There is literally not enough money in existance to pay off the national debt.. true. (due to interest) But we already had money in circulation which was not secured by debt when we left the gold standard. and 10x what the government issues is created by banks.
so, It's not true that government created all money.
Our only course is to keep doing what we're doing til it collapses, or trash the monary system in a controlled way. but it will fail. Dollars to doughnuts.
I'm not so sure about this - last time I looked the M2 money supply was at $9.5 Trillion and the total outstanding loans (commercial banks) was $1.2 Trillion
It's aeasy as ABC: there is NEVER more then 100% money. To ask for interest is to ask for money that can only exist in he future. That is why economic growth was necessary and now that growth slows down the virtual money system fails.
I'd give it a C. To the best of my knowledge- money's existence comes into being from a combination of bank lending and govt spending. Banks produce credit money which is 'monetized' in the banking system. The state issues money as payment for goods and services in the form of a promise to accept it for taxes. A bank creates checkable deposits. Thus the ORIGIN of money comes from the agreement between the issuer and user of money.
@sparc5 yes, banks create credit, but it has a corresponding liability. When you take a loan out, the bank credits your account. This account is the bank's liability (your asset), and the loan would be the bank's asset(your liability). This nets to zero, i.e. loans do not add net financial assets to the system. Only the government can add net financial assets to the system. So in order for the private sector to accumulate money as a whole, it has to come from government deficit spending.
@sparc5 sure, you can spend a loan like any other money, But you said issuer vs user. The govt is the issuer of the currency & it alone can add NFA's to the system. The public debt is the NFAs that the govt has created that the private sectors have accumulated. You don't pay it back, it's our savings. To 'pay it back' the govt would need to suck all the money out of the system. To grow the economy, you need new NFA(in order to have profit), gvt must deficit spend to add NFA, The point of the vid
@hrmIwonder listen to what you're saying- NFA's is govt right, NFA's are private savings right, you'd need to tax it all away to balance the budget.. Right. But I'm not interested in that part. Banks can, and do create most of the financial assets which we'd consider money at a ratio of about 4:1. Even without NFA's SOME can save, just not everyone combined.
@sparc5 Completely agree, most money is credit money. We're not disagreeing. It's exogenous vs endogenous money (NFA vs credit money, vertical vs horizontal). NFA are vertical, credit is horizontal. I'm just saying the point of the vid was that most people don't think about how pvt sect can accumulate money as a whole, it has to come from deficit spending. That's contrary to what most ppl think. Most seem to think a gvt should run a surplus to accumulate wealth, which is backwards (as we agree).
The exact line in this: When stating we should pay off the national debt, the response was: "If we pay off the national debt, there would be no money left in the economy. How would you get the money in your wallet?" WHAT?!?!?!? Seriously? This is a joke, right?
@lexdysicjerry This is how the economy works. The sooner you accept this, the better for you and everyone else who thinks we need to be paying down the debt.
@mmac992, you are bat-sh@# insane. Just like with credit cards, we pay massive amounts of interest on that debt. And, contrary to your belief, it has a due date. But we keep "reselling" the debt, and paying off the portions that are due. But, bad economies, devalued currencies, and loss of credit ratings means nobody will be willing to buy our bad debt for fear of getting "stuck" by us not paying or trying to pay with freshly printed monopoly money. This = default. You can't sustain this.
@napb123 Do you still abuse women (Agree/disagree)? Stupid start, like this video. Fiat system, yes. The reason we are even having this conversation is because the world agreed to adopt a dollar standard (vs gold standard) in regards to our debts. But that is based on confidence (and an international agreement we made) to be responsible. 14Trillion in debt we think is no big deal is not confidence building. If they drop our currency as standard and go with another... we are in a world of hurt.
@lexdysicjerry Ad homonym/baseless insults do not validate your argument. You agree with me on point 1 and 2, that we are not an asset backed currency and that we create money via fiat. If those two points are true, then each public sector deficit is a private sector surplus. That means that a "deficit" is just an accounting identity. Each debit in the public sector is a credit in the private sector. Go study some accounting.
