The Fiscal Cliff.....please explain it simply.

[psionl0]

Originally Posted by daenku32

It takes money out of the GDP = C + I + GS + NE equation.

Could you your terms please?

[Tippit]

Originally Posted by Pup

I'm not up on buzz-words like "legalized counterfeiting," but it seems you're talking about Treasury bills, notes, etc., and saying that the US government should default on them?

That would increase the cost of debt in the long run, not lower it, by making the government have to borrow in the future at sky-high rates, like people do when they really, really screw up their credit and have to go to the payday loan store on the corner because they can't get a loan any other way. Fortunately, economists realize that, which is why no one's talking about it.

No. The Fed not only monetizes the public debt directly, by buying US government bonds, but it also lends to private entities (via the legal right to counterfeit the public's money), at ridiculously low to negligible rates. This money gets flipped not only into US debt, but the debt of other sovereigns like Greece, Spain, and virtually every other country in the world. I'm saying that this debt, specifically, should be selectively defaulted on. This would save a sizeable portion of the roughly $380 billion in interest expense that could go to things taxpayers need, like roads and schools.

Why should I or any taxpayer have to pay tribute in the form of debt service to Goldman Sachs, who, because of their relationship with the Federal Reserve, gets a virtally endless supply of virtually free money? If you bought US debt with hard earned savings, you should be exempt.

[psionl0]

Originally Posted by Tippit

No. The Fed not only monetizes the public debt directly, by buying US government bonds,

Yes, the fed effectively prints the money to pay for servicing government debt. QE infinity?

Originally Posted by Tippit

but it also lends to private entities (via the legal right to counterfeit the public's money), at ridiculously low to negligible rates.

Interest rates (on bonds) are set by the market and the more money that gets printed, the lower the interest rate is.

Originally Posted by Tippit

This money gets flipped not only into US debt, but the debt of other sovereigns like Greece, Spain, and virtually every other country in the world.That doesn't make sense.

That doesn't make sense. When the fed buys government debt, the government doesn't have to service that debt (profits from the fed get returned to treasury) so if effectively reduces the government debt.

I don't know how much money the fed lends to Greece & Spain etc but I hope it isn't much. They would be the equivalent of NINJA loans by now. I would have thought that was more Germany's problem than any other nations'. In any case, that doesn't increase US government debt.

Originally Posted by Tippit

Why should I or any taxpayer have to pay tribute in the form of debt service to Goldman Sachs, who, because of their relationship with the Federal Reserve, gets a virtally endless supply of virtually free money?

Because you voted for politicians who think that borrowed money is free money (well . . . maybe not you specifically).

It doesn't help much when the economic "experts" keep saying the sky will fall in if the government doesn't borrow even more money.

[NewtonTrino]

Originally Posted by psionl0

Because you voted for politicians who think that borrowed money is free money (well . . . maybe not you specifically).

This seems like a fundamental flaw of extending the franchise to every warm body. There should be a minimum shared tax burden to qualify for voting rights.

[psionl0]

Originally Posted by NewtonTrino

This seems like a fundamental flaw of extending the franchise to every warm body. There should be a minimum shared tax burden to qualify for voting rights.

I don't see how borrowing money for corporate subsidies is any better than borrowing money for welfare payments.

[NewtonTrino]

Originally Posted by psionl0

I don't see how borrowing money for corporate subsidies is any better than borrowing money for welfare payments.

I'm not in favor of corporate subsidies. In fact corporate rent seeking is a huge problem. This is one of the primary reasons that government power should be restricted. If the power exists it will be subverted. We need to keep government small and lean and taxes as low as possible. Less money coming means less money to dip into. A lot of regulations are also due to companies trying to protect their turf (witness the fluff over nutrionists licensing for example). Public employee unions are also huge abusers of our system.

At this point I don't see much happening other than us spending ourselves until we are completely broke. Then we'll default and start the cycle over again. Yay for democracy.

[psionl0]

Originally Posted by NewtonTrino

. . . Yay for democracy.

I was with you up until this bit.

The economic track record of unaccountable governments is even worse. In fact, in many cases they just pillage the country for personal gain.

[NewtonTrino]

Originally Posted by psionl0

I was with you up until this bit.

The economic track record of unaccountable governments is even worse. In fact, in many cases they just pillage the country for personal gain.

Really? China seems to be growing pretty well.

