Ponzi would be if the govt. was dependent on borrowing to make payment.
The US Congress spends by instructing the Fed to credit someone’s member bank account at the Fed. This process is operationally independent from taxing and/or borrowing. It is not dependent on revenues of any sort.
All Social Security payments are a matter of the Fed entering data on its computer.
That is, all Federal spending can be said to be ‘printing money’.
And Federal taxing can be said to be ‘unprinting money’.
Also, Federal borrowing is nothing more than the shifting of dollars from reserve accounts at the Fed to securities accounts at the Fed.
And paying down the Federal debt is nothing more than the shifting of dollars from securities accounts at the Fed to reserve accounts at the Fed.
Neither is involved in the actual making of payments by the Fed.
Bottom line, the notion of Ponzi isn’t applicable when it comes to the issuer of the currency. Greece, the US states, corporations, and individuals are users of the currency and can be in Ponzi. The Fed, Bank of Japan, Bank of England, and European Central Bank are issuers of their own currency, so for them Ponzi does not apply.
Please forward this to the Republican candidates, the President, and all members of Congress, thanks.
Kudos to Mosler for smoothing out some of my earlier comments regarding elastic currency theory in standard format and in special circumstances.
ReplyDeleteNow the Ron Paulistas and Deficit terrorists will proclaim that we are really "unprinting" too much money by taxation and it is taking away from the rich and everyone else.
They'll say just about anything anytime.
"Bottom line, the notion of Ponzi isn’t applicable when it comes to the issuer of the currency."
ReplyDeleteCorrectomundo Mr. Mosler. Thank you. However I was not aware that the SS system was an issuer of currency.
In fact I believe it's a user of currency dependent on an income stream of payroll taxes and some bond interest.
Of course it could be bailed out by the Government....but then the Government could also have chosen to bail out Madoff's hapless victims (as it has for victims of flood, hurricane, Wall Street crashes and other tragedies from time to time). But the likelyhood of bailout doesn't erase the "Ponzi" does it?
Mikey is clueless about Monetary Sovereignty. Mikey, the federal government (the issuer of its own currency-why does it even NEED to sell bonds?)pays its bills by spending, not with your measly tax contribution.The federal government can pay any bill at any time and can NEVER go bankrupt. The federal government simply sends instructions to add numbers to bank accounts.It's that simple.
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