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doorbell ditcher!
i'd be interested to see what he defends or disclaims from the OP
doorbell ditcher!
more MMT
http://www.nakedcapitalism.com/2016/...re-needed.htmlMost Americans believe the federal government is like a family or business that must live within its income. On the surface, that makes sense and the reasons why it is wrong are complex. Here are five nuggets, or simple ways to explain why it is wrong to voters who will never be economists. They show why federal deficits are necessary. They can be adapted and used as appropriate.
Historical
Federal deficits are necessary and the government normally runs them. It ran them during 129 of the past 200 years or nearly two thirds of the time. During the other third, it ran surpluses to reduce its debt during five periods of six or more years. Each period led to a major depression.
1823-1836: Federal debt reduced 99% – depression began 1837.
1852-1857: ” ” ” 59% – ” ” 1857.
1867-1873: ” ” ” 27% – ” ” 1873.
1880-1893: ” ” ” 57% – ” ” 1893.
1920-1930: ” ” ” 36% – ” ” 1929.
The government had to run deficits to recover from each depression.
The Federal government is different
The economy needs a continuing influx of new dollars to grow. The government creates new dollars when it runs deficits by spending more than it receives from taxes.
When the government collects taxes it takes dollars out of the economy. It also appears to take dollars from the economy when it sells bonds. But unlike taxpayers who lose their purchasing power, bond buyers get bonds and keep their purchasing power. The deficit spending adds new dollars to the economy as if they had been “printed”. Note these key points:
- Unlike reluctant taxpayers, bond buyers want the bonds to use as savings accounts to safeguard their dollars and earn interest.
- The government redeems the bonds when they come due, but it can roll over or sell replacements indefinitely.
- The total of all dollars the federal government has created this way since 1790 is called the federal debt which never has to be repaid while the nation exists. Attempts to reduce the debt significantly never worked because they took dollars from the economy that it needs to operate and grow.
- Because the government can create dollars, it can never run out of them and cannot be forced into bankruptcy.
- The federal government is not like families or companies because only it creates new dollars that stay in the economy unless it removes them by running surpluses.
sameMost people have heard of the private sector but they don’t know what “sector” means. The economy has three major parts called the private sector, the public sector, and the foreign sector. The total dollar flows from all buying and selling within and among the sectors always cancel out or add up to zero. A sector has a deficit if it spends more than its income. When this happens, one or both of the other sectors must run a corresponding surplus, and vice versa.
Since the 1970s, the private sector has bought more goods and services from other countries than it sold to them. The dollars that flowed to other countries to pay for the net imports were foreign sector surpluses and private sector deficits.
Those deficits drained dollars from the private sector and the economy might have slowed down or even fallen into a depression for a lack of money. That did not happen because the federal government in the public sector ran deficits that replaced the dollars sent abroad. The country now imports about one half a trillion dollars worth of goods and services a year more than its exports. That flow will have to be reduced eventually or the economy will become weaker and even more unbalanced. But until that happens, the government is trapped into running deficits to compensate for the private sector’s failure to earn its living in relation to the foreign sector. Balanced federal budgets are formulas for economic decline.
Drive the Economy
The economy is like a car. Government spending is the accelerator. Taxes are the brakes. To keep going or speed up, press the accelerator. To slow down, ease off the accelerator or press the brakes. Driving too fast could lead to hyper-inflation, but that never happened here because the country always slowed down in time.
Reverse the Discussion
Those who oppose federal deficits should be made to answer two basic questions:
- Why should the government avoid spending to meet the country’s critical needs in order to save dollars which it can create?
- How could the government ever run out of dollars since it can create them by running deficits?
Wrecking the present, such as:* by degrading the installed asset base in areas like transport, power or potable water supply and distribution… is lowering the baseline for prosperity in the present which means a lower base to draw on in the future. These are not potential, theoretical problems which might emerge in the future; they are happening today. They represent legitimate areas where state intervention is perfectly justified.
* by neglecting health and social care services
* by crapifying education
* by tolerating unemployment, especially youth unemployment
the VRWC/1%/Repug "deficit/out-of-control spending" LIE is meant to cut spending only for the 99%, so they can cut taxes and keep spending for the VRWC/1%/BigCorp.
Same LIE about privatizing SS, public schools, USPS: it's all about enriching the 1%/BigCorp and impoverishing the 99%.
go play with yourself. grownups talkin.
after the Panic of 2008-9, what's the main difference between the US and the EU?
deficit spending, to put it crudely.
the EU embraced austerity and remains mired in debt-deflation that will amplify any economic shock. it faces another decade lost to stagnation.
the USA pursued monetary loosening and fiscal stimulus. we are recovering modestly.
rhymes with MMT, courtesy of Alan Greenspan:
http://realmoney.thestreet.com/artic...-never-will-beBack in 2005, when Paul Ryan was still only a congressman from Wisconsin and not speaker of the House, he asked a question of then-Fed Chairman Alan Greenspan in a hearing for the House Budget Committee. Ryan asked Greenspan if there was a way to ensure the solvency of Social Security through the use of personal retirement accounts.
