OF COURSE the government wants to predict a scary crisis, in order to fool gullible taxpayers into agreeing that the programs that are targeted by the austerity-driven neoliberals are dangerous to the economy and have to be ended.
They never predict a scary crisis for the vastly bloated military expenditures.
But I’m still wary. I have heard Randy say that too much saving has never been a problem before and you, Stephanie, saying savings are a good thing.
But does it mean creating unlimited yellow money into a financialized economy is entirely benign? I suspect it’s what governments do to keep asset bubbles inflating and turbocharge inequality.
So there, I said it. MMT makes a lot of sense but not creating savings like we’re doing today. At least let’s add one of Warren’s suggestions - a zero interest rate - if we’re going to create savings let’s not pay interest. His other three are: fully backed bank deposits, unlimited fixed-price shares, and no tax advantaged savings. Can someone start putting these on the table, please?
You are so full of Schiff. But you know that. If it is too good to be true, do more!
Let's get wonky. The baseline changes, and only for the better, because we no longer "Assume added deficit spending from Social Security and Medicare Part A". R does not matter, G neither. We just won't pay! And if we do, the debt problem goes away anyway. Why, we'll just create more loot the value of which the suckers will never figure out has no value anyway. The quantity of money is infinite, the tax is confidence, the scheme ever ongoing. MMT baby.
So its OK that we just spend it all, and maybe just a little more, for our favorite honey pot NGO's through USAID. We are entitled to. Manifest destiny. We'll tell "them" it's backed by Joe Biden's face on Mount Rushmore ;) Why not? We have a right, to it all, and more, Elon Musk be damned. It's what the people want. They just may not know it but we will tell them when the time is right and their small brains can take it in ;) Debt to GDP never really mattered because your loot and the debt is worthless anyway! Only suckers thought we might pay it back. C'mon.
Those darn right wingers don't realize, we have forever money. We reject the very premise of a sovereign debt crisis under easily understood planetary/ecological concerns that are derived from too much worrying. Forgetaboutit. Spend baby, debt is equity and a right of Empire. What could go wrong?
A bit of a rant? I have concerns with the amount of savings being created today, too, but not with the basic tenets of MMT. It seems you may?
MMT does not say everyone can stay home and be paid by the state. But it does say the state’s spending becomes its income and we can afford to educate our kids, look after our sick and give retirees a decent lifestyle.
If none of this is true then it makes me wonder what the point of it all is? Is your world view really that bleak?
MMT is BS. And the spending of government is not its income. Otherwise Government could just give everyone a million bucks a year and be done with it. AOC I sure is for that.
My world view is not bleak. That said the sooner we get our debt payments lower than what we spend on our military and cut out ridiculous waste, wars and aid we cannot afford, we might yet again become a place that people aspire to emulate.
There's this tiny problem called inflation, and the rampant psychological impact that would have. There IS limit on handing out cash, because there are limited things to purchase with it. Perhaps this nuance isn't possible.
Jen, i think you are right. Stephanie says she addresses that in new book. last i heard she relies on taxing the rich to tame inflation. i don't think the rich will let her do that.
Taxing the rich helps prevent them from becoming oligarchical and buying off politicians. Taxing wealthy CEOs forces them to invest more in their company and employees and finding ways to reduce their taxes that way rather than becoming a monopoly.
Kelton discusses the limits of spending at length in The Deficit Myth. She also discusses the huge problems created when the fed has a balanced budget. Even worse if it runs a surplus to pay down this imaginary debt.
i'll have to look at Deficit myth again. I don't remember what she said about limits of spending. i think she said they would tax the rich to limit inflation.
and yes, balancing the budget has always been counter productive.Even FDR caused a recession when he tried to balance the budget in 1937. I don't know the details, but i think the recession was short. FDR could learn from his mistakes.
Tax the rich... Of course, they should pay "their fair" share in the ponzi scheme the Elite has on offer ;)
A few facts....
Do you know the bottom 40% already pay zero effective tax? The bottom 50% less than 3%. Is that a fair share! In fact, after transfer payments and taxes, the bottom 20% of families actually earn more than the next 20% of strivers. Wow. Talk about "Fair Share". No wonder labor participation is so low. Why work at all.
The top 1% pay 40%+. The whole scheme is an inflation confidence game. A Fabian wet dream concocted by the Elite to separate private individuals from their earned wealth and property. The top 10% pay 72%. Oh my. It seems to me that Kelton's scheme is really just class warfare on steroids all paid by the other guy, fiat currency and debt and directed by the Administrative State. Of course, Kelton must see herself a part of the crowd. If tax doesn't work the tax of inflation does. Don't worry folks, it's all fair for the many. It is a giant race to the bottom... Lunar. Debt is really equity, drink up folks!! It is on the house baby.
What am I missing?
The Beatles understood well
Let me tell you how it will be
There's one for you, nineteen for me
'Cause I'm the taxman
Should five percent appear too small
Be thankful I don't take it all
'Cause I'm the taxman
The Stones too, Exile on Main Street baby. You leave... Bye
you are missing a lot. nothing you have said suggests you will ever stop missing a lot. ALL savings and investment vehicles depend on future investors or customers. a Ponzi scheme is a fraud that has no way to attract new investors once the lie is exposed. SS has an infinite supply of new investors who understand they need a reliable safe way to save for the day when they can no longer work, SS has paid back every investor with real interest for ninety years..because most people are not stupid...or at least were not stupid until the rich liars fooled people like you.
Trust me, the Beatles are are great musicians, but they do not understand national economies. neither do you. aside from SocialSecurity, a Nation needs money to do the things that individuals cannot do themselves...national defense, andthe general welfare...well being ,not the dole. the poor do not have enough money to pay for all of this, so the rich have to pay most of it because they have most of the money. you and the free-money people canot understand this and i have wasted my time trying to explain it to both of you. It sounds pretty stupid to me to claim "the elite" are responsible for "tax the rich." who the heck do you think the elite are?
That’s a strawman. Nowhere in MMT do they support unlimited government spending with no taxation. Nowhere. In fact, they are quite adamant that it would be a terrible path to go down.
i hope you are right. from the commenters here, I get the idea that that is what they expect.
meanwhile.. so far, i think mmt is a perfectly good theory and that it would help stop the Big Deficit lie. But I am not so sure it solves the problem of who gets the money.
DFW, you are right and make it clearer want MMT hopes to accomplish. David's rant contains not a single referece to reality. or repeats the hysterical claims of the Musks and Trumps.
i think you need to include that state spending becomes its income only if the spending generates more production. that's what all banks and modern economies understand. but there are limits. making it official policy opens the door to spending..possibly more for the rich than the poor. I haven't seen MMT address that problem. maybe they have and i just haven't seen it.
What you wrote is at best an incomplete argument. I don’t buy it. Let’s say we follow your argument to the logical conclusion, may I ask what is the implication to GDP (the denominator) growth of fully taxing to pay for the social security/medicare payment?
Is it likely the GDP growth would be less if the social security/mediare payment is fully taxed, so that you would still end up with the same scary-looking ratio, just that the numerator did not explode, but the denominator implode?
Btw, I’m an actuary, and I don’t know the answer yet, since I did not build an APL model that can dynamically model the interaction of the numerator and the denominator.
evidence that concluded that currently available historical data do not support the proposition that social security reduces private saving, and an ...
if that is addressed to me i did notmention taxing SSS benefits at all. As for SS benefits/SS payroll tax, the effect on GDP is zero. the money that is taxed away from the worker goes immediately to benefits to the retiree (who paid for them while he was still working) who spends them back into the economy. a deeper analysis might show some effect, but 1) as we have learned "deeper analysis" is ofter wrong, and 2) GDP is not a useful measure of the well being of the people or the country as a whole (except possible in terms of a deeper analysis: more money/production does make it possible for a bigger stick to keep our enemies at a respectful distance. I don't guarantee any of this except that one tenth of one percent of payroll will make SS solvent forever and that means keep you out of severe poverty in old age or disability.
by the way, the deputy chief actuary and SSA agrees with me. so does the American Academy of Actuaries.
