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

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

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

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

BK> Which is how it happens.

Except not all government debt can be financed through 15 year notes.  
That is the point.  


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

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

Deficit and debt are completely separate things.  This is what you keep 
missing.  I can be in debt and have plenty of money to pay my debts 
(i.e. debt servicing), then I can still rack up more debt, also service 
that debt and still obtain positive cashflow.  And yet the debt would 
rise.  Simple debt management.  People do it all of the time when the 
refinance their homes.  



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

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

Balancing the budget is the easy part, just spend less.  Bringing down 
the debt is much harder because of ongoing liabilities (i.e. expenses) 
along coupled with debt servicing and racking up new debt.


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

Not until the democrats have no say in this.  Not going to happen.  They
are drunk with money power.


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

BK>BK>> Yeah, it does. See below.

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

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

It includes debt servcing on the current year, nothing more.  I can 
easily push off debt liability to out years and still have a positive 
budget.  The Clinton did just this, yet you refuse to admit it.  


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

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

And don't incur more long term delayed liabilities and debt.  This is 
where Social Security bankrupts the country.  We are getting the money 
now and spending it, while the liabilities pile up.  At some point they 
will need to be paid, along with the debt interest and current year 
liabilities.  This is the triple play that bankrupts us in the 2020s 
unless we continue to grow the economy and reduce long term liabilities 
via private accounts.  


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

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

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

Current year debt servicing only.  I'll keep saying this till you get 
it.  And we can chose only to service the debt and not retire any of the
noninterest portion.  It's all in how we choose to finance it.  I could 
balance the budget for the next 5 years just by bringing back the long 
bond, yet debt will go up.  


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

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

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

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

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

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

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

Right.  I agree how you hate Bush.  It clouds your entire vision.  Bush 
put this country back on the right financial track (except for vetoing 
Congressional spending) and the Dems are determined to destroy it.  The 
entire world is benefiting from the current economic conditions.  The 
world has never seen times this good.  If the Dems have their way it 
will all be wiped out in less than 5 years.  The entire world will 
suffer.  I have ecomonic charts of the entire world economies of leading 
and developing third world countries.  It is scary how they have all 
risen together since 2000.  It has never happened before.  It can 
continue unless governments get in and screw with it.  That will happen.  
It is only a matter of when.


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

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

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

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

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

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

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

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

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

Construction will be down due to excess inventory.  Remodeling is on the
upswing.  Wages are up.  What spigot do you want the Fed to open ?  The 
liquidity spigot is too wide open right now.  There is more money out 
there than folks know how to spend.  Any more and we will see serious 
inflation.  Any recession that comes will be solely due to tax policy by 
the Dems.  Count on it.  The Dems are wanting to kill the stock market,  
yet it is what is lining the government coffers right now.  Not unlike a 
Democrat to kill the goose laying the golden eggs.


Jeff


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