@napb123 I'll take your offense to mean agree to my first question. Second.... your accounting argument is symantics when it comes to the US dollar. Our creditors are foreign entities that have other systems of currency used to compare value to our own dollar. And many of those agreements were guaranteed in current gold prices. Many of our foreign debt is paid in gold (not dollar). Fed reserve transfers gold between international interests. So, closed system, you might have a point. Not here.
@napb123 If we do not pay down our debt, we will default. And, when we do, we will find it impossible to borrow more, or heck, even enough to roll our current debt. When that happens, we have no choice but to print monopoly, causing hyper inflation. To stablize, we need to adopt a precious standard (at least temporarily)... and oh... have I mentioned that China is currently buying all that too? There is a governmental effort to have the largest stocks of precious metals by them in recent years.
@lexdysicjerry You're operating under the gold standard paradigm which ended when Bretton Woods broke down. Fiat money systems mean that China is just holding electronic credits that are not backed by gold or any assets. The interest that they receive on their holdings are simply additional DOLLAR DENOMINATED credits which we create out of thin air. Take a few international finance classes like I have if you still don't get it.
@lexdysicjerry Suppose in September wealthy Americans decide to pay off ALL America's debt! They get back ALL those T-bills, in fact get back every IOU America ever issued and pay off in American dollars. America wakes up with ZERO debt.
All other facts (CAD, etc) remain the same.
For the fiscal year 2012, after that miraculous pay-off, and in order for the American economy to grow, the US govt's budget should be calling for a surplus or (again) a deficit ? Think carefully.
Okay...lies or oversimplifications. Are Libs so desperate to win an argument they stage their own with cartoons now? The deficit is NOT the difference between what the gov. seeded into an economy and what it recouped in taxes. Wow, this is ignorant. The defict = spending more money then we budgeted. Optimally, we would spend equal or less than we bring in through revenue. But, we don't, so we borrow. I love the valid points being deferred by "maybe" and "that's for a later discussion"
@lexdysicjerry Please explain to me why a government that "prints" (actually, creates) its own money, needs to borrow money to finance its spending? Note that govt spending involved exactly the same operation whether natl finances are in surplus or in deficit. (Read the part abt creating money again.) If the US government deficit-spends until eternity but borrows not one more dollar, do you realize what will happen??
Exactly what happened all the time the US was def.spending.
@sternumagnum I'm not sure your point here, but I will try to answer you. A country does not have to run in deficit. With the exception of the last 50-60 years, this country actually did a really good job of staying in the green. Once it became clear that we wanted to live beyond our means, we dropped the gold standard. We have spent more money than we have made in revenue every years since 1969. In 1971, we threw in the towel, and dropped the gold standard.
@lexdysicjerry@lexdysicjerry That's factually incorrect. Check your data again. The US has been in deficit most of its history, periods which unfailingly preceded economic growth. "Living beyond our means" translates into PRIVATE borrowing, not the same thing as GOVT borrowing. Yes, when the govt allows too much private debt (ie facilitates too much bank lending), the economy can run into trouble. And when the govt allows PREDATORY lending, the economy definitely gets into trouble!
@sternumagnum continue... You say nothing has happened, but we've watched MANY countries collapse as a result of this. Reality is, just like a household, you can't overspend year after year and not have it eventually catch up. Also, you don't truly own your house until it is payed off. Right now, China owns a significant portion of our house. By devaluing money (ie, printing).... China has already stated it would be an act of war to try and pay our debt with them with devalued currency.
@lexdysicjerry If you "watched many countries collapse [because of def.spending]" then explain Japan, whose deficit has been constantly large and its debt/GDP ratio is now nearing 180%! Japan would not be allowed into the EU under Maastricht's (stupid) rules!
