US Debt Ceiling: Why Trump is Right to Call for its Abolition & Gene’s Experience with Aussie Debt Ceiling - EP268
12/29/24 • 30 min
Show host Gene Tunny discusses the ineffectiveness of the U.S. debt ceiling, citing its frequent increases and the political grandstanding it entails. He notes that since 1960, Congress has amended the debt limit 78 times. Tunny argues that the debt ceiling does not enforce fiscal discipline and highlights the need for better fiscal rules, such as the Swiss Debt Brake or the Taxpayer Bill of Rights. He also shares his experience with Australia's debt ceiling during the late 2000s financial crisis. Tunny concludes that Trump's criticism of the debt ceiling is justified.
If you have any questions, comments, or suggestions for Gene, please email him at [email protected].
Timestamps for EP268
- US Debt Ceiling Overview (0:00)
- Historical Context and Modern Monetary Theory (4:09)
- Ineffectiveness of the Debt Ceiling (7:07)
- Australian Experience with the Debt Ceiling (13:00)
- Conclusion and Alternative Fiscal Rules (24:49)
Takeaways
- Debt Ceilings Are Ineffective: The US debt ceiling fails to control spending or debt accumulation, as it is consistently raised to avoid financial crises.
- Alternative Fiscal Rules: Spending caps or frameworks like Switzerland’s debt brake are more effective at managing fiscal discipline than nominal debt ceilings.
- Political Grandstanding: The debt ceiling often serves as a stage for political drama rather than meaningful fiscal reform.
- Modern Monetary Theory Critique: Printing money to avoid debt constraints, as proposed by some MMT advocates, risks inflation and economic instability.
- Lessons from Australia: Australia abolished its debt ceiling a decade ago after recognizing its downsides, offering a model for US fiscal policy reform.
Links relevant to the conversation
Useful information on the US debt and deficit from the US Treasury:
https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/debt-limit (discusses how many times the debt ceiling has been amended)
https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/ (contains the spending, revenue, and deficit figures that Gene mentions)
Lumo Coffee promotion
10% of Lumo Coffee’s Seriously Healthy Organic Coffee.
Website: https://www.lumocoffee.com/10EXPLORED
Promo code: 10EXPLORED
Full transcripts are available a few days after the episode is first published at www.economicsexplored.com.
Show host Gene Tunny discusses the ineffectiveness of the U.S. debt ceiling, citing its frequent increases and the political grandstanding it entails. He notes that since 1960, Congress has amended the debt limit 78 times. Tunny argues that the debt ceiling does not enforce fiscal discipline and highlights the need for better fiscal rules, such as the Swiss Debt Brake or the Taxpayer Bill of Rights. He also shares his experience with Australia's debt ceiling during the late 2000s financial crisis. Tunny concludes that Trump's criticism of the debt ceiling is justified.
If you have any questions, comments, or suggestions for Gene, please email him at [email protected].
Timestamps for EP268
- US Debt Ceiling Overview (0:00)
- Historical Context and Modern Monetary Theory (4:09)
- Ineffectiveness of the Debt Ceiling (7:07)
- Australian Experience with the Debt Ceiling (13:00)
- Conclusion and Alternative Fiscal Rules (24:49)
Takeaways
- Debt Ceilings Are Ineffective: The US debt ceiling fails to control spending or debt accumulation, as it is consistently raised to avoid financial crises.
- Alternative Fiscal Rules: Spending caps or frameworks like Switzerland’s debt brake are more effective at managing fiscal discipline than nominal debt ceilings.
- Political Grandstanding: The debt ceiling often serves as a stage for political drama rather than meaningful fiscal reform.
- Modern Monetary Theory Critique: Printing money to avoid debt constraints, as proposed by some MMT advocates, risks inflation and economic instability.
- Lessons from Australia: Australia abolished its debt ceiling a decade ago after recognizing its downsides, offering a model for US fiscal policy reform.
Links relevant to the conversation
Useful information on the US debt and deficit from the US Treasury:
https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/debt-limit (discusses how many times the debt ceiling has been amended)
https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/ (contains the spending, revenue, and deficit figures that Gene mentions)
Lumo Coffee promotion
10% of Lumo Coffee’s Seriously Healthy Organic Coffee.
Website: https://www.lumocoffee.com/10EXPLORED
Promo code: 10EXPLORED
Full transcripts are available a few days after the episode is first published at www.economicsexplored.com.
Previous Episode
How Global Events are Affecting Coffee Prices w/ Raihaan Esat, International Coffee Traders - EP267
Coffee prices have surged dramatically over the past year, with green coffee increasing by 78%. In this episode, International Coffee Traders GM Raihaan Esat joins hosts Gene Tunny and Tim Hughes to explore the key drivers behind this spike, including harvest shortages, supply chain disruptions, and geopolitical factors. Discover why your morning brew may soon cost more and how the coffee industry is navigating these challenges.
If you have any questions, comments, or suggestions for Gene, please email him at [email protected].
About our guest: Raihaan Esat, General Manager, International Coffee Traders
Raihaan Esat is a passionate and seasoned coffee professional with extensive experience across the coffee industry. From working in bustling espresso bars and competing at the highest levels of barista competitions to managing roasteries and developing quality control systems, Raihaan has cultivated a deep understanding of every facet of coffee craftsmanship.
