digital form such as through banks or accountants. Cash is only about 2% of the money in the economy. Cash collected by banks or government is not shredded except if it failes to pass the test of whether it will survive when it is recirculated. Neither is the digital money. What I am telling you is supported by the facts that are available on the Fedral reserve and government websites as well as reliable other websites. It is not something some economist has fabricated for their own purposes and that is factually wrong but pushes their personal agenda. Try looking at this site as a guide to what happens with cash :- www.theatlantic.com/business/archive/2011/04/the-destruction-of-money-who-does-it-why-when-and-how/236990/#:~:text=When%20Money%20Disappears,out%20of%20the%20financial%20system. OR google it "The Destruction of Money: Who Does It, Why, When, and How? You will be better informed if you get your information from reliable sources who supply facts instead of propaganda. Secondly I totally agree that no banks that operate in te private sector are owned by the government. It is again fallacy. What happens with the creation of new money by the Federal Reserve is it created digital money and the Treasury gets hold of that money by transferring treasury bonds to them which is usually done by intermediaries. The Treasury gets that money in return to spend as directed by congress in their budget appropriations. Eventually like all Treasury bonds sold elsewhere the bonds mature and have to be paid out by the entity that sold them with the money amount shown on them. Those payouts must be funded by taxation or sales of more bonds to raise the money which starts the debt it over again.

[@Rob-fx2dw]

@@bobsmith2886 You have been badly mislead by MMT. Look at these facts about what happens to cash money and that is from teh Federal reserve whose charter is to manage it. www.newyorkfed.org/aboutthefed/fedpoint/fed11.html

[@wyattjd1157]

In the end, I thought of social security where we all get shafted, and yes old people are getting it right now but I as a young person am not going to get it unless they tax my kids even more than they taxed me. Also not to mention in years of high inflation the 500 dollars you make in profit from the bond may end up only matching or has the potential to be less than inflation in a really bad year making you loose money.

[@edwardrichardson8254]

INFLATION?? Hello?? Rate is 2.5%/yr now. They could live in Krugman’s universe (gross) $1 is just .75 cents in 10’years. I’m willing to bet wages didn’t shoot up 25% during that period either. Yield on a 5-yr Treasury bond is 0.437%!!! Inflation is the ghost in the picture.

[@bradfordlangston836]

Some people have a hard time with thought experiments.

[@kendreamer6376]

To me looking how Bob explained it looking at scenario 2. It seems to still balance out. What I notice is only that ultimately one group will get back more from the government than the other group in their old age.

[@dissonantsecond6596]

The individual people live for two periods in the example. Anyone marked in red receives at most 200 apples in their lifetime, and anyone marked in blue gets more. The point is that some people (like Frank) get to consume significantly less because eventually the government has to tax Frank to pay back its debts. In scenario 1, Frank got 200 apples. In scenario 2, Frank got 162.

[@kendreamer6376]

@@dissonantsecond6596 okay I see your point.

[@UniteAndAttack]

So what are your portfolios looking like?

[@davidrapalyea7727]

I was actually screaming at the screan "GET ON WITH IT"

[@obviouslykaleb7998]

Screan.

[@patakainstitute346]

So bonds are the non taxed savings in the non govt sector?

[@poetmaggie1]

Government never has any money left over.

[@JamesAndrewMacGlashanTaylor]

The link is wrong. When sharing this video it links to Bob's talk on "Economics of a Stateless Society". Not that that isn't worth sharing too! In fact I think I am going to do that right now. But, I would like to share this one as well.

[@JamesAndrewMacGlashanTaylor]

Oh what do you know. When sharing the "Economics of a Stateless Society" talk, it links to this video. The links are just switched.

[@zastorlexa9800]

Does anybody know in what book Nick Rowe discussed this government debt problem?

