Federal Spending, Debt, and Deficits
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- Опубліковано 14 лют 2023
- Governments spend and borrow money just like people do. But it's a little more complicated. Is it bad for a government to be in debt? Who does a government borrow money from? How is federal spending determined? What are the types of federal spending? Let's investigate!
Script by Matt Beat: / iammrbeat
Animation by Ignacio Triana: / unraveled
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In before the budget deficit makes a 900 part UA-cam series "debunking" ProDave
@@SlickSimulacrum what?
@@SlickSimulacrum Do You realise the original comment is a joke referring to how Professor Dave's biggest critic has uploaded a multi-part series failing to debunk anything he's said? You seem to have just posted irrelevant cringe in response... which is very intelligent
@@SlickSimulacrum You failed to identify a joke that everyone else understood, and you're still trying to say that you're more intelligent? You need a wakeup call
@@Randomstuffs261 I think the dude commenting is out of his mind. UA-cam is a a modern day psych ward
@@spectre908 I thought the same thing, and yeah I see so many mentally unwell people like him online
Dave, You failed to take into account that the US federal government is the only entity that can legally issue US Dollars (USD). That creates an interesting phenomenon. The federal government *must* issue USDs before they can be returned to the government via taxes. So the flow of USDs is as follows: The federal government buys goods and services by issuing USDs to cover those expenses. The USDs remain in circulation until they are removed from the economy via taxes. The federal debt is the difference between the amount of USDs issued minus the USDs returned to the government via taxes. Once I really stopped to think about the implications of the above, I realized that most of what I thought I knew about the federal budget was wrong.
Well, no. You are falling to a common misconception. (So did I. It took a while to find out what is obvious to everyone in finance.)
The money supply is created by banks each time they make a loan. The Treasury Department does print bills and mint coins but those have to be purchased by the banks. It isn't simply introduced into the economy, the money already exists.
The money comes from bank loans. Banks have a 10:1 reserve ratio, meaning that they can loan up to 10 times the amount of money they have on their books. Each time the bank makes a loan, let's say a customer borrows $10000 to buy a used car, the bank marks up the customer's account. The customer then purchases the car, the money is deducted from the customer account and credited to the seller's bank account. This increases the amount of money at the seller's bank. Thing is, the first bank can do this up to ten times, loaning out a total of $100,000 against it's reserves of $10,000. That money increases the accounts in other backs by that amount. This creates $90,000 of additional money in the economy. It also means the other banks now have an additional $90k in reserves and are able to make another $900k in loans. This process goes on daily, with over 72,000 banks in the US. When the debt is paid off, by the original customer, it then reduces the money supply by that amount. Thing is, the economy is continuously growing and demand for money continues to increase. The net result is that the money supply continues to grow endogenously in accordance to the demand for money.
The things to keep in mind are these. When the gov't pays down the Debt Owned By The Public, the money supply decreases by that amount. Less money in the money supply, less economic activity. The second is that debt equals savings. For every dollar in debt, there is a dollar in savings. When the gov't pays down the debt, there is less money held in private savings.
Debt is the lifeblood of the economy. Without it, a modern monetary economy doesn't function. The question you have to ask yourself is "Who should carry the debt?" Someone has to, whether it is private businesses, the consuming public, or the government because without debt, there is no money supply.
@@johnfitzgerald8879 You wrote: "The Treasury Department does print bills and mint coins but those have to be purchased by the banks. It isn't simply introduced into the economy, the money already exists. "
Um, no. "The money (used by the bank in your scenario) by law, cannot "already exist", they must have been issued by the USG at some point in the past.
The "debt" is not like a traditional loan; it is an entry in an accounting ledger. In accounting, debits and credits *must* balance. So, if the USG issues dollars, those USD end up in a different entity's account (as a credit) so, by the rules of accounting, the USG must have a debit. The USG doesn't owe another entity any USDs. In fact, the USG never has any USD until an appropriations bill is passed and signed, at which point the USDs are issued. When the government collects taxes, those USDs are (effectively) destroyed, they are no longer circulating in the economy.
