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Why do we have a national debt at all?


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2023 Mar 27, 9:37am   12,395 views  128 comments

by Patrick   ➕follow (59)   💰tip   ignore  

Seriously, what is the point?

I know that a lot of people say so that the Fed can collect interest from taxpayers, and that may be so, but why would the government even agree to that?

It seems that every country on earth has national debt, but how can this be? It always costs more to borrow and pay interest than to save and simply pay for something.

Is every country on earth stupid and/or irresponsible? Is it just that they have more demand for services than they can afford? If that's so, then it's still stupid because they have to pay it off eventually anyway. Or do they just keep rolling over the debt forever, growing ever larger? Eventually their debts will be infinite and the interest will be unpayable.


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15   clambo   2023 Mar 27, 5:00pm  

Of course there is no benefit to having a national debt.
It all started after WWI and prohibition I think.

For over 100 years the Federal government got by with 1. Alcohol and tobacco taxes 2. Tariffs on foreign goods.
16   Patrick   2023 Mar 27, 5:07pm  

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.
17   HeadSet   2023 Mar 27, 5:26pm  

Patrick says

We would all be richer if we simply saved our tax revenue in advance, and then spent it without incurring any interest payments at all.

True. Some cities in the US have that feature - they only spend this year what they collected in taxes last year.
18   Patrick   2023 Mar 27, 5:28pm  

Interesting!

Do you have any names of cities with no debt? A quick search did not turn up any.
19   HeadSet   2023 Mar 27, 5:52pm  

Patrick says


Interesting!

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

Hampton, VA, where I used to live. However, it looks like they did take on a capital improvement bond since I left. Other than that, no debts issued.


20   clambo   2023 Mar 27, 6:37pm  

Norway is rich, and owns a lot of bonds.
Kuwait and others are likely rich too.
21   Patrick   2023 Mar 27, 9:26pm  

But they both have national debt:


Norway's national debt has decreased significantly over the past 23 years, ranging from 31.0 billion to 108.1 billion USD from 1998 to 2021. In 2021, liabilities were only 76 billion USD, resulting in a debt of 14,046 USD per person based on the number of inhabitants.



Kuwait's national debt has been steadily increasing since 2010 when it was 5,359 million euros 7,110 million dollars. In 2020 it was 2,655 dollars per inhabitant


Why do they have any debt at all?
22   AD   2023 Mar 27, 9:46pm  

RayAmerica says


Trade deficits = national poverty


Right around 1997 is when the trade deficit started to take off, which coincides with NAFTA and free trade agreement with China.



.

From the BLS website: "At its peak in June 1979, manufacturing employment represented 22 percent of total nonfarm employment, but that share had fallen to 9 percent by June 2019. Manufacturing’s falling share of employment coincided with job growth in service-providing industries, including professional and business services, education and health services, and leisure and hospitality."

.
23   AmericanKulak   2023 Mar 27, 9:50pm  

clambo says


For over 100 years the Federal government got by with 1. Alcohol and tobacco taxes 2. Tariffs on foreign goods.

There was a contribution required by the states to pay based on per capita, if I recall. The states simply had to come up with the money, they didn't have to actually tax residents per head. They could have excise or state property taxes and pass the share to the Fed Gov along.

Unfortunately, the 24th Amendment got rid of POLL TAXES, which are a great way to take back America by excluding drains on society form voting, as many dumb Wine Aunts and Ho Moms and crack/meth heads wouldn't have the money to vote on election day or would have forgotten to pay or decided boxed wine and cat litter or crack was more important. AND it would make states have to track WHO paid, which would help prevent voter fraud.

SCOTUS went so far as to ban the the need to file free "State Resident" paperwork in the 1960s in a case involving Virginia substituting a filing for residency vs. a poll tax.

Interestingly, Leftoid cities are levying head taxes for Employees on both employees or employers. Seattle did so but repealled when big business squealed : The point being to soak suburban commuters and drain them of cash for Baby Mamas.

https://en.wikipedia.org/wiki/Seattle_head_tax
25   clambo   2023 Mar 27, 11:35pm  

Why Norway sells bonds I don't know.
Kuwait either.
But Norway has a giant investment fund that contains real assets, including USA bonds.
Maybe they like having a little cash for projects so they sell bonds and don't touch their investments.
That's like me using a credit card and not touching my IRA.
26   Misc   2023 Mar 28, 3:20am  

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.
27   NuttBoxer   2023 Mar 28, 8:24am  

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.
28   Patrick   2023 Mar 28, 9:11am  

But insiders could still do that if we had no national debt, right?
29   RayAmerica   2023 Mar 28, 9:23am  

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.
30   RayAmerica   2023 Mar 28, 9:33am  

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?
31   Misc   2023 Mar 28, 9:34am  

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.
32   Patrick   2023 Mar 28, 9:41am  

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.
33   Patrick   2023 Mar 28, 9:44am  

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.
34   RayAmerica   2023 Mar 28, 9:49am  

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.
35   GNL   2023 Mar 28, 10:27am  

Fiat is a massive crime wave...3 card monty.
36   Misc   2023 Mar 29, 9:32pm  

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.
37   AmericanKulak   2023 Mar 29, 9:43pm  

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.
38   ForcedTQ   2023 Mar 29, 11:43pm  

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!
39   Misc   2023 Mar 30, 12:07am  

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.
40   WookieMan   2023 Mar 30, 7:08am  

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.
41   clambo   2023 Mar 30, 7:36am  

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.
42   Patrick   2023 Mar 30, 9:00am  

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.
43   Patrick   2023 Mar 30, 9:07am  

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?
45   RWSGFY   2023 Mar 30, 9:59am  

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.
46   RayAmerica   2023 Mar 30, 10:32am  

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.
47   AD   2023 Mar 30, 10:50am  

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.

.
,
48   AD   2023 Mar 30, 11:32am  

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 :-(

.
49   Patrick   2023 Mar 30, 11:36am  

cisTits says


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


@citTits what is a "Swiss brake"? A search just gets me bicycle parts.
50   NuttBoxer   2023 Mar 30, 12:01pm  

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.
51   Patrick   2023 Mar 30, 12:16pm  

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.
52   Patrick   2023 Mar 30, 12:18pm  

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?
53   Patrick   2023 Mar 30, 12:21pm  

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.
54   NuttBoxer   2023 Mar 30, 1:41pm  

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.

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