It's telling that you use the household/mortgage example: Govt finances are NOTHING like private finances. Macroeconomy is not Microeconomy. As to China, it's a laughable argument:The US is not obliged to maintain dollar's parity !
@sternumagnum sad part is @sternumagnum, you are correct. We will likely eventually bite the bullet, print the money we are in deficit, pay that deficit with the introduced currency. In fact, in desperation... I sadly see this as a real possibility with the current administration. And, basically, because it will inflate currency... the average households $40,000 will only buy $25,000 worth of stuff. But don't forget, the government will now only be able to buy less too... so taxes must increase.
@lexdysicjerry The US Congress should have increased spending and cut taxes. (For the latter, a generous payroll-tax rebate was in order for faster effect.) Instead, the fools on the Hill cut spending and increased taxes.
It's a recipe for disaster.
If I knew you personally, I'd bet you serious money (I did that in real life, in the markets) that there won't be ANY inflation danger in the US for at least 2013! What the US actually is threatened by is DEFLATION. Even Bernanke admits it.
@lexdysicjerry Wow you made that one easy. Straight from the Treasury's website, the definition of a deficit: "The deficit is the fiscal year difference between what the United States Government (Government) takes in from taxes and other revenues, called receipts, and the amount of money the Government spends, called outlays."
@rogersat Believe it or not, that's what I am saying. This video leads one to believe that if the government were to not have a deficit, we would not have any money left. Ie, it if we did not have a deficit, the government would have taken 100% of it's money back. What this video fails to establish is the trade value money has once it has been "seeded". This seeding process happens when you introduce a currency, not every fiscal year.
@lexdysicjerry You explicitly wrote, and I quote, "The defict = spending more money then we budgeted." That is 100% wrong, even definitionally. Congress budgets whatever they decide, and if what they appropriate exceeds tax revenue, then the country runs a deficit. And perhaps the video is misleading, but it does not state what you are claiming it does. A surplus can be run without deleting all money in the system, clearly (we did this a little over 10 yrs ago under Clinton).
@rogersat yes, I used the word budgeted. I meant spending more than you had to spend, or as the definition states, earned in revenue. Bad choice of words. I am not against surplus... did you mean surplus or deficit? The video attempts to say that the $50 would not exist in his pocket if the government did not run a deficit. They are attempting to say that the government seeds all money as part of budget expenditure. That's not how currency works. The government needs percieved value to the money
@lexdysicjerry Not denying what you are saying. Yes, a strong private sector is vital to building sustainable value into the currency. Nevertheless, the govt does in fact add nominal net financial assets when it deficit spends, even after the initial seeding. Maybe sometimes this action adds real value to the currency, maybe sometimes it subtracts real value. But it happens. And that's economic fact, your political ideologies aside.
@rogersat Wow, I totally agree with your last point. When you are speaking in terms of gaining use of the capital of borrowing, of course. It's how most businesses fun/grow. But, the key to business, you have to eventually pay that off to keep going. Else, you spend all of your time, effort, and assets performing debt service. We're overspent, with noplans to reduce... only increase deficit spending. It is an economic LAW this can't continue indefinitely.
@lexdysicjerry Agree with your point about business, but the govt's budget is fundamentally different from a business. A business can't print the dollar, the govt can, so there is no solvency constraint for the govt. However, inflation and misallocation of resources is an issue if the govt prints too much or spends it in inefficient places (we could go to the extreme and say the govt creates hyperinflation). But the law you're talking about is not economic law, it's your ideology.
@rogersat I and everyone else have our ideologies, no doubt. But, you cannot spend your way into savings. You cannot spend more than you make indefinitely. One's ideology doesn't change this, it only prevents them from facing the fact we will feel the impact of these decisions for generations to come. You are correct, the government does have the ability to prolong, or as I see it (due to my ideology) worsen, the economic situation by attempting to hit "tilt" whenever they get in a corner.
