bigalpha
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So what is accumulated debt?
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spin this ecomike
- Thread starter ehall
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So what is accumulated debt?
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- MilkyWay Galaxy
It is the total debt.
Annual deficit is what is, was or will be added in one year to the previous total debt.
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- MilkyWay Galaxy
While this was a very interesting read for me too, and like XJEEPER, I too learned some new stuff reading it, so thanks for the post, it does have its own spin. It does not back off after making its point, to re-compare the Clinton years to the prior and later years true total deficits, as it's partial intent is to debunk the Clinton Surplus (implying that democrats are liars, Hell all politicians are liars. Liars, damn liars and statistics, LOL. .
In a round about way the Clinton Surplus was based on a typical accounting practice called a "cash flow basis" (which the author does not mention). I was not previously aware of this, although I knew that the government was borrowing from Social Security, I had not looked at it in this depth prior to today.
Don't forget that the treasury notes and bonds do pay interest, even to social security. But that gets into another issue, which is interest rates and changes in bond prices (value) as interest rates rise and fall.
Just don't forget that "Money is the evidence of someone else's debt". It is all circular. This article just points how circular it is within the government between the treasury and SS. It is not the total debt that is so important in the modern economy, it is the money velocity that is critical, velocity of M3 growth in particular.
If you guys want to worry about the government owing itself money, go check what the banks use for their capital reserves to meet Federal Reserve requirements for liquidity, cash reserves.
Hint, it is US Treasury notes, bonds, and Federal reserve notes, all forms of government debt. Which is part of the reason it will never be reduced or paid off. Go check the green backs in your pocket if you want a real shock. It says Federal Reserve Note! Debt of the Federal Reserve system, with full faith and backing of the US government, which has the backing of the tax payers, who pay their taxes with Federal reserve notes (government debt used to pay personal debt and used to pay taxes).
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- Location
- MilkyWay Galaxy
Money:
From Wiki,
http://en.wikipedia.org/wiki/Money
Money supply
Main article: Money supply
In economics, money is a broad term that refers to any financial instrument that can fulfill the functions of money (detailed above). These financial instruments together are collectively referred to as the money supply of an economy. Since the money supply consists of various financial instruments (usually currency, demand deposits and various other types of deposits), the amount of money in an economy is measured by adding together these financial instruments creating a monetary aggregate. Modern monetary theory distinguishes among different types of monetary aggregates, using a categorization system that focuses on the liquidity of the financial instrument used as money.
Market liquidity
Main article: Market liquidity
Market liquidity describes how easily an item can be traded for another item, or into the common currency within an economy. Money is the most liquid asset because it is universally recognised and accepted as the common currency. In this way, money gives consumers the freedom to trade goods and services easily without having to barter.
Liquid financial instruments are easily tradable and have low transaction costs. There should be no (or minimal) spread between the prices to buy and sell the instrument being used as money.
Measures of money
The money supply is the amount of financial instruments within a specific economy available for purchasing goods or services. The money supply is usually measured as three escalating categories M1, M2 and M3. The categories grow in size with M1 being currency (coins and bills) and checking account deposits. M2 is currency, checking account deposits and savings account deposits, and M3 is M2 plus time deposits. M1 includes only the most liquid financial instruments, and M3 relatively illiquid instruments.
Another measure of money, M0, is also used, although unlike the other measures, it does not represent actual purchasing power by firms and households in the economy. M0 is base money, or the amount of money actually issued by the central bank of a country. It is measured as currency plus deposits of banks and other institutions at the central bank. M0 is also the only money that can satisfy the reserve requirements of commercial banks.
Types of money
Currently, most modern monetary systems are based on fiat money. However, for most of history, almost all money was commodity money, such as gold and silver coins. As economies developed, commodity money was eventually replaced by representative money, such as the gold standard, as traders found the physical transportation of gold and silver burdensome. Fiat currencies gradually took over in the last hundred years, especially since the breakup of the Bretton Woods system in the early 1970s.
