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Liberty News ForumLNF Forums HerePolitical Opinion Page - The Hot Seat › Debt Tops $20 Trillion for First Time; Jumps $317,645,000,000 in 1 Day
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Very Hot Topic (More than 25 Replies) Debt Tops $20 Trillion for First Time; Jumps $317,645,000,000 in 1 Day (Read 787 times)
The Original Wally
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Debt Tops $20 Trillion for First Time; Jumps $317,645,000,000 in 1 Day
Sep 12th, 2017 at 8:27am
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https://www.cnsnews.com/news/article/terence-p-jeffrey/debt-tops-20-trillion-fir...

" A Billion here; a Billion there and pretty soon you're talking about real money"

        ~ Sen. Everett Dirksen


All that's CHANGED is the numbers and the magnitude of the problem which our children (and their children) will inherit!   Angry  Cry
  

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Re: Debt Tops $20 Trillion for First Time; Jumps $317,645,000,000 in 1 Day
Reply #1 - Sep 12th, 2017 at 11:21am
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Clearly the only way out of this will be to cut taxes for the investor class...
  

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The Original Wally
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Re: Debt Tops $20 Trillion for First Time; Jumps $317,645,000,000 in 1 Day
Reply #2 - Sep 12th, 2017 at 11:25am
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forgotten centrist wrote on Sep 12th, 2017 at 11:21am:
Clearly the only way out of this will be to cut taxes for the investor class...

You ought to make a Bumper Sticker out of your so insightful comment! (or is that where you got it?)
  

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Re: Debt Tops $20 Trillion for First Time; Jumps $317,645,000,000 in 1 Day
Reply #3 - Sep 12th, 2017 at 11:37am
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Please forgive my sarcasm, but it is based on prevailing republican orthodoxy.  "There is no debt crisis so large that we can't embrace hefty tax cuts.  Ever."

Even Trump himself stopped claiming he'd bring down the deficit, let alone the debt.
  

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The Original Wally
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Re: Debt Tops $20 Trillion for First Time; Jumps $317,645,000,000 in 1 Day
Reply #4 - Sep 12th, 2017 at 11:48am
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forgotten centrist wrote on Sep 12th, 2017 at 11:37am:
Please forgive my sarcasm, but it is based on prevailing republican orthodoxy.  "There is no debt crisis so large that we can't embrace hefty tax cuts.  Ever."

Even Trump himself stopped claiming he'd bring down the deficit, let alone the debt.

Sorry, I didn't realize you were being sarcastic.

As far as tax cuts.  We needed to make America more competitive if we are going to Make America Great Again.  We have one of the highest corporate taxes in the world. Small Businesses create jobs and prosperity and both the tax rate for large corporations and small business owners, need to be substantially reduced, in order to spark our economy into overdrive once again

Envy and Class Warfare may energize voters but it doesn't improve a damn thing for anyone (except the Elite Politicians who exploit the emotions of the ignorant)

Who knows if Trump (and the GOP) will actually do what they campaigned on?  We'll see.
  

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Re: Debt Tops $20 Trillion for First Time; Jumps $317,645,000,000 in 1 Day
Reply #5 - Sep 12th, 2017 at 12:25pm
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I saw this news item yesterday, on the 11th.

It's fitting that the nation was able to commemorate the 20 trillion mark on the anniversary of 9/11. For that was the crisis that kicked off a massive expansion in government spending and control, as well as debt.
  

"Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist." J M Keynes

"In the first place, the dichotomy between "theoretical" and "practical" is a false one. In economics, all arguments are theoretical. And, since economics discusses the real world, these theoretical arguments are by their nature "practical" ones as well." M Rothbard
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Re: Debt Tops $20 Trillion for First Time; Jumps $317,645,000,000 in 1 Day
Reply #6 - Sep 12th, 2017 at 1:31pm
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The Original Wally wrote on Sep 12th, 2017 at 11:48am:
Sorry, I didn't realize you were being sarcastic.

As far as tax cuts.  We needed to make America more competitive if we are going to Make America Great Again.  We have one of the highest corporate taxes in the world. Small Businesses create jobs and prosperity and both the tax rate for large corporations and small business owners, need to be substantially reduced, in order to spark our economy into overdrive once again

Envy and Class Warfare may energize voters but it doesn't improve a damn thing for anyone (except the Elite Politicians who exploit the emotions of the ignorant)

Who knows if Trump (and the GOP) will actually do what they campaigned on?  We'll see.


Our effective tax rates are below most of the rest of the developed world.  The tax code is riddled with loopholes and sweetheart deals to protect GE from (gulp) actually "paying" anything.