Greenspan's response was eye-opening. He told Ryan, "There's nothing to prevent the federal government from creating as much money as it wants and paying it to someone." He goes on to add that the real question is whether there is a system in place to ensure that the real assets are there for the benefits (money) to purchase.
You can watch the exchange here in this short YouTube clip.
Watch Ryan's face when Greenspan is explaining and you will see that the whole explanation goes right over his head and, I'm sure, right over most people's heads.
Yet what Greenspan said is not only the truth, but the real crux of the entire Social Security debate. (Or, false debate, I should say.) As Greenspan correctly states, there is no inability for the government to create the money ("it can create as much as it wants"), the only thing that we need to be focused on is whether or not we have sufficient quan ies of the food, shelter, clothing, hospitals, medicine, medical care, maybe leisure activities, etc., that all people will need and consume in their retirement. Greenspan correctly explains that it's not about the money. "It's nice to have the money," he says, "but you need the assets."
Yves Smith on the meaning of the national debt:
https://www.nakedcapitalism.com/2018...onal-debt.htmlWhat is unique about U.S. government “borrowing”—and what gives the term, applied in that context, its confusing ambiguity—is the fact that the “promise” which replaces a borrowed dollar is simply another kind of “dollar.” Specifically, the government borrows a dollar from the economy, and replaces it with a “Treasury bond or note” which is, in effect, a special form of “dollars” that earn interest. The Treasury bond or note has the same liquidity/tradability in the economy as the regular dollars it has replaced; therefore, the amount of “money” in the private sector doesn’t fall by the amount taken out by the “borrowing” but remains the same as before the “borrowing” occurred.
In conventionally understood “borrowing,” when the borrowed thing is returned, the “promise” that was being held by the lender (either implicitly or explicitly) is simply cancelled. In U.S. government “borrowing,” however, the borrowed thing is NEVERreturned because, by logic, the promise being held in its place is already the same thing as what was borrowed. E.g. a $1000 Treasury bond is the same “thing” as 1000 dollars—only better, because it earns interest! When the Treasury bond “matures,” the dollars it “contains” are simply converted to “regular” dollars or, more often than not, they are rolled into a new Treasury bond.
This is why there is nobody squeezing the U.S. government to repay what the government has “borrowed.” They have alreadybeen repaid by the Treasury bonds they took in exchange for the dollars they “loaned.” (As you can see, the term “loan” applied to this transaction has the same paradoxical ambiguity as the term “borrow.” What’s really happening is that one kind of money is simply being traded for another.)
The surprising result of this transaction is that when the government subsequently spends the “borrowed” dollars back into the economy, there is a net increasein the monetary assets in the private sector equal to the number of dollars “borrowed.” In effect, the Treasury bond auction process creates “new” dollars that previously did not exist—dollars which the U.S. government now has possession of and authorization to spend. And that’s exactly what it does: it spends the new dollars to pay for things that Congress has determined will benefit American society.
startling, yes
ibid.First, the U.S. “national debt” is functionally not a debt at all. It is simply a tally of the U.S. Treasury bonds which the government has issued and then traded for U.S. dollars which already existed in the private sector. These Treasury bonds are in effect interest-paying, time-deposit savings accounts for the bond holders. You personally may have traded some of your retirement dollars for one of these “savings accounts” and you know, firsthand, they definitely contain real money! The “national debt,” then, is really a “national savings account.”
This is, to say the least, a startling and liberating perspective. It means all the political drama and hand-wringing about how we are going to repay our “national debt” can just go away. Even better, all the haggling can be replaced with an entirely different conversation: What shall our government spend the new dollars—created by the Treasury bond auction process—to accomplish? The short list of deferred needs, recited earlier, could be a start.
from the comments:
ibid.The fact that borrowings of bank-created money must be repaid probably contributes to the widespread false belief that Treasury “borrowings” must also eventually be repaid. The essay makes an important point that the Treasury is not actually borrowing — it is exchanging interest bearing notes of its own creation for non-(or very low)-interest bearing reserves which are deposited into its reserve account at the Fed.
The US government, being a currency issuer (unlike the European examples mentioned in the essay) does not face a solvency constraint. It does, of course, face an inflation constraint.
the oligarchy's myth's are
govt, public to be run as for-profit businesses (even better, kill public education and hand it to for-profit orgs to really it up)
national debt / balanced budget is just like household debt
therefore, cut taxes for the oligarchy and balance the budget by decimating Medicare, Medicaid, pensions, vet care, etc, etc.
all VERY simple once you expand your cynicism to encompass the 100% bad faith of the for-profit, predatory Capitalist oligarchy.
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