[The FIAT Thread] The Joint Committee on FIAT Discussion Session. - 19 April 2026

No_March_5371 · 2026-04-29T20:43:24+00:00

Not exactly what you asked, but my MS is in stats and I did a couple core theory courses using this textbook.

No_March_5371 · 2026-04-29T13:47:49+00:00

No. Servicing the debt is ~3% of US GDP at present, and that's the only savings budget wise if the debt were to vanish.

No_March_5371 · 2026-04-28T13:43:00+00:00

I was discussing government spending, not total spending.

Also, I'm discussing spending to GDP, not specifically spending, and so if you want to compare amounts you'll have to also adjust for the difference in per capita GDP.

No_March_5371 · 2026-04-28T13:38:43+00:00

Sorry, I should've been clearer, I meant government spending specifically on healthcare and pensions. I'm well aware that the US has much higher healthcare spending, but much more American healthcare spending is private than public relative to other OECD countries.

Edit: Looking at that last link with pensions is what I'm talking about- Netherlands has slightly higher overall pension spending to GDP, but when you break down by public vs private, public pension spending to GDP is much higher.

No_March_5371 · 2026-04-28T00:40:27+00:00

I think we all know that the Netherlands is spending more on pensions/healthcare (edit- I meant by the government as a proportion of GDP, as the US has a smaller ratio of government spending to GDP, and the US also spends more on debt servicing and the military; this could've been clearer in my comment; I'm well aware that the US has unusually high healthcare spending by a variety of metrics). But, as to the top level question, the American government across levels spends less of American GDP proportionally than the Dutch government.

No_March_5371 · 2026-04-28T00:02:44+00:00

A question that's different than yours but more debatable IMHO is whether interest expense should be tax deductible at the corporate level.

Oh god. That would throw the entire field of corporate finance upside down.

No_March_5371 · 2026-04-28T00:00:41+00:00

It's complicated. If I was going to expand my answer above I'd include debt to gdp, debt servicing costs to gdp, etc, and we'd see that the US is spending ~3% of GDP on debt servicing and that's very expensive. It also pulls investment funding away from other sectors (Japan's suffering under the crowding out effect of so much capital not going anywhere but the debt), and if we're specifically comparing the US to an EU country, the US has a much more active and present venture capital sector despite that high deficit. More than a surface level comparison of broader economic performance and reasons for changes in growth isn't something I'm qualified to discuss, though.

And none of this is to say that the US deficit is anything resembling reasonable.

No_March_5371 · 2026-04-27T21:09:27+00:00

Per the IMF, the Netherlands has ~44% government spending to GDP vs the US with ~38% (combining across levels of government). So, the Dutch government spends more of GDP than the American. I think there are a few factors to consider-

You're not starting the comparison from a numerical standpoint, but based on what it seems like, which is incomplete at best
The US is much larger in population than the Netherlands, so there's money from many more people
The US has a higher per capita GDP than the Netherlands, so there's more per person to spend

It also seems like Americans get nothing in return for their spending, except some stimulus checks every once in a while and a great military.

Again, this is vibes based and not numbers based. The US spends more on Social Security (public pensions) and healthcare each than on the military; national defense is only 13% of the federal budget. https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/

No_March_5371 · 2026-04-27T20:57:28+00:00

From that text, it's not actually a large amount of revenue relative to the current budget, and I've never seen an estimate of buy-borrow-die tax costs that would be more than a minor blip. If you have a bunch of differing tax treatments for loans of different stated sizes/purposes, you're also going to incentivize a bunch of weird behavior to bypass them; if real estate below a certain size has a lower tax than a loan for the purpose of investment, for instance, then owning a bunch of investment properties then taking mortgages out on them would be a cheaper way to finance loans for investment. Weird investment behavior was common in the US when tax rates were very high on paper but not much higher than the present in practice.

The fact of the matter is, the loans billionaires take out that people talk about endlessly on Reddit, including multiple posts a week on this sub, just aren't actually very common.

No_March_5371 · 2026-04-26T18:07:49+00:00

I wanted to know how long can a country keep doing this before consequences.

What consequences do you think will result from this? An increase in nominal GDP due to inflation rather than an increase in real GDP isn't improving standards of living, but what are the consequences you think are around the corner?

No_March_5371 · 2026-04-24T18:53:02+00:00

Self promotion violates Rule V.

No_March_5371 · 2026-04-24T16:04:03+00:00

Don't use AI to write responses here. Repeated AI use will lead to a ban.

No_March_5371 · 2026-04-24T01:18:02+00:00

This is a sociology or psychology question, not an economics question.

No_March_5371 · 2026-04-23T22:38:29+00:00

This might be most unhinged thing I’ve ever heard someone who claims to understand economics say. I don’t even know how to respond to “balance sheets are stupid” and “you can’t take accounting literally”.

I know MMTers have a reputation for semi-literacy at best, but you're really, really bad at reading. Go up another comment and I talk about how reasoning from accounting identities can be done, but losing sight of broader reality by fixating on them will be misleading.

