
Best estimates are that American debt cannot be fixed with taxes on capital - baristaGeek
http://marginalrevolution.com/marginalrevolution/2015/09/best-estimates-are-that-american-debt-is-not-sustainable.html
======
redthrowaway
This presupposes that American debt is unsustainable. The American debt-to-GDP
is pretty average for a developed country. What matters is not the total
amount of debt, but rather the cost of maintaining it. And US Treasury bonds
carry negative real interest rates.

The US has many crises, but debt isn't on of them.

~~~
zeveb
> This presupposes that American debt is unsustainable. The American debt-to-
> GDP is pretty average for a developed country.

That's equivalent to 'but everyone else is doing it!' Our debt either is, or
is not, sustainable.

~~~
jgeada
Our debt is in dollars. You know, those things that can be arbitrarily printed
by the government anytime, and created out of thin air by financial
institutions (aka leverage). We can never run out of dollars.

~~~
chimeracoder
> Our debt is in dollars. You know, those things that can be arbitrarily
> printed by the government anytime, and created out of thin air by financial
> institutions (aka leverage). We can never run out of dollars.

Money can always be printed, but not without consequences. (Just ask Germany
or Zimbabwe).

So yes it is literally impossible for the US to default on that debt unless it
actively chooses to, but that doesn't mean that we can just rack up arbitrary
amounts of debt without any negative ramifications.

~~~
calibraxis
The poster is correct: money is a social phenomenon which the US can create
all it wants. (In fact, most of it is just numbers in databases. Points in a
game. Those who control the game's rules have everyone wasting endless time
life chasing these points.)

More important than creating money is having by far the biggest guns. What
does it mean to be owed a "debt" by the person who controls the currency and
most of the guns?

Yes, there are "consequences" to creating more money. Every act has
consequences. If someone advises you to drink a lot of water, should I respond
with counterexamples where someone drank from a firehose?

~~~
Gibbon1
As far as consequences are concerned, traditional economics as opposed the the
crap that currently in vogue teaches us the exact technique to deal with
excess debt; wage and price inflation. That's how the US successfully retired
it's WWII debt.

------
jgeada
Article seems heavy on faith and assumptions with surprisingly little
justification for the assumptions on those Laffer curves. For context, monthly
capital movement through the stock market is in hundred billion dollar range
(28,835,420,916 NYSE, 81,677,535,478 NASDAQ for last month).

Given the current political clamor about economic inequality, I can see the
financial class having "some" incentive to claim that any of the proposed
fixes would not work and it would be best to leave the current system as is,
ie with them owning all the money. Quoting Upton Sinclair “It is difficult to
get a man to understand something, when his salary depends on his not
understanding it.”

------
devinhelton
There is nothing wrong that needs to be fixed. Because the dollar is a fiat
currency, and the national debt is denominated fully in a currency the
government controls, the “debt” is not really debt. It is really equity,
shares of stock in USG. A dollar is just a piece of paper backed by the United
States Government. A US Treasury Bill (T-Bill) is just a piece of paper backed
by USG. A T-Bill is simply a dollar with a not-valid date. A dollar is
analogous to stock in a corporation (except that instead of providing a
dividend, it has the feature of extinguishing tax debt). A treasury bill is
therefore analogous to restricted stock, stock that cannot be sold until a
future date.

In other words, the national debt in a fiat currency should really just be
considered as part of the fully diluted money supply. There is no reason to
worry about the absolute quantity, only the rate of growth relative to GDP. I
wrote an extended explanation here: [https://devinhelton.com/why-the-national-
debt-is-non-problem](https://devinhelton.com/why-the-national-debt-is-non-
problem)

------
mgalka
> "the inequality debate needs to shift from individuals to businesses and
> communities."

It seems like the inequality debate is stuck between either doing _more_ for
education or redistributing _more_ tax from someone/somewhere else. There is
rarely any discussion of the other side of the equation -- ending government
policies that might be exacerbating the problem.

For the bottom 20% of households, about 5% of their collective before tax
income gets spent on the lottery, and get redistributed upward.

* [http://metrocosm.com/could-the-lottery-be-the-largest-tax/](http://metrocosm.com/could-the-lottery-be-the-largest-tax/)

40% of their income is spent on housing. Yet, nobody ever talks about the fact
that the government explicitly restricts the housing supply via zoning laws. I
understand that people want to maintain the character of their neighborhood,
but is that really a good justification when other people struggling to afford
a place to live?

* [https://www.quora.com/What-are-some-examples-of-racist-or-mi...](https://www.quora.com/What-are-some-examples-of-racist-or-microaggressive-actions-in-urban-planning/answer/Max-Galka)

Why are we still spending $601 billion per year on the military? Are more
fighter planes really the country's top priority? For comparison, the combined
income of the bottom 20% of households is only about $200 billion.

[http://www.businessinsider.com/how-the-us-military-spends-
it...](http://www.businessinsider.com/how-the-us-military-spends-its-
billions-2015-8)

* The first two posts were written by me. Not meant to be promotional and no reason to click unless you want to check my sources.

