If tariffs worked at all like Donnie portrays, to revitalize domestic production and promote local jobs, to help balance a trade deficit, and allow for market choice based on quality more than price, it might be useful.
The reality though is that the American manufacturing and industry space is functionally dead. We’ve shipped production elsewhere to reduce costs and that’s not something that’ll get reversed in any short order. All his big talk will do nothing beyond get the additional costs passed onto the buying public while the producers keep laughing all the way to the bank. They’ll take any extra taxes gained and put it into the military budget and continue stripping public good services to the bone all while cheering how great we’ve become. Look at the new carrier group we’ll build! So much winning for us both domestically and abroad!
They’ll take any extra taxes gained and put it into the military budget
Trump is actually trying to cut the military budget too. Which is actually problematic because we have a lot of equipment (particularly aircraft) that is aging out and we already can’t develop and/or manufacture replacements fast enough
Here’s my uneducated take, with little to no understanding of what’s going on in detail:
US public debt is at extraordinary levels. The treasury is hesitant to issue more debt and Donny doesn’t want to start his tenure with raising taxes on poor people (that will come in a few months, under the pretense to raise money for war with China or some shit). Therefore, he needs to collect money, whilst appeasing to right nationalists & business. Enter: Tarrifs.
At the federal level taxes aren’t used to pay debt, they’re used to reduce the money supply. That money goes into a shredder, and is functionally unrelated to the money printed.
This seems very odd… Can you give me a source on that? Both the shredding of federal tax income and the relation to public expenditure? It appears I have much to learn
That makes for an interesting take to things, however it’s simply an inverted way to think of paying for a debt incurred. Without the repayment by government revenue you would simply have acquisition by the government without a means to compensate for it.
The materials purchased have a cost. That cost is paid by the money created by the government. If the government simply continues to create an unbound supply of money then the currency becomes worthless and you end up with a hyper inflation cycle. See places like Zimbabwe or Venezuela where at some point you end up paying thousands of the sovereign currency for basic items. That currency volume needs to be maintained at some reasonable level for it to have any meaningful exchange value to another party.
So while it may not be directly input/output as the general population would see it, you could instead see it as a credit card. A limit is available on a card and to use it you must have available credit which is freed up by repayment of previous purchases.
Now, the fed through congress has the unique ability to extend their limit on demand, that still increases the debt load and associated interest payments, which is visible in the form of treasury bonds due and payable with accrued interest to the holder of those bonds. Those bonds are public debt, often held by foreign governments, but also by private sector investors, both which are assured payment by the credit worthiness of the government. This all is why there’s such a fuss when talk of the government defaulting their debt comes about, the credit rating of the government, and why we have regular fights over extending that debt ceiling.
The last time we had a balanced budged was during the Clinton years. Now I was barely out of high school and hardly paid a bit of attention to such matters at the time, but then there was a little event towards the end of 2001 that turned everything upside down. The military and police became supreme concerns and letting The Market™ fix everything was the name of the game under Bush. So much so that we got to experience the 2008 collapse during the Obama years in a major part due to the banks giving loans to people who couldn’t pay them on properties that where massively over valued. We’ve never managed to put things back in order since, in part because the climate got so polarized that ‘my team’ could NEVER support anything in the least that would be supported by THEM.
Throw in a dash of citizens united completely shifting any sense of public input into politics for anyone not a multi millionaire or more and some populist prattling about the good-ol-days and you get what we have now where a big chunk of people who can’t care to think for a moment of the actual policies being proposed beyond which team put it forth and you have a lovely recipe for an open pillaging by those with the power to do so.
Yeah, part of me wants to just shut off the news for the next several years, but unfortunately being prepared requires being aware…
True, but I don’t think anyone expects a balanced US budget at this stage of global economics. IMO a loss of the AAA rating would tank the economy significantly and risk a massive corporate backlash. This will make the government’s stance untenable and cannot simply be solved by issuing unlimited debt.
If tariffs worked at all like Donnie portrays, to revitalize domestic production and promote local jobs, to help balance a trade deficit, and allow for market choice based on quality more than price, it might be useful.