My comment was mistakenly addressed to you, sorry. But I appreciate your helpful reply nonetheless. I am not convinced the net effect on GDP is zero between the two cohorts of people one of which are workers, and the other are retirees. I would think there would be SOME impact on the denominator. I just don’t know how much. I suspect the actual line is somewhere between the two lines shown by the SS actuary
i wasn't sure who your comment was addressed to, but since it's a subject i think i know a lot about, i was glad to try to answer it. i think it is a mistake to look at it as two cohorts, any more than you would think of the guy who withdraws some money from his savings account on the same day as someone else deposits money into his own savings account...regard them as two cohorts.
you have been led to think of them that way by people who want to preend that "the young" are paying for "the old." and sow discontent about SS.
in any case I don't see what effect it has on GDP. the retiree contributed his production to GDP when he earned the money. he saved the money via SS...that is he deferred the consumption he had earned aright to. just as the still-working, and saving, worker his making his contribution to GDP and deferring his consumption. the older retiree will get more money "right to consume" than he gave up...just as all savers and investors expect...from the meanwhile growth in the economy which he helped happen. and the still=working peron will get the same "interest." this is the ordinary way money and savings work. call it something else if you like, but you will be misleading yourself. I don't know what two lines shown by the actuary you are referring to.
concentrate on what SS DOES, not on some vague idea of "SOME impact." There are no doubt secondary effects, but there are secondary effects from everything. any effect is likely to be positive, as workers who have some security are more likely to spend, more likely to take risks, and certainly buy more during retirement.
Somewhat related: I'd love to learn more about how SMI (Medicare parts B and D) "has the legal authority to pay full benefits if the trust funds are ever exhausted," as written in The Deficit Myth.
How exactly did that legislation get designed that way? And why didn't did lawmakers try to design the other entitlements that way (i.e. funded by "federal contributions from the Treasury" as I've read in a few places)?
stay tuned. I can talk about it until you understand it. but right now we start from such different knowledge that it would be hard to understand each other. to start with Social Security was designed to NOT be funded by contributions from the treasury, but to be paid for by the workers themselves (they get their money back about three times over...paid for by the growth in wages over time.) the trust fud should not be exhausted...it is only a bridge over times of less income from taxes than needed to pay benefits..but that bridge is paid for by the workers themselves. the problem is that we have not raised the payroll tax to keep up with rising life expectancy. please not again that the needed incrase is very small. and stop expecting someone else to pay for your groceries.
As a casual student of MMT, I am familiar with the dictum that the federal government's deficit is the private sector's surplus. However, in the first graph in this email, it appears that the debt declined during the post-WW II years at the same time that there was broad-based prosperity, which would seem to conflict with that dictum. That prosperity continued until the early 1980s when the Reagan revolution kicked in, generating sharp increases in the national debt which continued until under the Clinton administration, when there was an actual federal surplus for a few years. GWB then introduced tax cuts while waging two wars and we also hit the 2007-2009 financial crisis and later still the pandemic, all of which saw huge annual deficits which continue today. But despite this prolonged period of high annual deficits, the middle class has not seen steadily rising inflation-adjusted incomes. I attribute this to those Reagan and Bush tax cuts and other policies that have funneled those private sector surpluses into the hands of the top 1%. Perhaps if we are to really make America great again, we need to return to the tax policies we had in the 1950's and 60's. But given the 1%'s ability to evade much of the tax on their incomes, I think we should replace the estate tax with a wealth tax instead.
wealth taxes are dangerous. fine for those....if they would put up with it...but dangerous for ordinay people who can be wealth-taxed out of their homes. I think, can't prove, that you leave a lot out of your history that would explain the mismatch you see..but in am no position to really argue. i think..if i understand..that you are more or less on the right track.
I attribute it to grossly blooming inequality. Taxes are never paid by the morbidly rich at the same rate the middle class pays, for a start. And the dramatic revision of the tax brackets downward for the top incomes starting in the 1980s is the cause for the "deficit" to explode.
We don't invest, we buy consumables. Like bullets and bombs.
You’re Muskier than Musk! No debt problem if we don’t pay social security or Medicare when the trust funds run out? He’ll probably get round to that idea eventually snd then you’ll be aligned in agreeing on no debt problem. Perfect partners!
no idea who you are replying to. as things stand if we do not pay small increase in payroll tax, the trust fund will run out and benefits will be cut to about 80% of present. that is less than most people can live on, so SS will cease to be meaningful retirement or disability insurance. we can raise the tax one tenth of a percent per year and everything will work out fine. or we can raise it all at once 2% before 2033 and SS wil remain solvent forever. and you will get your money back three times over. but WE need to pay for it. "make the rich pay" will ensure they destroy SS totally. If there were no SS you would still have to find a way to save this much in order to live after you can no longer work. SS is the safest way to save at least a part of your wages. safe from inflation and actually insured in case you can't save enough to pay for food and rent.
Stephanie points out in this essay at least that the debt, and blaming it on Social Security, is a clever lie. I don't think we can rely on, or wait for, MMT to solve the need for us to pay more for the extra groceries we will need during an extra two years of life expectancy. Possibly it can, but we can't afford to wait for it.
The system is essentially PAYG. In ‘24, income was $1.351trn and outlays were $1.392. Yup. in 2035 if nothing is done, recipients will get only 83% of expected benefits. We know that reduction won’t happen. It may be that payroll taxes will be hiked, but they might not be.
CBO’s projections are therefore prudent - here’s what we will need to pay unless we cut benefits, and here’s what our revenue will be if we don’t hike taxes. Here’s the deficit and debt if we don’t nothing
The point of the exercise is to point out to politicians what will happen if they stick to current policies. CBO do a good job of that.
Some of the comments in reply to prof Kelton’s post seem to be based on the assumption that the rich do well out of austerity. In fact, it was corporate profits that did fantastically well out of Biden’s largesse. As MMT points out, one person’s deficit is another’s surplus, and corporate profits were a major counterpart to government deficits. Think Musk: who dies well if the government runs up deficits to buy armored cybertrucks or buys satellite launches from fSpaceX? Check out what’s happened to the real volume of road building compared with the nominal under Biden. The link between deficits and profits depends on what drives tge deficit. It’s not as simple as many beliieve, though of course tax cuts for billionaires snd job losses in the civil service definitely favor the rich - but they would still do so with a smaller, constant or bigger deficit.
PML by not mentioning the one tenth of one percent fix, or if you prefer, the two percent all-at-once fix, CBO is fuelling the debt hysteria, as well as the "blaming the debt on Social Security big lie. This may not be a lie "depending on what the meaning of "is" is." but it is dishonest.
I am so grateful to Stephanie for bringing this to our attention. I want to point out that "raising the payroll tax" IS the answer: cheapest, fairest, easiest to understand. Moreover the ultimate increase in the payroll tax needed is 2% of payroll, an amount no one would really even notice. More moreover, it is still (barely) possible for us to raise that tax gradually.about one TENTH of one percent per year. that's about one dollar per week for an average worker. This is an amount no sane person would notice at all...and you get the money back about three times over in effective interest from pay as you go financing...while protecting yourself from severe poverty in old age or disability, and protecting your family in case you die while the children are still young.
i do not know what a deeper analysis of mmt has to say about this, but it is certainly easier to understand and far more likely to be enacted in the near term.