The system as currently set up requires the Treasury to issue securities in the amount of appropriations. It would be possible to change the law so this is no longer required. (Not gonna discuss the policy ramifications, just want to point this out.) Treasury Securities are like a saving account, not a loan. Treasuries are "interest bearing coupons", while USDs are "non interest bearing coupons" in the parlance of the financial industry. (The answer to the question: What if China calls in its debt?", is: The securities held by China would be replaced with USDs.) T-bills are a way for those with money to make more money. Raising the federal interest rate will inject more USDs into the economy, which ,according orthodox thinking, should be inflationary. (But I digress.)
You also wrote: "The net result is that the money supply continues to grow endogenously in accordance to the demand for money"
Again, no. "Bank money" is ephemeral, if all private debt were to be paid off, there would be no "bank money" and all that would be left is USDs. That is the base money supply and it is equal to the "federal debt".
Here's something we can agree on: "When the gov't pays down the Debt Owned By The Public, the money supply decreases by that amount. Less money in the money supply, less economic activity. When the gov't pays down the debt, there is less money held in private savings."
However, I don't look at that as a good thing. There have been five times in US history where the debt has been reduced. In *every* instance, a recession occurred within 2 years of that reduction in federal debt. Why? Because households have (as you pointed out) less savings and take out loans to maintain their standard of living (or go hungry, or become homeless, etc.).
"For every dollar in debt there is a dollar in savings" that is what most economist say about the circular flow of income, that investements comes from savings that would be true in an economy without growth, since the economy is growing more money is required that is where bank lending enters the picture however since the multiplier effect takes places the statement should be like this:
For every dollar in savings under a 10% reserves ratio the banks can create 90 dollars more plus interests then for every dollar payed of debt 10 cents plus interests return to the saver and the rest becomes bank property
May I ask what is your suggestion to better manage money supply?
Wow Dave, the quality of the animations in this video is great!
I recommend we do as the famous poster instructs us:
‘Keep calm and carry on’
Japan has a debt of over 250% of GDP. As you point out, the money is owned by people, so it's not going to a place like Mars. This means solving the debt problem can be done by just upping taxes to where the money is. The top 10% hold 90% of all stocks and bonds, and the debt is mostly in bonds so up taxes on the top 10%.
sadly the top 10% have all the interest and meaning to avoid being taxed forcing the fiscal pressure all on the poor 90%
@@Marco-hb4pt You're assuming tax law is set in stone and cannot be changed. That's not a good assumption.
The money can and needs to be taxed away.
@@macy1066 no, i'm just assuming that tax law whenever it change or not, will always benefit who own big capitals because they can influence policy makers
@@Marco-hb4pt Then we are all done. The rich win, and you didn't even put up a fight. Nice job.
@@macy1066 I'm not saying that, but for things to change we need way more class consciousness
It's worth pointing out that the budgeted Entitlements every year is well over what is actually paid out - and that current Entitlements do not match inflation
Thank you Dave ! I think it would be great to have a series that covers the current state of the art and literature in origin of life research, ... a series that starts from the building blocks, up to the oligo- and polymerization of different classes of biomolecules (and the problems to be solved), Lipid bilayers, RNA world / evolution of metabolism, autocatalysis...etc. Starting from Oparin and Urey-Miller and the evolution of the science of Abiogenesis. Best !
I am considering this!
@@ProfessorDaveExplains Thank you so much for the great effort you put into this educational project ! Wish you the best of success ..
that's a very nice exposition, though it relies on the orthodox neoclassical approach to money (which is the 'exchange' or 'barter theory of money'), assuming they are just a simple commodity and don't play any 'real part' in how the economy works in the long run.
all of those are very serious assumptions that are being critized more and more even by the leading mainstream economists, let alone various 'skeptics' without any position within academia
Could you please do a video on Modern Monetary Theory?
@@zwerrell I don't think you know your history
... MMT only came about in 1992.
@@zwerrell I don't think you understand MMT either...
