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The US effectively uses government debt to avoid large asset holders from eating up the entire money supply. Using deficit spending to redistribute funds works

by lumost 3y ago

The US effectively uses government debt to avoid large asset holders from eating up the entire money supply. Using deficit spending to redistribute funds works when the money hits the right places, and is horrendously inefficient otherwise.

JumpCrisscross 3y ago
> US effectively uses government debt to avoid large asset holders from eating up the entire money supply What does this mean?
- bratwurst3000 3y ago
  If money isn’t debt it would be for example gold. So a person could hold all the gold in the world and in this sense also the power over money. Now money is there for the transfer between values so it represents the economics
  - JumpCrisscross 3y ago
    > a person could hold all the gold in the world and in this sense also the power over money Then something else becomes money. This has happened, in the past, when metal money was scarce. More realistically, if one person hoards a money, i.e. accumulates and doesn't meaningfully spend it, it gets taken.
- lumost 3y ago
  Profits accumulate to asset holders, and individuals have a fundamental cap on how much they can rationally spend. If individual asset holders have too much capital - then there won't be enough spending to keep the economy moving, resulting in deflation. Even in the case that large asset holders are efficiently lending capital, this situation can occur due to interest payments. The US Government effectively acts as the borrower of last resort in this situation by being the only place where a large asset holder can safely store capital and spending the borrowed capital. It would be possible to perform the same activity with taxation, or policy decisions that raise the base wage in the economy, or by simply printing more money - but the activity must be done to prevent deflationary spirals from occurring. Printing money comes with the con that asset holders will end up with more capital. Unfortunately, there is no guarantee that such holders remain obligatory savers, and they may begin engaging in irrational spending.

by lumost 3y ago

JumpCrisscross 3y ago

> US effectively uses government debt to avoid large asset holders from eating up the entire money supply What does this mean?

bratwurst3000 3y ago
If money isn’t debt it would be for example gold. So a person could hold all the gold in the world and in this sense also the power over money. Now money is there for the transfer between values so it represents the economics
- JumpCrisscross 3y ago
  > a person could hold all the gold in the world and in this sense also the power over money Then something else becomes money. This has happened, in the past, when metal money was scarce. More realistically, if one person hoards a money, i.e. accumulates and doesn't meaningfully spend it, it gets taken.
lumost 3y ago
Profits accumulate to asset holders, and individuals have a fundamental cap on how much they can rationally spend. If individual asset holders have too much capital - then there won't be enough spending to keep the economy moving, resulting in deflation. Even in the case that large asset holders are efficiently lending capital, this situation can occur due to interest payments. The US Government effectively acts as the borrower of last resort in this situation by being the only place where a large asset holder can safely store capital and spending the borrowed capital. It would be possible to perform the same activity with taxation, or policy decisions that raise the base wage in the economy, or by simply printing more money - but the activity must be done to prevent deflationary spirals from occurring. Printing money comes with the con that asset holders will end up with more capital. Unfortunately, there is no guarantee that such holders remain obligatory savers, and they may begin engaging in irrational spending.