...

BK>>BK>> When the deficit hits zero the debt starts retiring. The latest
BK>>BK>> budget figures I got from the Bush administration say it went
BK>>BK>> into surplus during Clinton's last few years.

BK>> JB> Yet the debt went up.  You can't explain it.  Also a

BK>> Nope. Some kinda govt accounting. The debt was even expected to
BK>> be paid off within a relatively few years, can't recall how
BK>> many, maybe 15.

 JB> You're delusional.  Of course one could argue that if we
 JB> finance the debt on 15 year government notes and we make
 JB> the payments we could retire the debt in 15 years.  The

 Which is how it happens.

 JB> problem with that fallacy is that during those 15 years,
 JB> the government would rack up more debt.

 Not if the defict was truly below zero. Or rather the balance
 was above zero, a surplus.

 However, I never believed the deficit would stay at zero anyway.
 I am just reporting what the budget figures, and the press,
 reported. I am the one who posted some economist's statement
 that balanced budgets are always followed by recessions. Even if
 they tried to keep it balanced, they would have a recession that
 would ruin their plans. Plus borrowing is the normal way of
 financing capital improvements. It's very difficult to run
 construction projects out of current accounts.

 So I did not believe a balanced budget was a practical reality
 in the long run, but I do see they had one, more or less, for a
 short time.

 I don't believe we would reach zero debt, but I did believe they
 could reduce the debt significantly.

BK>> JB> deficit hitting zero or going positive is current account
BK>> JB> balance cashflow and doesn't mean debt is being retired.

BK>> Yeah, it does. See below.

BK>> JB> You can have cash in your pocket and chose not to pay off
BK>> JB> debt.

BK>> The federal budget includes debt service. So, when the deficit
BK>> disappears, the debt service pays off the debt. When the bonds
BK>> mature, and are due they get paid. If the longest term is 15
BK>> years, then after 15 years they would all be paid off.

 JB> Right.  See above.  I already predicted this nonsense.

 It's not nonsense, it's common sense, *IF* they maintain the
 balanced budget.

BK>> OTOH, there is one possible explanation that hadn't occured to
BK>> me before. Social security surpluses are invested in T-Bills, by
BK>> law. So, no matter how low the deficit gets, the Federal govt
BK>> will still have to issue T-Bills, which contribute to the debt.
BK>> Now the income from those T-Bills could be used to pay off other
BK>> T-Bills, which would be a net zero difference. However, during
BK>> the transition I expect the total debt might continue to
BK>> increase even if only because no one has delt with a continuning
BK>> balanced budget before. And it turns out, not now either. So no
BK>> one knew what to do or how to do it.

 JB> No, you didn't know.  You're getting warmer.  Remember that
 JB> debt equals unpaid liabilities.  I can have positive
 JB> cashflow but still increase my debt.  So can the government.

 Not when debt service is calculated into the budget. If you are
 increasing your debt you do not have positive cash flow, though
 it may look that way if you see it as different accounts.

BK>>BK>>BK>> find govt accounting interesting, in that
Bush's budget
BK>>BK>>BK>> figures show the deficit wiped out under
Clinton, yet the
BK>>BK>>BK>> debt increasing.

BK>>BK>> JB> Those weren't Bush's budget figures but don't
let that stop

BK>>BK>> It was from Bush's 2007 budget, in the budget history files.

BK>> JB> They were the same under the Clinton.  Nobody played with

BK>> Yes, they were. And they are there under Bush. I use Bush's
BK>> figures because they are the most recent, and because if you
BK>> call them dishonest I don't mind calling Bush dishonest. I feel
BK>> no need to defend Bush, so I win either way.

 JB> Of course you do.  You hate Bush and don't understand what
 JB> you are saying.

 I hate loathe and dispise Bush, which he well deserves
 considering the damage he's done this country. However, the
 facts are the same. It's his budget, his budget history, and the
 numbers show a budget surplus. That may be hard for you to
 admit, but it's true.

 JB> You've believed a lie so long you feel
 JB> compelled to defend the liberal gospel.

 If it's a lie, why does Bush continue it? There is no liberal
 gospel there for me to defend, Clinton was the best republican
 president we have had in a long time. Look at how he balanced
 the budget, it's republican economics all the way. Look at the
 alleged Reagan and Bush growth, it's all Keynsian economics, all
 the way. Badly done, but Keynsian all the same.

 Both screwed up by trying to run a big military with tax cuts.
 Remember, it was military spending that brought down the Soviet
 Union. Both tried the most liberal economic philosophy you can
 find in the practical world, then coupled it with airhead
 conservative philosophy. The result was an exploding debt and
 increased government, not decreased.

BK>> JB> the numbers. You are just in denial, ignorant or both.  I
BK>> JB> am going with both.

BK>> Obviously you can't deal with the fact that your beloved leader
BK>> validates Clinton's numbers.

 JB> Not at all.  He validates that you are wrong.  The debt
 JB> went up, regardless of what the deficit was.

 Like I said, you are in denial. His numbers show exactly what
 the press reported, and the conventional economists claimed.

 It also turned out exactly as I predicted. I predicted the
 recession. I predicted the recovery in 1992 would be delayed. No
 real secret, just watch the Fed and allow about 9 months to a
 year for the results of their actions. More or less. I'd like to
 claim credit for predicting the exploding deficits and debt, and
 the increase in the debt load, but practically everyone saw that
 coming. Everyone except the adherents to conservative economics.

 And I see another downturn, good possibility of a recession, on
 the horizon. Just talking to a heating contractor yesterday, he
 says his new construction work is down about 60%. The papers
 report new construction down, while permit issues are up.
 Incomes down. Etc. That new construction figure lags the fed
 funds rate by quite a bit, so it's an indicator that things are
 not going well. Unless the Fed opens the spigot, and fairly
 soon, things could get a lot worse.


BOB KLAHN bob.klahn{at}sev.org   http://home.toltbbs.com/bobklahn

... He who dies thus rich, dies disgraced. A.C.
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