But you have to tell your Congress that you understand this in ways they cannot pretend not to hear. Please do that now, and keep working on MMT for the future. You will need to get lots of publicity for the people to even notice..that does mean organizing...go to your democratic party meetings. understand and verify this so you can explain it correctly on the internet, organize massive public letter writing to congress and get honest politicians to stand up in public and say so. You will not like it if Congress waits until 2033 and the Trust Fund runs out and SS can only pay about 80% of benefits and the people are stampeded into letting Congress do something stupid..or just let SS cease to be meaningful insurance without the need for them to touch it...leaving no fingerprints and saying "we told you so."
Social Security is one of the best monetary and economic reforms we ever came up with, but it isn't a paradigm change. However, strategically integrating the new monetary paradigm of Gifting into the current Debt Only system does everything Social Security does and a hell of a lot more like:
1) Immediately, continuously and mathematically doubling everyone's purchasing power (a $500k house only costs one $250k and $100 of groceries is only $50 to the consumer for instance
2) Ending erosive inflation forever because with the discount at retail sale it goes from 1-3% to -50% on virtually everything which means you've implemented BENEFICIAL price and asset DEFLATION. Holy shit! What a mind blowing and orthodoxy destroying policy/paradigm change that is!!!
3) Getting a $1000/mo. universal dividend at age 18 gives every adult $2000/mo/$24k/yr. worth of purchasing power...for their entire adult life instead of having to wait for 45 years to get a benefit.
4) People vote their pocketbooks and the policies of the new monetary paradigm fill those up REAL WELL so its a political winner that everyone can see and feel instead of trying to get them to realize that the deficit is the private sector's supplement.
MMT is also a good theory, but genuine paradigm changes integrate opposite beliefs and permanently resolve the major problems of the current anomalous paradigm. Thats what we need.
Finally, historical facts: 1) Everything adapts to a new paradigm, not the other way around and 2) Monetary Gifting implements every one of a list of signatures of historical paradigm changes.
Hummel i still honestly cannot understand a word you are saying. most of your words sound like pseudo intellectual padding, and I can't imagine how cutting the price of everything 50% will create the production need to supply the things they might want to buy.
You're making it harder than is necessary to understand. Just do the simple algebra and double entry bookkeeping and then LOOK at the temporal universe results those two policies accomplish. As for production, most factories are not operating at 100% capacity and the time between when these policies are generally broadcast and implemented all but the stupidest CEO will have ramped up additional productive capability. Throw in my policy of a sliding scale required investment in gifted money into 6% eco-energy & infrastructure treasury bonds to mitigate consumption and consider the fact that not everyone is going to eat twice as much as they do now or buy twice as many shoes, underwear, cosmetics etc. either. Everything adapts to a new paradigm, NOT THE OTHER WAY AROUND. Why? Because paradigm changes are the killers of orthodoxies on all sides. Consult history.
The problem isn't the vast expansion of the US Debt; the problem is that affluent investors in the upper 1% and cash-rich corporations are immensely benefitting. MMT IS WOEFULLY SILENT ON THIS. Per a 2018 Rand study, from 1975 till 2018, $47 Trillion of wealth has been transferred to the upper 1% from the bottom 90%., and it's increasing at a rate of approx. $2.5 Trillion per year, so in 2025, this will be a $60 Trillion wealth transfer to the US oligarchs, multinationals, and their buddies... WHILE these same folks saw their tax burden drop significantly. US debt has increased from < $1 Trillion to $36+ Trillion since 1975. The little guys aren't buying this debt
I’m not sure it’s accurate to say that MMT is “woefully silent” on the pernicious distributional effects of bond issuance — Warren Mosler calls the interest paid on bonds “welfare for rich people” and it’s part of the premise behind his permanent zero interest rate proposal.
Ok, so by law the payments cease once the reserves run out...so then what? In the current monetary schemes, taxes would need to be raised even if SS age is pushed out and SS and Medicare are cut. Not good... So the premise of this article is that you can disregard the CBO projections today due to this law, but you have not answered how the current monetary policies would pay for these benefits. GDP rises significantly due to AI, technology, etc? So, you still need money to pay the benefits...so the 'scare' tactic is still applicable even if you include this rule of law, benefits will need to be paid.
And I know MMT says that you can print the money, but that is not the reality of how the gov't manages monetary policy today, so this argument that the law doesn't allow congress to borrow for benefits is moot...in the end, either MMT is adopted or money is raised somewhere...
Stephanie is saying the Debt scare is a lie. It is.
but yes, SS still needs to be paid for. You paying more for your future needs due to longer life expectancy after you can no longer work is the oly answer that completely fixes the problem. it's fair. it's cheap, and it's easy to understand if you are not confusing yourself with the lies you have heard and you don't ecpect someone else to pay for your groceries. the increase in payroll tax would be 2% of your wage income. no matter what your income is, you can afford that without even noticing it. or, as an extra special boss, you can pay or it with a one tenth of one percent per year raise in the tax while your real income is rising about one full percent per year. "they" are doing a good job of keeping you from knowing or understanding that. But you can verify it yourself by actually reading the Trustees Report carefully and with a pencil and paper to do some fairly simple math.or read the Tables the actuaries supply. of if you can't do that, i can suggest some experts you might trust:American Academy of Actuaries, or Deputy Chief Actuary at SSA (may not respond to you. I got a response because my Congressman asked her to evaluate my work. I wish I had a way to talk to all of you until you understood it. I am pretty sure you would understandit if I could answer all of the questions or false beliefs you have.
Laws will need changing but the govt can just spend into existence currency needed for social security. But since we paid into it( half anyway. Your various employers in your career paid the other 6.2 % of your earnings) the govt would just need to pay the needed increase.
But payroll taxes should have never been a thing. Let workers keep that. Then at retirement the govt gives you a dignified retirement stipend every month as a bonus for working take this country prosper for 45 or 50 years. Currency is not stored. It is continuously created and destroyed as needed. The problem is thinking of currency as a commodity. It's more like score points
payroll taxes have ALWAYS been the thing that keeps SS from being welfare, and keeps it from being taken away by the politicians. of course the goverment can, and does, spend it into existence, but that doesn't mea they cn just give it to you. the needed increase in the prll tax to pay for your longerl life expectancy is about a dollar a week per year for a few years. you would neverfeel it. and if you did, you would still need to save that much anyway to pay for your future needs. no one is going to pay it for you. 'save' means defer consumption of the good you earned a right to by your work, until you need that consumption when you can no longer work, at that point you get a "ticket to oonsume so much that is made available by the then worker deferring his then-present consumption. that "ticket is cslled money, "currency is just the means to keep track of earned consumption on a daily basis. the "money" is that "worthess paper" that keeps track of the deferred consumption you earned with your work while you could still work. have been goin g easy on mmt because i know it is your religion and you desperately want free money, but however much the government can, and does, create money, how it distributes it won't work if that money is not distribute according to so measure of "earned by work." free money from government printing or 'taxing the rich" will not work ifi is just handed to you for "free." i suppose it could, according to some theory of universl justice, but so far as I know that has never worked out in practice. and i see no evidence is going to change that, or that the people who really understand mmt intend that. you make a mistake thining "government can create money" (which is true) means that it can or will just give it away.money is not a commodity..it is a way of keeping score. again, thegovrenment can, and does, give points to those who did not earn them if they, the people, decide it is in their interest...moral or financial...todo so. it can even decide that just living to retirement age is sufficient reason to give you those points, but don't count on tht without a system of keeping score. yourparents and grandparents paid enough pyroll tax to pay for their retirement benefits. why do you tink you shouldn't have to.
mmt does provide a way of looing ad "deficits" without creating deficit hysteria. work on that and stop tlling people you can just hand out moey--tickets for consumption_-without creating the product that is to b consumed. the payroll tax keeps track of your contribution to that product. in a country like France where there is no record of your contribution there is no way for you to claim you earned it, and the government cn just decide pne day that it cannot afford to give everyone as much as they need or deserve...so it raises the retirement age and all of a sudden you are still chained to the wheel until the real government (the rich) decide you are no longer worth the trouble and give you a few dollars ==for the looks of it---to keep you in groceries for a few months until you die of old age.
all this because you are too stupid to raise your own payroll tax==savings rate==a dollar a week.
