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Because unlike in a Ponzi scheme, the US government can simply choose to create more money, thus meeting the obligations of its payments. A Ponzi scheme involv
by rtpg 5y ago
Because unlike in a Ponzi scheme, the US government can simply choose to create more money, thus meeting the obligations of its payments.
A Ponzi scheme involves pretending a balance exists when there isn't one. When the gov't says "we will give you dollars later" and they give you dollars later, you might complain in the theoretical universe where the dollars aren't worth much/at all, but they can indefinitely match your bargain.
You can choose to opt out of this system! Go into the countryside, barter for everything. But perhaps, perhaps, there is a reason that economies that have fiscal flexibility flourish and economies that are pegged to some other store of value they don't control have bigger problems resolving economic issues.
- cartoonworld 5y ago>Because unlike in a Ponzi scheme, the US government can simply choose to create more money, It sure can, but this doesn't go far enough. The US Govt' can only choose to "print money". It cannot choose otherwise. This is because fractional reserve banking allows financial institutions to lend out the same $1 multiple times. The result of collecting $1 and lending 6 people that $1 with an expected total payment of $2 per debtor results in $1 causing $13 in the economy.
- snowwrestler 5y agoFractional reserve banking pre-dates the US by hundreds of years. It’s not related to central bank operations.