[@thomasd2444]

02:00 - So the upshot is government debt is probably, actually, more burdensome even to future generations then you might have originally supposed

[@Rob-fx2dw]

The Abba Lerner view of 'Owe it to ourselves' is wrong in one very easily explained away because much of the debt from T bond sales is owed to overseas entities who bought the bonds so the beneficiaries will be overseas entities and Not the people who live in the same country as the government who sold the bonds. The US has a big problem with this because 30% of it's debt is owed to overseas entities. This puts pressure on the exchange rate when the bonds mature. The additional factor with that situation is the interest factor increases every time the bonds are rolled over because newly rolled over bonds are not enough to satisfy the cost of interest.

[@timsteinkamp2245]

What I don't understand is the debt year 1 is 105 billion but the 5 billion in interest is paid out of current money the next year. The government did not borrow enough to pay the interest otherwise the second year carry over should have been 105 billion. That is why people say the debt can never be paid because not enough was borrowed. In other words if all the debt was paid there would be no money in our pockets. There is also the thought of supplying not only Americans with dollars but now the whole world. Everyone understands you need 100 dollars in your till each morning to run your business. America has to borrow that money for circulation if it wants to be the reserve currency and has to pay the bankers a fee for managing it. If all money is created by debt then how much debt do we need to hold on the books to be the reserve currency? How does that factor in to this debt problem?

[@Glockmog2007]

One could argue though that if the only people who are hurt by the debt are people who buy treasury bonds in the future that they deserve to lose it for being stupid and making a poor investment. But in reality at this point nobody besides the fed is going to buy treasury bonds since inflation will be higher than the interest. And as far as I can tell it seems that the government paying interest to itself doesn't actually matter, it just cancels out. The interest on bonds owned privately or by other countries does add up but that seems to be a very small percentage of the overall debt, the rest is publicly owned and I believe that the interest for those can be ignored. The main issue with running a deficit is that the fed must print dollars to make up the difference which is an inflation tax on everyone with savings and will eventually lead to hyperinflation.

[@thomasd2444]

02:40 - 02:48 - 03:36 - 04:12 - 05:42 - 05:55 - 09:39 - 10:47 -

[@minjarhau4396]

What

[@timsteinkamp2245]

The reason for not having government debt is so I don't have to listen to these people argue if it is okay or not. It is not that it makes anyone poorer but just because it is wrong. Compare this to having 90 percent of the citizens working for the government. How would that work for America? The money stays in America.

[@sangeetasharma5435]

Tim Steinkamp This argument is for intellectual entertainment purpose only. In this scenario govt and private are equally effective and no money is spent in transaction.

[@dondajulah4168]

When automation takes over and becomes fully integrated into every aspect of production, you will either have 90% of citizens "working" for the government or 90% of the citizens starving to death (actually percentages will be much higher for each). In that scenario, I prefer a basic income program instead of having one set of government workers "breaking windows" and another set fixing them. What will really fix society is a new mentality where people with ambition and talent do not have a compulsion to display their superiority over those they feel are their inferiors which is really what the accumulation of massive wealth is all about in many instances. The number of billionaires who have committed to donate their estates upon their passing is a step in the right direction in this regard.

[@kendreamer6376]

I would argue when the bill comes due the grandkids will be born and would just vote to not pay the debt.

[@kdcruz75]