Just saying it depends on how u look at it. Workers are taxed already so payroll taxes are just more tax. By working and paying regular taxes that shld be enuf of a contribution to society to have gov give us a certain amount if not a full retirement stipend after 66 or 70. Think of all the taxes one pays just on regular irs tax. It's not all nominal. Besides paying all that tax you have labored 40 hrs a week for 50 years! That's a lot of labor that's promoted the wealth of our country. It's not getting money fir nothing to then have gov send u soc sec. Why not think of social security as another line item spending item the gov pays. No one thinks that we need a special defense trust fund that we all need to pay in to be protected from countries that would do us harm
Almost everything is funded by the government. Why not some sec too?
It also would enhance everyone's standard of living during their working years not having to pay payroll taxes. And it would REALLY help our businesses bottom line by not having to match payroll taxes for ALL their employees. Make them better able to cut prices etc
yeah. if you look at it wrong it turns out bad. we pay for defense as a collective. we pay for Social Security as a way of safely paying for our own groceries when we can no longer work. you are still looking for a free lunch. there is no such thing. your comment here is pure wishful thinking fantasy. I think i have tried to explain all this to you enough that you show no sign of understanding, that i can stop trying.
i do not want to hurt your feelings, but after years of trying to explain SS to people who are either or both looking for a free ride or/and and cut government...which they seem to think of as something separate from "us" i have been horrified at how desperately they squirm to preserve their ignorance.
Elon Musk has revived the debt phobia and scaring population more than Peterson institute ever did. Musk is doing foolhardy things to destroy the government by using DOGE, AI tools and teenagers to cut federal spending and mass firings without any diligence and understanding.
I heard Musk lying about the Debt (and Social Security) from the oval office. Peterson never got a forum like that. but he did fund a massive (billion dollar) campaign of lies about Social Security...such that all the "serious people" believe it.
I don't know if Peterson believed what he was saying. Even rich people are not very smart about things they know nothing about. But the "non partisan experts," expert liars, know they are lying.
Musk may be off-script. we are now close enough to the Trust Fund running out of money that the enemies of SS may think it better NOT to scare the people [as they have been trying to do for at least the last thirty years when theythought they could fool thepeople into private accounts of crippling benefit cuts including raisng the retirement age) but just do nothing until the Trust Fund runs out of money on its own. then their fingerprints won't be on it and they can just say "we told you so."
It would be useful to have a non-technical walkthrough of the operations involved in creating and maintaining the "national debt". How much of that very large total number is currently outstanding accounts being paid interest? If we cut interest rates to zero today, how long would it take for interest payments to decline?
Hopefully someday in America and even in the UK that all of us come to the realization that we need to start having a balanced economy over worrying about balancing it's budget. Hopefully someday all of us realize that austerity which is sadly championed by so many economists and politicians is a dangerous nine letter word that will hurt the average person. Hopefully someday we realize that its all about the resources and not about the so-called lack of money or where to find it. Time for America to wake up.
could we start by waking up to the fact that we need to pay for our own Social Security just as our parents did. it is the same as in the case of our daily bread. some genrations get a slightly better or worse deal than others. but the principle remains the same.
And you need to wake up to the fact that once again the federal government issues the currency and funds Social Security. Stop falling for the crap that the program will go broke or run out of money or that your "tax dollars" fund it. That is simply not true whatsoever.
and you need to learn how social security works. the government issues the currency. of course. but that has nothing to do with how social security is funded. even if mmt is "true", you still need to understnd how things actually work now...and hve worked perhaps since Britain invented the "national debt."
i don't know if itis worth my time trying to explain it again to you, but here goes:
people pay into a program called Social Security. This is exactly what people do when they save money in the bank and/or buy insurance. that money is recorded against their name for future payout...exactly what banks do...they do not store the money in a vault. aftr 30 or forty years the people come back to social security (the "bank" that is keeping track of their claim on the money they paid in and the "interest" that money earned..in SS case by the growth of the economy over the time their money has been in the bank..i.e. not available for them to spend: atuate their clame on productivity by others...aided by their own meanwhile contributions to that growth in productivity. meanwhile other people have been paying into Social security.that is sving their own money for their own future. this is where the cash comes from to pay current benefits. this is not the same as "the young are "paying for" the old. that young guy does not know you and does not care. he is "paying for" his own future benefits, ALL finance works this way. it is not a Ponzi scheme. A Ponzi scheme has no real source of "profits", it is a fraud. Investments rely on future investors (or customers). The are not ponzi sches if there is an honest "probable" soource of profits. Social Security has an infinite and reliable source of future investors: people who need a safe way to save their own money for a future when they will no longe be able to work
Times change and some times savings and investment pay more than other times. In the case of Social SEcurity the times have changed in two ways: we are going to live longer so we will need more money to pay for a retirement. we will not be able to work longer, or want to, or need to. we just need to increase the amount that we save. thr other, less important, change iis that workers wages have not been growing as fast as they have in the past. this means that they have to pay more (save more) of their wages while they are working in order to cover the costs of their longer retirement. The Trust Fund running out of money is not the same as "the program going broke." the Trust Fund is only a bridge until income matches the need for benefits. the bad guys are using the failure to raise the tax...which they ignore or specifically rule out... even though it would only need to be about a dollar per week per year for a few years.
meanwhile the people, like you, who know nothing, have been persuaded that the only answer is to "make the rich pay" which is exactly what Roosevelt designed Social Security to avoid.
i personally don't think mmt can do this any better, and i don'tlike the idea of disconnecting SS benefits from "I paid for it myself" financing. The Rich will know how to take it away from you, mmt or not.
your saying "this is simply not true whatsoever" is not an argument. it is just an expression of a kind of religious faith. we don't have mmt, may not ever have it, and ertainly won't have it in time to save SS from the killing benefit cuts that would be required if we do not raise the payroll tax.
i never claimed to understand mmt. but it doesn't look to me like you do either. i do understand social security finances. But you would need to build up your short windedness to understand either my explanation or the facts you could figure out for yourself if you worked at it.
Stephanie Kelton’s The Deficit Myth is a great book to understanding MMT and how our monetary system works. You should try to catch up on that. Just saying.
the internet appears to draw out the nastiness in people. i may havecontributed to this when i said "people like you who know nothing.." I was thinking "know nothing about Social Security." I may know nothing about the bond market or mmt. But in fact you have not actually said anything here that SHOWS you know anything about those things either... or that increases what I know. so take this as an apology (explanation) of my know nothing remark. knowing nothing about some thing is the general human condition, you might want to go back over the conversation we have been having and see where the nastiness started. it could well have been me. or it could have been you,
Because DOOOOOOMMMM (THUNDER CLAPS)
OF COURSE the government wants to predict a scary crisis, in order to fool gullible taxpayers into agreeing that the programs that are targeted by the austerity-driven neoliberals are dangerous to the economy and have to be ended.
They never predict a scary crisis for the vastly bloated military expenditures.
It’s a shame Dr. Milton Friedman is here to teach you Econ 101.
the missing adjective -
national/government risk-free debt ;
problem?, what problem?
But I’m still wary. I have heard Randy say that too much saving has never been a problem before and you, Stephanie, saying savings are a good thing.
But does it mean creating unlimited yellow money into a financialized economy is entirely benign? I suspect it’s what governments do to keep asset bubbles inflating and turbocharge inequality.
