"Congress, Mr. Trump, and Mr. Biden have left a huge burden for future taxpayers" -- Japan's 3 decades of increasing debt without big increases in taxes falsify this claim.
Don't they?
There were two big decades to be hugely studied - the 1930s with the Great Depression, and the 70s with Stagflation - increasing inflation and higher unemployment/ lower growth.
Trump's tax cuts, which increased the deficit, also increased the investment and production in America. Not all deficits are equally bad.
I suspect there will be far more talk about austerity type programs then are actually enacted. Then there will be some inflation leveling out before much actual reduced gov't spending (= austerity?), but the reduction in inflation, even if it is mostly just reduced energy prices, will be used to stop any more (or any?) austerity,
--
Note that while the word austerity also applies to normal people, with a strong budget constraint, it is used almost exclusively for "government austerity", meaning less gov't expenditures ... than planned? than expected? than desired by the Deep State? Seldom compared with actuals from the previous year. (If the desire was a 5% increase, a 3% increase can be called "austerity" - and almost always is.)
What's the best way to understand the time scale on which austerity becomes unavoidable in your model? How do we tell if it will be a matter of years, decades or centuries?
In Spring 2020, millions of young adults had thousands of dollars deposited in their bank accounts with nothing to spend it on. What followed was an explosion of speculative trading in stocks and crypto currencies. The prices of many financial securities increased two to ten times between April 2020 and Fall 2021. Since the Federal reserve announced tightening of monetary policy, financial markets have entered a bear market.
Others appear to have directed their "Covid money" to real estate. What followed was a massive increase in the price of houses and significant increases in rents. So far, the inflation in housing prices has stuck, unlike what has happened in the financial markets.
The USA is experiencing significant inflation and significant supply shortages (what happens when you pay people to not work). The country is also experiencing ever worsening public services (education) and infrastructure and increasing congestion in its transportation network (road, air, sea ports).
It appears that private wealth (assets held by individual Americans) has never been greater but public debt has also never been greater. This public debt includes not only financial debt and liabilities but also the decline in quality of public services and infrastructure, despite massive legislation supposedly to fix infrastructure.
For reasons, public officials are inept at solving the education and infrastructure deficit. They either fail slowly or they never try. Either by direct transfer or via trickle down economics, public money makes its way to private citizens with no improvement made to the public services.
The intrinsic bias towards privatizing wealth and socializing debt points to a future of ever increasing inequality and social strife. Stein's law comes to mind: "That which cannot go on forever will stop." In this case, what exactly is going to stop? Will it be the illusion of government providing public goods and services? Then what?
We also need a retrospective on what the optimal degree and kinds of restriction on social interaction were in response to the changing course of COVID. My feeling is that on net there was too much restriction. For example, venues should have been restricted on the basis of how well or not they could prevent aerosol dispersion, not on the basis of the activity that was being carries out in them per se.
Amen! I think that the world wars should have been financed more with taxes, although not having a VAT at the time did make that more difficult. But there is just no excuse for a deficit when the economy is at full employment. The beneficial reductions incorporate taxes in 2017 should have been offset (or more than offset) with higher collection from personal income taxes (including converting most deductions into partial tax credits at less then the rate of the highest marginal rates.
Thanks for referring to a paper that very few economists will read. Too many economists are talking about inflation but know little about how government spending is financed (and much less about how central banks have been responding passively to large changes in relative prices). BTW, Tom Sargent has been studying the financing of government spending for the past 50 years, including episodes of hyperinflation. With George Hall, Tom has recently gone into the details of each source of funding large increases in government spending.
With respect to the long-run implications of your country's current federal debt, you should try to learn from Argentina's experience in the past 70 years (the show is still going on: the monthly inflation rate for last month jumped to 6% and since the agreement with the IMF is very unlikely to succeed the inflation rate will hardly decline as expected).
"Congress, Mr. Trump, and Mr. Biden have left a huge burden for future taxpayers" -- Japan's 3 decades of increasing debt without big increases in taxes falsify this claim.
Don't they?
There were two big decades to be hugely studied - the 1930s with the Great Depression, and the 70s with Stagflation - increasing inflation and higher unemployment/ lower growth.
Trump's tax cuts, which increased the deficit, also increased the investment and production in America. Not all deficits are equally bad.
I suspect there will be far more talk about austerity type programs then are actually enacted. Then there will be some inflation leveling out before much actual reduced gov't spending (= austerity?), but the reduction in inflation, even if it is mostly just reduced energy prices, will be used to stop any more (or any?) austerity,
--
Note that while the word austerity also applies to normal people, with a strong budget constraint, it is used almost exclusively for "government austerity", meaning less gov't expenditures ... than planned? than expected? than desired by the Deep State? Seldom compared with actuals from the previous year. (If the desire was a 5% increase, a 3% increase can be called "austerity" - and almost always is.)
What's the best way to understand the time scale on which austerity becomes unavoidable in your model? How do we tell if it will be a matter of years, decades or centuries?
In Spring 2020, millions of young adults had thousands of dollars deposited in their bank accounts with nothing to spend it on. What followed was an explosion of speculative trading in stocks and crypto currencies. The prices of many financial securities increased two to ten times between April 2020 and Fall 2021. Since the Federal reserve announced tightening of monetary policy, financial markets have entered a bear market.
Others appear to have directed their "Covid money" to real estate. What followed was a massive increase in the price of houses and significant increases in rents. So far, the inflation in housing prices has stuck, unlike what has happened in the financial markets.
The USA is experiencing significant inflation and significant supply shortages (what happens when you pay people to not work). The country is also experiencing ever worsening public services (education) and infrastructure and increasing congestion in its transportation network (road, air, sea ports).
It appears that private wealth (assets held by individual Americans) has never been greater but public debt has also never been greater. This public debt includes not only financial debt and liabilities but also the decline in quality of public services and infrastructure, despite massive legislation supposedly to fix infrastructure.
For reasons, public officials are inept at solving the education and infrastructure deficit. They either fail slowly or they never try. Either by direct transfer or via trickle down economics, public money makes its way to private citizens with no improvement made to the public services.
The intrinsic bias towards privatizing wealth and socializing debt points to a future of ever increasing inequality and social strife. Stein's law comes to mind: "That which cannot go on forever will stop." In this case, what exactly is going to stop? Will it be the illusion of government providing public goods and services? Then what?
We also need a retrospective on what the optimal degree and kinds of restriction on social interaction were in response to the changing course of COVID. My feeling is that on net there was too much restriction. For example, venues should have been restricted on the basis of how well or not they could prevent aerosol dispersion, not on the basis of the activity that was being carries out in them per se.
Amen! I think that the world wars should have been financed more with taxes, although not having a VAT at the time did make that more difficult. But there is just no excuse for a deficit when the economy is at full employment. The beneficial reductions incorporate taxes in 2017 should have been offset (or more than offset) with higher collection from personal income taxes (including converting most deductions into partial tax credits at less then the rate of the highest marginal rates.
Thanks for referring to a paper that very few economists will read. Too many economists are talking about inflation but know little about how government spending is financed (and much less about how central banks have been responding passively to large changes in relative prices). BTW, Tom Sargent has been studying the financing of government spending for the past 50 years, including episodes of hyperinflation. With George Hall, Tom has recently gone into the details of each source of funding large increases in government spending.
With respect to the long-run implications of your country's current federal debt, you should try to learn from Argentina's experience in the past 70 years (the show is still going on: the monthly inflation rate for last month jumped to 6% and since the agreement with the IMF is very unlikely to succeed the inflation rate will hardly decline as expected).