Understanding Government Finances For Philatelist

We have a big misunderstand how it all works ,so this is how I explained to the fellow next door .

During the recent pandemic to safeguard the U.S. economies, the Federal government gave me free a check for $1500.00 , all is fine and good .


I took that $1500.00 and purchased the British 5 pound Orange stamp {I was proud of getting it that I even posted that picture here on the chat board }.

Well today since the government didn't have the money they need to borrow the money ......so guess what ? I will borrow the money to the government at 5% .




So now your tax dollars are paying me $75.00 a year to use my money so the Government can give me a 5 pound Orange .


See how it works I get the stamp and you pay for it .

I think that you meant that you will loan the money

We need a stimulus package for philately.

That was a somewhat confusing post, floortrader, one which sounded more like someone for whom English is a second language.

But, giving you the benefit of the doubt, if you are alluding to how US Treasuries are approaching a yield of 5 percent, and are imagining taking the money the govt gave you to buy some treasury bonds, you should know that you are not giving your money to the US Treasury. You are giving it to someone who previously gave their money to the US Treasury.(or more likely, to someone who gave their money to someone who gave their money to someone ... ad infinitum ... to someone who once purchased it from the US Treasury). And that first person may have purchased it back when yields were 1-3 percent, so what you pay $1500 for today might have originally cost twice that (bond values fall as yields rise). True, the $75 you receive is coming from .gov, but you didn't give your money to the .gov to buy the Treasury bond(s).

The .gov does have something like a ponzi scheme going its its out of control spending and borrowing to pay for the spending, but it is a little more complex than your example.

But I suspect you know that, very well, in fact. You were just having fun.

Floortrader's always having fun, and I have fun reading his posts. That's what retirement should be about. There are many languages in the Windy C.

Fluent in Gibberish... apparently.

REV ----No hard feelings ,I just think you don't like me . It has nothing to do with stamps .

Your sitting down there in Corn country with the farmers and are upset with a person like me who made a lot of money from Corn . I am the one Cargill ,Conti , Bunge and ADM worked with when they wanted to market their warehouse receipts of Corn .

So I understand you and your community viewed me the way they did .

One of the challenges of threads like these is the original post often fails to convey any sense of tone - whether dead serious or joking - which frequently creates confusion among the replies.

To use the quote from the movie Stripes: "Lighten up, Francis."

You apparently missed the wink emoji at the end of my post, or don't know that on the Interwebz it means I was making a joke or otherwise humourous intent, i.e., NOT to be taken seriously.

I think the stimulus money was handed out with the understanding that it WOULD add to the deficit, but the positiveness of the stimulus would outweigh the negativeness of adding to the deficit. PLUS (and this is probably the bigger factor) it might buy some votes among the general public - I suppose depending upon where the recipients believed the $$$ was coming from. There were a lot of people hurting during the crisis that 'birthed' the stimulus payments, and I suspect it was a god-send to those that really needed it, who found their incomes down through no fault of their own. Except for their short-sightedness that allowed them to not see the Pandemic and associated economic affects coming. And, certainly, there were people that received $$$ that didn't REALLY need it. In the end, it was intended to be an economic stimulus - INTENDED to be spent - INTENDED to be $$$ pumped into the economy. And if that was its intent, then based on floortrader's story, it looks like it did as designed/hoped.

Me? Mine went in the bank, allowing me to pump up my 401K contribution, so I guess it ended up in my 401k. All of us that got it, did with it as we felt we needed/wanted to do with it.

FWIW, I remember in the 1970/1980's all the hubbub about the Federal deficit, and the talk then was similar to today's talk ("Our grandchildren will be paying off our debts."), yet that deficit was resolved in a much shorter timeframe. All the naysayers, with their MBA's (or higher), that say the destruction of Western society is just around the corner, just simply seem to be wrong time after time.

At least until the present.

The debt to GDP ratio is the ugliest thing.

yep

We have three debt issues coming together over the next decade that should create concern for us:

1. Annual debt service in the budget will more than double in the next ten years. Interest payments increased by 33 percent to $711 billion in the past year. By 2033, the Congressional Budget Office projects we will pay $1.5 trillion annually. Assuming interest rates don't go higher than the current market.
2. We owe the Social Security Trust Fund $2.8 billion and income versus expenses is now at a deficit, requiring payback of the debt to pay full benefits. The deficit will continue to grow over the next decade and we will add up to $400 billion annually to cover benefits until the debt is fully repaid in 2033. For those of you old to remember, Social Security was last facing insolvency in the 1980s and the Greenspan Commission made recommendations to create a fund solvent for 75 years or 2058. While wrong, borrowing those funds over the years does not create a 25-year shortfall.
3. Medicare is facing a projected $300 billion in deficits until insolvency as soon as 2029 or as late as 2031 for Hospital Insurance - better known as Part A.

We will pay $1 trillion of our current $6.1 trillion budget on debt service - financed by $1.7 trillion in borrowing and growing over the next decade. Elected officials want people to believe discretionary spending alone can balance the budget, but you would have to eliminate all $1.7 trillion in discretionary spending in the current budget to get the budget to balance.

Before stamps, I was a federal budget guy for 11 years on Capitol Hill. I occasionally miss these discussions.

Scott

I think that the COVID/stimulus spending is being used by politicians to acclimate taxpayers into being comfortable with trillion+ debt levels. I do not think that post COVID government spending will revert back to the deficit spending that was occurring pre-COVID. The COVID levels of deficit spending is now being accepted as the norm moving forward.

Add this to the fact that elections are coming up, and one of the easiest ways that politicians have to stay in power is tell people that they are getting more 'free' stuff, and I cannot see us addressing deficit spending anytime soon here in the US.

Once politicians have given free stuff to people, they never have the backbone to take it back. Rinse and repeat until everything collapses?
Don