Also,
money supply
Hide links within the definitionShow links within the definition Definition
The total supply of money in circulation in a given country's economy at a given time. There are several measures for the money supply, such as M1, M2, and M3. The money supply is considered an important instrument for controlling inflation by those economists who say that growth in money supply will only lead to inflation if money demand is stable. In order to control the money supply, regulators have to decide which particular measure of the money supply to target. The broader the targeted measure, the more difficult it will be to control that particular target. However, targeting an unsuitable narrow money supply measure may lead to a situation where the total money supply in the country is not adequately controlled.
Found at:
http://www.investorwords.com/3110/money_supply.html
Also of interest:
What is meant by the money supply? The term itself implies that a certain amount of money exists at any given time, even though the quantity may be unknown. In truth there can be no meaningful measure of the quantity because it is continually varying as a function of demand.
The Fed has its own arbitrary measures of the money supply which it once used to help guide its monetary policy decisions. It defines money as the total of cash in circulation and deposit liabilities of banks and thrifts. At one time it set targets for the growth of the money supply. Now it largely ignores its own measures because it has found little correlation between them and its major policy objectives – limiting inflation and unemployment.
Monetary Aggregates
The Fed has defined three monetary aggregates M1, M2, and M3. The narrowest definition, M1, includes the transaction deposits of banks and cash in circulation. M2 adds savings accounts, small time deposits at banks, and retail money market funds. M3 adds large time deposits, repurchase agreements, Eurodollars, and institutional money market funds. In March 2006 the Fed discontinued tracking M3 because it does not convey information about economic activity that is not already embodied in M2.
Note that the Fed's definition of the money supply includes only what the non-bank sector holds. Thus the reserves of banks, i.e. vault cash and deposits at the Fed, though a part of the monetary base, are not included in the monetary aggregates. That means when a bank spends for itself, it increases the money supply. When it receives payments from the public such as interest on loans, the money supply decreases.
Bank Lines of Credit as a Money Equivalent
An important shortcoming of the Fed's definition is that it ignores lines of credit which can be exercised at the discretion of the borrower. Firms often hold substantial lines of credit from their banks, which they can use on short notice. Likewise consumers hold lines of credit in their credit card accounts that are just as useful for purchases as checking accounts or the currency in their wallets. Lines of credit increase liquidity, which is ultimately what counts in terms of enhancing aggregate demand.
When someone uses a credit card in a purchase, he automatically expands the money supply. The seller receives a new deposit in his account, which increases the total of demand deposits in the banking system -- until the buyer pays off the loan. The result is that consumers who roll over their credit card loans rather than paying them off have increased the money supply on their own initiative by hundreds of billions of dollars. In effect, the money supply is substantially larger and less measurable than the Fed's definition.
The Quantity Theory of Money
Economists regularly use the term money supply without defining it. A notable example is the equation of exchange in the quantity theory of money.
Found at:
http://wfhummel.cnchost.com/moneysupply.html
From Wiki,
http://en.wikipedia.org/wiki/Money
Money supply
Main article: Money supply
In economics, money is a broad term that refers to any financial instrument that can fulfill the functions of money (detailed above). These financial instruments together are collectively referred to as the money supply of an economy. Since the money supply consists of various financial instruments (usually currency, demand deposits and various other types of deposits), the amount of money in an economy is measured by adding together these financial instruments creating a monetary aggregate. Modern monetary theory distinguishes among different types of monetary aggregates, using a categorization system that focuses on the liquidity of the financial instrument used as money.
Market liquidity
Main article: Market liquidity
Market liquidity describes how easily an item can be traded for another item, or into the common currency within an economy. Money is the most liquid asset because it is universally recognised and accepted as the common currency. In this way, money gives consumers the freedom to trade goods and services easily without having to barter.
Liquid financial instruments are easily tradable and have low transaction costs. There should be no (or minimal) spread between the prices to buy and sell the instrument being used as money.