Nice explanation, but there is a risk from a shrinking economy. Most people don't know how big a trillion dollars is. Our current debt is about $32 trillion. Here's some easy ways to visualize how big that is.
Lay 32 trillion dollar bills end-to-end, about 6 inches each. You stand at one end and a nasty old Congressman sets the other end on fire. You wouldn't see the blaze for four and a half hours - because that's how long it takes light to travel the distance of 32 trillion dollar bills. That's long enough to go from Earth to the sun and back again about 17 times with enough left over for about 125 round trips to the moon.
A dollar bill is about two by six inches and is about 0.0043 inches thick. The Goodyear blimp is six stories tall and half the length of a football field.
If you packed the Goodyear blimp's envelope with tightly compacted dollar bills, you would have enough to pay the interest on the national debt.
For about 61 hours.
All it takes to kill our economy is a downturn because our borrowing will skyrocket.
But have no fear, the dollar will always have value. Why? Because the government will not accept any other form of payment for taxes. The guaranteed baseline value of the dollar comes from the value of not going to prison for not paying taxes, and from not having your property confiscated for not paying property tax. That's the final reason to work for dollars.
Other than that, have a great day! 🤪
Impeccable timing your majesty
I love your videos, Dave. I am also honored to share your first name. 😉 I've heard that we are the coolest dudes at the party! Who knew?✌️
Debt is always a bad thing, only in finance people treat debt as a normal thing.
Lenin summarised imperialism as follows: “Imperialism is capitalism at that stage of development at which the dominance of monopolies and finance capital is established; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun, in which the division of all territories of the globe among the biggest capitalist powers has been completed”.
Instead of doing a video specifically on the different kinds of tax revenues for the government, you should do one for all the major revenue streams for governments. In Canada, or at least in Alberta, where I'm from, the government keeps 85% of gambling profit. There are also business licensees, certifications, criminal charges, and things of that nature. I bet the government takes in a lot more money than they like to mention. Also, have you considered to do a video on lobbying?
Is government allowed to invested in profitable endeavors to finance its own budget ?
Failed to discuss intragovernmental holdings, where a large amount of govt debt is owed to the govt itself... It's not the same as the public debt. Also Social Security itself does not contribute directly to the debt (yet) as it has a separate trust fund. The problem is that lawmakers have raided the trust fund of around $2T, but blaming Social Security as it was conceived and deployed is like blaming an otherwise profitable business owner for being shaken down by the local mob protection racket.
Professor, If social security is an entitlement, why is it’s official name the “Federal Old-Age and Survivors Insurance Trust Fund”. It works like every other insurance program. So, is my homeowners policy an entitlement too? How about my health insurance? Dental? Boat? Are these all actually entitlements and not insurance?
I'd offer that the single biggest issue the U.S. has right now isn't government spending on CoVID (or, rather, the economic impacts of CoVID), or even how much we spend on the military (though both of those certainly are issues we need to deal with). In my view, the biggest issue we have right now is in the formulation of our Entitlements Program. The period between 1946 and 1964 (those years that we often consider the birth years for the societal group we collectively call "the Baby Boomers") saw a massive explosion in population (hence the name: Baby BOOMERS).
So, in the 60s, 70s, and 80s, the ratio of people paying into Social Security (there are other Entitlement Programs, but I'll just pick on Social Security to make a point) to people retiring and withdrawing from Social Security was quite high. The burden on those paying into the system at that time was comparatively low. Later, as the 'Boomers' began to retire and the next generations (with vastly decreasing birth rates) became the payers into Social Security, that ratio completely flipped. So, today, the ratio of people paying into social security to those withdrawing from it has fallen dramatically, which puts much more of a financial burden on those who are paying in today. It also explains why the retirement age continues to increase - to try to put more controls on the number of people withdrawing from Social Security in the hopes of forestalling its bankrupty.
We must eventually face the fact that unless something turns this trend around (that is, subsequent generations suddenly get the urge to start making more babies again) our current Entitlement System will eventually go bankrupt - it's almost inevitable I'd further note that I'm not arguing for people to start making more babies, since also looming is that as the Earth's population continues to grow at an exponential rate, the Earth will eventually go bankrupt, too, so to speak. We will eventually run out of space, raw materials, or both. If a retirement system is to last for the long haul, it must be based on something other than relative generational birth rates.