We're starting to get to the bread and circuses stage here in the US. Do you honestly think our current political system is capable of fixing the current issues with regards to the long term budget? It's pretty clear to me we are going to keep spending until we really are broke. No idea what happens then but it's probably not going to be pretty.

[kevsta]

I can explain it pretty simply, the market needs to plunge convincingly enough to scare everybody before the politicians will panic enough to sort out some kind of further can-kicking.

and this looks like a very serious amount of Bernanke Put Longs wrongfooted and lined up for slaughter right now IMO



or, the majority of market participants could be right, because that always happens a lot, lol, well maybe not so much on this chart..

[Damien Evans]

Originally Posted by deaman

I was under the impression that we, and in fact the entire world, was already in a Global Recession.

Australia and China are still growing.

[Tippit]

Originally Posted by psionl0

That doesn't make sense. When the fed buys government debt, the government doesn't have to service that debt (profits from the fed get returned to treasury) so if effectively reduces the government debt.

I don't know how much money the fed lends to Greece & Spain etc but I hope it isn't much. They would be the equivalent of NINJA loans by now. I would have thought that was more Germany's problem than any other nations'. In any case, that doesn't increase US government debt.

You obviously either didnt read what I wrote, or didnt understand what I wrote. I'm not referring to debt that is directly monetized by the Fed. The Fed, in a non-transparent fashion, makes massive loans both on and off balance sheet to both known and unknown private entities at negligible rates, who then turn around and finance sovereigns with this counterfeit credit. These creditors are, in fact, receiving something for nothing, and form the basis of what can only be referred to as banker welfare.

The problems in Greece stem from whether the politicians pay interest on Greece's phony and onerous debts, or whether or not taxpayers receive basic government services. These problems are coming to the US. If you can't see why counterfeit credit in private hands used to finance sovereign debt (or anything else, for that matter) is a massive problem, then you are merely part of the problem.

[Hazel]

Originally Posted by lomiller

It would throw the US into recession. Tax increases and spending cuts both have the effect of decreasing demand, and the private sector responds to decreases in demand with layoffs or reduced hiring, which further decreases demand.

Now there, Folks, is a simple explanation! Thank you Iomiller.

[Hazel]

Originally Posted by patchbunny

That's more or less what I'm wondering. I have cash to invest, but am not sure when I should invest.

Maybe when politicians stop managing the economy? But then, again, do economists agree? At least they are better educated in the field.

[psionl0]

Originally Posted by NewtonTrino

Really? China seems to be growing pretty well.

Better than it was under Mao Tse Tung but do you want to migrate there? The (extinct) USSR and North Korea are two examples of what happens when you get the wrong dictators.

[psionl0]

Originally Posted by Tippit

You obviously either didnt read what I wrote, or didnt understand what I wrote. I'm not referring to debt that is directly monetized by the Fed. The Fed, in a non-transparent fashion, makes massive loans both on and off balance sheet to both known and unknown private entities at negligible rates, who then turn around and finance sovereigns with this counterfeit credit. These creditors are, in fact, receiving something for nothing, and form the basis of what can only be referred to as banker welfare.

The problems in Greece stem from whether the politicians pay interest on Greece's phony and onerous debts, or whether or not taxpayers receive basic government services. These problems are coming to the US. If you can't see why counterfeit credit in private hands used to finance sovereign debt (or anything else, for that matter) is a massive problem, then you are merely part of the problem.

I gather that your claim is that people are buying Greek bonds with money printed by the fed and given away for practically nothing.

Even if you can back this up I don't know why you call the Greek debt "phony". Greek politicians don't seem to be any different to other politicians. They don't care where the money comes from as long as they can borrow it.

[NewtonTrino]

Originally Posted by psionl0

Better than it was under Mao Tse Tung but do you want to migrate there? The (extinct) USSR and North Korea are two examples of what happens when you get the wrong dictators.

If I wasn't already established and I was the same age as when I immigrated to the US I very well might consider moving there and seeing what I could make happen. As it is things would have to get considerably worse here before I would do something like that at my age.

[daenku32]

Originally Posted by psionl0

Could you your terms please?

I thought I had done them in the post, but here they are:
GDP - Gross Domestic Product
C - Private Consumption
I - Private Investment
GS - Government Spending
NE - Net Exports

There are other versions of the GDP identity, but this is a nice and simple one.

[psionl0]

Originally Posted by daenku32

It takes money out of the GDP = C + I + GS + NE equation. GS is government spending, and taxes on working and middle classes effect mostly strongly the C by bringing it down. Decrease the GS & C and you are in a recession.