Measures of money
The money supply is the amount of financial instruments within a specific economy available for purchasing goods or services. The money supply is usually measured as three escalating categories M1, M2 and M3. The categories grow in size with M1 being currency (coins and bills) and checking account deposits. M2 is currency, checking account deposits and savings account deposits, and M3 is M2 plus time deposits. M1 includes only the most liquid financial instruments, and M3 relatively illiquid instruments.
Another measure of money, M0, is also used, although unlike the other measures, it does not represent actual purchasing power by firms and households in the economy. M0 is base money, or the amount of money actually issued by the central bank of a country. It is measured as currency plus deposits of banks and other institutions at the central bank. M0 is also the only money that can satisfy the reserve requirements of commercial banks.
Types of money
Currently, most modern monetary systems are based on fiat money. However, for most of history, almost all money was commodity money, such as gold and silver coins. As economies developed, commodity money was eventually replaced by representative money, such as the gold standard, as traders found the physical transportation of gold and silver burdensome. Fiat currencies gradually took over in the last hundred years, especially since the breakup of the Bretton Woods system in the early 1970s.
Also,
money supply
Hide links within the definitionShow links within the definition Definition
The total supply of money in circulation in a given country's economy at a given time. There are several measures for the money supply, such as M1, M2, and M3. The money supply is considered an important instrument for controlling inflation by those economists who say that growth in money supply will only lead to inflation if money demand is stable. In order to control the money supply, regulators have to decide which particular measure of the money supply to target. The broader the targeted measure, the more difficult it will be to control that particular target. However, targeting an unsuitable narrow money supply measure may lead to a situation where the total money supply in the country is not adequately controlled.
Found at:
http://www.investorwords.com/3110/money_supply.html
Also of interest:
What is meant by the money supply? The term itself implies that a certain amount of money exists at any given time, even though the quantity may be unknown. In truth there can be no meaningful measure of the quantity because it is continually varying as a function of demand.
The Fed has its own arbitrary measures of the money supply which it once used to help guide its monetary policy decisions. It defines money as the total of cash in circulation and deposit liabilities of banks and thrifts. At one time it set targets for the growth of the money supply. Now it largely ignores its own measures because it has found little correlation between them and its major policy objectives – limiting inflation and unemployment.
Monetary Aggregates
The Fed has defined three monetary aggregates M1, M2, and M3. The narrowest definition, M1, includes the transaction deposits of banks and cash in circulation. M2 adds savings accounts, small time deposits at banks, and retail money market funds. M3 adds large time deposits, repurchase agreements, Eurodollars, and institutional money market funds. In March 2006 the Fed discontinued tracking M3 because it does not convey information about economic activity that is not already embodied in M2.
Note that the Fed's definition of the money supply includes only what the non-bank sector holds. Thus the reserves of banks, i.e. vault cash and deposits at the Fed, though a part of the monetary base, are not included in the monetary aggregates. That means when a bank spends for itself, it increases the money supply. When it receives payments from the public such as interest on loans, the money supply decreases.
Bank Lines of Credit as a Money Equivalent
An important shortcoming of the Fed's definition is that it ignores lines of credit which can be exercised at the discretion of the borrower. Firms often hold substantial lines of credit from their banks, which they can use on short notice. Likewise consumers hold lines of credit in their credit card accounts that are just as useful for purchases as checking accounts or the currency in their wallets. Lines of credit increase liquidity, which is ultimately what counts in terms of enhancing aggregate demand.
When someone uses a credit card in a purchase, he automatically expands the money supply. The seller receives a new deposit in his account, which increases the total of demand deposits in the banking system -- until the buyer pays off the loan. The result is that consumers who roll over their credit card loans rather than paying them off have increased the money supply on their own initiative by hundreds of billions of dollars. In effect, the money supply is substantially larger and less measurable than the Fed's definition.
