Deficit spending as an extra tax.

Did anybody make any estimates of what the extra burden of deficit spending on an average taxpayer is? My back of the envelope calculations is we get taxed an extra 15-20% because of the federal government overspending. This does not take into account things like ZIRP which is absolutely necessary given the amount of public debt.

You're trying to put a dollar figure on it, or make a percentage out of it.

The ballooning debt has kept us tied to the Federal Reserve Funny Money. And that has cost us the middle class, which was made poor. It also cost the working poor their independence and freedom, as the wages they get for working forty, sixty, even eighty hours a week will no longer feed, clothe and house them. So, even though they're gainfully working their asses off being productive, they have to jump through government hoops and bow to government mandates just to eat.

And how has this happened? The dollar got devalued every day. We need a raise every day to keep up. Who can get a raise every day?

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Originally Posted by acptulsa

I think what the newcomer to this discussion has the most trouble understanding is the dollar is not a dollar--it's a nickel.

What do I mean? Well, my old man got out of the Army Air Corps after WWII and got himself a good job paying a dollar an hour. How is that a good job? Easy--it was 1946 and the dollar was still a dollar. As in, when he wanted a Pepsi he paid a nickel for it--now it costs a dollar. When he wanted to ride a bus, he put seven cents in the meter, or a nickel and a half--now it costs a buck and a half. When he wanted to sit down and have a cup of regular old coffee, he paid a dime, or two nickels--now it costs two bucks. When he put gas in the car (it was always cheap in Oklahoma), he paid 14.9 cents per gallon, or three nickles--now it costs three bucks. When he was hungry for lunch, he bought a deluxe double hamburger with all the trimmings for a silver quarter, or five nickles--now it costs five bucks. When he wanted to go to a movie, he paid thirty-five cents or seven nickles--now it costs seven bucks. And when he shopped for a new top of the line Dodge Custom with heater and radio and other options, it would set him back two grand, or forty thousand nickles--now it costs forty thousand dollars.

The Pepsi isn't any wetter, the gas doesn't burn any brighter, the double burger isn't any more filling, and the movie doesn't last any longer today (with no newsreel, serial and cartoon, it actually doesn't last as long). So, there's only one explanation. The dollar is no longer worth a dollar. The dollar is worth a nickel. Period.

Why do you think all the five and ten cent stores have been replaced with dollar stores?

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The debt has ultimately cost the nation its middle class, and has cost the working poor their independence and liberty. How does that work out percentage-wise...?

I feel fortunate that I grew up in a time that the poor were independent and managed for themselves . They were better people than today . My Father was the local County Clerk and then a state representative , a farmer and then sold real estate after he no longer worked as a public servant . He was a real public servant . Representing the people . Doing taxes for others for free etc . Of course he knew everyone , he ate as many meals and had as many conversations with poorer people as he did of people with means , probably more. To him everyone was the same . And they were , there was no welfare . Everyone scratched to make do and the Churches etc were able to help rhose who could not .

Yes. It will cost you at least one and a half of your children.

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Originally Posted by timosman

Did anybody make any estimates of what the extra burden of deficit spending on an average taxpayer is? My back of the envelope calculations is we get taxed an extra 15-20% because of the federal government overspending. This does not take into account things like ZIRP which is absolutely necessary given the amount of public debt.

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The extra burden for this year is $266 billion- that is what interest on the debt cost the government. That is about 6.5%.

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Originally Posted by Zippyjuan

The extra burden for this year is $266 billion- that is what interest on the debt cost the government. That is about 6.5%.

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You forget the immediate cost of letting the government spend the extra money that didn't exist. :cool:

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Originally Posted by Zippyjuan

The extra burden for this year is $266 billion- that is what interest on the debt cost the government. That is about 6.5%.

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Which is paid for by devaluing the dollar, not by paying off quantities.

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Originally Posted by timosman

You forget the immediate cost of letting the government spend the extra money that didn't exist. :cool:

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But it did exist. It was funded through the sale of US Treasuries. Investors purchased them by their own choice from money already had and they could have decided to do something else with.

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Originally Posted by Zippyjuan

But it did exist. It was funded through the sale of US Treasuries. Investors purchased them by their own choice from money already had and they could have decided to do something else with.

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The Cayman Islands, a country with $2.5B GDP holds $269B of US debt - https://www.thebalance.com/who-owns-...l-debt-3306124

Are we running out of places where to stuff this turkey?:cool:

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Originally Posted by timosman

Did anybody make any estimates of what the extra burden of deficit spending on an average taxpayer is? My back of the envelope calculations is we get taxed an extra 15-20% because of the federal government overspending. This does not take into account things like ZIRP which is absolutely necessary given the amount of public debt.

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Did you not get the memo?

A republican is President now, deficits don't matter

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Originally Posted by timosman

Did anybody make any estimates of what the extra burden of deficit spending on an average taxpayer is? My back of the envelope calculations is we get taxed an extra 15-20% because of the federal government overspending. This does not take into account things like ZIRP which is absolutely necessary given the amount of public debt.