~~~
ArkyBeagle
The military sometimes works as the social program of last resort.

We have a not-too-bad program for housing subsidy in place today - Section 8.
The government that operates Section 8 is not the same one that operates
zoning commissions. And at some point , we do need to talk about land rents
and taxation.

If lotteries could quietly be subsidized, the effect on monetary velocity
would doubtless be significant. I am nearly certain that this cannot be
quietly done, and it may have adverse effects that aren't clear at first
blush. It also smacks of 1984.

~~~
mgalka
Agree. Not saying we should get rid of the military, just questioning whether
all $600 billion of that spending is really where we should be spending it.

I don't have any particular criticisms of Section 8, but it's an inefficient
bandaid for a much bigger problem. It only accommodates about 5m households
(while adding to socioeconomic segregation). For everyone else, it doesn't do
anything. Why not fix the root of the problem by doing what we do with every
other market, and let the free market determine housing prices.

Not sure I understand your point about subsidizing the lottery. I think we
should either get rid of it, or at least turn it over to private businesses
and heavily regulate it. At the moment, it's a predatory state-sponsored
monopoly.

In any case, not trying to say that these _are_ the solutions, only that the
criticism of government policies like these are largely left out of the
inequality debate.

~~~
ArkyBeagle
I dunno about the "should" there w.r.t the military. I just really don't know.

Gah, let the free market decide! What a concept! We don't, you know. We
subsidize the foo out of people who can afford to pay enough interest spending
to qualify for a deduction. People control zoning to drive up land rents.

My version of "subsidizing the lottery" would be to pump up the payouts as a
helicopter drop of money. But as it is, so little of the money actually goes
back to the players that it's quite bad. It's probably a terrible idea for
some reason I haven't thought of yet.

------
digikata
Best estimates with some model of the Laffer curve as a given - of course
experts disagree on what values that curve actually traces. In addition, the
effect of the curve where it has been tested on the tax cut side has not been
convincing (or perhaps even visible) ...

------
protonherz
Of course, workers pay so few taxes, and corporations lik GE pay way too much
already.

~~~
sp332
I'm afraid your joke will be lost without context. GE seems to have paid no
tax in 2010: [http://www.weeklystandard.com/blogs/ges-tax-return-
cont_6091...](http://www.weeklystandard.com/blogs/ges-tax-return-
cont_609153.html) They are really, really good at sheltering money from taxes.
[http://www.forbes.com/sites/janetnovack/2014/02/17/wheres-
my...](http://www.forbes.com/sites/janetnovack/2014/02/17/wheres-my-refund-
general-electric-sues-for-658-million-tax-refund/)

------
matthewbauer
"American debt" is a pretty vague term. I think they mean US public debt as
opposed to debt held by Americans which could also be considered "American
debt".