The 'I' is not being effected by current government debt or borrowing. But a recession will cut it hard. NE is net exports, which will only go up if US dollar comes down.

Now I get you.

But according to that formula, T (taxes) have no effect on either C (consumption) or I (investment) so the government could simply increase taxes until there is no deficit without affecting the economy.

Perhaps you meant to say, GDP = C + I + GS - T + NE

[Startz]

Originally Posted by psionl0

Now I get you.

But according to that formula, T (taxes) have no effect on either C (consumption) or I (investment) so the government could simply increase taxes until there is no deficit without affecting the economy.

Perhaps you meant to say, GDP = C + I + GS - T + NE

The formula presented is an accounting identity, not a behaviorial relation. It doesn't say that tax changes leave consumption (etc.) unaffected. It just says that changes in one variable have to be matched by changes in other variables to maintain the equality in the equation.

[Skeptic Ginger]

Originally Posted by NewtonTrino

Really? China seems to be growing pretty well....

Sure, if you enslave 3/4 of your population in sweatshops, you can sell cheap goods to the countries that don't.

If you ignore the tradeoffs it might look like an ideal situation.

[Skeptic Ginger]

Originally Posted by lomiller

It would throw the US into recession. Tax increases and spending cuts both have the effect of decreasing demand, and the private sector responds to decreases in demand with layoffs or reduced hiring, which further decreases demand.

And yet the Republican Band plays on.

They continue to repeat the mantra, raising taxes on anyone will slow the economy. But this is absurd. Raising takes on the rich isn't going to change their spending habits.

They continue to repeat the campaign slogan, taxing people who make over $250,000 would mean taxing small business owners. That's $250K net profit that they take home folks, not $250k gross that you pay your employees out of. I believe the data shows that only a small percentage of small business owners take home $250K. And a good share of those are millionaire athletes, writers and actors.

And they continue to ignore our crumbling infrastructure that rebuilding could do wonders to stimulate the economy in addition to saving money that would cost much much more when things like bridges and levies fail.

[Skeptic Ginger]

Originally Posted by Startz

The formula presented is an accounting identity, not a behaviorial relation. It doesn't say that tax changes leave consumption (etc.) unaffected. It just says that changes in one variable have to be matched by changes in other variables to maintain the equality in the equation.

Can you justify the claim that raising taxes on people who already have enough money to buy anything they want is going to change consumption?

[Skeptic Ginger]

Originally Posted by Tippit

You obviously either didnt read what I wrote, or didnt understand what I wrote. I'm not referring to debt that is directly monetized by the Fed. The Fed, in a non-transparent fashion, makes massive loans both on and off balance sheet to both known and unknown private entities at negligible rates, who then turn around and finance sovereigns with this counterfeit credit. These creditors are, in fact, receiving something for nothing, and form the basis of what can only be referred to as banker welfare.

The problems in Greece stem from whether the politicians pay interest on Greece's phony and onerous debts, or whether or not taxpayers receive basic government services. These problems are coming to the US. If you can't see why counterfeit credit in private hands used to finance sovereign debt (or anything else, for that matter) is a massive problem, then you are merely part of the problem.

Hardly anyone educated in the field of economics takes this Ron/Rand Paul Fed stuff seriously.

OTOH, the bailout of the banks suggests way too much political influence and corruption at the top.

It's a political lie that whatever the US liberals want is EU Socialism or financial collapse Greece-ism.

Money supply is not the current issue, Tippit. How is the Fed making the rich richer and the poor so poor they can't consume enough to stimulate the economy. How is the Fed causing the middle class to shrink?

[Hazel]

Originally Posted by Startz

The formula presented is an accounting identity, not a behaviorial relation. It doesn't say that tax changes leave consumption (etc.) unaffected. It just says that changes in one variable have to be matched by changes in other variables to maintain the equality in the equation.

I don't pretend to understand economics but, from what I see among people, I suspect we need a "behaviorial equation". Seems to me that most people keep right on buying and charging. Much like the person who drives across town to buy a bunch of bananas because they are two cents cheaper over there. No thought for the gas they spend and not thought for their taxes having risen. All that is future payment. People just do not behave according to scientific or economic equations, seems to me. They buy on an "I have to have it now" formula. Maybe I am wrong.

