I see Trump’s suggestion that the US haircut holders of treasury debt through a different lens than most observers. Almost every year, I walk into an introductory economics class in the fall and try to disabuse students of the notion that debt and credit assets like bonds are two unrelated things. They are shocked to discover that the savings bonds many have stashed away are pieces of the “national debt”, and that eliminating this debt would mean draining the world of all such bonds—that America’s collective public debt is (apart from foreign holdings, which is another story) America’s collective private wealth. Yes, the unequal ownership of that wealth is scandalous, but that’s about how much inequality we have, not how much wealth.…Econospeak
What Donald Trump Is Telling Us about Popular Understanding of Debt and Assets
Peter Dorman | Professor of Political Economy, The Evergreen State College
1 comment:
A little while back there was an advert which was made like a British documentary and it had an English voice over. The narrator sounded very familiar of a person who was often used in very good British documentaries and this gave the advert merit. I don't know if they used the same narrator, or they got an actor who sounded like him, but the documentary was all about the American and British national debt, and about how it was all fiat money, which they said was funny money, not the real thing. They said that the end of the world was coming because of all this debt and fiat money.
The advert was pure doom and gloom and they said they doomsday was coming any day soon. But they had the answer, of course, of how to protect your wealth, and even make money while everyone else was losing theirs.
This advert was everywhere I went, maybe due to the cookies. I knew a little bit about MMT by then, and I would explain in the comments section underneath what a loaf of rubbish it was. Without fiat money, I said, no one would have any money to spend. If all debts got paid up, and all government debt too, there wouldn't be any money in society.
Of course, they have all got this thing about gold, but that is so primitive, and only the mega rich can own gold mines, so why give the 0.001% any more power?
All this doom and gloom about government fiat money and debt that people love so much, the internet is full of it.
To me, government fiat money is an amazing thing. It gives ordinary people control over their money supply, and it helps the government provide public services cheaply and efficiently.
This is what the 0.001% don't want people to know. That they they needn't have high taxes to have good public provision. And they people don't have to carry so much debt for there do be a sufficient money in circulation. The government can provide more of the money supply instead.
I'm still working on fully understanding MMT, and how the private banks, which issue most of the money, fit into it. Correct me on the above, if you wish.
Name Changed from nivekvb to Kaivey.
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