Just thought I'd check in and see how much of our debt we've "paid back" so far this fiscal year. Let's see...hmmm...well, turns out it's now up to $54 TRILLION. And that was in the past 10 months.
And with absolutely no problem whatsoever. The world didn't end. Interest rates didn't spike up (they're actually at record lows...AGAIN), the dollar went up, the economy is still growing, there's no hyperinflation, gold is down, commodities are down. What else? It's all good.
What say the idiots likes Schiff, Santelli, Rogers, Faber, Paul Ryan, Simpson/Bowles, Peterson, Walker, Fox News, et al?
We don't have money? Can't pay for Social Security for our seniors? Health care? Education? Infrastructure? Basic research? Jobs for the unemployed?
What a joke. We have all the money we need and an abundance of goods and services to make and distribute. It's religion that keeps us from doing it. The proof is right here in these numbers that folks at Treasury and the Fed all understand.
I just had a long debate with one monetarist kool-aid kid. He claimed monetization would give us "30-40%" inflation. I said, look, the private sector gets full monetization every 3 months, and what do they do? They turn back to buy the bonds again. He cannot internalize that it blows the monetization myth to pieces. These people cannot fathom that just because you change how people store savings (strip it of interest payments), they won't immediately blow it, just because you converted it to "money". The mystique of the word "money" is just too strong for their brains...
ReplyDeleteI just had a long debate with one monetarist kool-aid kid. He claimed monetization would give us "30-40%" inflation. I said, look, the private sector gets full monetization every 3 months, and what do they do? They turn back to buy the bonds again. He cannot internalize that it blows the monetization myth to pieces. These people cannot fathom that just because you change how people store savings (strip it of interest payments), they won't immediately blow it, just because you converted it to "money". The mystique of the word "money" is just too strong for their brains...
ReplyDeletesomebody with the technical capability should make a nation redemption clock to counter the debt clock
ReplyDelete"somebody with the technical capability should make a nation redemption clock to counter the debt clock"
ReplyDeleteHas been done... think it was Matt
If you understand how the system works, including all the stupid hurdles we politically/institutionally construct, so long as the US Treasury is happy with a rate profitably higher than the FED's target interest there is an infinite supply of free money (and for the banks risk free profit) to fund the US government. We could fund $54 Googolplex of dollars if we chose to - its free money after all, the only question is - is there a Googolplex of output+savings+private consumption to support it.
ReplyDeletemiller & Andy,
ReplyDeleteIt was actually Trixie who did the SAVINGS clock (in contrast to the "debt" clock).
Here is a link to the clock at Mike's:
http://mikenormaneconomics.blogspot.com/2012/04/still-going.html
You can use the "view source" option for the blog page and cut the HTML out of it and use it on another blog it you want...
rsp,
OK, MMTers, riddle me the following:
ReplyDeleteIf I claimed that higher government deficits leads to lower private investment for the consumer's benefit, would you say this is crazy talk?
First imagine answering this question (probably in the affirmative I am guessing), and then second, look at this chart.
This chart shows Gross Private Domestic Investment (GDPI) as a percentage of GDP (the top blue line), and Net Government Saving (TGDEF) as a percentage of GDP (the bottom red line).
When the blue line goes up, that means there is more private domestic investment per GDP; when it goes down, that means there is less. For the red line, up means the deficit is getting smaller (or the surplus larger, depending on whether you are below or above the 0 point on the chart); down means the deficit is getting larger.
Here is what I notice:
They move in close correlation. It looks like when the government deficit falls (meaning when the surplus increases as per the red line goes up), private sector investment rises. When the government deficit increases (meaning when the surplus decreases as per the red line goes down), private sector investment falls.
Can anyone explain this? It seems to directly contradict what MMTers say should happen, which is that private sector investment should increase along with increasing government deficits.
Is it a question of falling tax revenues?
ReplyDeleteNever mind.
ReplyDeletehttp://research.stlouisfed.org/fredgraph.png?g=937
Thanks for the discussion, LOL
ReplyDeleteMajor,
ReplyDeleteSectoral balances.
For instance the public deficit was collapsing and I believe the govt was running a surplus over 9 months in 2007 while the banks were letting people borrow ever increasing amounts against houses during that time...
Now it is the opposite.
Banks are not lending squat so accordingly MMT says we should cut taxes/increase public investment to allow the public balance to go more negative...
It's all just tradeoffs if we had non-morons in govt...
rsp,
Major,
ReplyDeleteYou guys may be over-thinking your position.
I believe your position can be stated more clearly and in a less complicated fashion...
rsp,
The other thing Major...
