The nature of public debt seems to have changed since the Reagan administration allowed vast deficit spending for that time. Cutting taxation without balancing the budget has been a Republican tradition since the 1980s. Lafferian supply-side economics theory was that economic growth would bring in enough revenues with lower taxes to make up the difference yet it didn’t.
When the United States went off the gold standard it took a few years to realize what a free floating currency implied. Some people still think along the pre-Nixon era paradigm wherein one needed to have a real budget with a real balance and debt mattered. Money theory may have evolved since then. As a non-economist I am as uncertain about what the rich and powerful are doing with the national budget as the next guy.
Well- some people are certain yet incorrect, and a few may be certain and right, yet who to believe in reading what the experts have to say about it with conflicting opinions?
I have different ideas about it all the time. My most recent theory is that when the Federal Reserve gave more than 20 trillion dollars in zero-interest or low interest loans to big banks in quantitative easing since 2008, and the rich had the ability with the marginal reserve rate of 9% or so to electronically mint 9 or 10 dollars in electronic loans for every dollar they have on deposit, yet instead held on to most of the money and didn’t loan it out, they were keeping inflation down. If they were to flood the market with 180 trillion dollars right away that would perhaps devalue the dollars.
The dollar is an abstract medium of exchange. Real capital might be in real properties and skills rather than in the currency of exchange itself, so the value of a dollar may be relative, as is the public debt. If the point of the Federal Reserve is to allow the dollar to be an effective lubricant of business that will keep society healthy, the quantity of dollars available and amount of public debt become less meaningful than if they had some absolute value for-themselves like the number of propane bottles one has in a cabin when the temperature outside is 30 below zero in which case if one has a lot of empty bottles (regarded as debt) or full bottles owed to another cabin, it really matters.
The value of the capital on public exchange may be somewhere around 200 trillion dollars or more. Global wealth is concentrated and ordinary Americans have just a tiny fraction of it, yet the plutocrat class and 1%ers have somewhere more than 60% of the wealth in the U.S.A. (or more). In my opinion the levels of public debt are another aspect of the new relative value of money- the government could even evolve to a different medium of exchange if it would be of value to the rich.
https://www.sifma.org/resources/research/fact-book/
Bad government fiscal policy one would think must be harmful to the nation. Many people including myself tended to support David Stockman’s ideas rather than Arthur Laffer’s, yet monetary relativity has won that ideological contest easily, and people seem happy enough with floating currency and perennially unbalanced budgets.
The Republican party sometimes seems deaf and sadistic in being opponents to clever, practical measures to reform the economic opportunities for the bottom 25% of income earners so they would never be absolutely poor nor struck in poverty. Innumerable practical measures and structures could be made to support relief from poverty for any American that cared to, yet like monetary theory based on the gold standard that seems anachronistic, some political beliefs concerning poverty and what people could do to help themselves if they tried are obsolete in the modern economy.
With the rich seemingly able to influence inflation any time they like as a fractional release of their own money supply, and with the amount of money needed to improve the life of the poor being such a small figure comparably, ideas that affect determinations of the level of unemployment and amount of public spending seems to be first and foremost determined in regard to how changes and constants would affect the 1%.
Probably it would be possible to progressively reduce public debt, yet the federal budget would also need to be balanced at that would require agreement on how to restructure the federal budget. Republicans want to cut spending to the poor, increase military spending, cut taxes on the rich and move along lines that are minimal maintenance of the state- and that figure is about 7–8% of the nation’s annual income. A healthy budget with a level of public spending on socially valuable goods and services might be 20 to 30% of the national income- regardless of the wealth and standard of living of the nation their are some that would be against the latter. Republicans are happy enough with a broken federal budget ongoing with monetary elasticity and relativism enabling them to continue to pile up cash and snap purchase corporations and buy into business opportunities worldwide. Plainly though, real wealth is in the physical things in themselves as well as intellectual capital and social structures to support a system that is in itself in great need of ecological economic reform and value theory evolution to restore wilderness and ecospheric health where possible while, simultaneously relieving poverty and transitioning displaced workers to new and satisfying roles. Tasks a little more challenging than walking and chewing gum at the same time.
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