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Takeaways: -the federal government is self funding. (my opinion: we should take advantage of this by lowering taxes or spending more) - taxes create demand
by bubbleRefuge 9y ago
Takeaways:
-the federal government is self funding.
(my opinion: we should take advantage of this by lowering taxes or spending more)
- taxes create demand for money but don't fund government.
- 'money' doesn't exist till the federal gov spends it into existence
- interest rates are determined exogenously by the fed.
- large deficits tend to drive down , not up, interest rates because of the excess reserves created.
- api 9y agoI wish people understood that public debt is not really debt as ordinarily understood. It's really just an accounting artifact and tends to reflect and mirror net private savings. That is unless your country does not issue it's own sovereign currency. Then it is debt.
- tcmb 9y agoDoes this last sentence apply to the countries that have the Euro?
- bb88 9y agoThat would be correct.
- candiodari 9y agoNot entirely. It doesn't apply to the Euro as a whole and that means it doesn't apply to countries that, if they have a big banking crisis would provide a medium-or-higher risk to the Eurozone as a whole. So it does't apply to France, Germany, Italy, Spain, perhaps Poland.
- barrkel 9y agoPublic debt is a promise to fund future obligations and things like pensions would be significantly devalued if it isn't honoured, so in political practice it is debt. That debts and savings are two sides of the same coin is tautological and doesn't require a state or fiat currency. Your current account with the bank is a debt the bank owes you. All savings are debts.
- bubbleRefuge 9y agoRight, but public debt is someone's asset as well. To parapharse Stephanie Kelton. The federal deficit is the public's surplus.