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The author wrote thousands of words based on a fundamental misconception. The US is not Greece. Greece doesn’t control its own currency. The US does. It can al

• pjc50 2y ago
  https://www.worldgovernmentbonds.com/spread/greece-10-years-vs-united-states-10-years/ https://www.worldgovernmentbonds.com/spread/greece-10-years-... > It will never default It doesn't have to default, but there have been several near misses vs Republicans who want to deliberately default because they don't understand the implications.
• JanisErdmanis 2y ago
  The US could print itself out of debt, but with an unbalanced budget and economy, that may be a disaster if it needs to finance new budget deficits. The result seems similar to the default.
  • Ekaros 2y ago
    There is always next time. Unless you are an oil state. And either deflation or massive over printing means that next time fewer are willing to loan money. Maybe domestic holders will. But investors and foreign surely go somewhere more stable and less inflationary.
  • spacebanana7 2y ago
    Henry Ford made an interesting argument for printing money to fund productive enterprise in the context of a gold standard currency. Just as it's okay to print money corresponding to central bank gold reserves, so too it's okay to print money to pay for the construction of the gold mine. Either way currency holders have real gold on the other side of the ledger. Taking this one step further, it should be okay to print money to fund any enterprise whose output can be traded into gold. For example if we printed money to build a silver mine then the silver could be traded for gold at some ratio, so the currency holders would be in a protected position. In fact whether the enterprise produces silver, timber, cars or software doesn't really matter as long the output is tradable for gold; and produces enough "gold value" to justify the newly printed currency. I think the economics on this actually checks out. Although politicians in the real world would realistically use money printing for consumption rather than production.
    • logicchains 2y ago
      That's how the current system works too: newly created money goes through the banks, and so the ones who spend it first (and benefit from seigniorage) are the financial industry and its customers: corporations borrowing to invest in productive activity. The key thing to note is that this system (and Ford's) represents a system of continuous wealth transfer from the working class (who hold most of their money in cash or low interest savings accounts, and suffer the most from inflation) to the owners of the means of production.
      • spacebanana7 2y ago
        A socialist version of this could work too - governments creating money/debt to invest in state owned enterprises for example.
    • amrocha 2y ago
      Yes, this is the entire point. Government needs to spend productively to grow the economy. Any spending can be inflationary if it’s perceived to not be productive. How that spending is financed is a footnote. Domestic debt works, foreign debt works, but the central bank can also purchase bonds and that works too (and is not inflationary). This is what Japan has been doing for decades to great success. Not to say that the transition is easy, and if too much of the USs debt is owned by 3rd parties that means that there will be currency value shocks that have to be mitigated. It does not mean that there will be a crash, or a recession, or a default.
      • Panzer04 1y ago
        The counterargument is whether the government should be directing the allocation of resources via its spending rather than private actors. Any money spent by the government in an economy is going to cause a redirection of resources from other actors to its own spending. In an economy running below its normal potential it makes it easy to justify because not much is getting done anyway, but if everyone is already doing a lot of stuff and there's not much spare capacity, then the government is effectively overriding the preferences of private citizens to its own ends to a much greater degree. There's other arguments as well as to how efficiently the government tends to be at actually getting productive things done with its spending. It's up to you whether this is good or not, but I'd argue it should not be our default position.
• immibis 2y ago
  The US has the option to not default, but don't forget what libertarians are like. Instead of choosing to print money to avoid default, they may choose to default to avoid printing money. Also, other countries that printed away their debt hyperinflated their currencies, which is just as bad. Even the US can only sustain its level of anti-debt-printing because it's the global reserve currency, and to be the global reserve currency, it needs to have massive trade deficits. Do you see an incompatibility with the way the current regime thinks?
• piva00 2y ago
  It will never default except for political reasons, there's been a few near misses on debt payment exactly due to that so there's already a material risk it could default even though it doesn't need to. The whole issue is basically that, there's no guarantee the political will to never default currently exists, a classic confidence crisis is brewing.
• tossandthrow 2y ago
  De facto it doesn't make too much difference. If the US deliberately print money, it will immidiately realize kn the bond market and manifest as higher interest rates. That is literally what the article explains.
  • croes 2y ago
    And some point your bonds are considered trash
• eviks 2y ago
  > Inflation is not a concern At lest your misconception took a base less than a hundred words long
• zshrdlu 2y ago
  I will attempt a reductio ad absurdum: why do anything other than print dollars then? Why farm? Why build anything? Why not just use the magic wand all the way?
  • amrocha 2y ago
    Why are you assuming the worst version of my argument to argue against?
• croes 2y ago
  That’s how you prevent future bonds because they become trash.
  • amrocha 2y ago
    Doesn’t matter, a sovereign government doesn’t need bonds to fund its spending.
• bigbacaloa 2y ago
  [dead]
• Panzer04 2y ago
  Printing money to pay debts is inflationary. Every dollar printed is a dollar stolen from the collective citizenry of the USA. Of course it makes sense to add money supply commensurate with increased productivity, so that money doesn't deflate, but go beyond that and that is what your are doing. Either way, someone has to pay the debt, even if you repudiate it.
  • amrocha 2y ago
    You’re wrong, empirical evidence shows that you’re wrong, but you don’t seem like you’re engaging in good faith so I’m not going to do your homework for you either.
    • itake 2y ago
      Pot calling the kettle black. You're saying the commenter is wrong, without presenting any substantive arguments or "empirical evidence" otherwise. "Do your homework" is not a useful comment, b/c you can easily find eco-chambers re-enforce any point you want on the internet. Instead of trying to engage in conversation, you're just pushing them further into their own ecochamber.
      • amrocha 2y ago
        You can’t reason someone out of a viewpoint they didn’t reason themselves into. There’s no economic argument to be had with someone that says monetary policy is theft.
        • Panzer04 1y ago
          If the government prints itself double the money supply, it has effectively made every dollar held by everyone else half as valuable. I'm not making a value statement as to whether this is good or bad, particularly at low levels, but the fact of the matter is that if you pay for debt with money printing your are in practice taking that value from people who hold cash-denominated (ie. cash, debt etc) non-inflation-protected assets.