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Patrick says

Is there even one country with zero national debt? I looked on a list and found only Macau with no debt, but that's hardly a country.

North Korea would rather be poor than be in debt. I obviously prefer our system.

Patrick says

Why do they have any debt at all?

In a central banking system, insiders are incentivized to take on as much debt as they can while maintaining the illusion, because worst case, they are bailed out through more inflation. Just like FDIC does not insure deposits, it's insures bailouts.

But insiders could still do that if we had no national debt, right?

Misc says

North Korea would rather be poor than be in debt. I obviously prefer our system.

North Korea is poor due to their totalitarian, Communist dictatorship. That's the reason for their poor standard of living and not because their government is not heavily in debt.

By the way, real wealth is when you actually own what you have. Artificial wealth is when you possess what you have but are making payments to the real 'owner,' the lender that you borrowed your funds from.

Patrick says

But insiders could still do that if we had no national debt, right?

Patrick,
In every crime, the first question is always asked ... cui bono, i.e., who benefits? In this case, the private bankers of the Federal Reserve are the direct beneficiaries, because they earn $billions every single year due to deficit spending. Indirectly, federal politicians also benefit by gaining political power (along with, often times, kick backs from corporations and even foreign nations ... think Ukraine). The people pay for all of this through the hidden tax of inflation, which the average person cannot understand. If you don't believe that, ask practically ANY person to explain what exactly inflation is and how it comes about. Most will just shrug their shoulders and respond with something like 'inflation is when prices go up,' but can't explain how and why.

If every spending program had a tax attached to it in order to fund it, how many do you think would pass?

RayAmerica says

Misc says

North Korea would rather be poor than be in debt. I obviously prefer our system.

North Korea is poor due to their totalitarian, Communist dictatorship. That's the reason for their poor standard of living and not because their government is not heavily in debt.

By the way, real wealth is when you actually own what you have. Artificial wealth is when you possess what you have but are making payments to the real 'owner,' the lender that you borrowed your funds from.

You may expand your definition if we have $6 trillion or so in defaults by iffy corporations.

Misc says

North Korea would rather be poor than be in debt. I obviously prefer our system.

@Misc How does not having a national debt make North Korea poor? And how does having a national debt make us richer? I just don't see either one at all.

RayAmerica says

The people pay for all of this through the hidden tax of inflation, which the average person cannot understand. If you don't believe that, ask practically ANY person to explain what exactly inflation is and how it comes about.

I do believe all of that. And none of it benefits US citizens or the country as a whole.

RayAmerica says

If every spending program had a tax attached to it in order to fund it, how many do you think would pass?

I don't think that it is necessary to create a new tax for each program though. I just want all government spending to be funded with savings collected in advance, rather than via debt which incurs the large extra expense of interest.

Heck, funding by saving in advance would actually earn interest, make that system cheaper than a national debt in yet another way.

Patrick says

I just want all government spending to be funded with savings collected in advance, rather than via debt which incurs the large extra expense of interest.

This is exactly what Andrew Jackson was advocating way back in 1829, and the bankers and their newspapers attacked him for the entire 8 years of his Presidency. Again, when Jackson vetoed the central bank charter, for the only time in its entire history, the federal government was completely debt free. When Jackson left office, the charter was renewed and we've been in debt ever since.

Fiat is a massive crime wave...3 card monty.

Patrick says

Misc says

North Korea would rather be poor than be in debt. I obviously prefer our system.

Misc How does not having a national debt make North Korea poor? And how does having a national debt make us richer? I just don't see either one at all.

@Patrick Once upon a time, the United States government was running tax surpluses instead of deficits, and it was banking this money with the treasury. All the other governments of the world were being prudent and running deficits.

The US citizen protests about this were legendary. The citizens were stating that we had the richest government in the world, but therefore, had the poorest people.

RayAmerica says

This is exactly what Andrew Jackson was advocating way back in 1829, and the bankers and their newspapers attacked him for the entire 8 years of his Presidency. Again, when Jackson vetoed the central bank charter, for the only time in its entire history, the federal government was completely debt free. When Jackson left office, the charter was renewed and we've been in debt ever since.

They hated Jackson and the banks used a mentally ill guy as his assassin. After Jackson caned the man, he told Jackson people with money put him up to it.

Patrick says

RayAmerica says

The people pay for all of this through the hidden tax of inflation, which the average person cannot understand. If you don't believe that, ask practically ANY person to explain what exactly inflation is and how it comes about.

I do believe all of that. And none of it benefits US citizens or the country as a whole.

RayAmerica says

If every spending program had a tax attached to it in order to fund it, how many do you think would pass?

I don't think that it is necessary to create a new tax for each program though. I just want all government spending to be funded with savings collected in advance, rather than via debt which incurs the large extra expense of interest.

Heck, funding by saving in advance would actually earn interest, make t...

So what we really need are state and federal sinking funds, not debt chains!

Do you think that the taxpayers would put up with seeing all their money being hoarded by the government?

