Steve, the difference is that the people of the United States have faith in their government, and the people of Venezuela do not. I mean that. Despite the fierce resistance to President Trump - perhaps because of it - the institutions of the Presidency and Congress are held in regard (though not high regard; we are, after all, Americans).  

Moreover, and to the point, unlike Venezuela, the US government has not inflated the currency. The actual money on the street has not changed much - some, over time, but not much, dramatically.  In contrast, in Venezuela, prices skyrocketed and the currency was inappropriate to the task. Those price spikes were not just caused by inflation - though there was that.  The regulations, the restrictions on imports, and the taxes on production, caused shortages that drove prices up. And as is so often the case with the promises of the central planner, they failed to see the future. The government of Venezuela expected to pay for its programs with oil exports.  But the price of oil fell precipitously. Hugo Chavez's government was caught short. The consequences fell to Nicolas Maduro, specifically because of the third prong: the failure of their democracy.  In the enthusiasm of electoral victory, the Chavez government overwrote the constitution with emergency decrees to keep themselves in power. That is why Maduro is still in power and even deadly protests have no effect. 

On the other hand, in the United States, President Trump cannot even keep the reins on his own party. He gets as much flak from Ted Cruz as he does from Bernie Sanders -- sometimes on the same issues. Today's news is that five states have refused to honor demands from a presidential commission for voter rolls.  That actually makes the US dollar stronger: our democracy still works; our society is not just stable, but meta-stable.

And (in case you missed it) Venezuela was unable to pay in hard currency (foreign currency; US dollars) to have more money printed by firms such as Delarue.  The government of Venezuela is bankrupt. They have no assets.  The US government still owns Kennedy Space Center, Carpenter's Hall and Yosemite, among many, many other assets.

Sacagawea dollars circulate as currency in Ecuador. On the cusp of the new millennium the sucre fell to 25,000 to $1, so they went to dollars.  They are not alone.  What circulates in the USA?  It is true that the exchange rate on gold has changed over time, with a strong upward trend. If you remember, though, the salient points were the 9/11 attacks, the wars in southwest Asia, and the mortgage meltdown.  On that last, however, note, again, that the price of gold did not triple, though the nominal money supply did.  People bought on fear, but not in response to the markets. In fact, the price of gold fell back almost dramatically - almost 50% - during the Obama Administration. That is contrary to the expectations of conservatives.

Over time, the dollar will continue to erode.  I tell young people all the time that what they buy in a vending machine for a dollar, I bought for a dime when I was their age, and my mother called it penny candy.  But it is not the end of the world. We are not going to see a dramatic collapse of the economy: hills and valleys, of course; the Apocalypse, no.  

(Edited by Michael E. Marotta on 7/01, 6:14am)

Steve wrote: "But, the current size of the national debt is worrisome because of the portion of the budget consumed by its maintenance.  Increase the interest rates and it isn't sustainable."

This page reports the average interest rate on US federal government debt as of December, 2016 was 2.204%. US federal government debt is about $20 trillion. 2.204% x $20 trillion = $0.44 trillion.

4.4% x $20 trillion = $0.88 trillion, which is $0.44 trillion more
6.6% x $20 trillion = $1.32 trillion, which is $0.88 trillion more

Either increase would be a signifcant added burden compared to federal government spending, which is projected to be $4.06 trillion for fiscal year 2017 -- 10.8% and 21.6% respectively. Moreover, the amount of debt keeps growing with deficits of about $0.5 trillion per year.

https://ftalphaville.ft.com/2014/10/16/2004102/the-real-reasons-why-the-us-treasurys-debt-maturity-has-been-rising/?mhq5j=e1

Steve, the above page shows the maturity breakdown of US Treasury debt as of July 31, 2014. 

In general repayment of principal is done by issuing new debt. In other words, money received from one lender is used to pay off another lender, or an existing lender in effect agrees to a later maturity date.

If the amount paid off plus interest exceeds new issuance, that would imply a surplus (tax revenue > spending). If the amount of new issuance exceeds repayments plus interest, then the excess is added to the debt and implies a deficit (tax revenue < spending). 

P.S.: You may need to register or sign in to see the page. When I first went there, I didn't need to. But when I tried putting a link in the post and clicked on it, then I needed to sign in or register.

(Edited by Merlin Jetton on 7/01, 6:05pm)

In a different discussion, Luke and I parsed "rational-empiricism" versus "empirical-rationalism" as the wider school of thought under which to put Objectivism. I mention that here because Steve's posts are an example of "Kantian rational-empiricism." They are completely in line with the free market theories of the Mises Institute, the works of von Mises, Hayek, and others who rationally derived the axioms of economics. Mises in particular is explicit about that in Human Action. 

Objectivism as "empirical-rationalism" begins with the observable facts of reality.  In this discussion (and in economics broadly), that must be the historical record. Numismatics is the art and science that studies the forms and uses of money.  I wrote an introduction to numismatics for RoR here:  http://rebirthofreason.com/Articles/Marotta/Numismatics_History_as_Market.shtml

In that are links to reliable websites of information.

