You can keep pushing the taxation as revenue lie as long as you want and it still won’t become true.
And you can pretend that tax revenues are irrelevant all you want and it still won’t become true.
Here’s reality, and it’s simple:
- If the US doesn’t make it’s payments on its bonds, the world economy crashes.
- If the US stops collecting taxes to use, in part, for the payments on its bonds, the world economy crashes.
So, what’s moot is the idea that you can change that reality; it doesn’t matter if you’re right or wrong. You may BE right, for all intents and purposes; doesn’t matter. The economic world works the way it does, not the way you want it to.
Why did bond prices not fall for any length of time following that?
Because the US productive capacity remains awesome by world standards, and we’re the only nation that can pump out the bond volume that we do at AA+ risk. So, we can get away with more mischief than other nations can. (This is not a good game to play, however.)
Could it be that it is actually the issuer of bonds that controls the rate?
The issuer requests the rate; there is then an auction for the bonds. If not enough buyers show up, the issuer raises the rate and holds another auction. So yes, we set the rate in part, but the bond sale proceeds according to supply and demand.
Where is the debt level that pulls the trigger?? Is it $22 Trillion? $30 Trillion?? If you have the formulas to make the claim you do you should be able to pin it down as well.
Nope, and the reason is that we only have a 35-odd year history with fiat money. We are still learning about the underling factors that affect its price.
Personally, I’ve come around a bit on this from the hard-conservative view. It’s not that deficits don’t matter, but we seem to be learning that there are a lot more variables in the “how much is too much” equation than we thought. We MAY have a lot more headroom than we though we did; if so, we’re going to test that headroom it seems.
The reason why the level is unpredictable is because it’s due to human sentiment, not a computer. If human beings, the ones that buy our bonds, look at the state of our economy, our projected tax receipts, our projected future growth, our existing deficits, and decide they want a half point higher on the 10-year to take that risk……..then we have to pay it. Or risk the whole house of cards coming down.
Operational reality is what it is.
Agreed. And there is insufficient correlation between budget balancing and recession to claim causation.
There is no connection between deficit spending and taxation, as the government is not revenue constrained.
The world economy has decided that there is. Without agreement by all parties to change that, unilateral change by any of the large players would be devastating. (In the past, financial crises in even small economies hit all markets worldwide.)
Those children you are so worried about are not obligated to repay any of what is mislabeled as debt.
The world doesn’t work the way you think it should. If the country in which they live in says they are obligated to pay or else face jail, they’re obligated. Stop with the nonsense.
3. The “crowding out” theory is nonsense also.
It is economically demonstrable that economic activity in the private sector is more contributory to GDP than economic activity in the government sector. If the government grows as a percentage of the economy, it becomes less efficient, which is essentially what you want anyway (so stop arguing against your own objectives).
Efficiency in government is the last thing we need. Until you get the concept of government’s red ink becoming our black ink as it is spent in the private sector you will never understand how your wish to shrink the government harms the economy, but keep on keeping on. It’s been working wonderfully so far, right??