Politics

[Louis Toadvine]

It is unfortunately not such a simple matter to pay off the national debt. The dollar is a debt currency.

Investopedia has a good write-up on reserve ratios and money multiplier here: https://www.investopedia.com/terms/r/reserveratio.asp

Paying off our debt would destroy the dollar with a massive deflation.

When a loan is issued, "money" is created out of thin air. Suppose a bank has 500M USD in deposits, and the reserve requirement 10% - the can make 450M USD worth of loans, which all turn back into deposits at some point. With that extra 450M USD in deposits, it can lend another 405M. When that 405 comes back in as deposits, the bank can lend another 364.5M USD, and so on. When the loan is repaid, the money created by the loan is destroyed (a little at a time as the debtor meets his monthly obligation to the bank).

The USG is 33T USD in debt to the federal reserve. If it is repaid, that's a lot of money that'll just evaporate.

All of that leaves us really with a Hobson's choice. It's why our founders were absolutely against currency and actually wrote into our constitution in Article I Section 8 that the federal government would have the power to "coin money." It didn't give it the power to "print paper."

I hope you realize I wasn't actually advocating for paying down the national debt but was instead trying to illustrate that the bulk of the spending down by the U.S. (and therefore the most likely places to cut spending) are social entitlement programs.

I'm definitely not an expert, but I'm versed enough in money supply (M1, M2, etc.) and the treasury markets to understand the dilemma we (and much of the world with exposure to international markets) face with devaluation when sovereign debts are fully repaid. Makes it hard to shrink the balance sheet.

 

[Louis Toadvine]

There are other programs to cut that don't include cuts to Social Security, Medicare, and National Defense.

Agreed. I didn't say there weren't other programs to cut, only that those are the larger pools of expenditures and therefore good candidates for making meaningful cuts.

And there are also other ways to cut the deficit, of course. Raising taxes (revenue) is a straightforward (but unpopular) way to do it. If we really wanted to work on the deficit, it's probably a combination of shaving down entitlements paired with a tax increase across the board (corporate, personal, capital gain).

But cutting social programs--especially Social Security and Medicare--and raising taxes are hugely unpopular, so politicians (at least the ones that care about being elected and reelected) don't like to touch it.

Also, from my non-expert (and anecdotal) knowledge of our social programs, the big pools of funding like Social Security and Medicare serve myriad purposes and are not just going to retirees. Portions get meted out to education (special education, etc.), income security (the large spectrum of welfare programs), and likely other social programs that you referenced (including ones going to non-citizens). So there's plenty that could be cut from within those big pools.

And at the end of the day, cutting the deficit by either raising taxes or removing social programs results in cash being removed from the markets, which generally means lower GDP growth. And sovereign nations are not unlike F500 companies. Growth is king.

 

[PHOENIX PHIL]

I pay over $800 a month per employee on health care costs (I pay 100%, no employee contributions) plus on average over $10K a month overall payroll costs. I pay about $2,000/month per degreed engineer with minimum 5 years of experience overseas, you do the math.

Let me make sure I’ve got this. Your cost for a degreed engineer with 5 or more years of experience is $24K per year?

 

[Tanks]

Let me make sure I’ve got this. Your cost for a degreed engineer with 5 or more years of experience is $24K per year?

Yes, overseas. Before Venezuela went to crap Simon Bolivar University used to provide very competent engineers, I even brought some over. Same for similar ones in Argentina and Brazil. There are also some real good engineers in Georgia, Egypt etc.. By the way the $2K I mentioned is above the local rates.

There is a very competent pool of talent overseas if one knows where to look and have the right connections, and all fluent in English.

 

[sgt_zim]

Agreed. I didn't say there weren't other programs to cut, only that those are the larger pools of expenditures and therefore good candidates for making meaningful cuts.

And there are also other ways to cut the deficit, of course. Raising taxes (revenue) is a straightforward (but unpopular) way to do it. If we really wanted to work on the deficit, it's probably a combination of shaving down entitlements paired with a tax increase across the board (corporate, personal, capital gain).

But cutting social programs--especially Social Security and Medicare--and raising taxes are hugely unpopular, so politicians (at least the ones that care about being elected and reelected) don't like to touch it.

Also, from my non-expert (and anecdotal) knowledge of our social programs, the big pools of funding like Social Security and Medicare serve myriad purposes and are not just going to retirees. Portions get meted out to education (special education, etc.), income security (the large spectrum of welfare programs), and likely other social programs that you referenced (including ones going to non-citizens). So there's plenty that could be cut from within those big pools.

And at the end of the day, cutting the deficit by either raising taxes or removing social programs results in cash being removed from the markets, which generally means lower GDP growth. And sovereign nations are not unlike F500 companies. Growth is king.

On average, the USG rakes in about 17% of the GDP in income taxes - doesn't matter if the tax rates are higher or lower.

