Yes, every dime the govt spends comes from taxes. Bonds are simply loans based on ***future taxes***. That's why in this country govt bonds are considered the safest possible investment. The only other way the govt can raise money is by selling (or leasing) publicly-owned assets (e.g. spectrum or off-shore oil).
Yes, every dime the govt spends comes from taxes. Bonds are simply loans based on ***future taxes***. That's why in this country govt bonds are considered the safest possible investment. The only other way the govt can raise money is by selling (or leasing) publicly-owned assets (e.g. spectrum or off-shore oil).
This "The only other way the govt can raise money is by selling (or leasing) publicly-owned assets (e.g. spectrum or off-shore oil)."
contradicts this: "Yes, every dime the govt spends comes from taxes."
"Bonds are simply loans based on ***future taxes***"
False, bonds are simply a promise to pay back the principal, plus periodic interest, over a fixed period of time. There's nothing stating that a Treasury has to be paid off with tax dollars. In fact, that rarely ever happens: Most Treasuries are paid off through the issuance of other Treasuries.
You could pay off Treasuries by simply printing more money in your own currency (I do not advise doing this, but the Treasury certainly could do it if Congress told it to do so and the Fed went along and this option is only available to the federal government, who controls the currency).
The failure to understand this concept is a fundamental reason why people loathe macroeconomists like Summers: You think the federal government works like a P&L. But it doesn't, because the federal government can impact the money supply.
I realize you're just trying to win an Internet argument, but...just saying "You're wrong! The answer is waaay more insane and unsustainable than THAT!" doesn't necessarily win you this particular argument.
You are contending "It's not tax dollars, it's a Ponzi Scheme!" and "It's not tax dollars, it's Magical Unicorn Money conjured up by we got the plates, ink and paper!"
The sale or lease is a drop in the bucket, so we can settle on nearly every dime.
Your comment on Treasuries reminds me of the woman defending Hindu cosmology - it's turtles all the way down.
Debasing the currency is indeed a bad plan for repayment of debt. And it is not available to non-federal bond issuers, of which there are many - and all of them are paid off in time out of taxes collected.
Yes, every dime the govt spends comes from taxes. Bonds are simply loans based on ***future taxes***. That's why in this country govt bonds are considered the safest possible investment. The only other way the govt can raise money is by selling (or leasing) publicly-owned assets (e.g. spectrum or off-shore oil).
This "The only other way the govt can raise money is by selling (or leasing) publicly-owned assets (e.g. spectrum or off-shore oil)."
contradicts this: "Yes, every dime the govt spends comes from taxes."
"Bonds are simply loans based on ***future taxes***"
False, bonds are simply a promise to pay back the principal, plus periodic interest, over a fixed period of time. There's nothing stating that a Treasury has to be paid off with tax dollars. In fact, that rarely ever happens: Most Treasuries are paid off through the issuance of other Treasuries.
You could pay off Treasuries by simply printing more money in your own currency (I do not advise doing this, but the Treasury certainly could do it if Congress told it to do so and the Fed went along and this option is only available to the federal government, who controls the currency).
The failure to understand this concept is a fundamental reason why people loathe macroeconomists like Summers: You think the federal government works like a P&L. But it doesn't, because the federal government can impact the money supply.
I realize you're just trying to win an Internet argument, but...just saying "You're wrong! The answer is waaay more insane and unsustainable than THAT!" doesn't necessarily win you this particular argument.
You are contending "It's not tax dollars, it's a Ponzi Scheme!" and "It's not tax dollars, it's Magical Unicorn Money conjured up by we got the plates, ink and paper!"
Are you a crazy person? Or an economist?
The sale or lease is a drop in the bucket, so we can settle on nearly every dime.
Your comment on Treasuries reminds me of the woman defending Hindu cosmology - it's turtles all the way down.
Debasing the currency is indeed a bad plan for repayment of debt. And it is not available to non-federal bond issuers, of which there are many - and all of them are paid off in time out of taxes collected.
Question: Is the following statement true or false?
"Given the size of deficits today and the current levels of government debt, taxes must increase in the future."
This is fundamental, so really, really think about your answer.
If something cannot go on forever, it will stop. --H. Stein