@lexdysicjerry What a surplus does in fact do, however, is delete net financial assets from the system. So if you imagine the beginning of a fiat monetary system, the only way fiat enters the system is if the govt spends it. If the govt then taxes back the same amount of money, all net financial assets are gone, and there is nothing left, unless banks had extended loans, in which case, net financial assets no longer exist, and the economy may find itself in quite a precarious situation.
@rogersat You keep confusing seeding with revenue and expenditures. I agree, when you start monopoly, you hand out money. But, you only do it at the beginning of the game. You establish a seed value, once the money is spent in society, it develops an economic system. A vital part of this system as the video tries to minimize is the earned value of $50. Fact is, he did put sweat equity in it, and that's the only reason it has value. That value is perceived AFTER seeding.
"But we already had money in circulation which was not secured by debt when we left the gold standard."
True - $400 Billion in 1971 or about 3% of the cash that exists now.
"10x what the government issues is created by banks."
Money issued by banks is created by the government and it is credit which is temporary money (doesn't add to national savings).
"so, It's not true that government created all money."
Yes it is true - read the Constitution. Only the Federal government can create money.
frackintosh 5 months ago
There is literally not enough money in existance to pay off the national debt.. true. (due to interest) But we already had money in circulation which was not secured by debt when we left the gold standard. and 10x what the government issues is created by banks.
so, It's not true that government created all money.
Our only course is to keep doing what we're doing til it collapses, or trash the monary system in a controlled way. but it will fail. Dollars to doughnuts.
RayHoli0 5 months ago
Scratch the last comment - debt outstanding (private sector) is more like $37 Trillion - my mistake.
frackintosh 6 months ago
"Completely agree, most money is credit money"
I'm not so sure about this - last time I looked the M2 money supply was at $9.5 Trillion and the total outstanding loans (commercial banks) was $1.2 Trillion
frackintosh 6 months ago
It's aeasy as ABC: there is NEVER more then 100% money. To ask for interest is to ask for money that can only exist in he future. That is why economic growth was necessary and now that growth slows down the virtual money system fails.
thomasnordwest 6 months ago
I'd give it a C. To the best of my knowledge- money's existence comes into being from a combination of bank lending and govt spending. Banks produce credit money which is 'monetized' in the banking system. The state issues money as payment for goods and services in the form of a promise to accept it for taxes. A bank creates checkable deposits. Thus the ORIGIN of money comes from the agreement between the issuer and user of money.
sparc5 6 months ago
@sparc5 yes, banks create credit, but it has a corresponding liability. When you take a loan out, the bank credits your account. This account is the bank's liability (your asset), and the loan would be the bank's asset(your liability). This nets to zero, i.e. loans do not add net financial assets to the system. Only the government can add net financial assets to the system. So in order for the private sector to accumulate money as a whole, it has to come from government deficit spending.
hrmIwonder 6 months ago
@hrmIwonder Listen to your own key word, net financial assets. The money might not be counted as NFA, yet it doesn't make it not money.
sparc5 6 months ago
@sparc5 sure, you can spend a loan like any other money, But you said issuer vs user. The govt is the issuer of the currency & it alone can add NFA's to the system. The public debt is the NFAs that the govt has created that the private sectors have accumulated. You don't pay it back, it's our savings. To 'pay it back' the govt would need to suck all the money out of the system. To grow the economy, you need new NFA(in order to have profit), gvt must deficit spend to add NFA, The point of the vid
hrmIwonder 6 months ago
@hrmIwonder listen to what you're saying- NFA's is govt right, NFA's are private savings right, you'd need to tax it all away to balance the budget.. Right. But I'm not interested in that part. Banks can, and do create most of the financial assets which we'd consider money at a ratio of about 4:1. Even without NFA's SOME can save, just not everyone combined.
