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That's one of the dumbest things I have ever read.
What Does Paul Ryan NOT Understand about Reserve Banking?
It’s clear that Paul Ryan believes the Federal government uses money created by the U.S. banking industry for its sovereign spending. If this actually were the case, we’d be correct in believing that, like the rest of us, the Federal government has to EARN the dollars it spends—in its case, by collecting taxes, fines and fees—or it will have borrow them from someone who has more dollars than they need. There would also be some justification for Congressman Ryan’s fearful belief that the Federal government is spending a whole lot more dollars than it “earns” and, as a result, is having to borrow way more dollars that it can ever pay back.
In truth, however, the Federal government does NOT use money created by U.S. banks—it is the other way around: U.S. banks have accounts at the Federal Reserve which they use to leverage money created by the Federal government. And this operational relationship leads inexorably to three apparent realities that Congressman Ryan would do well to consider and understand before he succeeds in leading our nation into poverty.
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That's one of the dumbest things I have ever read.
Repug, tea bagging extremists, libertarian politicicians may or may not actually know something, but they in public they spout non-stop bull , lies, propaganda with absolutely no interest in advancing the coutnry or in governing. Ryan is another absolute clown, a fool with his 100% magic budgets, that 100% of House Repugs vote for.
Correction
I wasn't counting all of Boutons posts.
calling it dumb won't make MMT, neo-chartalism, post-Keynesianism -- whatever one wishes to call it -- go away. it's so counterintuitive to common sense and the common experience of money it seems it could not possibly be right, and in fact it sounds very silly. that doesn't make it wrong. I'm not sure I could put my finger on where it is wrong.
can you, CC?
I'm not saying that a certain level of deficit spending is bad. It's like chemotherapy for a sick economy. The question is, at what level does it eventually kill the patient?
Deals like this are the beginning of the end for the US's ability to keep printing money like drunken politicians.
http://www.channelnewsasia.com/news/...rt/633936.html
dunno. no political state lasts forever.
another would be, what level of deficit spending is good, and why?
Repug/tea bagger/Fox propaganda hiding their real objective: cut taxes on the corps and 1% even more, either by tax rate reduction or more loopholes.
govt employment at all levels AND federal spending are down versus the growth in population, and down since the criminal Repugs left office.
the govt austerity CC and other (wealthy) right wingers masturbate after will worsen the deficit just as we see in yet another factual, irrefutable proof, in Europe, that austerity in deep recession makes the economy, and thereby deficits, worse.
Michael Hudson: Government Debt and Deficits Are Not the Problem. Private Debt Is.
So governments from the United States to Europe face a choice: to save the economy, or to save the banks and bondholders from taking a loss by keeping the debt overhead in place and re-inflating real estate prices to a level high enough to cover the debts attached to the property whose underwater mortgages are weighing down the banking system.
The problem is that rising housing prices increase the cost of living, and hence of employing labor. When I started to work on Wall Street fifty years ago, banks had a basic rule in lending mortgage money: mortgage debt service should not exceed 25% of family income. A year ago Sheila Bair recommended limiting mortgage lending to 32% of income. Washington’s most recent rules for providing housing loan guarantees raised the ratio to 43%.
When it comes to analyzing comparative advantage among nations, the key no longer is food or prices for other goods and services. Financial charges and taxes are the key. The typical blue-collar family budget provides the explanation for why the United States is losing its industrial advantage:
Housing (rent or home ownership) 40%
Other bank debt 10 to 15%
FICA wage withholding 13%
Other taxes 15%
Only 20 to 25% of the family’s budget is free to buy the commodities being produced. This means that Say’s Law – the circular flow of income and spending between employers and their work force – is diverted to pay debt service, and also to pay including Social Security and Medicare taxes as a user fee instead of these services being paid for out of the general fiscal budget by progressive taxation falling mainly on what Adam Smith, John Stuart Mill and their Progressive Era followers urged: land rent, natural resource rent, monopoly rent, and luxuries.
A Keynesian economist would point to excess saving as the problem. But debt repayment has changed the character of saving in today’s debt-ridden economies. In the 1930s, Keynes pointed to savings being a leakage from the economy’s circular flow. What he meant by “saving” was mainly non-spending – keeping income in bank accounts or other liquid or illiquid financial investment.
But savings rates have risen since 2008 for quite a different reason. America’s recovery of savings rate from zero in 2007 is not a result of people building up saving for a rainy day. What the National Income and Product accounts report as “saving” is actually paying down debt. It is a negation of a negation.
This is what debt deflation means. The antidote should be more government spending and larger deficits – as well as debt forgiveness.
Bank lobbyists are urging just the opposite set of policies. They have implanted a false memory and a false economic theory blaming hyperinflation on deficit spending. The reality is that every hyperinflation in history has come from paying foreign debts, not domestic debts.
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dubble post
Last edited by Capt Bringdown; 04-10-2013 at 10:59 AM.
How exactly is it dumb?
Be specific.
Won't happen, other than right wing propaganda
It ignores the way commerce works and assumes all payments originate with the government and a 1/1 ratio of payment/tax would be required to balance the budget. It completely ignores the fluid nature and velocity of money as it flows from person to person and business to business where the same dollar is taxed multiple times as it changes hands.
Last edited by CosmicCowboy; 04-10-2013 at 01:06 PM.
are the claims you ascribe to MMT in the previously posted?
I do not find the assumption that all payments originate with the government, whatever that means, nor do I see how you point about taxation relates.
It was a simplifying example, meant only to address Mr. Ryans statements. The concept of velocity of money, and multiple taxation were not needed, and outside of the scope of the article's main idea. If you toodle around the the website there, I would be willing to be one of the other authors, or even that author might address just that. My lunch hour is up, or I would help you out and offer a link or two.
All payments exactly originate with the government in fiat currencies, by definition. You are too focused on the medicare payment part, and forget about the fact that the Reserve bank has to create funds before a bank can issue them. Re-read it a bit, and this may become a bit clearer.
go to the posted link. I was referring to the whole article linked (that I read) and not the snippet clipped by the original post. I can see how it was confusing.
Sorry, but oversimplifying by leaving out the velocity of money when discussing necessary tax rates to balance the budget was a HUGE flaw in his argument.
hmmm. I will go back and re-read it when I get time.
Hudson's argument, or the OP? my impression is that both deemphasize the importance of balancing the budget and in fact, think it a bad idea to do so.
for macroeconomic reasons a bit beyond my ken, i must admit . . .
I think it's irrational to ever think we can balance the budget, but slowing down the geometric growth of debt is certainly a reasonable goal IMHO. The pain that would be necessary to truly balance the budget is just not politically expedient for either party.
has anyone suggested that isn't a reasonable goal?I think it's irrational to ever think we can balance the budget, but slowing down the geometric growth of debt is certainly a reasonable goal IMHO.
To be fair, quantum mechanics does pretty much the same thing with physics.
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