[Startz]

Originally Posted by Hazel

I don't pretend to understand economics but, from what I see among people, I suspect we need a "behaviorial equation". Seems to me that most people keep right on buying and charging. Much like the person who drives across town to buy a bunch of bananas because they are two cents cheaper over there. No thought for the gas they spend and not thought for their taxes having risen. All that is future payment. People just do not behave according to scientific or economic equations, seems to me. They buy on an "I have to have it now" formula. Maybe I am wrong.

Quite right about needing a behaviorial equation. The most simple model takes the identity given and adds a behaviorial equation relating consumption to after-tax income. That gives a pair of simultaneous equations that can be solved (if you have the right behavioral equation!) for the effect of a tax change on the economy.

[Startz]

Originally Posted by Skeptic Ginger

Can you justify the claim that raising taxes on people who already have enough money to buy anything they want is going to change consumption?

Sure. See "Do the Rich Save More?," by Karen E. Dynan, Jonathan Skinner, and Stephen P. Zeldes, Journal of Political Economy, 2004.

[blutoski]

Originally Posted by NewtonTrino

Really? China seems to be growing pretty well.

The GDP is growing nicely for now, but it's too early to tell what will be required to bring them to the standard of living of the West. They're becoming a plutocracy of ultrarich and slave class, which may have economic limitations shortly.

Originally Posted by NewtonTrino

We're starting to get to the bread and circuses stage here in the US.

I think that's a very important point and worth examination. Roman politics did not depend Corn Dole and public entertainment until after establishing a monarchy and permanent disenfranchisement. Nobody voted for that system - it was introduced because plutocracy and dictatorship is inherently unstable and a people with no vote must be bribed or they will not feel part of the state at all.

We live in a post-Nixon era with broad cynicism for government accountability. As skeptics we're aware of the immortality of government conspiracy theories, which seem to be stacking on top of one another and expanding into the general culture as established truths. And every election since the 1970s we seem to see worse voting support by the states, on a district by district basis, with intense gerrymandering, such that much of the electorate has good reason to believe their votes are not really meaningful or even wanted anymore.

And then we act shocked - shocked - that this systematic disenfranchisement results in reduced sense of national collegiality, ownership and personal responsibility for things like national debt.

Originally Posted by NewtonTrino

Do you honestly think our current political system is capable of fixing the current issues with regards to the long term budget? It's pretty clear to me we are going to keep spending until we really are broke. No idea what happens then but it's probably not going to be pretty.

I have confidence in democracy. The countries that have overspent recently are noticeably weak democracies with concentrated and corrupt plutocratic influences that I feel have deliberately and systematically looted their treasuries. I'm talking about you, Greece. (Irony alert - did they convince themselves that they were Plato's philosopher kings?)

[Skeptic Ginger]

Originally Posted by Startz

Sure. See "Do the Rich Save More?," by Karen E. Dynan, Jonathan Skinner, and Stephen P. Zeldes, Journal of Political Economy, 2004.

You're going to have to do better than that. You cite something, no link and no comment whatsoever about what argument it supposedly supports?

No, try again.

[NewtonTrino]

Originally Posted by Skeptic Ginger

Can you justify the claim that raising taxes on people who already have enough money to buy anything they want is going to change consumption?

As someone who makes that kind of money I certainly can't afford to buy anything I want. I do know people who can but they mostly made their money through capital gains anyway.

If we really want to tax the rich we need to tax wealth, not income. 1% of wealth over $100M would probably bring in a lot cash.

[NewtonTrino]

Originally Posted by blutoski

The GDP is growing nicely for now, but it's too early to tell what will be required to bring them to the standard of living of the West. They're becoming a plutocracy of ultrarich and slave class, which may have economic limitations shortly.

I don't disagree but for now they are playing us and our political class seems oblivious to it.

Quote:

I think that's a very important point and worth examination. Roman politics did not depend Corn Dole and public entertainment until after establishing a monarchy and permanent disenfranchisement. Nobody voted for that system - it was introduced because plutocracy and dictatorship is inherently unstable and a people with no vote must be bribed or they will not feel part of the state at all.

Bribery is still bribery though. We had out money to get votes and once the balance tips we are screwed. I would argue that point has already been reached but who knows.

Quote:

We live in a post-Nixon era with broad cynicism for government accountability. As skeptics we're aware of the immortality of government conspiracy theories, which seem to be stacking on top of one another and expanding into the general culture as established truths. And every election since the 1970s we seem to see worse voting support by the states, on a district by district basis, with intense gerrymandering, such that much of the electorate has good reason to believe their votes are not really meaningful or even wanted anymore.