He also does nto address that the majority of credit is created in the private sector banki g system..ehere as fed franchises they record the public and registered companies using future account receivablrs like labour that backs the creating of loans as new deposits .. This is what happened in 2008.. Till 2008..the public via banking system created and expanded deposits...by creating mortgage backed securoties...payable to the banking system.. When the valur of assets became sour..due to defaults..ans credit default swap payments kicking in...the govt was asked to provide liquidity and cash flow. By buying up these public crested toxic zero valur assets ..for 100 cents to the dollar...in return for dollars to the banks that then exchanged it for treasury bills...the immense supply of treasury bills reduced the interest rate..on thisr bills.. The banks then used those dollars to pay off creditors and treasury bills.. .as collateral for invesying in foreign trades..thus exporting the inflation..from the US... That is why printing money dodnt crrate inflation.. Thus the publicnin thr form of the govt and its book keeper the central bank...turned public created privatr bank assets into public assets.. This has continued .. The resutlt is an extra 16 trillion of public assets in the public central bank books as assrts..held at hundred cents to tue dollar.. So the public is buying via centrl bank public crrsted assets created in fed franchised banking system...acting as lender of first resort.. That is why one see easy availability of credit for cats and consumablrs even in india..Emi plans unheard of even 5 years ago...in a jobless market such as india.. The speech doesnt address inflation as a hidden tax...as well.. It also does not address ...the public licence and choice to reduce debt at the US treasury bill...thus destroying debt and thus the ability to take debt out of the hands of banks that use these treadury bills in their central bank reserves as a licence to create loams for the public thus cresting credit inflation. The public can access the tresdury directly for credit if it reduces debt with the bank credit ..as well as other assets.. The result is zero inflation..the only drawback would be the public would not own any assrts just have the use of it... One can start a service..as a business and pledge to use profits to reduce debt at the treadury...the treadury will provide credit to run the business service... Google : surety rights

[@interactparty6629]

The debt service payments are completely at the decision of the government, and if it is not it should be! Time to take our economy back and introduce debt write downs because money that is born as debt should be managed as debt!

[@futmunch420]

*BARE'S!!! TARDS!

[@poetmaggie1]

Before he gets to it, To borrow money requires income to pay the loan. Government has no income, it can't count on the economy and on top of that it knows that if it takes too much of our income we are really going to get upset.

[@DF-ss5ep]

Ill be honest, I don't even understand the starting fallacy to begin with. If the government contracts debt, then uses the money to buy tons of gold, then shoots it into space, it is going to have to tax more to pay the initial debt. There's no need for any traps with paper bonds, just keep an eye on the physical system: gold was shot up into space, how could you not end up poorer? I thought the fallacy was going to be something like spending in hard assets like a train station versus spending in ephemeral things like healthcare for 90 year olds, but bafflingly the argument is that it doesnt matter

[@MrMurfle]

Huh? I'm missing something here. In the chart, after x (any number) of generations with government activity, the GDP is still 200 apples every period. How does that support the burden being borne by future generations?

[@stanleyvandermeer]

Without the rolling over of debt all generations would consume at least 200 apples over their lifetime. When you start having to levy taxes to repay the debt because rolling over the debt is no longer a possibility you start running into serious problems. Frank gets to consume only 162 over his lifetime and thus 'pays' 38 apples for an initial 3 apples worth of government loan.

[@poisonedbanana]

Total apples consumed - Al - 203 (+3 more than were produced in lifetime) Bob - 203 (+3) Christy - 206 (+6) Dave - 212 (+12) Eddy - 224 (+24) Frank - 162 (-38) George - 200 Hank - 195 (-5) Iris - 196 (-4) John - 199 (-1) This is assuming a period 0 and period 10 of no government involvement. In total, the +3, +3, +6, +12, +24 (+48) Is exactly offset by the -38, -5, -4, and -1 (-48) What is happening overall is 48 apples are borrowed from the future. The extra consumption of the early-period apple farmers represents the overspending for healthcare/military/education now, and the tight times for the late-period apple farmers represents a time when the debt must be paid off once the total debt exceeds the GDP.

[@patakainstitute346]

Government..

[@ricerealtor980]

46:16 I'm Young Frank...

[@lastmanstanding5423]

hello Young Frank... I'm Young Frank

[@thomasd2444]

00:40 - 01:00 -

[@margaretalexiu2047]

Stay at home mother/house wife will teach YOU all what is a real economics.

[@1800JimmyG]

I wish this guy would have taxed some of the time at the beginning setting up the argument to fund his explanation at the end.