The ideal is to only spend based on taxes collected. Yes. 100% agree.
Why is this the “ideal”?
Because it is the ideal we CAN say that spending money that doesn’t exist is “bad” or “not good”. Just because the perception that the benefits outweigh the cons doesn’t change this ideal.
Just because the short term effects are desired & the long term effects out of sight & mind to the beneficiaries doesn’t change the reality. Someone or some group benefits from the unwilling sacrifices of others.
Short term debt is not good but with manageable side effects. But beyond that risk grows & controls weaken as debt increases.
This depends. If I privately want to start a business, I need to invest capital to begin with.
I can finance this in three ways:
I can take a loan. This is great if I can repay the debt reasonably quickly, I maintain control over my business.
I can ask for investments from others, but it I can't match them, how do I keep control over my business?
I can save for many years, and see someone else staring that business instead.
If I want somewhere to live, I can rent and wait forever to save money to buy a house or an apartment (witch seem to increase in price a lot over time) with a lower monthly cost than my rented accommodation, or I can borrow money at a premium, for the first years my living costs will be higher, but eventually it will probably be a sound investment. I live cheaper and my apartment or house has increased in value.
It is the same way with states.
War bonds is an extreme example,. where people buy war bonds which create money that is paid to workers in factories that produce equipment to fight a (defensive) war. If the state wait until it has collected that money from taxes, the war is already over and the aggressor now controls all the resources.
And what about education? How do you pay for education that will increase taxes in ten to twenty years time?
So being without debt is not ideal.
Another investment debt is student loans. If you work in low skill jobs and save for ten years, you might be able to afford a tuition-free four year education in your early 30s (finished by 35). Or you could borrow money in your early 20s and have a work that pays better by the age of 25.
But I suppose this difference between borrowing for investments (good), and borrowing for consumption (not good), could also apply to states, except what constitutes investment and what constitutes consumption might vary.
is it possible for the government to place some money in banks to get good returns?
what about stocks?
In many countries, governments have sovereign wealth funds that help prop up the budget and to support state pensions, but this alone is not enough to solve the problem.
The solution is higher taxes
@@MrAljosav higher taxes are definitely needed.
my favorite is an actual percentage gradient, where higher income gradually demands more taxes.
no more income class bs.
also, motor vehicles need to be taxed higher.
Adding to that is a noise tax, the louder your vehicle, the more you have to pay.
and a fuel economy tax, to incentivise lower pollution.
and definitely a much higher oil tax... we need to get off that stuff.
these solutions alone could boost the tax income by 60-270% (obviously just a guess)
@@WetDoggo In Australia we have a progressive tax system, where there's 5 tax brackets where the personal income tax rate increases from 0%, 19%, 32.5%, 37% to a max 45% as you enter the higher tax brackets. On top of that, we have GST (i.e. VAT), business/corporation taxes, levies (including a 2% levy to fund Australia's universal healthcare system - Medicare), flood levies (in some flood disaster years), luxury car taxes, trade tariffs. All of these are federal government taxes.
Then you have state taxes, which are mainly payroll taxes, land taxes, local council rates, registration fees, etc.
Even with all these taxes, sadly, the political will in Australia (by both major political parties) is to reduce taxes, which means more borrowing. Honestly, it's a terrible path the government is going down on. How are we supposed to pay for education, health, infrastructure, defence, etc? It's slowly becoming a user-pays system like in America, only at a slow generational pace.
The worse is yet to come, not just in Australia but everywhere, considering that most countries have an ageing population, except India, sub-Saharan Africa, and maybe South America(?). The ageing population is a serious issue for all governments, because as people live longer, they are more dependent on the welfare system to pay their pension, aged-care and expensive medical treatment like hip surgeries. So unless governments increase the pension age, the welfare system will cost significantly more in the coming years (particularly in health and aged-care), and is already unsustainable for many countries. Some countries have minimised the burden by legislating compulsory superannuation payments by employers which are only accessible after reaching the retirement age (65-67 in Australia), or by investing in sovereign wealth funds (like Norway which has the biggest wealth fund in the world, for a country of 5M population).