So there, I said it. MMT makes a lot of sense but not creating savings like we’re doing today. At least let’s add one of Warren’s suggestions - a zero interest rate - if we’re going to create savings let’s not pay interest. His other three are: fully backed bank deposits, unlimited fixed-price shares, and no tax advantaged savings. Can someone start putting these on the table, please?
All in favor of putting it all on the table.
keynes wrote a whole book on too much savings. he was right. the real world is more complex than can be explained in a single sound bite.
as for zero interest. some of us saved for our retirement and rely on an interst rate at least near inflation rate to survive.
You are so full of Schiff. But you know that. If it is too good to be true, do more!
Let's get wonky. The baseline changes, and only for the better, because we no longer "Assume added deficit spending from Social Security and Medicare Part A". R does not matter, G neither. We just won't pay! And if we do, the debt problem goes away anyway. Why, we'll just create more loot the value of which the suckers will never figure out has no value anyway. The quantity of money is infinite, the tax is confidence, the scheme ever ongoing. MMT baby.
So its OK that we just spend it all, and maybe just a little more, for our favorite honey pot NGO's through USAID. We are entitled to. Manifest destiny. We'll tell "them" it's backed by Joe Biden's face on Mount Rushmore ;) Why not? We have a right, to it all, and more, Elon Musk be damned. It's what the people want. They just may not know it but we will tell them when the time is right and their small brains can take it in ;) Debt to GDP never really mattered because your loot and the debt is worthless anyway! Only suckers thought we might pay it back. C'mon.
Those darn right wingers don't realize, we have forever money. We reject the very premise of a sovereign debt crisis under easily understood planetary/ecological concerns that are derived from too much worrying. Forgetaboutit. Spend baby, debt is equity and a right of Empire. What could go wrong?
MMT, MMT, MMT ;) Crazed.
A bit of a rant? I have concerns with the amount of savings being created today, too, but not with the basic tenets of MMT. It seems you may?
MMT does not say everyone can stay home and be paid by the state. But it does say the state’s spending becomes its income and we can afford to educate our kids, look after our sick and give retirees a decent lifestyle.
If none of this is true then it makes me wonder what the point of it all is? Is your world view really that bleak?
MMT is BS. And the spending of government is not its income. Otherwise Government could just give everyone a million bucks a year and be done with it. AOC I sure is for that.
My world view is not bleak. That said the sooner we get our debt payments lower than what we spend on our military and cut out ridiculous waste, wars and aid we cannot afford, we might yet again become a place that people aspire to emulate.
There's this tiny problem called inflation, and the rampant psychological impact that would have. There IS limit on handing out cash, because there are limited things to purchase with it. Perhaps this nuance isn't possible.
Jen, i think you are right. Stephanie says she addresses that in new book. last i heard she relies on taxing the rich to tame inflation. i don't think the rich will let her do that.
Taxing the rich helps prevent them from becoming oligarchical and buying off politicians. Taxing wealthy CEOs forces them to invest more in their company and employees and finding ways to reduce their taxes that way rather than becoming a monopoly.
Sandra,
how is that "taxing the rich" thing going for you?
Kelton discusses the limits of spending at length in The Deficit Myth. She also discusses the huge problems created when the fed has a balanced budget. Even worse if it runs a surplus to pay down this imaginary debt.
i'll have to look at Deficit myth again. I don't remember what she said about limits of spending. i think she said they would tax the rich to limit inflation.
and yes, balancing the budget has always been counter productive.Even FDR caused a recession when he tried to balance the budget in 1937. I don't know the details, but i think the recession was short. FDR could learn from his mistakes.
Tax the rich... Of course, they should pay "their fair" share in the ponzi scheme the Elite has on offer ;)
A few facts....
Do you know the bottom 40% already pay zero effective tax? The bottom 50% less than 3%. Is that a fair share! In fact, after transfer payments and taxes, the bottom 20% of families actually earn more than the next 20% of strivers. Wow. Talk about "Fair Share". No wonder labor participation is so low. Why work at all.
The top 1% pay 40%+. The whole scheme is an inflation confidence game. A Fabian wet dream concocted by the Elite to separate private individuals from their earned wealth and property. The top 10% pay 72%. Oh my. It seems to me that Kelton's scheme is really just class warfare on steroids all paid by the other guy, fiat currency and debt and directed by the Administrative State. Of course, Kelton must see herself a part of the crowd. If tax doesn't work the tax of inflation does. Don't worry folks, it's all fair for the many. It is a giant race to the bottom... Lunar. Debt is really equity, drink up folks!! It is on the house baby.
What am I missing?
The Beatles understood well
Let me tell you how it will be
There's one for you, nineteen for me
'Cause I'm the taxman
Should five percent appear too small
Be thankful I don't take it all
'Cause I'm the taxman
The Stones too, Exile on Main Street baby. You leave... Bye
Take it all baby. MMT.
David,
you are missing a lot. nothing you have said suggests you will ever stop missing a lot. ALL savings and investment vehicles depend on future investors or customers. a Ponzi scheme is a fraud that has no way to attract new investors once the lie is exposed. SS has an infinite supply of new investors who understand they need a reliable safe way to save for the day when they can no longer work, SS has paid back every investor with real interest for ninety years..because most people are not stupid...or at least were not stupid until the rich liars fooled people like you.
Trust me, the Beatles are are great musicians, but they do not understand national economies. neither do you. aside from SocialSecurity, a Nation needs money to do the things that individuals cannot do themselves...national defense, andthe general welfare...well being ,not the dole. the poor do not have enough money to pay for all of this, so the rich have to pay most of it because they have most of the money. you and the free-money people canot understand this and i have wasted my time trying to explain it to both of you. It sounds pretty stupid to me to claim "the elite" are responsible for "tax the rich." who the heck do you think the elite are?
That’s a strawman. Nowhere in MMT do they support unlimited government spending with no taxation. Nowhere. In fact, they are quite adamant that it would be a terrible path to go down.
i hope you are right. from the commenters here, I get the idea that that is what they expect.
meanwhile.. so far, i think mmt is a perfectly good theory and that it would help stop the Big Deficit lie. But I am not so sure it solves the problem of who gets the money.
Well said!
DFW, you are right and make it clearer want MMT hopes to accomplish. David's rant contains not a single referece to reality. or repeats the hysterical claims of the Musks and Trumps.
Enlighten me :)
David
fair reply. but i have been trying to enlighten you and about a thousnd others who don't want to see.
typo: make it clearer WHAT mmt hopes. not "want."
DFW
i think you need to include that state spending becomes its income only if the spending generates more production. that's what all banks and modern economies understand. but there are limits. making it official policy opens the door to spending..possibly more for the rich than the poor. I haven't seen MMT address that problem. maybe they have and i just haven't seen it.
What you wrote is at best an incomplete argument. I don’t buy it. Let’s say we follow your argument to the logical conclusion, may I ask what is the implication to GDP (the denominator) growth of fully taxing to pay for the social security/medicare payment?
Is it likely the GDP growth would be less if the social security/mediare payment is fully taxed, so that you would still end up with the same scary-looking ratio, just that the numerator did not explode, but the denominator implode?
Btw, I’m an actuary, and I don’t know the answer yet, since I did not build an APL model that can dynamically model the interaction of the numerator and the denominator.
Btw, that is a joke.
But not about being the actuary part.
Social Security and Private Saving: Theory and Historical ...
Social Security Administration (.gov)
https://www.ssa.gov › policy › docs › ssb
PDF
evidence that concluded that currently available historical data do not support the proposition that social security reduces private saving, and an ...