The Quantity Theory of Money
Economists regularly use the term money supply without defining it. A notable example is the equation of exchange in the quantity theory of money.
MV = PT
This relates the money supply, M, and the velocity of money, V, to the average price level, P, and the total number of transactions, T, in a given time period. The equation is simply an identity, meaning it is true by definition. Yet it is often used to "prove" that the average price level increases with the quantity of money. An identity says nothing about causal relations. The only thing we know is the product MV, which equals the national income, PT, which itself is only roughly measurable. The quantity of money, M, remains undefined and unknowable.Found at:
http://wfhummel.cnchost.com/moneysupply.html
- Location
- MilkyWay Galaxy
This is worth reading!
http://news.goldseek.com/RickAckerman/1219212180.php
[FONT=Verdana, Arial, Helvetica, sans-serif][SIZE=+2]Collapse of M3 Spells Deflation[/SIZE][/FONT]
http://news.goldseek.com/RickAckerman/1219212180.php
[FONT=Verdana, Arial, Helvetica, sans-serif][SIZE=+2]Collapse of M3 Spells Deflation[/SIZE][/FONT]
RichP
NAXJA Forum User
- Location
- Effort, Pa
This is all very interesting but pray tell, WHY THE XXXX CAN'T THOSE BUTT HEADS IN DC RUN A GOVERNMENT ON AN EVEN BUDGET.
Maybe you economic types believe debt is good, but this simple person believes it's NOT GOOD to be in debt, PERIOD, I don't care who you are. In fact after all these years we should be paying even less taxes not smoking every federal, state and county credit card in existence to their max and beyond. Some debt is on the personal end for say a mortgage. Remove the corporate tax on cars and they would drop down to the $10K range like they were in the 70's and 80's before they jacked the tax up. In my opinion there are too many economists in the govt playing games instead of shooting for a debt free country.
Maybe you economic types believe debt is good, but this simple person believes it's NOT GOOD to be in debt, PERIOD, I don't care who you are. In fact after all these years we should be paying even less taxes not smoking every federal, state and county credit card in existence to their max and beyond. Some debt is on the personal end for say a mortgage. Remove the corporate tax on cars and they would drop down to the $10K range like they were in the 70's and 80's before they jacked the tax up. In my opinion there are too many economists in the govt playing games instead of shooting for a debt free country.
- Location
- MilkyWay Galaxy
Since you mentioned "mortgage" (asset backed debt), and other than what looks like a typo(*) in your post, it appears(*) you tried to make an exception for a mortgage debt (?), as acceptable debt, so assuming that is case, here is one thought you never hear in "the government is spending too much and going too far into debt debates". That is the net worth of the city, state and federal governments. Why don't we calculate them and compare them to the current debt, just like a business building, home, etc?
The accounting never mentions the liquidation value of government assets. While private for profit businesses borrow money based on their asset values, and income producing values and no one gives it a second thought (as long as they make money). So then why is it when the government entities spend money (invests) to buy and build highways, dams, bridges, water and sewer plants and piping connections, shipping ports, airports, military installations, Navy ships, Air Force planes, submarines, tanks, missles, and government buildings, why don't we ever look at both sides of the equation?
I remember 35 years ago listening to the same dire predictions of impending US financial calamity (predictions of an eminent collapse of the US dollar, and claims that US debt was way out of control) in the 70s and 80s, which never happened. No doubt the screams of eminent collapse being on its way due to excess government debt, have been sung out load and clear since WWI, and have yet to materialize in the USA.
That said, I do not believe too much personal debt is good. People can not print money (at least not legally:laugh3:!). But I see nothing wrong with the government putting excess idle production capacity to work during a severe recession to invest in improved infrastructure while helping a limp economy get back on its feet. On the other hand I was one of the people since 2003 screaming that we had no business borrowing and spending a trillion dollars to go set Iraq up so Halliburton could get rich quick at US tax payer and US soldier expense.