Other ways to manage it is by growing the population to help maintain the working population to pay for these expensive social programs, but that involves either immigration (not very popular in countries with xenophobic attitudes - see Europe as an example) or keep the birth (replacement) rate up high enough (2.1 births per woman in most developed countries). However, the birth rate in many developed countries is so low, that some countries are now facing a shrinking population (i.e. there were more deaths than births in China in 2022, with a net loss of ~850,000). The reason for lower birth rates is mixed, but mainly to do with younger generations shifting away from having kids entirely, or postponing it to much later in their lives to ensure they have a house and job security first before having kids, often resulting in smaller family sizes. In developing countries like Sub-Saharan Africa, the birth rate is still considerably higher than is actually needed, (i.e. Nigeria having an average 5.1 births per each woman).
So it's really a "wicked" problem (search it up) on how we manage this for future generations. Do we raise taxes (unpopular), increase immigration (also unpopular) or increase the retirement age (very unpopular)? Or do we do a mix of all three?
If we don't have a honest and frank conversation about the state of our nations, we'll have a Hunger Games situation where everyone fends for themselves, ultimately having a much bigger class gap, where the rich can retire happily and live long lives in their retirement and your average Joe living on minimal government support with a user-pay system where things are just too far out of their reach to afford, and most probably with a shorter life expectancy as a result of the system.
BTW, I'm not advocating for a communist utopia, but we must face reality and be pragmatic that the current system of income tax is not doing the job, and we must carefully target tax evaders, increase personal income tax on higher incomes, and most importantly educate the people on why we must do these things.
@@MrAljosav whoa mate you should write a book 😂👍
dude what a long comment 😁
it'll take me a while to finish this
@@WetDoggo Haha I'm passionate about the issue... and I'm not even an economist. I'm a civil engineer!
The 1% pocketed 50 trillion dollars in the last 40 years.
The national debt is 31 trillion.
If somebody stole your credit card and spent the last 40 years racking up debt on it, would you pay the bill?
As an individual, you'd probably notice the illicit spending long before 40 years transpired and would have canceled the card in favor of a new one. Unfortunately, governments can't just "cancel their card" and start over.
@@glennpearson9348 yeah but the government can damn well make the person who ran up the bill pay it. So can you.
Somebody stoled 31 trillion dollars from you. What are you going to do about it?
@@jeremygregorio7472 LOL! I think you're oversimplifying this just a bit. No one "stole" $31 Trillion. Over the years, Congress has approved $31 Trillion in spending that wasn't covered by taxes (which Congress also controls).
Name me a politician who got elected on the platform of: "Vote for me! I'm going to raise your taxes!"
Likewise, name me a politician who got elected on the platform of: "Vote for me! I'm going to cut spending on the military and Entitlement Programs!"
If we're looking to find who "stole" $31 Trillion, we should all start by looking in the mirror.
@@glennpearson9348 why are you defending billionaire thieves? You just like arguing online or are you being paid to do it?
@@jeremygregorio7472 I'm not defending billionaire thieves. That is your conclusion, not mine. I don't consider this an argument, I consider it a debate. However, if this conversation is making you cranky, I'm happy to desist.
You asserted this "billionaire thieves" hypothesis as if it were a fact. I'm just asking for your evidence.
I think it's true that extremely wealthy people could pay more in taxes, and it is true that the top 25% of individuals in the U.S. have or control perhaps as much as 95% of the wealth.
The problem with your conclusion, based on that information alone, is that the top 25% also pay about 89% of all income taxes received by the Federal Government. So, while there is a little bit of disparity there, I don't think it entirely explains where this $31 Trillion went.