17 pages
Synchro
if that is addressed to me i did notmention taxing SSS benefits at all. As for SS benefits/SS payroll tax, the effect on GDP is zero. the money that is taxed away from the worker goes immediately to benefits to the retiree (who paid for them while he was still working) who spends them back into the economy. a deeper analysis might show some effect, but 1) as we have learned "deeper analysis" is ofter wrong, and 2) GDP is not a useful measure of the well being of the people or the country as a whole (except possible in terms of a deeper analysis: more money/production does make it possible for a bigger stick to keep our enemies at a respectful distance. I don't guarantee any of this except that one tenth of one percent of payroll will make SS solvent forever and that means keep you out of severe poverty in old age or disability.
by the way, the deputy chief actuary and SSA agrees with me. so does the American Academy of Actuaries.
My comment was mistakenly addressed to you, sorry. But I appreciate your helpful reply nonetheless. I am not convinced the net effect on GDP is zero between the two cohorts of people one of which are workers, and the other are retirees. I would think there would be SOME impact on the denominator. I just don’t know how much. I suspect the actual line is somewhere between the two lines shown by the SS actuary
synchro
i wasn't sure who your comment was addressed to, but since it's a subject i think i know a lot about, i was glad to try to answer it. i think it is a mistake to look at it as two cohorts, any more than you would think of the guy who withdraws some money from his savings account on the same day as someone else deposits money into his own savings account...regard them as two cohorts.
you have been led to think of them that way by people who want to preend that "the young" are paying for "the old." and sow discontent about SS.
in any case I don't see what effect it has on GDP. the retiree contributed his production to GDP when he earned the money. he saved the money via SS...that is he deferred the consumption he had earned aright to. just as the still-working, and saving, worker his making his contribution to GDP and deferring his consumption. the older retiree will get more money "right to consume" than he gave up...just as all savers and investors expect...from the meanwhile growth in the economy which he helped happen. and the still=working peron will get the same "interest." this is the ordinary way money and savings work. call it something else if you like, but you will be misleading yourself. I don't know what two lines shown by the actuary you are referring to.
concentrate on what SS DOES, not on some vague idea of "SOME impact." There are no doubt secondary effects, but there are secondary effects from everything. any effect is likely to be positive, as workers who have some security are more likely to spend, more likely to take risks, and certainly buy more during retirement.
Somewhat related: I'd love to learn more about how SMI (Medicare parts B and D) "has the legal authority to pay full benefits if the trust funds are ever exhausted," as written in The Deficit Myth.
How exactly did that legislation get designed that way? And why didn't did lawmakers try to design the other entitlements that way (i.e. funded by "federal contributions from the Treasury" as I've read in a few places)?
I wish more people knew or talked about that!
Patrick
stay tuned. I can talk about it until you understand it. but right now we start from such different knowledge that it would be hard to understand each other. to start with Social Security was designed to NOT be funded by contributions from the treasury, but to be paid for by the workers themselves (they get their money back about three times over...paid for by the growth in wages over time.) the trust fud should not be exhausted...it is only a bridge over times of less income from taxes than needed to pay benefits..but that bridge is paid for by the workers themselves. the problem is that we have not raised the payroll tax to keep up with rising life expectancy. please not again that the needed incrase is very small. and stop expecting someone else to pay for your groceries.
Yes. Thank you.
I’m guessing it’s because B and D are funded by current premiums, not payroll taxes.
As a casual student of MMT, I am familiar with the dictum that the federal government's deficit is the private sector's surplus. However, in the first graph in this email, it appears that the debt declined during the post-WW II years at the same time that there was broad-based prosperity, which would seem to conflict with that dictum. That prosperity continued until the early 1980s when the Reagan revolution kicked in, generating sharp increases in the national debt which continued until under the Clinton administration, when there was an actual federal surplus for a few years. GWB then introduced tax cuts while waging two wars and we also hit the 2007-2009 financial crisis and later still the pandemic, all of which saw huge annual deficits which continue today. But despite this prolonged period of high annual deficits, the middle class has not seen steadily rising inflation-adjusted incomes. I attribute this to those Reagan and Bush tax cuts and other policies that have funneled those private sector surpluses into the hands of the top 1%. Perhaps if we are to really make America great again, we need to return to the tax policies we had in the 1950's and 60's. But given the 1%'s ability to evade much of the tax on their incomes, I think we should replace the estate tax with a wealth tax instead.
Very importantly, the graph is debt as a percentage of GDP, not just debt itself.
So, post WW II, you can have high debt and higher prosperity and the graph goes down.
wealth taxes are dangerous. fine for those....if they would put up with it...but dangerous for ordinay people who can be wealth-taxed out of their homes. I think, can't prove, that you leave a lot out of your history that would explain the mismatch you see..but in am no position to really argue. i think..if i understand..that you are more or less on the right track.
typo: fine for those in no danger of running out of wealth...
I attribute it to grossly blooming inequality. Taxes are never paid by the morbidly rich at the same rate the middle class pays, for a start. And the dramatic revision of the tax brackets downward for the top incomes starting in the 1980s is the cause for the "deficit" to explode.
We don't invest, we buy consumables. Like bullets and bombs.
You’re Muskier than Musk! No debt problem if we don’t pay social security or Medicare when the trust funds run out? He’ll probably get round to that idea eventually snd then you’ll be aligned in agreeing on no debt problem. Perfect partners!
PML
no idea who you are replying to. as things stand if we do not pay small increase in payroll tax, the trust fund will run out and benefits will be cut to about 80% of present. that is less than most people can live on, so SS will cease to be meaningful retirement or disability insurance. we can raise the tax one tenth of a percent per year and everything will work out fine. or we can raise it all at once 2% before 2033 and SS wil remain solvent forever. and you will get your money back three times over. but WE need to pay for it. "make the rich pay" will ensure they destroy SS totally. If there were no SS you would still have to find a way to save this much in order to live after you can no longer work. SS is the safest way to save at least a part of your wages. safe from inflation and actually insured in case you can't save enough to pay for food and rent.
Stephanie points out in this essay at least that the debt, and blaming it on Social Security, is a clever lie. I don't think we can rely on, or wait for, MMT to solve the need for us to pay more for the extra groceries we will need during an extra two years of life expectancy. Possibly it can, but we can't afford to wait for it.
The system is essentially PAYG. In ‘24, income was $1.351trn and outlays were $1.392. Yup. in 2035 if nothing is done, recipients will get only 83% of expected benefits. We know that reduction won’t happen. It may be that payroll taxes will be hiked, but they might not be.
CBO’s projections are therefore prudent - here’s what we will need to pay unless we cut benefits, and here’s what our revenue will be if we don’t hike taxes. Here’s the deficit and debt if we don’t nothing
The point of the exercise is to point out to politicians what will happen if they stick to current policies. CBO do a good job of that.
Some of the comments in reply to prof Kelton’s post seem to be based on the assumption that the rich do well out of austerity. In fact, it was corporate profits that did fantastically well out of Biden’s largesse. As MMT points out, one person’s deficit is another’s surplus, and corporate profits were a major counterpart to government deficits. Think Musk: who dies well if the government runs up deficits to buy armored cybertrucks or buys satellite launches from fSpaceX? Check out what’s happened to the real volume of road building compared with the nominal under Biden. The link between deficits and profits depends on what drives tge deficit. It’s not as simple as many beliieve, though of course tax cuts for billionaires snd job losses in the civil service definitely favor the rich - but they would still do so with a smaller, constant or bigger deficit.
PML by not mentioning the one tenth of one percent fix, or if you prefer, the two percent all-at-once fix, CBO is fuelling the debt hysteria, as well as the "blaming the debt on Social Security big lie. This may not be a lie "depending on what the meaning of "is" is." but it is dishonest.
I am so grateful to Stephanie for bringing this to our attention. I want to point out that "raising the payroll tax" IS the answer: cheapest, fairest, easiest to understand. Moreover the ultimate increase in the payroll tax needed is 2% of payroll, an amount no one would really even notice. More moreover, it is still (barely) possible for us to raise that tax gradually.about one TENTH of one percent per year. that's about one dollar per week for an average worker. This is an amount no sane person would notice at all...and you get the money back about three times over in effective interest from pay as you go financing...while protecting yourself from severe poverty in old age or disability, and protecting your family in case you die while the children are still young.
i do not know what a deeper analysis of mmt has to say about this, but it is certainly easier to understand and far more likely to be enacted in the near term.