On my blog, you will find Numismatics: the Standard of Proof in Economics and Numismatics Informs Econonics.  From that second article, I offer this:

 

In apparent violation of Gresham's Law, presenting a test case for hard money conservatives, the US Mint 3-cent silver and 3-cent nickel circulated side-by-side. The base metal coin did not drive the precious metal competitor from the market.  The same was true of the US Mint 5-cent nickel versus the silver half-dime.  The US Treasury also issued Fractional Paper, an emergency scrip from the Civil War that circulated alongside coinage, even after the apparent necessity was gone.  People could have demanded hard money (as small silver coins), but they did not.  The paper was good enough.  

 

Relevent here, in the context of the so-called "coming collapse of the American economy" I offer these facts. When Japan was opened to the West, they were on a silver standard, their silver Yen being the same size as the US Silver dollar (give or take). When America went to the gold standard, so did Japan.  Again, Japan's 1-yen gold coin was on the same standard as the US gold dollar. Then Japan launched a series of wars, and won all but one of them. The yen plummeted.  After two nuclear attacks and occupation by a foreign army, Japan slowly recovered. The yen was about 300 to 1 against the dollar. Then, about 1980, their recovery took hold. Their quality programs began to pay off.  Then yen was as high as 85 to the dollar in the early 1990s - and at 79 in 2012.  Today, the yen is at 110 to the dollar.  The Japanese are big on honor. Other nations, such as Israel and Brazil, go through horrendous inflations and issue new currencies for old hundreds and thousands to one. Japan kept her word on the yen.

(Yen historical chart here: http://www.macrotrends.net/2550/dollar-yen-exchange-rate-historical-chart)

But those failed currencies of Israel, Brazil, and other nations do inform Americans of possible futures.  The fact is that the currency can lose all value, but the society will continue pretty much as before, unfaltering.

In Brazil, just for instance, inflation was so ridiculous that people bought anything as soon as they could. Portable radios became an alternate currency. You could trade a lot of radios for one refrigerator.   But Brazil is still here. There was no revolution, no economic collapse, no lights-out-John-Galt moment.

Turkey and Italy both have a stories similar to Japan's:  they picked the losing side in two world wars.  But they each kept their lira. And they continue today, pretty much as they have in most of modern history.

(Edited by Michael E. Marotta on 7/02, 5:40pm)

Generally, mathematicians (and physicist) tend to achieve their creative insights while young because those are rationalist studies. You don't even need paper and pencil, though they help.  If you read Simon Singh's story of Fermat's Last Theorem, after his demonstration was shown to be faulty, Andrew Wyles went home, and with a ream of white paper and a cup of sharp pencils, started over.  On the other hand, if you read In Suspect Terrain by John McFee, you meet a mature geologist who late in her career now has the depth of knowledge needed to see the unsolved problems in the easy claims she learned as a student.  (Plate tectonics does not explain everything...)  

So, too, with economics.  As rationalists, the Austrians were able to demonstrate logically why socialism must fail.  It was not just one argument, but many, all inter-related.  By analogy, I recently read an old book that provided 300 proofs of the Pythagorean Theorem. (See my blog here.) The one given in Euclid is actually quite involved and difficult if you are not conversant with geometry. On my blog, I give a simple one. But there are many... Central planning for a command economy has so many failure points that you could write a thick book about it. The most pervasive error is believing that the market can be commanded out of existence. 

That error is not exclusive to left wing socialists. If you read any US history you will find a plethora of errors about money and banking from political patriots and also from advocates for a (mostly) free market. Ayn Rand never advocated for competing currencies. She wanted a strong dollar, backed in gold. In the Gulch, John Galt's gold coin claimed the authority of the United States of America. It did not say, "I am good gold. Value me as you choose."

I used to believe all the same easy claims from Steve's appeal to emotion:

 

"Haven't you read of the deaths, the huge spikes in crime, the chaos, the inability to make long-term contracts, the fact that people working for government were paid in worthless paper, that people with wheelbarrows full of near worthless currency trying to buy a loaf of bread, the shortages in the markets - maybe it is toilet paper you go without for a few weeks, maybe it is meat.  The deprivation as people go without.  Businesses close.  People focus on survival not flourishing.  Plans, hopes and dreams are abandoned."

 

 He was 100% correct when he identified the problem of context-dropping.  All of those horrors were caused by other events.  The visible consequences of monetary inflation were caused by deeper problems.  In some cases, the images are just that: snapshots that symbolize, but do not explain. The old German man with the wheelbarrow of paper is iconic. But it was not the case that the German government, like the Romans way back or like the USA now, slowly, inexorably, constantly and continuously increased their debt and devalued their currency over the course of 120 years.

The actual facts of real history speak to deeper truths. I point out again that Israel has gone through several currencies and Israel prospers. Being on a strict gold standard would be better.  Not being Israel at all might be best. But given a nominally free society with strong roots of personal liberty, the economy continues, regardless of what happens to the debts of the government.  And the Jews of the world continue to buy those bonds.  They have faith. Faith is real.  Even Ayn Rand differentiated the metaphysical from the man-made.