The people doing the gerrymandering should be shot for treason.

Quote:

And then we act shocked - shocked - that this systematic disenfranchisement results in reduced sense of national collegiality, ownership and personal responsibility for things like national debt.

In other words the system is broken.

Quote:

I have confidence in democracy. The countries that have overspent recently are noticeably weak democracies with concentrated and corrupt plutocratic influences that I feel have deliberately and systematically looted their treasuries. I'm talking about you, Greece. (Irony alert - did they convince themselves that they were Plato's philosopher kings?)

Democracy simply doesn't have a long enough or deep enough track record to trust it that much. I don't see any reason why we don't end up where greece is in a few decades.

[NewtonTrino]

Originally Posted by Skeptic Ginger

And yet the Republican Band plays on.

They continue to repeat the mantra, raising taxes on anyone will slow the economy. But this is absurd. Raising takes on the rich isn't going to change their spending habits.

They continue to repeat the campaign slogan, taxing people who make over $250,000 would mean taxing small business owners. That's $250K net profit that they take home folks, not $250k gross that you pay your employees out of. I believe the data shows that only a small percentage of small business owners take home $250K. And a good share of those are millionaire athletes, writers and actors.

And they continue to ignore our crumbling infrastructure that rebuilding could do wonders to stimulate the economy in addition to saving money that would cost much much more when things like bridges and levies fail.

Let me run you through a simple though process. Imagine you are dentist who make a few hundred thousand a year. Your taxes go up by 10-20k a year. You've got a kid in college that you are paying for and another one about to graduate high school. Do you hire that extra dental assistant or do you hold off?

There are a lot of other things to take into account in the analysis but the idea that you can raise taxes and it won't have any effect on people because they are already "rich" is silly. The money comes out of the same pot and taxes are an expense like anything else.

Also keep in mind the cost of business increases every year. Current employees want raises, equipment needs to be replaced etc. So if the choice is cut your lifestyle or don't hire more people which on do you do?

In other words everyone saying this doesn't have any effect on hiring are wrong. The effect may be small but it's there.

Now let's talk about how the middle class are dramatically undertaxed for the level of services they seem to want... Take a look at the Canadian tax tables and deductions compared to the US for example.

[psionl0]

Originally Posted by daenku32

It takes money out of the GDP = C + I + GS + NE equation.

Originally Posted by Startz

The formula presented is an accounting identity, not a behaviorial relation. It doesn't say that tax changes leave consumption (etc.) unaffected. It just says that changes in one variable have to be matched by changes in other variables to maintain the equality in the equation.

The formula seems too simplistic to allow any conclusions to be drawn from it. I was just hoping that daenku32 would be able to expand on it.

[Startz]

Originally Posted by Skeptic Ginger

Can you justify the claim that raising taxes on people who already have enough money to buy anything they want is going to change consumption?

Originally Posted by Startz

Sure. See "Do the Rich Save More?," by Karen E. Dynan, Jonathan Skinner, and Stephen P. Zeldes, Journal of Political Economy, 2004.

Originally Posted by Skeptic Ginger

You're going to have to do better than that. You cite something, no link and no comment whatsoever about what argument it supposedly supports?

No, try again.

You asked a question, "Can you justify the claim..." I answered with "Sure." Meaning, "yes, I can justify the claim..." Sorry that you didn't understand that.

The Journal of Political Economy is arguably the leading academic economics journal.

[psionl0]

You can find a PDF HERE.

You can also view an ABSTRACT:

Quote:

. . . . .
. . . We find a strong positive relationship between saving rates and lifetime income and a weaker but still positive relationship between the marginal propensity to save and lifetime income. There is little support for theories that seek to explain these positive correlations by relying solely on time preference rates, nonhomothetic preferences, or variations in Social Security benefits. . . .
. . .

[Tippit]

Originally Posted by Skeptic Ginger

Hardly anyone educated in the field of economics takes this Ron/Rand Paul Fed stuff seriously.

I don't know what you're talking about with regard to "Ron Paul stuff". I made a clear, specific claim. Are you claiming you're educated in the field of economics? Because everything I've seen from you on these issues is evidence to the contrary.

Quote:

OTOH, the bailout of the banks suggests way too much political influence and corruption at the top.

