In the US the debt ceiling is a legal construct that requires majority in both chambers to allow government to allow taking on more debt. Whether this makes sense is the subject of an ongoing debate, but a related question often comes up. If there would not be a debt ceiling, how much money could government spend or, how high could government debt be?
The question has been answered by Warren Mosler in his book Soft currency economics II in such a way that I find it unnecessary to come up with my own version. Here are the two paragraphs that address this question:econoblog101
The “natural” government debt ceiling – fact or fiction?
Dirk Ehnts | Berlin School for Economics and Law
Dirk Ehnts on board soft currency-MMT train. Welcome aboard.
He adds, "Let me just add that since the liabilities in the global economy denominated is US dollars are very large it is unlikely that people stop accepting the US dollar, in both the US and the world at large." As I have said many times, anyone can send me all their "worthless dollars" for proper disposal, and I'll even foot the postage worldwide. The offer still stands.
1 comment:
I read that post and his IS/MY post and a related post to that on a liquidity trap.
He reads like a Circuit Theorist. Is he?
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