sparc5 6 months ago
@sparc5 Completely agree, most money is credit money. We're not disagreeing. It's exogenous vs endogenous money (NFA vs credit money, vertical vs horizontal). NFA are vertical, credit is horizontal. I'm just saying the point of the vid was that most people don't think about how pvt sect can accumulate money as a whole, it has to come from deficit spending. That's contrary to what most ppl think. Most seem to think a gvt should run a surplus to accumulate wealth, which is backwards (as we agree).
hrmIwonder 6 months ago
Comment removed
napb123 6 months ago
The exact line in this: When stating we should pay off the national debt, the response was: "If we pay off the national debt, there would be no money left in the economy. How would you get the money in your wallet?" WHAT?!?!?!? Seriously? This is a joke, right?
lexdysicjerry 6 months ago
@lexdysicjerry This is how the economy works. The sooner you accept this, the better for you and everyone else who thinks we need to be paying down the debt.
mmac992 6 months ago
@mmac992, you are bat-sh@# insane. Just like with credit cards, we pay massive amounts of interest on that debt. And, contrary to your belief, it has a due date. But we keep "reselling" the debt, and paying off the portions that are due. But, bad economies, devalued currencies, and loss of credit ratings means nobody will be willing to buy our bad debt for fear of getting "stuck" by us not paying or trying to pay with freshly printed monopoly money. This = default. You can't sustain this.
lexdysicjerry 6 months ago
Comment removed
napb123 6 months ago
@napb123 Do you still abuse women (Agree/disagree)? Stupid start, like this video. Fiat system, yes. The reason we are even having this conversation is because the world agreed to adopt a dollar standard (vs gold standard) in regards to our debts. But that is based on confidence (and an international agreement we made) to be responsible. 14Trillion in debt we think is no big deal is not confidence building. If they drop our currency as standard and go with another... we are in a world of hurt.
lexdysicjerry 6 months ago
@lexdysicjerry Ad homonym/baseless insults do not validate your argument. You agree with me on point 1 and 2, that we are not an asset backed currency and that we create money via fiat. If those two points are true, then each public sector deficit is a private sector surplus. That means that a "deficit" is just an accounting identity. Each debit in the public sector is a credit in the private sector. Go study some accounting.
napb123 6 months ago
@napb123 I'll take your offense to mean agree to my first question. Second.... your accounting argument is symantics when it comes to the US dollar. Our creditors are foreign entities that have other systems of currency used to compare value to our own dollar. And many of those agreements were guaranteed in current gold prices. Many of our foreign debt is paid in gold (not dollar). Fed reserve transfers gold between international interests. So, closed system, you might have a point. Not here.
lexdysicjerry 6 months ago
@napb123 If we do not pay down our debt, we will default. And, when we do, we will find it impossible to borrow more, or heck, even enough to roll our current debt. When that happens, we have no choice but to print monopoly, causing hyper inflation. To stablize, we need to adopt a precious standard (at least temporarily)... and oh... have I mentioned that China is currently buying all that too? There is a governmental effort to have the largest stocks of precious metals by them in recent years.
lexdysicjerry 6 months ago
@lexdysicjerry You're operating under the gold standard paradigm which ended when Bretton Woods broke down. Fiat money systems mean that China is just holding electronic credits that are not backed by gold or any assets. The interest that they receive on their holdings are simply additional DOLLAR DENOMINATED credits which we create out of thin air. Take a few international finance classes like I have if you still don't get it.
napb123 6 months ago
Comment removed
sternumagnum 6 months ago
@lexdysicjerry Suppose in September wealthy Americans decide to pay off ALL America's debt! They get back ALL those T-bills, in fact get back every IOU America ever issued and pay off in American dollars. America wakes up with ZERO debt.
All other facts (CAD, etc) remain the same.
