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That was an excellent interview, but I do wish that when people criticize debt they would be more specific about the type of debt they are referring. I once got into a discussion criticizing debt only to find that I was criticizing private debt whereas the other people were all right wingers criticizing public debt. They were completely confused about debt and had no appetite to learn anything except that the government should quit spending
Yes you see that conflation all of the time.... Dan Kervick has a post up at NEP recommending that the govt just stop "borrowing" for among other reasons to eliminate this confusion.... Resp,
Next time ask your right winger friends who seem to think that the public and private debts are identical if they would trade their 100,000$ T Bill for your 100,000$ mortgage.
The questions you should ask your friends in order are - and typical answers.
1) What is the government borrowing? Ans. Dollars 2) Who has these dollars? Ans. The Public, or China, or OPEC 3) Where did these dollars come from? Ans. Personal savings, exports to US 4) Where did those dollars come from? Ans. What do you mean? I just told you. 5) Where did these dollars come from in the first place? Ans. From the bank. 6) Who created those dollars? Ans. The bank? 7) But isn't the only way the banks can create dollars is by giving out loans? And if you took out a loan, don't you owe the bank the money plus interest? Therefore you really didn't get any net dollars did you? Ans. Huh? 8) Isn't the US Government the ultimate issuer of dollars? Ans. Yes. 9) How did the US Government create those dollars if it needs those dollars if it needs to borrow them to spend? Ans. My head hurts. It is all so complicated!
That was an excellent interview, but I do wish that when people criticize debt they would be more specific about the type of debt they are referring. I once got into a discussion criticizing debt only to find that I was criticizing private debt whereas the other people were all right wingers criticizing public debt. They were completely confused about debt and had no appetite to learn anything except that the government should quit spending
ReplyDeleteAnon,
ReplyDeleteYes you see that conflation all of the time.... Dan Kervick has a post up at NEP recommending that the govt just stop "borrowing" for among other reasons to eliminate this confusion.... Resp,
Anon
ReplyDeleteNext time ask your right winger friends who seem to think that the public and private debts are identical if they would trade their 100,000$ T Bill for your 100,000$ mortgage.
That was good.
ReplyDeleteAnon,
ReplyDeleteThe questions you should ask your friends in order are - and typical answers.
1) What is the government borrowing?
Ans. Dollars
2) Who has these dollars?
Ans. The Public, or China, or OPEC
3) Where did these dollars come from?
Ans. Personal savings, exports to US
4) Where did those dollars come from?
Ans. What do you mean? I just told you.
5) Where did these dollars come from in the first place?
Ans. From the bank.
6) Who created those dollars?
Ans. The bank?
7) But isn't the only way the banks can create dollars is by giving out loans? And if you took out a loan, don't you owe the bank the money plus interest? Therefore you really didn't get any net dollars did you?
Ans. Huh?
8) Isn't the US Government the ultimate issuer of dollars?
Ans. Yes.
9) How did the US Government create those dollars if it needs those dollars if it needs to borrow them to spend?
Ans. My head hurts. It is all so complicated!