The error of the socialists is not recognizing the metaphysical in economics.  The conservatives fail to understand the man-made.

As a conservative, Steve identifies the government of the United States of America with the people of America.  It is, indeed, our government. We are a democracy, a republic actually, but it is not a centralized republic of a few, but all of us, We the People. That said, though, the government can be declared completely bankrupt, sell off Yosemite and lease out Carpenter's Hall as a Disney theme park, and America will still be here, as long as we have entrepreneurship, individualism, and enterprise. 

Is there anyone reading this who does not have carry an ounce of silver for "just in case"?  

What does government money have to do with the general economy?

I agree that government distorts the markets.  Every action carried out for political power is a dislocation somewhere, often several somewheres.  Conservatives are willing to accept some of those, as in the courts, police, and military. Even Objectivists cheered the space program.  Granting that it was an improper function of the government, the deadweight loss was worth the emotional satisfaction of proving that it could be done.  

If you look at the history of the federal debt -- see here:  https://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm  --  you will see that the debt does not matter. 

Steve challenged me: "Marotta, if you think that the there is no amount of debt that won't crush our nation, why not say so and make a case for it."  I could make the same point: If you think that some amount of debt will crush our nation, name it.  It was not a $71 million in 1790, or $2.6 billion in 1864, or $1 trillion in 1982. And BTW, those were the benchmarks of Washington, Lincoln, and Reagan.  

I point out, moreover, that "our nation" is not synonymous with the government.  

Finally, to bring this to a scientific understanding of the facts of economic history, debt is not a negative.  Debt is the seed of civilization. 

Ayn Rand never advocated for competing currencies. She wanted a strong dollar, backed in gold. In the Gulch, John Galt's gold coin claimed the authority of United States of America. It did not say, "I am good gold. Value me as you choose."

Ayn Rand did not advocate, nor sanction a legal tender act.  Marotta would have us believe that Ayn Rand was in favor of outlawing any currency other than a gold-backed dollar - that is false.
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Marotta, I'm curious.  You used the term "left wing socialists."  Aren't all socialists left wing?  Are there, in your opinion, socialists who are not left wing and that do not make the mistake of believing the market can be commanded out of existence?  I'm starting to wonder if you voted for Bernie.
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As a conservative, Steve identifies the government of the United States of America with the people of America.  

There you go again.  I am NOT a conservative.  I am an Objectivist, which means that politically I am a libertarian and that I subscribe fully to an unfettered Capitalism.  Your knowledge of what our government is, what it can do, and the dangers of inflation are as faulty as your knowledge of who I am.  Maybe having been a far-left liberal who turned anarchist and now seems to be just a muddled progressive these simple facts are too much for you.
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I no longer believe Marotta's claim that he isn't an anarchist. And I continue to think that he uses words like a kind of decoration - he adorns his image of himself in pretty prose ("See how much I know!").  That isn't using words as symbols that represent reality.  He is too willing to let his thoughts float free of reality, to present only one side of things as if that were the only thing, to use any subject as an excuse to give us the history of Marotta, or of currency, or of debt... just so he can preen about in his words. 

I maintain that progressivism is more than an ideology, more than a political movement, more than a cultural phenomena, and even more than a sense of personal identity - it is, when lived with for too long and too intensely, a mental/emotional disorder.  It becomes a habitual form of 'thinking' that is seriously flawed.  

My Encyclopedia Britannica (1984) was dedicated by permission to Ronald Reagan, the US President, and to Queen Elizabeth II. So you know this is quality stuff.

In the article on SOCIALISM, we learn:

“The uses and abuses of the word socialism are legion. As early as 1845 Engels complained that the socialism of many Germans was ‘vague, undefined, and undefinable’. Since Engels’ day the term socialism has been the property of anyone who wished to use it. The same Bismarck who as German chancellor in the late 1870s outlawed any organization that advocated socialism in Germany declared a few years later that ‘the state must introduce even more socialism in our Reich’. Modern sophisticated conservatives, as well as Fascists and various totalitarian dictators, have often claimed that they were engaged in building socialism.” 

Steve wrote: 

Merlin,

(The link to "right-wing socialists" isn't working for me.)
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The top of the Wikipedia page on Market Socialism starts by providing links to "libertarian socialist" proposals, and refers to "socialist market economy" in describing China.

I cannot take seriously the idea that socialism (of any kind) is also libertarian - unless it is purely voluntary, like a commune or a co-opt, which exists inside of a free market (capitalist) framework.  Just as there is a serious problem with talking about China as being a "market" economy.  

Capitalism requires, and is, a system where people are free to make choices, and where property rights are enforced.  Socialism, facism, communism, mixed economies... and all other kinds of government-enforced economies are just different forms of NOT-FREE. 

Sorry about the link. I fixed it. Again.  

I agree with the rest.