For the fiscal year 2012, after that miraculous pay-off, and in order for the American economy to grow, the US govt's budget should be calling for a surplus or (again) a deficit ? Think carefully.
sternumagnum 6 months ago
Okay...lies or oversimplifications. Are Libs so desperate to win an argument they stage their own with cartoons now? The deficit is NOT the difference between what the gov. seeded into an economy and what it recouped in taxes. Wow, this is ignorant. The defict = spending more money then we budgeted. Optimally, we would spend equal or less than we bring in through revenue. But, we don't, so we borrow. I love the valid points being deferred by "maybe" and "that's for a later discussion"
lexdysicjerry 6 months ago
@lexdysicjerry Please explain to me why a government that "prints" (actually, creates) its own money, needs to borrow money to finance its spending? Note that govt spending involved exactly the same operation whether natl finances are in surplus or in deficit. (Read the part abt creating money again.) If the US government deficit-spends until eternity but borrows not one more dollar, do you realize what will happen??
Exactly what happened all the time the US was def.spending.
NOTHING!
sternumagnum 6 months ago
@sternumagnum I'm not sure your point here, but I will try to answer you. A country does not have to run in deficit. With the exception of the last 50-60 years, this country actually did a really good job of staying in the green. Once it became clear that we wanted to live beyond our means, we dropped the gold standard. We have spent more money than we have made in revenue every years since 1969. In 1971, we threw in the towel, and dropped the gold standard.
lexdysicjerry 6 months ago
@lexdysicjerry @lexdysicjerry That's factually incorrect. Check your data again. The US has been in deficit most of its history, periods which unfailingly preceded economic growth. "Living beyond our means" translates into PRIVATE borrowing, not the same thing as GOVT borrowing. Yes, when the govt allows too much private debt (ie facilitates too much bank lending), the economy can run into trouble. And when the govt allows PREDATORY lending, the economy definitely gets into trouble!
sternumagnum 6 months ago
@sternumagnum continue... You say nothing has happened, but we've watched MANY countries collapse as a result of this. Reality is, just like a household, you can't overspend year after year and not have it eventually catch up. Also, you don't truly own your house until it is payed off. Right now, China owns a significant portion of our house. By devaluing money (ie, printing).... China has already stated it would be an act of war to try and pay our debt with them with devalued currency.
lexdysicjerry 6 months ago
Comment removed
sternumagnum 6 months ago
Comment removed
sternumagnum 6 months ago
@lexdysicjerry If you "watched many countries collapse [because of def.spending]" then explain Japan, whose deficit has been constantly large and its debt/GDP ratio is now nearing 180%! Japan would not be allowed into the EU under Maastricht's (stupid) rules!
It's telling that you use the household/mortgage example: Govt finances are NOTHING like private finances. Macroeconomy is not Microeconomy. As to China, it's a laughable argument:The US is not obliged to maintain dollar's parity !
sternumagnum 6 months ago
@sternumagnum sad part is @sternumagnum, you are correct. We will likely eventually bite the bullet, print the money we are in deficit, pay that deficit with the introduced currency. In fact, in desperation... I sadly see this as a real possibility with the current administration. And, basically, because it will inflate currency... the average households $40,000 will only buy $25,000 worth of stuff. But don't forget, the government will now only be able to buy less too... so taxes must increase.
lexdysicjerry 6 months ago
@lexdysicjerry The US Congress should have increased spending and cut taxes. (For the latter, a generous payroll-tax rebate was in order for faster effect.) Instead, the fools on the Hill cut spending and increased taxes.
It's a recipe for disaster.
If I knew you personally, I'd bet you serious money (I did that in real life, in the markets) that there won't be ANY inflation danger in the US for at least 2013! What the US actually is threatened by is DEFLATION. Even Bernanke admits it.
sternumagnum 6 months ago
@lexdysicjerry Wow you made that one easy. Straight from the Treasury's website, the definition of a deficit: "The deficit is the fiscal year difference between what the United States Government (Government) takes in from taxes and other revenues, called receipts, and the amount of money the Government spends, called outlays."
