Progressives are wrong about stimulus checks

[Hardkill]

Progressives right now have become very upset that Biden and conservative democrats such as Manchin have now blocked $1400 stimulus check for about 17 million Americans after tightening income eligibility. I get that Progressive Democrats want the government to be as charitable as possible to every US citizen out there who has been suffering from the COVID pandemic; however, what they are not taking into account is how much the $1.9 trillion stimulus package is already going to raise the national debt significantly. So, if the government gave even way more money than that to several million around the country then obviously the national debt would get even worse. Also, another thing that progressives are not realizing is that, according to the mainstream news, most people who already got the first two previous stimulus checks didn't even end up spending theirs on anything because it turns out that most people who've received stimulus checks before actually didn't really need them in order to survive. So, while I generally don't like conservative democrats like Joe Manchin, I actually think that he made a valid point when he said that wants the stimulus checks targeted as much as possible in order to make sure that the government doesn't waste it's money on those who don't need it.

[Thought Art]

https://www.amazon.ca/Deficit-Myth-Monetary-Peoples-Economy/dp/1541736184/ref=sr_1_1?dchild=1&hvadid=351480966897&hvdev=c&hvlocphy=9000062&hvnetw=g&hvqmt=e&hvrand=5340639548046077707&hvtargid=kwd-774902124190&hydadcr=23339_9622019&keywords=the+deficit+myth&qid=1614906145&sr=8-1

[aurum]

2 minutes ago, Hardkill said:

however, what they are not taking into account is how much the $1.9 trillion stimulus package is already going to raise the national debt significantly. So, if the government gave even way more money than that to several million around the country then obviously the national debt would get even worse.

I would argue the debt is a much more complicated issue than that.

Yes, the debt isn't good. But the debt caused largely by our monetary system, which only creates money as interest-bearing debt. There is no inherent "budget" for government money, money does not exist. It is created entirely out of nothing at all.

You're not solving the debt crisis without changing the monetary system or a debt jubilee. Maybe both.

Of course, in a practical sense, governments do have budgets. But this misses the point. If we have social problem, lack of money should not be a obstacle to solving that problem. Money should only serve as a tool to coordinate human activity, not something that enslaves us to it.

Also, we have to consider how the current budget is allocated. Are we wisely spending the money that is in circulation? I'd argue we are not.

Conservatives often are concerned about the budget until it's time for spending on what they want.

Finally, we also have to consider that stimulus = people spending money = taxes = government revenue = able to pay off the budget. It's not like you're just throwing it down a hole.

13 minutes ago, Hardkill said:

Also, another thing that progressives are not realizing is that, according to the mainstream news, most people who already got the first two previous stimulus checks didn't even end up spending theirs on anything because it turns out that most people who've received stimulus checks before actually didn't really need them in order to survive.

I would fact check whoever said this.

Considering most people are in debt and living paycheck to paycheck, it's hard to imagine anyone who couldn't use the money.

I'd argue this narrative is just an excuse to not send out stimulus money.

19 minutes ago, Hardkill said:

So, while I generally don't like conservative democrats like Joe Manchin, I actually think that he made a valid point when he said that wants the stimulus checks targeted as much as possible in order to make sure that the government doesn't waste it's money on those who don't need it.

Again, I really have a problem with this narrative.

The government does not "have" a limited amount of money. It literally just creates it. It can create as much as it wants as long as you account for inflation.

The problem is more so the monetary system. It is old and needs to be redone.

For now, send the stimulus money. We had no problem doing huge amounts of stimulus for corporations when the pandemic hit, why are we suddenly on such a shoe-string budget now that it's about the average person?
 

[commie]

This "national debt" is irrelevant. The issue is that helicopter money is a wasteful. But there's a reason for this waste: there is no system in place that could support most of the people in need in a targetted way or supply essential goods and services to the population. Meanwhile much of the population has financial obligations it must service and there is no rational system to provide relief on that front either.

Arguing that most people didn't spend the previous checks is asinine. The whole point was to support the ones who did spend them in a fair way. You do that by increasing the net wealth of the more conservative or skillful planners. You want to reward the savers who are financing this "national debt" along with countless businesses and so forth, not incentivize people to spend money on whatever. If you have a problem with that, you might as well have the Man seize everyone's assets, because they didn't spend their wealth and therefore don't need it. That would take care of this "national debt". Go ahead, make my day!

I also refer you the UBI thread.

[Hardkill]

2 hours ago, aurum said:

I would argue the debt is a much more complicated issue than that.

Yes, the debt isn't good. But the debt caused largely by our monetary system, which only creates money as interest-bearing debt. There is no inherent "budget" for government money, money does not exist. It is created entirely out of nothing at all.

You're not solving the debt crisis without changing the monetary system or a debt jubilee. Maybe both.

Of course, in a practical sense, governments do have budgets. But this misses the point. If we have social problem, lack of money should not be a obstacle to solving that problem. Money should only serve as a tool to coordinate human activity, not something that enslaves us to it.

Also, we have to consider how the current budget is allocated. Are we wisely spending the money that is in circulation? I'd argue we are not.

Conservatives often are concerned about the budget until it's time for spending on what they want.