What our government has is a spending problem, not a revenue problem. Lower taxes, increase growth rate, collect 17% of a larger economic pie. Everything else is window dressing and demagoguery.

Or better yet, ditch the income tax entirely and switch to something that looks like https://fairtax.org. Cost of complying with Title 26 and Chapter 26 of the CFR is an unproductive drain on total output. The cost of complying with what fairtax proposes is trivial; moreover, it's hard to cheat on it - and best of all, it gets rid of the giant tax-collection bureaucracy that has been used for malicious ends going back to FDR.

 

[glen matunas]

You didn’t answer my question directly but I will assume my statement to be correct. Must suck being an actual American working for you eh?

 

[glen matunas]

Yes, overseas. Before Venezuela went to crap Simon Bolivar University used to provide very competent engineers, I even brought some over. Same for similar ones in Argentina and Brazil. There are also some real good engineers in Georgia, Egypt etc.. By the way the $2K I mentioned is above the local rates.

There is a very competent pool of talent overseas if one knows where to look and have the right connections, and all fluent in English.

Spoken like a true Patriot lol

 

[glen matunas]

You didn’t answer my question directly but I will assume my statement to be correct. Must suck being an actual American working for you eh?

Or maybe you employ 0 Americans

 

[Tanks]

Or maybe you employ 0 Americans

How many do you employ?

 

[Saul]

On average, the USG rakes in about 17% of the GDP in income taxes - doesn't matter if the tax rates are higher or lower.

What our government has is a spending problem, not a revenue problem. Lower taxes, increase growth rate, collect 17% of a larger economic pie. Everything else is window dressing and demagoguery.

Or better yet, ditch the income tax entirely and switch to something that looks like https://fairtax.org. Cost of complying with Title 26 and Chapter 26 of the CFR is an unproductive drain on total output. The cost of complying with what fairtax proposes is trivial; moreover, it's hard to cheat on it - and best of all, it gets rid of the giant tax-collection bureaucracy that has been used for malicious ends going back to FDR.

Do you have an opinion on Friedman’s negative income tax proposal?

 

[Tanks]

Spoken like a true Patriot lol

Without the foreign talent, the Americans I employ would not be getting paid above market salaries and have 100% of their health insurance paid as I would not be competitive.

What part of the world being a global economy do you not understand? We can not go back to the days of subsistence farming and horse and buggy travel. Well, the Amish do try, but it is not feasible for most of the population.

 

[glen matunas]

How many do you employ?

As I clearly stated earlier in the posing I’m retired…have been for 2 years. At one point at the height of my small medical practice I employed 5 hard working Americans, treated and paid them better than the competition. Was very successful and retired young enough to enjoy life. Would have never even considered interviewing a foreigner

 

[Saul]

We know Europe will never be able to defend themselves because you allowed the globalist to disarm you. Fact

Who do you define as the “globalist?”

 

[glen matunas]

And it wasn’t that difficult to do either

 

[glen matunas]

Who do you define as the “globalist?”

Honestly you can’t figure this out without explanation…

 

[glen matunas]

Who do you define as the “globalist?”

Am I talking to a us citizen? Just so I can explain it clearly enough if you are not.

 

[Tanks]

It is really interesting that those accuse people of being globalists and jobs that no one wants (for the most part) going overseas would be the first ones to cry out if prices at grocery stores, Walmart, Target etc. went up tenfold.

We saw a small example of that during the pandemic when due to supply chains being constrained and the prices went up on items or we ran out of items.

My girlfriend's American made hoodie costs $138.00 (https://www.american-giant.com/prod...ull-zip-fir-green?_pos=1&_fid=6ff500990&_ss=c)

A hoodie at Target costs $25 made outside of USA
(https://www.target.com/p/women-s-fl...n/-/A-88340856?preselect=88557618#lnk=sametab)

Imagine the outcry if the Target version was not available.

 

[mdwest]

So you run an American firm, that employs foreign workers? Ok got it

Yes. I run a fairly sizeable US based firm that directly supports the US Federal Government (mostly the DOD, but also the State Dept and the Intelligence Community).. and we employ both US Citizens and foreign workers. In some cases those are local nationals working in the countries we are executing work in.. in others they are what we refer to as 3rd Country Nationals.. which means from a country other than the US, working for us in a foreign country, but not the country that they are from (for example, US firm, employing a UK national, on a contract being executed in Saudi Arabia)..

 

[Saul]

Am I talking to a us citizen? Just so I can explain it clearly enough if you are not.

Yes, I am a U.S. citizen.

 

[mdwest]

Maybe just maybe every man and women in the us do 2 years active duty in the military?? Yea soy boys would head to Canada and viola less beggars to feed

Lets ask the military what they think of that idea..

the all volunteer military is one of the key reasons our military is as good as it is... the overwhelming majority of our service members.. both officers and enlisted, have no desire to see the US military filled with conscripts or draftees..