Do you really want the government to become a money making enterprise?

Historically the people have decided 'no' to these questions.

Patrick says

Interesting!

Do you have any names of cities with no debt? A quick search did not turn up any.

I’m on a board as an elected official. You’d be shocked how dumb citizens are. We have money sitting in an account for construction and people bitch that we’re hoarding their tax money. Basically they WANT us to spend it.

What the federal government realized is spending more makes a larger fraction of the population happy even if it’s debt. Our debt doesn’t need to be paid. Who is gonna collect?

Our board has a balanced budget. No referendum’s. $300k in the bank and soon to be about $1.2M. We’ll spend it but idiots think we’re scamming the tax payers. So what happens is it gets spent and then they bitch it wasn't enough. So the pressure kicks in to borrow.

Norway has about $1.2 Trillion in a sovereign wealth fund.
Divide that by the population of Norway; each Norwegian is theoretically rich.
Edit: Norway is rich from North Sea oil and gas production; historically it was not.

Right, so it's stupid for Norway to have any debt at all. It's like having $1000 in the bank but having $500 on your credit card and paying interest on that instead of paying off the card.

WookieMan says

You’d be shocked how dumb citizens are.

After the last three years, I don't think my opinion of the intelligence of the general public can go any lower. There are still a lot of people with masks on around here.

IIRC correctly, the link between fiat and the national debt is this:

When the government wants to borrow money, it creates and sells US Treasury bonds to the Federal Reserve, a private bank. The Fed literally creates the dollars with with to buy the bond formerly via a printing press, but now just electronically.

To pay back debt of that bond plus the interest, the government does it again. So the number of dollars always goes up and never down.

Everyone holding dollars is screwed as their holdings continuously decline in value. Who gets that value? It seems like the Fed gets it. But what exactly does the Fed do with it?

Patrick says

Misc says

North Korea would rather be poor than be in debt. I obviously prefer our system.

Misc How does not having a national debt make North Korea poor? And how does having a national debt make us richer? I just don't see either one at all.

Not sure if serious. Living standards in NoKo are shit. Worse than shit, actually. They do have debt though - internal debt to their citizens. The government steals their labor and keeps them dirt poor.

Patrick says

Everyone holding dollars is screwed as their holdings continuously decline in value. Who gets that value? It seems like the Fed gets it. But what exactly does the Fed do with it?

That's an easy one to answer. The Fed (like all central banks) use their enormous profits in order to convert their fiat currency into hard assets, along with equities, etc. Since the 2008 global financial crisis, they have quietly been buying up boatloads of Gold and Silver. The central bankers are doing this because they know that the fiat currencies which they create eventually will crash in value. Throughout history, over 300 fiat currencies have failed. Our Dollar will not be the exception.

Since Biden took office, one U. S. Dollar is now worth only 87 cents ... and they did that in just a little over two years.

PS: I personally think this is all being done by design, with the goal being the Great Reset, which will turn out to be totalitarian communism on a global level.

ForcedTQ says

So what we really need are state and federal sinking funds, not debt chains!

Only way to ensure sustainability is to slightly raise taxes and noticeably cut spending.

A lot of deficit is technically funded by taxes, that is the Social Security Trust is funding the deficit.

It shows how much government spending is part of our economy, and that by reducing it, we may see some significant reset in our standard of living.

I am willing to undergo small reduction or cut, such as 5%, for a couple of years, if that means the USA federal government's financial condition realizes a greater solvency.

I have a trifecta retirement plan (military reserve, VA disability, and civil service deferred annuity); I would be willing to see a reduction in my Social Security payments if it was part of a broader plan to improve the federal government's financial health.

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cisTits says

Canada claimed theirs would be temporary until their budget crisis was fixed. That was fixed in the early 2000s but they still have it.

Canada's debt to GDP ratio is over 100% even with high taxation :-(

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cisTits says

Adopting a 'Swiss brake' would be ideal, too.

@citTits what is a "Swiss brake"? A search just gets me bicycle parts.

Patrick says

But insiders could still do that if we had no national debt, right?

No, because no national debt means no central bank. Again, if you refer to Griffin, he does a really good job of explaining how all fiat currency is generated through debt, so if all debts were paid off, the Federal Reserve dollar would cease to exist. Central banks, and dishonest banking(anything not 100% backed by specie), exist only to create debt.

Understanding this subject requires a view of the whole, not a focus on the parts. Think Austrian economics.

RWSGFY says

Not sure if serious. Living standards in NoKo are shit.

Yes, living standards in North Korea are shit.

I don't see any causal relation between not having a national debt and low living standards.

cisTits says

We could impose a VAT like Canada did in the 1990s.

Why not eliminate all income tax and sales tax and just have a land value tax instead?