ReplyDeleteYou want to guard against being against something just because you do not understand it in general.
I dont think you and Bob R. really understand how our current system operates. And you may be saying to yourselves: "I cannot be for something I do not understand" in this.... if this is what you are doing you are not being "fair" to yourselves...
rsp,
Govt deficits rise when non-govt saving desire increases and falls when saving desire declines. The shift in savings desire is reflective of the shifting ratio between saving and investment based on the cycle. Saving increases counter-cyclically, and investment pro-cyclically.
ReplyDeleteThe issues are twofold —economic policy and public policy. One view is that economic policy is a subset of public policy. The other view is that there need be no policy other than letting free markets decide policy.
ReplyDeleteThese are the liberal (left) and conservative (right) views, and within each are authoritarian and libertarian wings.
These are not discrete positions, either. The spectrum is continuous over a range.
Matt Franko:
ReplyDeleteYou want to guard against being against something just because you do not understand it in general
I disagree. I think I understand everything that you understand about the monetary system, and more.
You don't understand the monetary system's effect on economic calculation.
Tom Hickey:
Govt deficits rise when non-govt saving desire increases and falls when saving desire declines.
I disagree. Government agents are not on automatic pilot. They do not mindlessly react to the private sector. Deficits require positive choices by government agents. Government deficits are not private sector driven. They are government driven.
The issues are twofold —economic policy and public policy. One view is that economic policy is a subset of public policy. The other view is that there need be no policy other than letting free markets decide policy.
This is a rather sloppy way of understanding social interaction. The actual two views are violent, involuntary interaction, and peaceful, voluntary interaction.
Both the left and right want to promote the former, and I want to promote the latter.
There is also the view that public policy is a subset of human action and is therefore under the rubric of praxeology.
Major: "I disagree. Government agents are not on automatic pilot."
ReplyDeleteAutomatic stabilization is "automatic" — pre-appropriated. Tax revenue falls when the economy contracts. The govt fiscal deficit expands with automatic stabilization and falling tax revenues. Seems pretty obvious and clear to me.
"This is a rather sloppy way of understanding social interaction. The actual two views are violent, involuntary interaction, and peaceful, voluntary interaction."
The fact is that groups of people act to promote interests that are incompatible with the interests of other groups. The result is conflict of one sort or another. It's the way humans interact at their present stage of development. My solution is to get with people who understand voluntary cooperation for mutual benefit and stay out of the way of the others, since they will do their best to control you when it is in their interest to do so.
I am confident that the collective conscious of humanity will evolve beyond this stage, but this is where we are now and we have to deal with it.
Tom Hickey:
ReplyDeleteAutomatic stabilization is "automatic" — pre-appropriated. Tax revenue falls when the economy contracts. The govt fiscal deficit expands with automatic stabilization and falling tax revenues. Seems pretty obvious and clear to me.
The fact that you put "automatic" in quotes is the giveaway I am right.
The fact is that groups of people act to promote interests that are incompatible with the interests of other groups.
False. The fact is that individuals act to promote their individual interests that can be, but are not necessarily, incompatible with other individuals.
If you view individuals as members of groups only, then of course you will only see conflict everywhere, and you will have no way to argue against initiations of violence. Violence will seem to be inherent in human action, when are actions built on ideas, which are not constant.
The result is conflict of one sort or another.
You see that? When you view yourself as a white person, and you promote white people interests, then you will invariably introduce conflict.
If however you view individuals as they are, then one individual promoting his interests does not necessarily imply others are harmed. For individuals can engage in voluntary interactions with other individuals, for mutually selfish motives.
It's the way humans interact at their present stage of development.
Not all individuals.
You are arrogating yourself to having a God's eye view of human history. Your knowledge however is constrained to the logical structure of a HUMAN mind, which does not give you access to that which is beyond those constraints. You can't understand human history in such a way that you call this time a "stage in human development" where we are all inevitably doomed to behaving a certain way, rather than another way.
My solution is to get with people who understand voluntary cooperation for mutual benefit and stay out of the way of the others, since they will do their best to control you when it is in their interest to do so.
Make way for "the others", even if they aggress against you?
I can't follow that praxis.
I am confident that the collective conscious of humanity will evolve beyond this stage, but this is where we are now and we have to deal with it.
Deal with it? It's under your control, silly. If you know you're at a certain stage, then why not move beyond it? If you can see the possibility of improvement, then in principle so can others, as they share your logical structure of mind. It's how you're even able to communicate with others.
Collective consciousness? Oh brother. You really believe in Jungianism? There is neither logic nor empirical evidence to support it.