[@bungeebones]

The teaching paradigm overlooks a very crucial issue that applies to this very different time in history; namely that the "money" used in the examples is illusionary and is created out of thin air. That perspective reveals major flaws in the presentation's theories. First, since ALL money IS created with a keyboard, then the only reason a government increases the national debt is because it refuses to create the money to pay deficits off each year. Doing so, obviously, would have nearly immediate effects on the present taxpayers, mainly, it would cause price inflation and politicians avoid being voted out of office by avoiding the inflation associated with their unfunded spending. Government borrowing delays the price inflation because the bond holder temporarily substitutes their "saved phony money" for "created phony money". When the debt comes due, the government can create any and all amounts to pay the debt off IF the lender wishes to "cash out" of the Ponzi scheme. That will give the lender the advantage of spending the phony money first and before the price inflation happens that the phony money will truly cause. Long term, since ever increasing national debts can't possibly be paid with taxes alone, we know they will be paid with a combination of money creation and/or taxes. This system has been in place for 100 years and has already rejected the tactic of paying the deficit off with phony money. We have already gotten numerous cycles of higher taxes and higher inflation and higher interest rates to cover up the phony money creation. Since each generation gets handed the propaganda kool-aid to drink, and each previous generation has agreed to propagate the lie (ie. that money can be created out of thin air) there will end up a generation that won't possibly be able to pay any additional taxes (to retire the debt) and ALL the interest on previous debt along with ALL new deficits will have to be paid by money creation alone. That may be where we are currently. Creating all the money to fund the government's excess spending is the inevitable outcome. Since no real value is paying the debt, the system will collapse except for perhaps one, last ditch effort the liars may attempt. They may attempt to convince the last generation (i.e. the one the debt has been handed to) that austerity is the answer. I call that the "dummy" generation because they would have to be convinced that it was 1) ok for previous generations to create money out of thin air 2) it was ok for previous generations to SPEND more than they could create out of thin air 3) It has now become "wrong" for some plausibly justifiable reason and 4) the money creation (out of thin air) will need to end in order to preserve this very valuable financial system. if they are successful at dumming down the next generation to believe all that then the previous generations will have been successful at covering up the biggest fraud ever perpetrated on humanity by selling their posterity into debt slavery. An alternative solution would be for the last generation to cause the creation of phony money to such a degree as to pay off every debt in existence (a "Jubilee"). Such a massive money creation would certainly destroy the last remnant of a belief that money can (or should) be created out of thin air. It would properly wipe out the savings and pensions of those that had placed trust in such a fraudulent system. It would compensate the creditors with the exact same type of money (i.e. phony money) as what they had lent and it would be difficult (if not impossible) for them to argue they were defrauded when they knew (or should have known) the money they lent had, itself been created out of thin air and the repayment could be too (and to infinite amounts as well). The future generations will obviously need to come up with a new "money" and will hopefully been convinced that it can't be created out of thin air and no group of people can be trusted with license to create money out of thin air. That is especially true if were to include the ability to create it to infinite amounts like the current system and if politicians are given license to pass debts onto non-voting future generations with deficit spending.

[@sangeetasharma5435]

Robert Lefebvre Nice comment. But I think you should replace the words high interests rates with low interest rates.

[@sangeetasharma5435]

Also if there is gold standard, there might be a constant. Eg. Old Frank takes 148 apples and leave the debt payment to future generations. He just have to not increase deficit.

[@timsteinkamp2245]

That's what I wanted to say.

[@bungeebones]

Sangeeta Sharma i don't believe there was ever a "gold standard". The U.S. was formed with a "dollar standard" (which is, by law then and now a one oz silver coin - NOT gold). The Constitution allowed for a bi-metallic system (a big mistake) giving the Secretary of the Treasury authority to actively pursue what should best be described as price fixing and market manipulation to affect the relative prices of the two metals. The 'standard' was, however, the dollar.

[@bungeebones]

MRGuvhah Man, they can pay the entire debt with a stroke of a keyboard!! If you hold that as a "burden" on anyone then you've earned the right to bear it based on stupidity. ALL the debt is denominated is Federal reserve Notes that are all created digitally! If you think I'm selling my kids and grandkids into debt slavery to pay a debt that can be paid with "monopoly money" screw you!