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This is a very rough estimate but I think we collect about 3 trillion and borrow about a trillion so we're spending 33% more than we're collecting.

I think the cost of that 33% extra we borrow every year is going to fall more on the holders of dollars. I think if you hold real assets you can avoid a lot of that.

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Originally Posted by timosman

The Cayman Islands, a country with $2.5B GDP holds $269B of US debt - https://www.thebalance.com/who-owns-...l-debt-3306124

Are we running out of places where to stuff this turkey?:cool:

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The Cayman Islands is a large banking center and a lot of hedge funds have offices there. The Treasuries are held by investors there. https://cnsbusiness.com/2016/06/caym...reasury-bonds/

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Originally Posted by Zippyjuan

The Cayman Islands is a large banking center and a lot of hedge funds have offices there. The Treasuries are held by investors there. https://cnsbusiness.com/2016/06/caym...reasury-bonds/

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He asked if we were running out of places to stuff this turkey. Did you think lecturing us with information most of us already knew was going to distract us from that valid question?

Water is a good thing everyone wants around, until the floodwaters come. Is the market for U.S. T Bills infinite or not?

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Originally Posted by acptulsa

He asked if we were running out of places to stuff this turkey. Did you think lecturing us with information most of us already knew was going to distract us from that valid question?

Water is a good thing everyone wants around, until the floodwaters come. Is the market for U.S. T Bills infinite or not?

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The market for anything is not infinite. The question is how big the market actually is. That will be shown by what interest rates people are wiling to accept to purchase US debt. Are we at the limits to that market? Rates are so low they suggest we are not.

Historic Ten Year US Treasury Rates:
http://www.multpl.com/10-year-treasu...f3fb693464.png

http://www.multpl.com/10-year-treasu.../table/by-year

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Originally Posted by Zippyjuan

The market for anything is not infinite. The question is how big the market actually is. That will be shown by what interest rates people are wiling to accept to purchase US debt. Are we at the limits to that market? Rates are so low they suggest we are not.

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Are you really talking about The Market? You wouldn't be trying to cover up the fact that the biggest customer for the nation's mortgage at this point is your masters at the Federal Reserve, would you?

Yeah, buddy, the Federal Reserve is clearly the free Treasury market at work. They aren't propping that vehicle up at all.

Answer: Why, yes, Zippy is trying to deflect from the question.

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Originally Posted by acptulsa

Are you really talking about The Market? You wouldn't be trying to cover up the fact that the biggest customer for the nation's mortgage at this point is your masters at the Federal Reserve, would you?

Yeah, buddy, the Federal Reserve is clearly the free Treasury market at work. They aren't propping that vehicle up at all.

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Actually Social Security is the biggest holder. The Fed currently has $2.4 trillion or about eleven percent. And they are reducing- not increasing- their holdings so they are not currently a customer for US debt. They stopped being a net- buyer back in October, 2014 (they do purchase some Treasuries still- to replace ones they currently own but have matured).

https://www.thebalance.com/who-owns-...l-debt-3306124

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Which agencies own the most Treasurys? Social Security, by a long shot. Here's the detailed breakdown as of December 31, 2016.

Social Security (Social Security Trust Fund and Federal Disability Insurance Trust Fund) - $2.801 trillion
Office of Personnel Management Retirement - $888 billion
Military Retirement Fund - $670 billion
Medicare (Federal Hospital Insurance Trust Fund, Federal Supplementary Medical Insurance Trust Fund) - $294 billion

All other retirement funds - $304 billion
Cash on hand to fund federal government operations - $580 billion.

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Debt Held by the Public. The public holds the rest of the national debt ($14.7 trillion). Foreign governments and investors hold nearly half of it. One-fourth is held by other governmental entities. These include the Federal Reserve, as well as state and local governments. Fifteen percent is held by mutual funds, private pension funds and holders of savings bonds and Treasury notes. The remaining 10 percent is owned by businesses, like banks and insurance companies. It's also held by an assortment of trusts, companies, and investors.

Here's the breakdown of holders of the public debt as of December 2016:

Foreign - $6.004 trillion
Federal Reserve - $2.465 trillion
Mutual funds - $1.671 trillion
State and local government, including their pension funds - $905 billion
Private pension funds - $553 billion
Banks - $663 billion
Insurance companies - $347 billion
U.S. savings bonds - $166 billion
Other (individuals, government-sponsored enterprises, brokers and dealers, bank personal trusts and estates, corporate and non-corporate businesses, and other investors) - $1.662 trillion.

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China and Japan each have roughly $1.1 trillion.

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Originally Posted by Zippyjuan

China and Japan each have roughly $1.1 trillion.

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What percentage of treasuries are bought by the private market? Any treasuries bought by central banks and foreign countries are artificial.

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Originally Posted by Madison320

What percentage of treasuries are bought by the private market? Any treasuries bought by central banks and foreign countries are artificial.

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Difficult to say for certain. When they list the holdings a foreign country has, that includes both private investors and their central bank holdings. The Cayman Islands for example.