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Modern Monetary Theory reveals the entire premise of this issue to be false. The private sector does not fund the public sector in the way that most people bel

Modern Monetary Theory reveals the entire premise of this issue to be false. The private sector does not fund the public sector in the way that most people believe. Non-convertible floating FX currency regimes (ie fiat money) such as the US,UK, and Japan can meet any and all financial obligations by issuing currency. Thus: 1) Taxes do not fund government. ( they 'back' the currency) 2) Treasury securities do not fund government. ( they are a tool to control interest rates) 3) Social security is solvent and we are not creating a financial burden for our grandchildren. (we are creating a burden by not upgrading and investing in infrastructure such as roads,highways,mass transit,etc) 4) Medicare is solvent ( though we have to clean up the fraud) 5) Private sector savings do not fund investment. ( banks create loans out of thin air) The public is being lied to by politicians( on both sides of the aisle) who are selling a false need for government austerity when in fact what we need is the government to invest more. Much more. People stop believing the bullshit from mainstream media bought and paid for by the plutocrats. Spend a bit of time to educate yourself on Modern Monetary Theory. It will change your political outlook. Its an earth is round vs earth is flat type of revelation. You can Google the following list of founders and well known MMT advocates in academia and the blogosphere. Warren Mosler - www.moslereconomics.com Dr Randal Wray - UMKC neweconomicperspectives.blogspot.com Dr Stephanie Kelton - UMKC neweconomicperspectives.blogspot.com Dr Scott Fullwiler Wartburg College neweconomicperspectives Dr Bill Mitchel - U of Newcastle, Australia. http://bilbo.economicoutlook.net/blog/ http://bilbo.economicoutlook.net/blog/ Marshall Auerback http://www.newdeal20.org/ http://www.newdeal20.org/ Dr James K Galbreath UT - Austin Mike Norman Fox Business Analyst www.mikenormaneconomics.org ( Mike takes a beating on Fox -bless him)

CWuestefeld 15y ago
Sure, if you choose to look at it that way. But if you're going to make "Non-convertible floating FX currency regimes (ie fiat money) ... can meet any and all financial obligations by issuing currency", then you've got to consider that entire reference frame. Issuing currency is identically equal to inflation, which is itself nothing more than a tax levied against those holding assets denominated in that currency. Using this option makes continued borrowing increasingly expensive, because those holding the debt wind up not getting repaid in actual value, only in nominal currency. So when you look at the world from your perspective, the result is still that, long term, continually increasing deficit and debt is unsustainable.
- gnaritas 15y ago
  > Issuing currency is identically equal to inflation That simply isn't true, not even close to true.
- _delirium 15y ago
  > Issuing currency is identically equal to inflation That's the main dogma of monetarism, but the empirical evidence for it is fairly contested (especially by neo-Keynesians). Measured inflation in many cases doesn't seem to actually move in line with what changes in the money supply would predict; for example, we should have much higher inflation currently than we do. Some monetarists did predict significant inflation, or even hyperinflation, two years ago, in the wake of stimulus spending and quantitative easing, but it didn't materialize. But I suppose I'll keep reloading http://www.hyperinflatingyet.com http://www.hyperinflatingyet.com periodically just to be safe...
- asg 15y ago
  Sure, it can cause inflation, but it is incontrovertible that governments can always replay local currency debt by issuing currency (except the EURO, where priting money has been offloaded to an external entity). Which is why sovereign debt in local currency is always the risk free credit, by definition. And the US is in the enviable position where, due to the nature of the dollar being the global reference currency, all (most?) of its debt is denominated USD. So I'm left puzzled at the recent debate about the US debt.
  - btilly 15y ago
    In the USA the printing of currency has also been offloaded to an external entity (the Fed), and the amount of currency to circulate has been fixed by Congress. Thus while in theory it is possible to just print money, in practice it is a lot more difficult than that.
  - tlear 15y ago
    Yes they can.. unless an angry mob whose life savings they just stole does not overthrow them. There are limits on how much you can do this and stay in power, they don't figure in the economics calculations but they do exist in real life.

CWuestefeld 15y ago

Sure, if you choose to look at it that way. But if you're going to make "Non-convertible floating FX currency regimes (ie fiat money) ... can meet any and all financial obligations by issuing currency", then you've got to consider that entire reference frame. Issuing currency is identically equal to inflation, which is itself nothing more than a tax levied against those holding assets denominated in that currency. Using this option makes continued borrowing increasingly expensive, because those holding the debt wind up not getting repaid in actual value, only in nominal currency. So when you look at the world from your perspective, the result is still that, long term, continually increasing deficit and debt is unsustainable.

gnaritas 15y ago
> Issuing currency is identically equal to inflation That simply isn't true, not even close to true.
_delirium 15y ago
> Issuing currency is identically equal to inflation That's the main dogma of monetarism, but the empirical evidence for it is fairly contested (especially by neo-Keynesians). Measured inflation in many cases doesn't seem to actually move in line with what changes in the money supply would predict; for example, we should have much higher inflation currently than we do. Some monetarists did predict significant inflation, or even hyperinflation, two years ago, in the wake of stimulus spending and quantitative easing, but it didn't materialize. But I suppose I'll keep reloading http://www.hyperinflatingyet.com http://www.hyperinflatingyet.com periodically just to be safe...
asg 15y ago
Sure, it can cause inflation, but it is incontrovertible that governments can always replay local currency debt by issuing currency (except the EURO, where priting money has been offloaded to an external entity). Which is why sovereign debt in local currency is always the risk free credit, by definition. And the US is in the enviable position where, due to the nature of the dollar being the global reference currency, all (most?) of its debt is denominated USD. So I'm left puzzled at the recent debate about the US debt.
- btilly 15y ago
  In the USA the printing of currency has also been offloaded to an external entity (the Fed), and the amount of currency to circulate has been fixed by Congress. Thus while in theory it is possible to just print money, in practice it is a lot more difficult than that.
- tlear 15y ago
  Yes they can.. unless an angry mob whose life savings they just stole does not overthrow them. There are limits on how much you can do this and stay in power, they don't figure in the economics calculations but they do exist in real life.