[@interactparty6629]

All money is created as debt out of money that formerly did not exist, it comes with a demand that you will work to pay it off, but what when the machines and the robots are doing all the work and there is no waged income. Will we wait for people to start dying because they are denied an income before this system is changed to one that serves us and not the banks who seem to think that they are owed the money where the money is thin air made. Let government with the help of AI algorithms work out what the debt service should be or even if it is time to tell banks to write down debt to an AI algorithmically reached and reasoned level. It is important not to kill the economy.

[@psychopathmedia]

The Government, obviously

[@fusion9619]

Except that it's even more nefarious, because the interest on debt is less than inflation, so the people "investing" in gov bonds are being robbed in the present. Worse still, such investors are retirees, as their advisors tell them to shift from stocks to bonds. It's only rational if they _must die_ before a certain date, and they have no ambition to leave anything to their children. Now what I want to know is, how are foreign governments persuaded to buy the world's worst investment, US bonds? And Krugman doesn't make mistakes - he lies.

[@davidandemmagipson9378]

He who has all the Gold pays the debts.

[@bungeebones]

The above are all based on the belief that the money is real and the debt is real but both are an illusion. Since 100% of the "money" is created out of thin air there is never a NEED for the government to either borrow or tax since, in theory they could create the "money" and just pass all "taxes" on in the form of inflation (just an option - I'm not saying that is the correct one). Since the decision of whether to create the "money" to run the government out of thin air is an option then the decision to instead borrow it is also an option. It is basically a decision to kick the inflation effect down the road to the future. Borrowing the "money" takes it out of private spending and places it under public spending but the net amount of "money" in circulation remains the same. Now, just because they have run the scheme so long and run up a debt of $23 trillion, the option to create the "money" to pay it is still available. Yes, it would cause inflation (no different than if they had created it yearly) but it is still an option. The alternative to creating the "money" is to tax the present generation enough to pay down the debt of previous generations but that is not fair. So the ponzi keeps going generation after generation. IF it ever ends but requires that the debt be paid then "austerity" is the only option and that amounts to forcing the present generation to pay for the spending of previous generations. The only reason for taking the austerity option would be to preserve the fake money system. The only reason for maintaining the Ponzi scheme is to maintain the fake money system. The only reason the debt isn't paid is because no one wants to create the money to pay it. So, the debt is an illusion and the money is an illusion and the kids are not bound the the results of contracts while they were minors and under the color of fraud. A tax revolt is inevitable and the only ramifications is the destruction of a fake monetary system.

[@patakainstitute346]

What if your on a floating fiat currency?

[@fusion9619]

Then you get to print money while borrowing at a rate that's lower than the rate of inflation caused by the printing. If your investment returns less than inflation, you've lost real value, despite the number in your bank account going up. So in reality, deficit spending robs both future generations AND present investors. Those present investors are retirees, because only retirees choose a fixed income that consumes their savings, as well as foreign governments (and I don't know why they buy bonds). I find it particularly despicable to rob old people, most of which don't even understand how they're being robbed.

[@kdcruz75]

@25:00 ... He doesnt address the US as a world reserve currency... As well as govt composite investemtn funds that buy these US bills..amd the stock market... For govt composite funds Utube : biggest game in town These funds ..pension fumds..school district investment funds..etc... own the majority of the stock market and invest in US treasury bills...as collatetla for their margin trading.. There is thus always a demand from outside and insode of US.. Even foreign markets are.controlled by goct composite funds.. Look at any CFR..comprehensive finance report of any school district fund..state fund..state pension fund...and see where they invest in... China, India stock market is driven by these funds

[@obviouslykaleb7998]

That’s the issue I was noticing here; he was talking strictly “American to American,” not “America to everywhere else.”

[@s.nawfal6211]

this is why we bitcoin.

[@newthirx4311]

18:43 literally Liz Truss policies in a nutshell. And somehow they blame it on the libertarians.