My argument, on the other hand, is that this isn't just an issue of who pays how much in taxes. It also has to do with the people we elect and send to Congress - and what those Congressional representatives perceive are the interests of those who elected them. It is an historical fact that most people who are elected to Congress spend far more time debating what government should be spending its money on - not what it should NOT be spending its money on. They do that because that is either what we expect them to do, or because that is what they think we expect them to do.
Have you heard anything from Tour, aside from the one email he wrote back to you? I can't wait to watch this absolute bloodbath, that is if it even happens.
Calling Social Security an entitlement is twitch-inducing. Social Security holds funds in trust for account holders (citizens). Separate contributions fund Social Security, and recipients of payments are receiving a purchased benefit, not a government hand-out. "Entitlement" is a weasel word used by "budget hawks" to make recipients of benefits appear to be a drain on the economy, and promote casting already disadvantaged people into further disadvantage.
The word 'entitlement' does not mean 'government hand-out.'
A title is a charter for a thing that is owned -- house, car, etc. -- therefore to en-title is to confer, or recognize, rightful legal ownership of the thing denoted by the charter... or the 'entitlement.' In this case, as you suggest, the stream of Social Security benefit payments is the thing that is owned (earned as matter of law, not 'purchased'), or the thing to which eligible beneficiaries are entitled to receive.
Most people who misunderstand such basic terms as this really just need to make acquaintance with a dictionary.
@@patrickburke6789 Thank you for the etymology lesson. I laud your pedantry. I was referring to an actual common modern usage (which I intended to indicate with the phrase, "weasel word used by "budget hawks" to make recipients of benefits appear to be a drain on the economy" ). As for whether the benefit is purchased, try to collect Social Security benefits without having paid in. The only words for which dictionaries don't lag behind actual usage is when words fall out of use.
Hey Dave, I haven't any knowledge on this topic. But my country is going through a tough financial period so I thought I'd learn something about it. Forgive me if i sound really dumb but why can't my country simply just print more money? The dollar rate here is currently 260 PKR per dollar. So if 260 PKR means 1 dollar, why can't we just print a billion PKRs and make a ton of dollars in exchange for it?
Because if you do that, then everybody will want to trade in their PKR to dollars. The forex banks that trade currencies will realize ”hmm, a lot of people are trading PRK for USD lately. we should increase the price.” This means you now have to pay even more PKR than you started out with, effectively making the venture worthless.
If the forex banks don’t raise the price, then they will run out of dollars and go bankrupt. Banks going bankrupt is one of the worst things that can happen, because people would lose all their savings, so you’d want to avoid that at all costs.
Domestically, it will lead to inflation if you put that newly printed money into circulation. If everyone has a bunch of PKR, they will go to the store and buy a bunch of stuff they couldn’t afford earlier. The businesses will realize the same thing as the forex banks did, and will either raise prices, or they will run out of goods. Imagine going to the store to buy bread but all of the shelves are empty. Not a good idea.
@@puernatura8998 Thank you for your time.
Okay i got it. But what if my Govt doesn't put the money into circulation? Just keep the money to them selves and use it to get dollars which they keep themselves and then pay off the debt? No one other than my Government would then be exchanging for dollars. So how would the forex banks come to the realization that "hmm a lot of people have been exchanging for dollars".
@@novaapostle9739 The simplest way I can put it is, the moment that your government trades your PRK, it is put into circulation. Think about it: what is the forex bank going to *do* with the PRK that it just got? It's not going to sit on it. It's going to spend it, specifically in the form of loans. The forex bank will loan out that money to your country's people, and they will in turn spend it. In short, it's impossible for a government to spend money without it entering circulation. Any money that the government "prints" will always eventually end up in the hands of your citizens.
@@novaapostle9739 "keep the money themselves and use it to get dollars" the money has to go somewhere to get those dollars. You can't just hold onto the money and say "gimme dollars please"
Plus, any exchange is paying incredibly close attention to the amount of money countries print. So they'll know and peg the value of your currency as lower, since there is more.
@@SECONDQUEST okay got it. Thanks a lot.
So then why can't US print dollar? They don't have to exchange it for some other currency. Why can't they just print a ton and have unlimited money?