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8Mud
NAXJA Forum User
- Location
- Central Germany
In 1972 I bought gold at $35 an ounce. I for one believed we were a lot closer to the edge (then) than many thought. What if the government defaults on it's bonds or they become nearly worthless? If the world in general looses confidence in lucky bucks. The government has some big guns it can use, like devaluing the dollar and others, it can even pass laws forbidding foreign purchase of American real assets (many countries do). What happens if the government shoots it's wad and runs out of big guns?
One major CEO recently let the bag out of the cat and said on national TV, their were no mathematical models for the housing meltdown, we were in uncharted territory.
I'm not screaming gloom and doom, I just consciously try to keep my eyes open and not get too comfortable.
I really don't trust government to actually be very competent. Most of the higher ups spend the vast majority of their days self promoting. When do they have time to take care of your best interests?
Knowing how Ecksjay loves my stories I'll share one with you. Shortly after the Tet offensive I was ordered to go from point "A" to point "B". Two lane road full of hundreds of thousands of refugees, somebody told them to get out of town and head east. After hours of pushing our way through the column, we finally hit clear road. Drive up to the top of a small mountain, start down the other side and meet another column of hundreds of thousands somebody told to head west. One of those moments in life that define a person.
One major CEO recently let the bag out of the cat and said on national TV, their were no mathematical models for the housing meltdown, we were in uncharted territory.
I'm not screaming gloom and doom, I just consciously try to keep my eyes open and not get too comfortable.
I really don't trust government to actually be very competent. Most of the higher ups spend the vast majority of their days self promoting. When do they have time to take care of your best interests?
Knowing how Ecksjay loves my stories I'll share one with you. Shortly after the Tet offensive I was ordered to go from point "A" to point "B". Two lane road full of hundreds of thousands of refugees, somebody told them to get out of town and head east. After hours of pushing our way through the column, we finally hit clear road. Drive up to the top of a small mountain, start down the other side and meet another column of hundreds of thousands somebody told to head west. One of those moments in life that define a person.
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- Location
- MilkyWay Galaxy
I was just as pessimistic as you back then. But 35 years has taught me to expect the unexpected, not the expected that the news media pumps up. I recall in 1988-89, well after the last big, BIG 2 day market crash when computer trading drove the major stock indexes down 35% in 2 days, and other related lessons of the 70's inflation wave, and 80's recession, that I promised my self the next time the market crashed, and or inflation fears abounded, and people ran for shelter, that I would make sure I had lots of worthless (LOL) dollar cash ready to buy what others were selling (like stocks recently), and not buy what they were buying.
In the 80's the US government let foreign investors flush with US dollars (Japan and Germany) buy up nearly everything in the USA, companies, stocks, assets, as US companies lost their asses during Reagan's voodo economics era, while the FED raised interest rates up to 20%, to kill inflation. Then the foreign companies paid the US property and corporate income taxes till they decided to sell it back to us at a 2 day discount in the 1987 crash!
They claimed they had no math models for the 87 crash either. I don't beleive it. I also don't believe there were no math models for the housing crash. The math models exist, the problem is too many acted like the herd, and followed the same wrong math models, herd mentality. I new a housing crash was coming back around 2000, just did not know when or how bad the crash would be, but I expected it to be pretty bad. The bigger the bubble got, the worse I knew the crash would be. I was pretty sure the housing and market, and economic crash was coming real soon when oil hit $100/barrel.
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http://www.frontlinethoughts.com/pdf/mwo091109.pdf
Interest write up this week on inflation, deflation, money supply and money velocity.
Interest write up this week on inflation, deflation, money supply and money velocity.
- Location
- MilkyWay Galaxy
Interesting write up on Oil, copper, and dollar price directions.
http://www.insidefutures.com/article/114027/Chart Presentation: 1992 Comparison.html
http://www.insidefutures.com/article/114027/Chart Presentation: 1992 Comparison.html