[@patakainstitute346]

If Govt issues the currency, why can't it just issue the $$ to pay the interest on the bonds? The bond holder is paid off for the interest, and the currency issuer is the only one who issues currency. Regardless of what is on the Govt books, it issues the currency and nobody else. It seems your lesson is operating under the assumption of a fixed or pegged currency, not a fiat currency. Your lesson would also be true if it was prior to 1971 before the US abandoned the gold standard.

[@rahfx5485]

Because the Treasury DOESN'T issue the currency. You first statement is incorrect. The private banking system does. Hence the source of many many problems

[@patakainstitute346]

@@rahfx5485 who said Treasury? I didn't, so wrong assumption to make. Treasury just sends a message to FED to mark up accounts. The FED is the electronic scorekeeper of the $US. Both Treasury and FED are Govt agents. The FED cannot do anything without its legislation enacted in Congress. If congress wants it can liquidate the FED, the Treasury and FED serve at the pleasure of Govt.

[@lowrydan111]

Exchange rates. Dollar would be (and will be) destroyed in the fx market

[@realrockvince]

The US Treasury owes the $21 trillion, not me. *They* are forcing *me* to pay for *their* debt. When the first state leaves this situation, the people of that state will learn that it's not their debt to owe. The people will not continue to pay for the debt after they free themselves from DC. NHindependence.org

[@dinamarcus3694]

This doesn't make any sense. Of course, if you have a totally fixed economy out of which you must pay for deficit spending with interest, every year you are going take more and more out of the "economy" and have less and less for the "population." That doesn't really prove anything about how a dynamic economy works.

[@rahfx5485]

Your point is the first good counter to his point I have read. His example is too simple and does not account for growth which could in theory fix the imbalance between future and present generations.

[@VincentWeisTheThird]

This doesn't really contest his view. The whole point of the speech is that those who argue that internal debt is not important as a constraint on spending is wrong, and that the burden of debt is not nonexistent or neutral. It doesn't mean there's no argument for how spending can improve or hamper growth, it's to point out that this view of the debt *smuggles in* the presumption that the debt is used to finance growth that leaves all parties better off. That is an extreme presumption, and more to the point need have nothing to do with the issue of debt. They could just as easily make the argument that any government taxation can be made good so long as the spending it finances produces more value than it saps. It is the same argument economically, with the same immediately present commensurability, distributional, and efficiency problems.

[@thomasd2444]

Your children and grandchildren will find your simple mistake very amusing.

[@lowersaxon]

Neither his critique of Samuelson on capital theory nor what’s offered here is sound, it’s simply wrong.

[@LAudioS]

sorry Pal if you think that the debt is real you pay it trillions of dollars of debt almost every country ( supposed Debt who is collecting and what do they do with that money , do they pay tax on that collected money with interests ? will government pay My credit car debt ? I did not sigh the contract . can you sign contract for someone , without his consent ? You spent Unreal repetition of lies did work on you ,

[@krisandre2002]

What is the point? That young generation pays for treasury bonds? It is still a distributional issue. Where is the insight here? If you don't like them then lobby for government not issuing them, let It deficit spend without issuing them.

[@krisandre2002]

Murphy's fallacy is really easy to see. Don't issue bonds and don't pay interest on them at all. Deficit spend by crediting bank accounts. Is Murphy going to say that young generation has to work to get money from older generation? What a brat?

[@Roberta-my7qr]

Stop running that racket about the equivalency of government and household debt! It comes from keystrokes.

[@lowersaxon]

You „Austrians“ are fatefully on the wrong track, so wrong that it’s really hard to understand. The idea of an eternal stock of money , neither capable to expand nor to shrink and the very idea of financing investment out of savings and savings alone are ..., no don’t want to qualify it. I’m mainstream, say Chicago school, but read Keynes‘ chapter 17 of the General Theory and try to debunk it seriously. Then we will discuss the rest of your „ deflation is quite natural and right“ approach. No, no, why are you no more than sectarians? Think about it. Seriously. Wishful theorizing is not science, that’s the reason why no competent economist will ever join your brand of „thought“.

[@AlexiusRedwood]

A good book on this subject: mises.org/library/failure-new-economics-0