💓💓💓love u brother
and?>>
happiness,in slavery
👏👍
A good way to keep people informed considering our current risk of having our economy crash if we don’t increase the debt ceiling
The debt ceiling is made up. It needs to go. It's just a way to have the rightwing threaten to pull down the whole economy if they don't get what they want.
@@macy1066 The debt ceiling is most definitely not made up. You are welcome to explain why do you think it is
@@Power_to_the_people567 You're saying the government has to stop operations because a debt number is reached. The US suddenly cannot sell one more bond? Rich people will not continue to buy US bonds when that number is reached?
And that number can magically get moved like it has loads of times before...
I don't think you want to save democracy.
@@macy1066 “You’re saying the government has to stop operations because a debt number is reached”
What a way to build an entire straw man around what I said.
Did I say the government will have to stop operation? No
Did I say The US cannot sell more bonds? No
Did I mentioned anything about rich people?No
You simply are arguing a strawman. Yes, the debt ceiling can arbitrarily be increased. However, if it is NOT increased(Which is what republicans generally support), there are multiple roads that have to be taken in order to keep our debt below it. Those roads can lead to economic crisis, I can lead to underspending. Spending would likely have to be cut in multiple government institutions in order to keep spending on other avenues while the dept ceiling is not moved. It doesn’t mean the government suddenly shuts down, it simply means less spending. “Less” spending does not equal “No spending at all”.
I dont know what purpose does your last statement have do do with any of this conversation. Seems to be like you just wanted to feed your ego and try to attack me personally instead of focusing the conversation on the topic. It shows the lack of confidence you have on your opinion in this market place of ideas we call democracy.
I have stated the debt celling is made up and needs to go. It's only there to help the rightwing get what they want.
And cuts? OK, we'll give you a big cut. The whole military goes, but what you mean by cuts is what you want to be cut.
You do not want to save democracy.
Your content is some of my favorite. Do you have any plans to release a video regarding anything in the recent train derailment in Ohio?
Government spending in itself is what governments are supposed to do to provide services for the citizens of that government. Taxes in itself make sense to be able to afford projects like making roads and utilities. But there is a problem when the government spends too much, causing inflation which harms the poor the most becaus the rich usually have enough money to afford goods despite inflation, but the poor might not be abl to afford food or gas under high inflation.
The increased government spending for bailouts can be good, or bad, depending on the circumstances. But the current US spending is too much compared to the debt Te debt has been increased by trillions in 2 years, which is just too much. The US government needs to limit its spending but they have made deals with certain companies or industries to push that industry, such as the increased subsidies for battery powered cars under Joe Biden and the cutting of all subsidied on oil and gasoline cars.
Government can go into debt and its fine, but over time too much debt without the growth to offset that is not good for the economy.
This seems what you get when you have someone who is better editor than producer or camera talent sounds like your reading text book too fast
Um, the pace is fine.
@Professor Dave Explains maybe it's just subject matter hard to get I to $ tax issues
goverment should not use the darn central bank thing. ah well.
Central banking is one of the best inventions in the history of economics. Abolishing it would be a disaster.
@@puernatura8998 it has been grossly misused since the neoliberals like Reagan and Thatcher took over though. Silverado come to mind?
Do philosophy more, don’t do economics anymore. This is incredibly ideological topic, and you’re unknowingly reiterate tired neoliberal dogmas that are either wrong, or misleading or inconsequential (like debt/GDP ratio).
You’re not equipped to do this if you’re not prepared to study Marxism, Keynes and MMT first.
It's not "ideological", and there's no "dogma". This is high school level economics content written by a high school economics teacher. Get your undeserved pat on the back elsewhere, champ.
the rise of a dynasty
Government spending ain't mostly made of taxes recieved as you suggest. Governments have wide range of revenue sources.
Such as?
@@SECONDQUEST royalties, leases, revenue from government owned enterprises etc
@@Dopaaamine27
Most recent data (2021)
Total federal revenue = 4 trillion
Pesonal income tax - 2 trillion
Payroll taxes - 1.3 trillion
Corporate Tax - 372 billion
Over 90% of revenue is from taxes.