As General Manager of International Coffee Traders (ICT), a green coffee sales business, Raihaan connects both commercial and home roasters with premium green beans and equipment, sharing his love for exceptional coffee. Inspired by mentors like Phillip Di Bella and a history of innovation, Raihaan is also spearheading coffee events at The Coffee Commune, fostering a thriving community of coffee enthusiasts. Dedicated to excellence and driven by a lifelong passion, Raihaan continues to inspire others through mentorship, entrepreneurship, and a relentless pursuit of the perfect cup.
Source: https://www.roastmagazine.com/roastsummit/events/raihann-esat
Timestamps for EP267
- Coffee Market Overview and Initial Discussion (0:00)
- Factors Contributing to Coffee Price Increases (7:36)
- Quality Concerns and Market Dynamics (19:41)
- Consumer Behavior and Market Volatility (26:44)
- Impact on Coffee Shops and Consumers (47:07)
- Geopolitical and Weather Impact on Coffee Prices (54:20)
Takeaways
- Green Coffee Prices Surge: Over the past 12 months, green coffee prices have increased by 78%, impacting every part of the supply chain.
- Major Producers Facing Challenges: Brazil and Vietnam, responsible for a large share of global coffee production, are experiencing lower yields due to weather conditions and harvest quality issues.
- Geopolitical Factors: Disruptions in trade routes, such as those caused by Middle East conflicts, have further strained the coffee supply chain, driving up costs.
- Changing Consumer Expectations: As prices rise, consumers may need to reconsider what they expect for a $5 cup of coffee and the value they receive in return.
- Sustainability of Cafes: For cafes to survive, they need to adjust their pricing to reflect increasing costs in labor, rent, and coffee supplies.
Links relevant to the conversation
Our previous conversation with Raihaan, “The Future of Coffee: Climate Change & Rising Prices w/ Raihaan Esat, International Coffee Traders – EP217”:
Raihaan’s slide explaining factors driving up coffee prices:
https://drive.google.com/file/d/1JAhmCl_TmfSoWRkh9wF9fDFU395mPnyL/view?usp=sharing
Chart of the green coffee price:
https://drive.google.com/file/d/1qnX28VagJ3FtD40JntMujADsNKI-NhBs/view?usp=sharing
International Coffee Traders at the Coffee Commune:
https://www.coffeecommune.com.au/international-coffee-traders/
ABC News article “Coffee prices hit record high after bad weather”:
https://www.abc.net.au/news/2024-12-11/coffee-prices-hit-record-high-after-bad-weather/104711708
Greensquare coffee roaster app:
Lumo Coffee promotion
10% of Lumo Coffee’s Seriously Healthy Organic Coffee.
Website: https://www.lumocoffee.com/10EXPLORED
Promo code: 10EXPLORED
Full transcripts are available a few days after the episode is first published at
Next Episode
Jimmy Carter the Great Deregulator, AmFest, MAGA & Migration, and Why Competition? w/ Darren Brady Nelson - EP269
Gene Tunny and Darren Brady Nelson discuss the economic legacy of President Jimmy Carter, highlighting his deregulation efforts, particularly in aviation, which led to increased competition and significant cost savings. They also touch on Carter’s appointment of Paul Volcker as Federal Reserve Chairman, credited with fighting inflation. The conversation shifts to the America Fest conference in Phoenix, where key speakers included Charlie Kirk, Tucker Carlson, and Glenn Beck. They discuss the tensions within the MAGA movement, particularly around immigration policies. Lastly, they explore the intersection of Christian economics and competition, emphasizing its ethical foundations and the potential for a moral case for free markets.
If you have any questions, comments, or suggestions for Gene, please email him at [email protected].
Timestamps for EP269
- President Jimmy Carter's Legacy and Deregulation (0:00)
- Carter's Economic Policies and Personal Anecdotes (5:16)
- America Fest Conference in Phoenix (14:36)
- Trump’s Speech and MAGA Movement Dynamics (27:46)
- Christian Economics and Competition (36:34)
- Darren's Critique of Mainstream Economics and Antitrust Regulation (51:22)
- Regulatory Challenges and Natural Monopolies (55:55)
- Final Thoughts and Future Directions (59:26)
Takeaways
- Jimmy Carter’s Deregulation Impact: Carter’s policies in aviation, trucking, and beer production revolutionized U.S. markets, creating long-lasting consumer benefits.
- MAGA’s Immigration Debate: Tensions exist between Bannon's nationalist stance and Musk's globalist vision for high-skilled immigration policies.
- The Role of Competition: Darren highlighted the economic and ethical importance of competition, criticizing overreach in antitrust regulations.
Links relevant to the conversation
Mises Institute article “Jimmy Carter’s Legacy Is Much More than Good Deeds Done in His Later Years”:
https://mises.org/mises-wire/jimmy-carters-legacy-much-more-good-deeds-done-his-later-years
The previous episode with Darren:
Great Reset discussion with Darren from 2020:
https://economics-explained.simplecast.com/episodes/the-great-reset
Larry Reed, President Emeritus of FEE, speaking about the Parable of the Vineyard Workers:
Darren’s articles in Concurrences on competition and antitrust (paywalled, alas):
https://www.concurrences.com/en/page/recherche/?recherche=darren+nelson#
Alfred Kahn’s Economics of Regulation:
https://www.amazon.com.au/Economics-Regulation-Principles-Institutions/dp/0262610523
Lumo Coffee promotion
10% of Lumo Coffee’s Seriously Healthy Organic Coffee.
Website: https://www.lumocoffee.com/10EXPLORED
Promo code: 10EXPLORED
Full transcripts are available a few days after the episode is first published at www.economicsexplored.com.
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