Re: About National Debt (was For Trucker)

> Analogies can be useful in orienting one's thinking, but they should
> never be used as "proof" of a proposition. And any measure of "sameness"
> of an analogy is purely subjective. A proposition can only be defended
> on the basis of fundamentals and logic, not by analogy.

You assumed that analogy is used to PROVE a proposition. Bad
assumption. An analogy helps us understand the same causal relationship
in different situations. For example, Einstein claimed that he imagined
himself riding on a space ship and looked back at a clock to help him
figure out the Theory of General Relativity. He did not use this
analogy to PROVE a proposition, he used it as a useful tools to help
him understand the same causal relationship involved.

> The value of a currency is measured in terms of what a unit of that
> currency will buy in a basket of goods and services, not by the exchange
> rate with other currencies.

This paragraph should be changed to: "The value of a currency is
measured in terms of what a unit of that currency will buy in a basket
of goods and services, which is determined at any given moment by the
exchange rate with the currency of the nation that provides the goods
or services." When the exchange rate is doubled against another
currency, the value of this currency (to purchase goods and services
from another nation) is reduced into half.

> The ignorance shown here is breathtaking. The notion that the US
> might default on its own bonds is absurd. Only if the US borrowed in
> a foreign currency, as Argentina did, could it possibly be in danger
> of defaulting, and then only on the foreign currency portion of its
> debt. But the US only borrows in the very currency that it issues,
> and will never be forced to default on its debt, regardless of how
> large the debt or the interest payments on the debt.

A nation can only issue so many bonds before its currency melts
down. A government sells new bonds to cover its debt. When a currency
has a meltdown, who will buy the new bond to pay off the debt? Though a
government can print more money to pay off the debt (and basically give
the useless paper/credit to the creditors), it only worsen the
meltdown. Paying off a bond with meltdown currency is essentially the
default of a bond. Which government wants to do that?

> And then you followed it up with this proposal which falsely argues
> that reducing the debt will increase tax money available for national
> expense:

How do you prove it is false? With all other factors being equal,
lowering debt reduces the interest a government must pay for its debt,
thus increase the portion of tax money available for government
expense.

> The fact is that the money available to the government for "national
> expense" is unrelated to the amount of interest paid on the national
> debt. The government has unlimited spending power in its own currency
> for the reasons I have already explained.

The credibility of this sentence is very questionable. Care to site
just one credible source that also claims "the government has
unlimited spending power"?

.

Relevant Pages

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  • Re: About National Debt (was For Trucker)
    ... > Equating government debt to family debt is a serious mistake because ... The analogy fails because government ... > has not borrowed in a foreign currency. ... simply to increase the tax money available for the national expense. ...
    (sci.econ)
  • Re: About National Debt (was For Trucker)
    ... >> Equating government debt to family debt is a serious mistake because ... The analogy fails because government ... >> in a foreign currency and does not do so. ...
    (sci.econ)