4 ms·

Saying you have to 'keep printing money' to cover debts is meaningless. All money is printed (or keystroked) into existence. Governments impose a tax burden p

Saying you have to 'keep printing money' to cover debts is meaningless. All money is printed (or keystroked) into existence. Governments impose a tax burden payable only in the state's currency (so that people are forced to offer their output for sale in that currency), then they provide that currency. The way to be fiscally responsible with your currency is to print enough so that everyone has a job, but so much that you're overrunning your output capacity and increasing inflation. Keep interest rates on bonds (if you choose to issue them) lower than your GDP growth (and since you're the monopoly issuer of your currency, you have control over interest rates) and you won't have issues with expanding debt % [1]. The first response to this is usually "well, Greece" or "well, Zimbabwe". The crucial difference in those countries was that what they owed was not their own currency, but foreign currencies. [1] http://www.cfeps.org/pubs/wp-pdf/WP53-Fullwiler.pdf http://www.cfeps.org/pubs/wp-pdf/WP53-Fullwiler.pdf

SilasX 14y ago
So how does that contradict what I said?
- kaonashi 14y ago
  > That says nothing about how much you fuck up the economy by doing so. It says a great deal about the possible effects of deficit spending. If you owe a foreign currency and have a catastrophic decrease in output, you're going to have problems. If your debts are denominated in your own currency and have stable output, then increasing net financial assets to the private sector can prop up aggregate demand to keep the economy operating at full employment.
  - SilasX 14y ago
    That sounds great, until you realize that "the printing money" can have consequences worse than default, which is why we have actual examples of defaults by nations that had debts denominated in their own currency. Hence my point, to which reiterating how cool it is to print your way out of debt is non-responsive.
    - kaonashi 14y ago
      Russia had foreign denominated debts and a collapse of real output. Try again. http://pragcap.com/the-russian-default-what-happened http://pragcap.com/the-russian-default-what-happened

SilasX 14y ago

So how does that contradict what I said?

kaonashi 14y ago
> That says nothing about how much you fuck up the economy by doing so. It says a great deal about the possible effects of deficit spending. If you owe a foreign currency and have a catastrophic decrease in output, you're going to have problems. If your debts are denominated in your own currency and have stable output, then increasing net financial assets to the private sector can prop up aggregate demand to keep the economy operating at full employment.
- SilasX 14y ago
  That sounds great, until you realize that "the printing money" can have consequences worse than default, which is why we have actual examples of defaults by nations that had debts denominated in their own currency. Hence my point, to which reiterating how cool it is to print your way out of debt is non-responsive.
  - kaonashi 14y ago
    Russia had foreign denominated debts and a collapse of real output. Try again. http://pragcap.com/the-russian-default-what-happened http://pragcap.com/the-russian-default-what-happened