Commentary by Roger Erickson
U.S. Budget Deficit Shrinks as Revenues Rise
Be still my beating heart! These idiots don't grasp that:
1) pubic "deficit" = private financial savings?
2) public "revenue" = claw back of it's own currency, previously issued to citizens?
See p.35 here; to a fiat currency issuer "Taxes for Revenue are Obsolete" WRITTEN IN 1946!!! We weren't always this ignorant!
To err is human. To really screw up requires willful institutional ideology?
Even then the editor of that publishing couldn't figure it out. He writes "Mr. Ruml does not say precisely how in that case the govern- ment would pay its own bills
ReplyDeleteBe still my beating heart! These idiots don't grasp that:
ReplyDelete1) pubic "deficit" = private financial savings?
People don't grasp it because it's not true. It's a lie perpetuated by you Leninist retreads. Repeating it over and over won't convince anyone other than other Leninist retreads. One saves by foregoing consumption.
"One saves by foregoing consumption"
ReplyDeleteCommon misconception based on popular understanding of technical terms in economics, just as saving of financial assets is called investment by most people but not economists, who reserve investment for firm spending on capital goods.
In a closed economy the household identity is "income equal funds spent on consumption goods plus saving" and the firm identity is income equals funds received from consumption goods plus fund spent on capital goods. Thus saving equals investment, but this is an identity that says nothing about causality. It is often erroneously assumed that saving "causes" investment.
Saving is defined as the accounting residual of income (flow) less consumption (flow) in an accounting period. Income, consumption and the difference as saving are all flow entries. The flow of saving increases gross worth, which after subtraction of liabilities, is net worth.
But saving is not deferred consumption, in that there is no direct relationship. At the top, wealth accumulates.
If someone receives a funny money loan, that person gets to spend the new money first before it dilutes the value of the outstanding money. That is a form of wealth transfer and arguably it is income to the recipient and a loss to everyone else.
ReplyDeleteIf a person gets of gift of new funny money from the government (new net financial assets!!!), that is obviously a form of wealth transfer and it is income to the recipient and a loss to everyone else. Your “accounting” does not account for that.
Bob, the funny money that the privilege get access to before others and at a better rate comes from bank lending, the bulk of which is from the TBTFs.
ReplyDeleteIf money "came from the government," that is, were exogenous, then government could regulate its quantity directly. But that is not the case in the existing system in which money is endogenous, subject to bank lending.
It is true that government facilitates this through legislation and regulation of banking, as well as the central bank as lender of last resort.
Could this be changed by changing the rules? Of course. But then the question becomes the tradeoffs, and there are arguments on both sides affecting a number of areas.
However, as Warren Mosler points out, it is very difficult to change an existing system politically, e.g., by going to sound money, even if that were a good idea, which he disagrees with. Much more practical to adopt reforms that fix the big issues that result in dysfunction.
Bob,
ReplyDeleteaccording to you, we personally save by holding our breath?
the semantics are what are getting funny here
Can someone check to see whether Bob's on the payroll of the Peterson Foundation?
ReplyDeleteps: In the spirit of fairness, I'm actually going to try his suggestion, and reduce my consumption of his endlessly negative & angry narrative.