rogersat 6 months ago
@rogersat Believe it or not, that's what I am saying. This video leads one to believe that if the government were to not have a deficit, we would not have any money left. Ie, it if we did not have a deficit, the government would have taken 100% of it's money back. What this video fails to establish is the trade value money has once it has been "seeded". This seeding process happens when you introduce a currency, not every fiscal year.
lexdysicjerry 6 months ago
@lexdysicjerry You explicitly wrote, and I quote, "The defict = spending more money then we budgeted." That is 100% wrong, even definitionally. Congress budgets whatever they decide, and if what they appropriate exceeds tax revenue, then the country runs a deficit. And perhaps the video is misleading, but it does not state what you are claiming it does. A surplus can be run without deleting all money in the system, clearly (we did this a little over 10 yrs ago under Clinton).
rogersat 6 months ago
@rogersat yes, I used the word budgeted. I meant spending more than you had to spend, or as the definition states, earned in revenue. Bad choice of words. I am not against surplus... did you mean surplus or deficit? The video attempts to say that the $50 would not exist in his pocket if the government did not run a deficit. They are attempting to say that the government seeds all money as part of budget expenditure. That's not how currency works. The government needs percieved value to the money
lexdysicjerry 6 months ago
@lexdysicjerry Not denying what you are saying. Yes, a strong private sector is vital to building sustainable value into the currency. Nevertheless, the govt does in fact add nominal net financial assets when it deficit spends, even after the initial seeding. Maybe sometimes this action adds real value to the currency, maybe sometimes it subtracts real value. But it happens. And that's economic fact, your political ideologies aside.
rogersat 6 months ago
@rogersat Wow, I totally agree with your last point. When you are speaking in terms of gaining use of the capital of borrowing, of course. It's how most businesses fun/grow. But, the key to business, you have to eventually pay that off to keep going. Else, you spend all of your time, effort, and assets performing debt service. We're overspent, with noplans to reduce... only increase deficit spending. It is an economic LAW this can't continue indefinitely.
lexdysicjerry 6 months ago
@lexdysicjerry Agree with your point about business, but the govt's budget is fundamentally different from a business. A business can't print the dollar, the govt can, so there is no solvency constraint for the govt. However, inflation and misallocation of resources is an issue if the govt prints too much or spends it in inefficient places (we could go to the extreme and say the govt creates hyperinflation). But the law you're talking about is not economic law, it's your ideology.
rogersat 6 months ago
@rogersat I and everyone else have our ideologies, no doubt. But, you cannot spend your way into savings. You cannot spend more than you make indefinitely. One's ideology doesn't change this, it only prevents them from facing the fact we will feel the impact of these decisions for generations to come. You are correct, the government does have the ability to prolong, or as I see it (due to my ideology) worsen, the economic situation by attempting to hit "tilt" whenever they get in a corner.
lexdysicjerry 6 months ago
@lexdysicjerry "The video attempts to say that the $50 would not exist in his pocket if the government did not run a deficit."
And that's one hundred percent correct! (We presume a CA balanced or in deficit.)
You may want to visit
econviz.com/balance-sheet-visualizer.html
to experience in an excellent simulation how Macroeconomy works.
sternumagnum 6 months ago
@lexdysicjerry What a surplus does in fact do, however, is delete net financial assets from the system. So if you imagine the beginning of a fiat monetary system, the only way fiat enters the system is if the govt spends it. If the govt then taxes back the same amount of money, all net financial assets are gone, and there is nothing left, unless banks had extended loans, in which case, net financial assets no longer exist, and the economy may find itself in quite a precarious situation.
rogersat 6 months ago
@rogersat You keep confusing seeding with revenue and expenditures. I agree, when you start monopoly, you hand out money. But, you only do it at the beginning of the game. You establish a seed value, once the money is spent in society, it develops an economic system. A vital part of this system as the video tries to minimize is the earned value of $50. Fact is, he did put sweat equity in it, and that's the only reason it has value. That value is perceived AFTER seeding.
lexdysicjerry 6 months ago