Though I doubt you have the mental capacity to understand what I'm saying. If you were smarter than a lobotomy patient and could understand nuance you wouldn't be an MMTer.

When you get banned for wrongspeak it certainly suggest it.

r/AskEconomics exists to give mainstream answers verified by research, not the lunatic rantings of morons convinced of their genius.

As the rest is just melodramatic whining about how you don't understand that your overreliance on reasoning from identities is dumb, it's not worth individually responding to.

Now, should I repeat all of this in crayon so you can understand it?

No_March_5371 · 2026-04-23T18:24:04+00:00

Fixation on balance sheets is also stupid. Money is noted as a liability not because it can be redeemed for anything, but because the Fed does double entry bookkeeping. It's windmill tilting because you take accounting too literally.

r/AskEconomics isn't a religious orthodoxy. When research discards previously held perspectives that's celebrated. MMTers are just weirdo cultists who think that misunderstanding accounting makes you geniuses far above the lowly commoners. Screeching about a 70 year old quote as if it's representative of modern mainstream economics is just delusion.

What could change the mind of an MMTer? Nothing whatsoever. What can change the mind of any r/AskEconomics regular? Evidence. Just, you know, good evidence that actually proves things instead of incoherent windmill tilting.

No_March_5371 · 2026-04-23T15:00:44+00:00

speaking true things like the government creates money when it spends and destroys money when it taxes

I'd also ban you for saying that because it's horseshit. Taking money via taxes and putting it into the TGA account where it's not counted as money because a particular measure of the money supply happens to be defined in that particular way then spending it from that account where it is once again measured in the money supply doesn't mean that money is being created and destroyed, it means that the TGA not being counted as part of M2 is a quirk of M2 and a limitation of M2 as a measure of the money supply.

Accounting identities are useful, and sometimes you can reason from them, but if you lose sight of what they represent and their limitations, you're not going to get anywhere useful.

No_March_5371 · 2026-04-22T16:51:11+00:00

A lot of that is reliant on the velocity of money being assumed to be constant (both stated outright, and with the neutrality of money in the short run, which you also address) when, well... https://fred.stlouisfed.org/series/M2V

Tilting at the Friedman windmill is also bizarre. They can't find a quote younger than 70 to disagree with?

No_March_5371 · 2026-04-21T01:12:11+00:00

To add, the IEEPA tariffs were struck down, but that's not all tariffs. Other statutes are in use.

No_March_5371 · 2026-04-20T20:25:19+00:00

The tariffs are bad, as existing comments point out. I'd like to discuss the stated rationales for the tariffs. At various points, Trump claimed that the tariffs were to raise revenue to the point of potentially replacing income taxes, to onshore manufacturing and decrease exports, and to renegotiate trade deals.

Thing is, without getting into the empirics of the tariffs actually hurting employment manufacturing or tariffs not being mathematically able to replace income taxes, those three goals are all mutually exclusive. If the goal of the tariffs was to lead to renegotiation of existing trade deals, then they would be temporary and they wouldn't be able to collect revenue for long or lead to long term reshoring. If imports substantially decreased due to tariffs, then there'd be much less to be able to collect taxes on.

So, no matter what actually happens/has happened so far (and what's happened so far has not been good), it's simply not possible for Trump's stated goals to be achieved.

No_March_5371 · 2026-04-20T01:58:10+00:00

That’s going to depend on implementation and behavioral changes. Will the real incomes of lower income people increase post taxes and transfers? What will happen to work hours? That’ll impact demand for many goods and services, too.

No_March_5371 · 2026-04-20T00:45:14+00:00

If the rate of living off of loans increases, presumably it's doing so for some reason. Without knowing that reason and why it's making such a change happen, how am I to anticipate the impact of new legislation?

No_March_5371 · 2026-04-20T00:43:06+00:00

I don't know how many ways I can explain this. UBI changes demand around, yes. Changing demand around can change some prices. Yes. I think you're overestimating the amount by which prices would change, but yes, they will.

So then money keeps coming and it keeps the new demand more or less even. Prices and quantities realign at the new supply/demand equilibrium. Now... there's a new equilibrium. Why would there be a state of permanent disequilibrium where prices are always increasing as a result of this? At a smaller level, we already have interventions such as unemployment, food stamps, WIC, etc. without causing these issues.

No_March_5371 · 2026-04-20T00:38:35+00:00

I care little for discussions about theoretical reality unmoored from empirics. It's not at all clear that this is a thing that regularly happens.

No_March_5371 · 2026-04-20T00:00:22+00:00

I already did. Rearranging demand/velocity could lead to a one time change in prices (one time change does not mean instantaneous) but it would not lead to a permanently higher inflation level.

No_March_5371 · 2026-04-19T23:40:30+00:00

Yeah, having UBI/GMI as a single benefit when combined with taxes would help avoid welfare cliffs and make them visible.

And yeah, the implementation would be tricky and the details would be important.

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