But you have to tell your Congress that you understand this in ways they cannot pretend not to hear. Please do that now, and keep working on MMT for the future. You will need to get lots of publicity for the people to even notice..that does mean organizing...go to your democratic party meetings. understand and verify this so you can explain it correctly on the internet, organize massive public letter writing to congress and get honest politicians to stand up in public and say so. You will not like it if Congress waits until 2033 and the Trust Fund runs out and SS can only pay about 80% of benefits and the people are stampeded into letting Congress do something stupid..or just let SS cease to be meaningful insurance without the need for them to touch it...leaving no fingerprints and saying "we told you so."
Cobe
Social Security is one of the best monetary and economic reforms we ever came up with, but it isn't a paradigm change. However, strategically integrating the new monetary paradigm of Gifting into the current Debt Only system does everything Social Security does and a hell of a lot more like:
1) Immediately, continuously and mathematically doubling everyone's purchasing power (a $500k house only costs one $250k and $100 of groceries is only $50 to the consumer for instance
2) Ending erosive inflation forever because with the discount at retail sale it goes from 1-3% to -50% on virtually everything which means you've implemented BENEFICIAL price and asset DEFLATION. Holy shit! What a mind blowing and orthodoxy destroying policy/paradigm change that is!!!
3) Getting a $1000/mo. universal dividend at age 18 gives every adult $2000/mo/$24k/yr. worth of purchasing power...for their entire adult life instead of having to wait for 45 years to get a benefit.
4) People vote their pocketbooks and the policies of the new monetary paradigm fill those up REAL WELL so its a political winner that everyone can see and feel instead of trying to get them to realize that the deficit is the private sector's supplement.
MMT is also a good theory, but genuine paradigm changes integrate opposite beliefs and permanently resolve the major problems of the current anomalous paradigm. Thats what we need.
Finally, historical facts: 1) Everything adapts to a new paradigm, not the other way around and 2) Monetary Gifting implements every one of a list of signatures of historical paradigm changes.
Hummel i still honestly cannot understand a word you are saying. most of your words sound like pseudo intellectual padding, and I can't imagine how cutting the price of everything 50% will create the production need to supply the things they might want to buy.
You're making it harder than is necessary to understand. Just do the simple algebra and double entry bookkeeping and then LOOK at the temporal universe results those two policies accomplish. As for production, most factories are not operating at 100% capacity and the time between when these policies are generally broadcast and implemented all but the stupidest CEO will have ramped up additional productive capability. Throw in my policy of a sliding scale required investment in gifted money into 6% eco-energy & infrastructure treasury bonds to mitigate consumption and consider the fact that not everyone is going to eat twice as much as they do now or buy twice as many shoes, underwear, cosmetics etc. either. Everything adapts to a new paradigm, NOT THE OTHER WAY AROUND. Why? Because paradigm changes are the killers of orthodoxies on all sides. Consult history.
The problem isn't the vast expansion of the US Debt; the problem is that affluent investors in the upper 1% and cash-rich corporations are immensely benefitting. MMT IS WOEFULLY SILENT ON THIS. Per a 2018 Rand study, from 1975 till 2018, $47 Trillion of wealth has been transferred to the upper 1% from the bottom 90%., and it's increasing at a rate of approx. $2.5 Trillion per year, so in 2025, this will be a $60 Trillion wealth transfer to the US oligarchs, multinationals, and their buddies... WHILE these same folks saw their tax burden drop significantly. US debt has increased from < $1 Trillion to $36+ Trillion since 1975. The little guys aren't buying this debt
I’m not sure it’s accurate to say that MMT is “woefully silent” on the pernicious distributional effects of bond issuance — Warren Mosler calls the interest paid on bonds “welfare for rich people” and it’s part of the premise behind his permanent zero interest rate proposal.
Ok, so by law the payments cease once the reserves run out...so then what? In the current monetary schemes, taxes would need to be raised even if SS age is pushed out and SS and Medicare are cut. Not good... So the premise of this article is that you can disregard the CBO projections today due to this law, but you have not answered how the current monetary policies would pay for these benefits. GDP rises significantly due to AI, technology, etc? So, you still need money to pay the benefits...so the 'scare' tactic is still applicable even if you include this rule of law, benefits will need to be paid.
And I know MMT says that you can print the money, but that is not the reality of how the gov't manages monetary policy today, so this argument that the law doesn't allow congress to borrow for benefits is moot...in the end, either MMT is adopted or money is raised somewhere...
Stephanie is saying the Debt scare is a lie. It is.
but yes, SS still needs to be paid for. You paying more for your future needs due to longer life expectancy after you can no longer work is the oly answer that completely fixes the problem. it's fair. it's cheap, and it's easy to understand if you are not confusing yourself with the lies you have heard and you don't ecpect someone else to pay for your groceries. the increase in payroll tax would be 2% of your wage income. no matter what your income is, you can afford that without even noticing it. or, as an extra special boss, you can pay or it with a one tenth of one percent per year raise in the tax while your real income is rising about one full percent per year. "they" are doing a good job of keeping you from knowing or understanding that. But you can verify it yourself by actually reading the Trustees Report carefully and with a pencil and paper to do some fairly simple math.or read the Tables the actuaries supply. of if you can't do that, i can suggest some experts you might trust:American Academy of Actuaries, or Deputy Chief Actuary at SSA (may not respond to you. I got a response because my Congressman asked her to evaluate my work. I wish I had a way to talk to all of you until you understood it. I am pretty sure you would understandit if I could answer all of the questions or false beliefs you have.
cober
Laws will need changing but the govt can just spend into existence currency needed for social security. But since we paid into it( half anyway. Your various employers in your career paid the other 6.2 % of your earnings) the govt would just need to pay the needed increase.
But payroll taxes should have never been a thing. Let workers keep that. Then at retirement the govt gives you a dignified retirement stipend every month as a bonus for working take this country prosper for 45 or 50 years. Currency is not stored. It is continuously created and destroyed as needed. The problem is thinking of currency as a commodity. It's more like score points
Roger
why are you so desperateto be on welfare?
payroll taxes have ALWAYS been the thing that keeps SS from being welfare, and keeps it from being taken away by the politicians. of course the goverment can, and does, spend it into existence, but that doesn't mea they cn just give it to you. the needed increase in the prll tax to pay for your longerl life expectancy is about a dollar a week per year for a few years. you would neverfeel it. and if you did, you would still need to save that much anyway to pay for your future needs. no one is going to pay it for you. 'save' means defer consumption of the good you earned a right to by your work, until you need that consumption when you can no longer work, at that point you get a "ticket to oonsume so much that is made available by the then worker deferring his then-present consumption. that "ticket is cslled money, "currency is just the means to keep track of earned consumption on a daily basis. the "money" is that "worthess paper" that keeps track of the deferred consumption you earned with your work while you could still work. have been goin g easy on mmt because i know it is your religion and you desperately want free money, but however much the government can, and does, create money, how it distributes it won't work if that money is not distribute according to so measure of "earned by work." free money from government printing or 'taxing the rich" will not work ifi is just handed to you for "free." i suppose it could, according to some theory of universl justice, but so far as I know that has never worked out in practice. and i see no evidence is going to change that, or that the people who really understand mmt intend that. you make a mistake thining "government can create money" (which is true) means that it can or will just give it away.money is not a commodity..it is a way of keeping score. again, thegovrenment can, and does, give points to those who did not earn them if they, the people, decide it is in their interest...moral or financial...todo so. it can even decide that just living to retirement age is sufficient reason to give you those points, but don't count on tht without a system of keeping score. yourparents and grandparents paid enough pyroll tax to pay for their retirement benefits. why do you tink you shouldn't have to.
mmt does provide a way of looing ad "deficits" without creating deficit hysteria. work on that and stop tlling people you can just hand out moey--tickets for consumption_-without creating the product that is to b consumed. the payroll tax keeps track of your contribution to that product. in a country like France where there is no record of your contribution there is no way for you to claim you earned it, and the government cn just decide pne day that it cannot afford to give everyone as much as they need or deserve...so it raises the retirement age and all of a sudden you are still chained to the wheel until the real government (the rich) decide you are no longer worth the trouble and give you a few dollars ==for the looks of it---to keep you in groceries for a few months until you die of old age.
all this because you are too stupid to raise your own payroll tax==savings rate==a dollar a week.
sorry forthe typos. if you can't figure out what i was tryijng to say, ask.