Also, corporate coffers are full.  The last time we did a deal to get companies to repatriate earnings at a big tax discount, they applied most of it to stock buybacks.  Stock buybacks and dividends are fine for stockholders, but they do nothing to grow companies and create jobs.

Further, stock buybacks and dividend payouts are a sign that a company does NOT have other investment opportunities.  It's done the math and has calculated that further investment in expansion, automation, whatever is not profitable.  They can't raise stockholder value.

So that shoots down the theory that corporate America would create all these new jobs if only they had a lower tax burden.
  

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Re: Debt Tops $20 Trillion for First Time; Jumps $317,645,000,000 in 1 Day
Reply #7 - Sep 12th, 2017 at 1:56pm
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forgotten centrist wrote on Sep 12th, 2017 at 1:31pm:
Our effective tax rates are below most of the rest of the developed world.  The tax code is riddled with loopholes and sweetheart deals to protect GE from (gulp) actually "paying" anything.

Also, corporate coffers are full.  The last time we did a deal to get companies to repatriate earnings at a big tax discount, they applied most of it to stock buybacks.  Stock buybacks and dividends are fine for stockholders, but they do nothing to grow companies and create jobs.

Further, stock buybacks and dividend payouts are a sign that a company does NOT have other investment opportunities.  It's done the math and has calculated that further investment in expansion, automation, whatever is not profitable.  They can't raise stockholder value.

So that shoots down the theory that corporate America would create all these new jobs if only they had a lower tax burden.


What is the investor who these companies buy shares from going to do with the money?
  
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Re: Debt Tops $20 Trillion for First Time; Jumps $317,645,000,000 in 1 Day
Reply #8 - Sep 12th, 2017 at 3:01pm
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wyattstorch2004 wrote on Sep 12th, 2017 at 1:56pm:
What is the investor who these companies buy shares from going to do with the money?


Yeah, sure, investors can take their winnings and go seek other opportunities.  Not the point.  The point here is that US companies are finding it less profitable to re-invest earnings back into their own business, their own production lines, their own R&D.

Moreover, when companies withhold dividends and refrain from buybacks in order to re-invest in their own production lines, they are NOT stiffing investors.  They are building stock value by making the company more valuable.

So the takeaway here is not "hurray, investors benefit from buybacks and dividends!", it's "bummer, overall demand for this company's product is so flaccid that it doesn't make sense to upgrade production..."
  

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Re: Debt Tops $20 Trillion for First Time; Jumps $317,645,000,000 in 1 Day
Reply #9 - Sep 12th, 2017 at 3:41pm
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forgotten centrist wrote on Sep 12th, 2017 at 1:31pm:
Further, stock buybacks and dividend payouts are a sign that a company does NOT have other investment opportunities.  It's done the math and has calculated that further investment in expansion, automation, whatever is not profitable.  They can't raise stockholder value.

So that shoots down the theory that corporate America would create all these new jobs if only they had a lower tax burden.


I'm not sure I agree that they have no other investment opportunities.

The thing is these sorts of productive investments involve more risk. You end up committing resources in specific projects and if those investments do not pan out then there are significant costs involved with retooling and reorganizing inputs.

So there are costs and risks to account for when discussing capital expansion.

Of course if the firm makes the right decisions then the profit rate will be significantly greater than the return shareholders get from buybacks.

But these greater profits come with the before mentioned risks.

With that said, there is another element to this puzzle and that is the availability of credit. When credit is abundant and cheap, firms find that they can borrow for relatively little cost, whether that means a loan from a bank or a corporate bond offering.

They could borrow these funds and invest them in long term risky projects involving fixed and human capital investment.

Or they could use them to engage in the kinds of activities you point to, FC. The incentive is to engage in financialization rather than cap ex because these are short term loans at low rates of interest. The return on the investment does not need to be large to make the trade profitable, but it does need to be short term.

So this is all to say that there are profitable investments to be made, there always are. There are always unmet needs to fill and luxuries which are begging to be made into necessities.

These activities involve risk though. And to the extent that a profitable and low risk business model is made available through credit expansion, it will be seized upon. We are subsidizing financialization, as it were.

So we cannot be surprised when we get more of it.

« Last Edit: Sep 12th, 2017 at 4:18pm by TowardLiberty »  

"Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist." J M Keynes

"In the first place, the dichotomy between "theoretical" and "practical" is a false one. In economics, all arguments are theoretical. And, since economics discusses the real world, these theoretical arguments are by their nature "practical" ones as well." M Rothbard
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