Finally, we also have to consider that stimulus = people spending money = taxes = government revenue = able to pay off the budget. It's not like you're just throwing it down a hole.

I would fact check whoever said this.

Considering most people are in debt and living paycheck to paycheck, it's hard to imagine anyone who couldn't use the money.

I'd argue this narrative is just an excuse to not send out stimulus money.

Again, I really have a problem with this narrative.

The government does not "have" a limited amount of money. It literally just creates it. It can create as much as it wants as long as you account for inflation.

The problem is more so the monetary system. It is old and needs to be redone.

For now, send the stimulus money. We had no problem doing huge amounts of stimulus for corporations when the pandemic hit, why are we suddenly on such a shoe-string budget now that it's about the average person?
 

So, then why can't the government give out direct checks of $10,000 to everyone within the country?

[Lews Therin]

@commie what they could do is hand up contracts asking the people if they really needed to use it. if they didn't use it on something important it's a contract breach.

That way no one is forced to anything they don't agree to.

[Thought Art]

@Hardkill Lol maybe because they are busy building bombs with 60% of your tax payer money

Edited March 5, 2021 by Thought Art

[aurum]

16 hours ago, Hardkill said:

So, then why can't the government give out direct checks of $10,000 to everyone within the country?

It's a good question.

Partly because people like Joe Manchin would never vote for it.

You also have to account for inflation. Pump too much money into the system and and you risk devaluing the currency.

But as I said before, I feel the biggest problem is with the monetary system.

People who say "who cares about the deficit, rack it up as much as you want" are half-right. They're right in the sense that governments do not technically need to keep balanced budgets to operate thanks to their ability to create money. In that sense, they are not like a household that must budget.

But the debt is still highly problematic. Because debt is what keeps the hamster wheel of capitalism running.

As long as you are in debt, you must keep working. But our debt is a constantly growing, moving target because of how the monetary system works. We will never, never, never pay it off. It is mathematically impossible. And even if we did, it would simply start growing again and we'd be right back here.

So in practice, huge stimulus like 10k checks for everyone would be problematic. You'd either have to pull huge amounts from other places in the budget, like the military (good luck with that). Or the government would have to create it as new money, which would inevitably would drive up the debt by some degree.

But these are very different reasons than what conservatives usually give, like "people don't need it" or "people won't work".

[commie]

$10K per US resident would be significant but isn't a huge amount... irrational and disruptive for sure but certainly possible and no game-changer.

1 hour ago, aurum said:

As long as you are in debt, you must keep working. But our debt is a constantly growing, moving target because of how the monetary system works. We will never, never, never pay it off. It is mathematically impossible. And even if we did, it would simply start growing again and we'd be right back here.

Nonsense. Show us the math you're talking about.

[aurum]

2 hours ago, commie said:

$10K per US resident would be significant but isn't a huge amount... irrational and disruptive for sure but certainly possible and no game-changer.

I agree, I would actually be in favor of it if I thought there was a the right economic plan in place to make it happen.

2 hours ago, commie said:

Nonsense. Show us the math you're talking about.

Happily.

It is very simple if you understand the monetary system and how money is actually created.

Money is not created by the government printing paper. At least not any significant amount of it.

The vast majority of the money supply is loaned into existence via commercial banks and the fractional reserve system.

In this way, every $1 dollar created is the equivalent of $1 of debt created. Money actually equals debt. There is a one to one ratio in our current system.

If everyone paid off their debt tomorrow, including governments, you would completely destroyed the money supply. There be nothing left.

In sense, as long as we need money and keep our current system, it is impossible to pay off all debts. There be no more money.

BUT it is actually far worse than that.

Because a loan from a commercial bank never comes with 0% interest. There is always some amount of positive interest attached to any loan, e.g 4%, 8% etc.

So in reality, you didn't create a one to one ratio of money to debt. You created MORE debt than money. Because someone has to pay not only that loan back, but also the interest.

Compounded over time, there is no other option but for exponential debt to accumulate. However fast the government thinks they can pay it off with taxes, it will never happen. Which is of course why they never have been even close to doing so in over a hundred years.

 

Here are independent sources backing up what I'm saying:

 

And if you really want to go deep:

 

Edited March 5, 2021 by aurum

[Consilience]

@aurum Thank you so much for this simple explanation. I honestly had no idea this is how our debt/money supply system worked...

This seems like a complete disaster waiting to happen, just waiting for an exponential take off in debt from interest. 

[commie]

26 minutes ago, aurum said:

Happily

Yet you have not shown any math, only asserted falsehoods and reposted mis/disinformation.

Please stop misleading the naive. Case in point:

17 minutes ago, Consilience said:

@aurum Thank you so much for this simple explanation. I honestly had no idea this is how our debt/money supply system worked...

This seems like a complete disaster waiting to happen, just waiting for an exponential take off in debt from interest. 

Funny that the disaster hasn't happend by now... as if your learning for simplicity has made you believe in yet another fairy tale.

Edited March 5, 2021 by commie

[aurum]

4 minutes ago, commie said:

Funny that the disaster hasn't happend by now... as if your learning for simplicity has made you believe in yet another fairy tale.