NuttBoxer says

if all debts were paid off, the Federal Reserve dollar would cease to exist

As it should. We should have a system of:

1. silver by weight (not "dollars", only weight) being real money
2. every other instrument classified as debt with a default warning printed on it
3. gold priced in terms of silver, but acceptable for large transactions as a substitute for silver

Internet commerce would run on credit as now, but the credit card transactions would be promises of real silver, and convertible to real silver for those willing to pay the shipping cost.

Patrick says

2. every other instrument classified as debt with a default warning printed on it

We have this now, read your "money" carefully.

Patrick says

Internet commerce would run on credit as now, but the credit card transactions would be promises of real silver, and convertible to real silver for those willing to pay the shipping cost.

In the larger scheme of what this would mean, decentralization would be key. As large corporations like FedEx, UPS, and of course the USPS cannot exist without mountains of debt. Not saying no internet, but it would return to it's primary purpose, a source for sharing information freely. Marketplaces and ecommerce could still exist, but scale would be limited mostly to local transactions.

Franklin Sanders and others have been strong proponents for self-sufficient local economies, pointing to the damage done by the tractor. If every community had a tailor, a farmer, a mechanic, the need for shipping would dramatically decrease.

NuttBoxer says

We have this now, read your "money" carefully.

I don't see any default warning on Federal Reserve Notes.

Patrick says

Why not eliminate all income tax and sales tax and just have a land value tax instead?

How would that work? Curious.

@GNL

Glad you asked! See https://patrick.net/post/1346922/2022-08-05-georgism-thread

Income tax discourages work.

Sales tax discourages commerce.

A land value tax... discourages nothing except non-productive rent-seeking on land. The house on the land is a different matter. Everyone should be able to charge whatever rent they want on a physical building and pay no tax at all on the rental income from the building, because the building is the result of productive work. But merely owning land and trying to rent it out is not at all productive, but instead is merely an attempt to suck money out of productive people while doing nothing useful at all.

Note that almost all "house" values in the Bay Area are actually the value of the land under the house.

All land, I assume. Farmland, corporate etc? Including land your primary home is on?

I'm trying to envision what the end result would be. Just much lower land values? It would have to be a tax on ALL land otherwise nontaxed land would skyrocket, no?

Yes, all land should be taxed, every last bit of it, including farms, corporate, primary residence, church land, government land.

And all those land tax records should be public, so that everyone can see the rate paid and by whom.

The end result would be that no one can profit by doing nothing while demanding that others pay them for the right to live.

Land prices would decline, and this would be a wonderful thing for everyone except landlords who don't create and maintain nice buildings. (If you build and maintain a nice building, you could still be a landlord and make a profit.) Banks would find that their collateral for mortgages is lower, but this is also a good thing. Bankers live by sucking interest payments out of young couples who want to buy a house to raise a family.

There would also be a boom in economic activity because working and running a business would no long be punished by taxes. Most taxes are currently paid solely so that land owners can avoid paying fair land value taxes. And there would be a secondary boom just because no one would have to file income taxes or sales tax reports. Tax lawyers would hate it because the tax system would be so simple.

The land value tax should be set by bidding when the land is sold. Let the market figure out the right tax.

Government would hate it because a market-based land value tax would limit how much they could extract to spend on wars and other stupidity.

Current land owners would also hate it because they were counting on exploiting the next generation.

Patrick says

I don't see any default warning on Federal Reserve Notes.

The section where they specify that it's legal tender. If it was real money, you wouldn't have to say it on the money.

Patrick says

Yes, all land should be taxed, every last bit of it, including farms, corporate, primary residence, church land, government land.

And all those land tax records should be public, so that everyone can see the rate paid and by whom.

The end result would be that no one can profit by doing nothing while demanding that others pay them for the right to live.

Land prices would decline, and this would be a wonderful thing for everyone except landlords who don't create and maintain nice buildings. (If you build and maintain a nice building, you could still be a landlord and make a profit.) Banks would find that their collateral for mortgages is lower, but this is also a good thing. Bankers live by sucking interest payments out of young couples who want to buy a house to raise a family.

There would also be a boom in economic activity because working and running a business would no long be punished by taxes. Most taxes are currently paid solely so that...

I must say, it sounds pretty good. No downsides come to mind. Are there any?

Patrick says

Yes, all land should be taxed, every last bit of it, including farms, corporate, primary residence, church land, government land.

This is like paying rent to the government on all acreage in the domain. Just like to a feudal lord.

Patrick says

The land value tax should be set by bidding when the land is sold. Let the market figure out the right tax.

This would lead to forced sales when the value of the land goes up. For example, I buy some raw land in Shenandoah that is off road. I build a community of solar powered homes with shared well and septic. The government does not like the low taxes on the land based on the original sale price, so laws allow a rich guy to buy that land out from under me.

RayAmerica says

Artificial wealth is when you possess what you have but are making payments to the real 'owner,' the lender that you borrowed your funds from.

or the government who taxes your possessions FOREVER! Or until you die.

This is another reason we should have hard silver metal currency by weight.

The government cannot plausibly find it and tax it, nor should they be able to.