@@jpt7342 bro what makes you think US government is only government in the world. For usa it mayne the case. Not everywhere.
@@Dopaaamine27 Because Professor Dave is talking about the US Federal government. This tutorial is based on high school level information.
Mandatory spending: requiring by federal law to keep an active dozen aircraft carriers that are tactically worthless.
Military spending is, by definition, discretionary, not mandatory. I know plenty of Navy officers who would disagree with your assertion that aircraft carriers are tactically worthless. For example, if we didn't have them, the Gulf War would very likely have turned out quite differently. Aircraft carriers allow the U.S. to project power quite effectively.
@@glennpearson9348 They are only good to bully third world countries, other than that they've long gone the way of the battleship. Mandated as in by federal law.
@@Breakfast_of_Champions You are, of course, entitled to your opinion as to their usefulness. I'm simply pointing out that there are many in our military who would disagree with you and could show strong evidence for their arguments, just as I'm sure you have strong evidence for yours.
@@glennpearson9348 No problem, your military hasn't won a war in 80 years and it's OK if they are lagging a bit.
Adam and eve did not need money to survive
They also didn’t exist.
So we have to raise taxes, that's what I heard.
And before you say anything , Yes to all your hypothetical back-sass questions because of course it's gonna get harder. We could also decrease military spending, but I'm sure we don't agree on anything now.. so don't @ me bro unless you have a solution you can share without your ego holding the mic.
Good Day👍🏽
100 percent Debt to GDP ratios are an arbitrary metric. Japan ran over 250 percent for decades with no ill effects. In fact, inflation in Japan was at zero during most of that time. This real world example flies in the face of the theory that going over 100 percent Debt to GDP ratios will necessarily cause inflation.
"Japan ran over 250 percent for decades with no ill effects. "
I don't think you will find that to be the actual case. They played up their economy as an act, quite deliberately. neoliberals took notice and did the same for Western democracies as well. Starting with Reagan and Thatcher, they just made a mockery of actual constructed economies, and went with the pure sham model instead. It has NOT ended up well. you would see this if you didn't buy their crap to begin with. Hell, even BUSH sr. tried to warn everybody by calling it voodoo economics.
@@thomasneal9291 theory says that debt like that would lead to serious inflation problems. please explain why Japan had no inflation problems after doubling their money supply.
@@thomasneal9291 voodoo economics is a description given to the supply side economic theory of Reagan's campaign organizers. Reagan's own economic advisors admitted that it was all magical thinking. supply side economics (Reaganomics) has been proven wrong so many times it is hard to count. Ask Sam Brownback and Grover Norquist and Art Laffer about it. I have. I have spoken with all of them. I have interviewed the Kansas Republicans who for the first time in their lives voted for tax increases, to save the state following the catastropic disaster that followed the loss of revenue of Sam Brownback's self-described "great conservative experiment" in which he put Reaganomics to the test yet again, not realizing how catastrophically this always, always fails. I have been there every step of the way, watching day by day. But my point was not about supply side economics, it was about basic monetary theory. The US dollar is the world's reserve currency. That is important and it means the monetary rules are different for us than anyone else. Also, our debt is denominated in our own currency, which matters a great deal. These are deep topics, each. If you would like to dig in, let's do it. Let's start with the very idea of money, what it is, and where it comes from. Tell me about what you know about the closing of the Nixon shock when he closed the gold window. Go.
Sovereign debt is different than foreign debt. This is an important distinction. Also important is the fact that the US dollar is the world's reserve currency. These two factors are important. Because most of US debt is not foreign, the US does not have to acquire foreign currency to pay it off. The US owes people something that only the US can create an unlimited amount of. There never need to be even the possibility of defaulting on that. Again, other countries that are not the creators of the worlds reserve currency and who owe money in foreign debt obligations - think Greece owing Euros - another story. The US is not Greece and it is important to understand that difference
Pay child support Dave
Yeah, what?
Second