Where is what I said wrong?

I am open to critique. That is the point of this dialogue. But so far in both your responses you have provided no counter points, you've simply dismissed mine as naive and simplistic.

22 minutes ago, datamonster said:

Government debt doesn't work like personal debt. It doesn't need to be paid off completely, money just has to keep flowing.

I am not comparing government debt to personal debt. I'm aware of MMT and its ramifications.

26 minutes ago, datamonster said:

This is not a problem as long as you have a strong currency like the USD or EUR because then you can basically create money to pay your debt.

Exactly. You're essentially talking about a ponzi scheme. Create more money to pay off your debt, which then creates more debt, which means you need to create more money, which means more debt, ad infinitum.

It is a problem, because more debt essentially equates to more economic activity. Which equates to environmental pressures on a finite planet, as well as psychological limits of people continually having to work to service debt.

35 minutes ago, Consilience said:

@aurum Thank you so much for this simple explanation. I honestly had no idea this is how our debt/money supply system worked...

This seems like a complete disaster waiting to happen, just waiting for an exponential take off in debt from interest. 

You're welcome.

Don't feel bad, most people don't have any idea because it's never taught. I myself would probably have no clue except that I studied economics at university.

As far as the disaster waiting to happen, I'm more optimistic. It is unlikely that any government will default, it would simply be too big of a collapse. They will likely keep creating new money to pay down the debt as @datamonster mentioned.

That said, I still find it a highly problematic. The modern monetary system was largely created at Bretton Woods after WWII, and it feels to me that it is starting to outlast its usefulness.

[commie]

2 minutes ago, aurum said:

I am open to critique. That is the point of this dialogue. But so far in both your responses you have provided no counter points, you've simply dismissed mine as naive and simplistic.

Math I could have dealt with. A short formal argument would also be workable. But I can't read your mind to understand what on Earth you find convincing in what you posted or where you went wrong. And debunking every falsehood you wrote while providing enough background information that everyone might understand all possible mistakes that might lead someone to be convinced by each of the falsehoods would be a full-time job requiring pedagogical talent I lack.

The best I can reasonably do is take a guess at what, assuming you're sincere, might be your central mistake and then address that. So here goes: you basically say that debt has to grow because of interest. But of course that only works if you assume that the interest is not spent on goods and services, taxes or asset purchases. Failures to pay interest or pay back the principal should also be taken into account but even with the unrealistic assumption that lending is risk-free, your argument wouldn't work. One could try to rescue this argument by tying it to irrelevant falsehoods or fallacies but I can't possibly debunk all of the potential falsehoods or fallacies which could be use to buttress such an argument...

If you want more, focus on whatever you think is important and write down something like a formal argument listing your assumptions. If you did that, you'd probably be able to debunk yourself. If not, it would be much easier to provide assistance.

[Lyubov]

lefties online have been losing their shit over this complaining about dems failing and how they will be slaughtered in 22. same with the 8 dem senators voting against $15 minimum wage. really not sure where I stand on this. ideologically I would like both to happen but I don't know the full systemic under-workings and I'm tired of a hasty and reckless government like the last administration. 

[aurum]

27 minutes ago, commie said:

Math I could have dealt with. A short formal argument would also be workable. But I can't read your mind to understand what on Earth you find convincing in what you posted or where you went wrong. And debunking every falsehood you wrote while providing enough background information that everyone might understand all possible mistakes that might lead someone to be convinced by each of the falsehoods would be a full-time job requiring pedagogical talent I lack.

The best I can reasonably do is take a guess at what, assuming you're sincere, might be your central mistake and then address that. So here goes: you basically say that debt has to grow because of interest. But of course that only works if you assume that the interest is not spent on goods and services, taxes or asset purchases. Failures to pay interest or pay back the principal should also be taken into account but even with the unrealistic assumption that lending is risk-free, your argument wouldn't work. One could try to rescue this argument by tying it to irrelevant falsehoods or fallacies but I can't possibly debunk all of the potential falsehoods or fallacies which could be use to buttress such an argument...

If you want more, focus on whatever you think is important and write down something like a formal argument listing your assumptions. If you did that, you'd probably be able to debunk yourself. If not, it would be much easier to provide assistance.

I would like to continue this conversation but I will not. I find your rhetoric unnecessarily rude and combative.

[Heart of Space]

Debt created by the central bank doesn't matter.  It's effectively a zero interest loan that never has to be paid back.  

The only issue is inflation from injecting large sums of money into the economy.  

Our debt will expand to infinity, it does not matter in the way you think it does.

[Heart of Space]

8 hours ago, aurum said:

So in practice, huge stimulus like 10k checks for everyone would be problematic. You'd either have to pull huge amounts from other places in the budget, like the military (good luck with that). Or the government would have to create it as new money, which would inevitably would drive up the debt by some degree.

Nah, you literally could give everyone 1 trillion dollars without reducing government spending 1 dollar.  

Obviously that would be catastrophic, but it's possible in our current system.  

The debt number is entirely irrelevant.  The only thing that matters is inflation rate, that's it.  That's the only limiting factor.