The reality though is that the American manufacturing and industry space is functionally dead. We’ve shipped production elsewhere to reduce costs and that’s not something that’ll get reversed in any short order. All his big talk will do nothing beyond get the additional costs passed onto the buying public while the producers keep laughing all the way to the bank. They’ll take any extra taxes gained and put it into the military budget and continue stripping public good services to the bone all while cheering how great we’ve become. Look at the new carrier group we’ll build! So much winning for us both domestically and abroad!
Trump is actually trying to cut the military budget too. Which is actually problematic because we have a lot of equipment (particularly aircraft) that is aging out and we already can’t develop and/or manufacture replacements fast enough
Right? This does nothing without initatives to help people launch manufacturing start-ups
Here’s my uneducated take, with little to no understanding of what’s going on in detail:
US public debt is at extraordinary levels. The treasury is hesitant to issue more debt and Donny doesn’t want to start his tenure with raising taxes on poor people (that will come in a few months, under the pretense to raise money for war with China or some shit). Therefore, he needs to collect money, whilst appeasing to right nationalists & business. Enter: Tarrifs.
Destroy my armchair take!
He’s already planned tax “cuts” that only cut taxes for those making north of $500k/yr. They go up for everyone under that. So we got both!
At the federal level taxes aren’t used to pay debt, they’re used to reduce the money supply. That money goes into a shredder, and is functionally unrelated to the money printed.
This seems very odd… Can you give me a source on that? Both the shredding of federal tax income and the relation to public expenditure? It appears I have much to learn
https://www.mmt.works/mmt-taxes-do-not-fund-government-spending/
What is this AI dribble?
That makes for an interesting take to things, however it’s simply an inverted way to think of paying for a debt incurred. Without the repayment by government revenue you would simply have acquisition by the government without a means to compensate for it.
The materials purchased have a cost. That cost is paid by the money created by the government. If the government simply continues to create an unbound supply of money then the currency becomes worthless and you end up with a hyper inflation cycle. See places like Zimbabwe or Venezuela where at some point you end up paying thousands of the sovereign currency for basic items. That currency volume needs to be maintained at some reasonable level for it to have any meaningful exchange value to another party.
So while it may not be directly input/output as the general population would see it, you could instead see it as a credit card. A limit is available on a card and to use it you must have available credit which is freed up by repayment of previous purchases.
Now, the fed through congress has the unique ability to extend their limit on demand, that still increases the debt load and associated interest payments, which is visible in the form of treasury bonds due and payable with accrued interest to the holder of those bonds. Those bonds are public debt, often held by foreign governments, but also by private sector investors, both which are assured payment by the credit worthiness of the government. This all is why there’s such a fuss when talk of the government defaulting their debt comes about, the credit rating of the government, and why we have regular fights over extending that debt ceiling.
Yes, this is all well accounted for in MMT. I recommend reading a bit more on the website I linked or on the wikipedia page about it.
Surely, if printing money (theoretically) causes inflation; and if collecting taxes reduces inflation, then the two are somewhat closely related.
If the amount of money that can be created by the government is somewhat limited, then surely tax money is another valid source for that money.
The last time we had a balanced budged was during the Clinton years. Now I was barely out of high school and hardly paid a bit of attention to such matters at the time, but then there was a little event towards the end of 2001 that turned everything upside down. The military and police became supreme concerns and letting The Market™ fix everything was the name of the game under Bush. So much so that we got to experience the 2008 collapse during the Obama years in a major part due to the banks giving loans to people who couldn’t pay them on properties that where massively over valued. We’ve never managed to put things back in order since, in part because the climate got so polarized that ‘my team’ could NEVER support anything in the least that would be supported by THEM.
Throw in a dash of citizens united completely shifting any sense of public input into politics for anyone not a multi millionaire or more and some populist prattling about the good-ol-days and you get what we have now where a big chunk of people who can’t care to think for a moment of the actual policies being proposed beyond which team put it forth and you have a lovely recipe for an open pillaging by those with the power to do so.
Yeah, part of me wants to just shut off the news for the next several years, but unfortunately being prepared requires being aware…
True, but I don’t think anyone expects a balanced US budget at this stage of global economics. IMO a loss of the AAA rating would tank the economy significantly and risk a massive corporate backlash. This will make the government’s stance untenable and cannot simply be solved by issuing unlimited debt.