Cob
Just saying it depends on how u look at it. Workers are taxed already so payroll taxes are just more tax. By working and paying regular taxes that shld be enuf of a contribution to society to have gov give us a certain amount if not a full retirement stipend after 66 or 70. Think of all the taxes one pays just on regular irs tax. It's not all nominal. Besides paying all that tax you have labored 40 hrs a week for 50 years! That's a lot of labor that's promoted the wealth of our country. It's not getting money fir nothing to then have gov send u soc sec. Why not think of social security as another line item spending item the gov pays. No one thinks that we need a special defense trust fund that we all need to pay in to be protected from countries that would do us harm
Almost everything is funded by the government. Why not some sec too?
It also would enhance everyone's standard of living during their working years not having to pay payroll taxes. And it would REALLY help our businesses bottom line by not having to match payroll taxes for ALL their employees. Make them better able to cut prices etc
Roger
yeah. if you look at it wrong it turns out bad. we pay for defense as a collective. we pay for Social Security as a way of safely paying for our own groceries when we can no longer work. you are still looking for a free lunch. there is no such thing. your comment here is pure wishful thinking fantasy. I think i have tried to explain all this to you enough that you show no sign of understanding, that i can stop trying.
i do not want to hurt your feelings, but after years of trying to explain SS to people who are either or both looking for a free ride or/and and cut government...which they seem to think of as something separate from "us" i have been horrified at how desperately they squirm to preserve their ignorance.
#MintTheCoin
Elon Musk has revived the debt phobia and scaring population more than Peterson institute ever did. Musk is doing foolhardy things to destroy the government by using DOGE, AI tools and teenagers to cut federal spending and mass firings without any diligence and understanding.
I heard Musk lying about the Debt (and Social Security) from the oval office. Peterson never got a forum like that. but he did fund a massive (billion dollar) campaign of lies about Social Security...such that all the "serious people" believe it.
I don't know if Peterson believed what he was saying. Even rich people are not very smart about things they know nothing about. But the "non partisan experts," expert liars, know they are lying.
btw
Musk may be off-script. we are now close enough to the Trust Fund running out of money that the enemies of SS may think it better NOT to scare the people [as they have been trying to do for at least the last thirty years when theythought they could fool thepeople into private accounts of crippling benefit cuts including raisng the retirement age) but just do nothing until the Trust Fund runs out of money on its own. then their fingerprints won't be on it and they can just say "we told you so."
It would be useful to have a non-technical walkthrough of the operations involved in creating and maintaining the "national debt". How much of that very large total number is currently outstanding accounts being paid interest? If we cut interest rates to zero today, how long would it take for interest payments to decline?
Hopefully someday in America and even in the UK that all of us come to the realization that we need to start having a balanced economy over worrying about balancing it's budget. Hopefully someday all of us realize that austerity which is sadly championed by so many economists and politicians is a dangerous nine letter word that will hurt the average person. Hopefully someday we realize that its all about the resources and not about the so-called lack of money or where to find it. Time for America to wake up.
Michael
could we start by waking up to the fact that we need to pay for our own Social Security just as our parents did. it is the same as in the case of our daily bread. some genrations get a slightly better or worse deal than others. but the principle remains the same.
And you need to wake up to the fact that once again the federal government issues the currency and funds Social Security. Stop falling for the crap that the program will go broke or run out of money or that your "tax dollars" fund it. That is simply not true whatsoever.
michael
and you need to learn how social security works. the government issues the currency. of course. but that has nothing to do with how social security is funded. even if mmt is "true", you still need to understnd how things actually work now...and hve worked perhaps since Britain invented the "national debt."
i don't know if itis worth my time trying to explain it again to you, but here goes:
people pay into a program called Social Security. This is exactly what people do when they save money in the bank and/or buy insurance. that money is recorded against their name for future payout...exactly what banks do...they do not store the money in a vault. aftr 30 or forty years the people come back to social security (the "bank" that is keeping track of their claim on the money they paid in and the "interest" that money earned..in SS case by the growth of the economy over the time their money has been in the bank..i.e. not available for them to spend: atuate their clame on productivity by others...aided by their own meanwhile contributions to that growth in productivity. meanwhile other people have been paying into Social security.that is sving their own money for their own future. this is where the cash comes from to pay current benefits. this is not the same as "the young are "paying for" the old. that young guy does not know you and does not care. he is "paying for" his own future benefits, ALL finance works this way. it is not a Ponzi scheme. A Ponzi scheme has no real source of "profits", it is a fraud. Investments rely on future investors (or customers). The are not ponzi sches if there is an honest "probable" soource of profits. Social Security has an infinite and reliable source of future investors: people who need a safe way to save their own money for a future when they will no longe be able to work
Times change and some times savings and investment pay more than other times. In the case of Social SEcurity the times have changed in two ways: we are going to live longer so we will need more money to pay for a retirement. we will not be able to work longer, or want to, or need to. we just need to increase the amount that we save. thr other, less important, change iis that workers wages have not been growing as fast as they have in the past. this means that they have to pay more (save more) of their wages while they are working in order to cover the costs of their longer retirement. The Trust Fund running out of money is not the same as "the program going broke." the Trust Fund is only a bridge until income matches the need for benefits. the bad guys are using the failure to raise the tax...which they ignore or specifically rule out... even though it would only need to be about a dollar per week per year for a few years.
meanwhile the people, like you, who know nothing, have been persuaded that the only answer is to "make the rich pay" which is exactly what Roosevelt designed Social Security to avoid.
i personally don't think mmt can do this any better, and i don'tlike the idea of disconnecting SS benefits from "I paid for it myself" financing. The Rich will know how to take it away from you, mmt or not.
your saying "this is simply not true whatsoever" is not an argument. it is just an expression of a kind of religious faith. we don't have mmt, may not ever have it, and ertainly won't have it in time to save SS from the killing benefit cuts that would be required if we do not raise the payroll tax.
I have a far better understanding of MMT and government finances than you do. Your long winded response means nothing to me.
michael
i never claimed to understand mmt. but it doesn't look to me like you do either. i do understand social security finances. But you would need to build up your short windedness to understand either my explanation or the facts you could figure out for yourself if you worked at it.
Oh but I do understand MMT. But hey, childish insults won’t get you very far in life. Touch grass kid.
Stephanie Kelton’s The Deficit Myth is a great book to understanding MMT and how our monetary system works. You should try to catch up on that. Just saying.
Michael
the internet appears to draw out the nastiness in people. i may havecontributed to this when i said "people like you who know nothing.." I was thinking "know nothing about Social Security." I may know nothing about the bond market or mmt. But in fact you have not actually said anything here that SHOWS you know anything about those things either... or that increases what I know. so take this as an apology (explanation) of my know nothing remark. knowing nothing about some thing is the general human condition, you might want to go back over the conversation we have been having and see where the nastiness started. it could well have been me. or it could have been you,