The Fed makes massive, off-balance sheet loans to various private and other central banks all around the globe, at a cost of virtually nothing, and this counterfeit credit gets invested into sovereign debt that taxpayers all over the globe pay interest on, which crowds out your beloved social programs.

Of the about $3.8 trillion in US government expenditure in 2010, around $380 billion of that represented nothing more than debt service. That's 10% of our tax dollars that went to US creditors. A sizeable portion of that amount, but virtually unknowable due to the Fed's opacity, went to creditors whose "credit" represents nothing more than the Fed's ability to create electronic money with a computer keystroke.
This isn't about bank bailouts. It's about massive, perpetual looting by the banks at the top, of sovereigns all over the world.

Quote:

It's a political lie that whatever the US liberals want is EU Socialism or financial collapse Greece-ism.

I don't think you want financial collapse, but I do think you're ignorant enough to either promote, or remain oblivious to policies that will ensure it.

Quote:

Money supply is not the current issue, Tippit. How is the Fed making the rich richer and the poor so poor they can't consume enough to stimulate the economy. How is the Fed causing the middle class to shrink?

I just explained it above. We need to cut spending, starting with interest on the national debt paid to the largest banks who have access to our glorified counterfeiter, the Federal Reserve.

[The Central Scrutinizer]

Originally Posted by Tippit

Since most sovereign credit was issued to private banks by central banks at ridiculously low subsidized rates and then flipped into government bonds for guaranteed no-risk profits, it is therefore illegitimate, and counterfeit.

(I didn't even bother reading the rest)

[Damien Evans]

Originally Posted by The Central Scrutinizer

(I didn't even bother reading the rest)

I didn't even read that far, seeing the posters name was enough for me.

[Hazel]

I've mentioned the book before. It's quite an eye-opener in so many ways. "Who Stole The American Dream?" by Hedrick Smith. Last night I read Chapter 20 in which we are told that the powers that be "hid" the cost of the Iraq and Afghanistan wars by "charging" them to the deficit instead of using a "pay-as-you-go" tax increase. (the quotation marks are because those words are mine but the point was the author's.)

I do think there's more to be said than the book says - perhaps some "other side of the story" to be told - but the facts are there and well worth noting in relationship to what we are discussing in this thread.

[psionl0]

Originally Posted by Tippit

The Fed makes massive, off-balance sheet loans to various private and other central banks all around the globe, at a cost of virtually nothing, . . .

Not according to the published fed balance sheet (http://www.federalreserve.gov/releases/h41/current/). As a matter of fact, loans, net portfolio holdings of Maiden Lane LLC and central bank liquidity swaps are all a fraction of what they were a year ago.

Originally Posted by Tippit

. . . and this counterfeit credit gets invested into sovereign debt that taxpayers all over the globe pay interest on, which crowds out your beloved social programs.

ie governments keep borrowing money.

[Tippit]

Originally Posted by psionl0

Not according to the published fed balance sheet (http://www.federalreserve.gov/releases/h41/current/). As a matter of fact, loans, net portfolio holdings of Maiden Lane LLC and central bank liquidity swaps are all a fraction of what they were a year ago.

I suggest you read what you wrote, and then read what I wrote very carefully, and then perhaps re-consider your response. Second, are you implying that central banks only loan money to governments? Even given the evidence willingly provided by the perpetrators, we know that they make massive private loans all the time. When central banks use their legal counterfeiting power to make loans to governments, they enable profligate government spending. When they use it to make negligible-to-zero cost loans to select private entities who then use that capital to make interest bearing loans to governments to enable even more profligate spending, we have private looting of the public. Surely someone even as obtuse as you are can see that.

Quote:

ie governments keep borrowing money.

I'm well aware that governments keep borrowing money. I'm arguing that the source of private government credit should be a determining factor in determining its legitimacy. Assuming you understand the issue, which, to be quite honest I'm not sure that you do, you're claiming in essence that debts issued by glorified counterfeiters are sacrosanct, I am claiming the opposite.

Understanding the distinction between legitimate and illegitimate forms of government credit is crucial to understanding the phony "fiscal cliff", especially as government interest expense as a percent of government spending begins to exceed 10%.

If a criminal counterfeiter conspired with politicians and counterfeited 75% of the capital that makes up the national debt, would you be in favor of continuing to recognize that portion of the debt, and paying interest to the criminal? Would that be before, during, or after he is jailed?

Do you support debt repudiation under any circumstances?