An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Tuesday, November 13, 2018
Randy Wray — A Better Way to Think about the “Twin Deficits”
(These remarks will be delivered today at the UBS European Conference in London.)
“A sovereign government cannot run out of its own liabilities. All modern governments make and receive payments through their central banks. Government spending takes the form of a credit by the central bank to a private bank’s reserves, and a credit by the receiving bank to the account of the recipient. You cannot run out of balance sheet entries.”
Why isn’t the academe of cognitive “science “ helping out to correct this population wide cognitive deficiency/error of reification?
Too busy studying chimpanzees?
If you asked any cognitive “scientists” if we are running out of “money” they all would say ‘yes!’.....
The population already understands that a monetary sovereign cannot run out of its own money - that's obvious.
The real problem is that the banking model is designed/evolved for expensive fiat, i.e. for the Gold Standard, which had the effect of eliminating monetary sovereignty.
Wray and the others need to face that inexpensive fiat and the current banking model are not compatible - unless their hidden agenda is to save the current banking model from itself, and not promote the general welfare and economic justice.
“A sovereign government cannot run out of its own liabilities. All modern governments make and receive payments through their central banks. Government spending takes the form of a credit by the central bank to a private bank’s reserves, and a credit by the receiving bank to the account of the recipient. You cannot run out of balance sheet entries.”
ReplyDeleteWhy isn’t the academe of cognitive “science “ helping out to correct this population wide cognitive deficiency/error of reification?
Too busy studying chimpanzees?
If you asked any cognitive “scientists” if we are running out of “money” they all would say ‘yes!’.....
The population already understands that a monetary sovereign cannot run out of its own money - that's obvious.
ReplyDeleteThe real problem is that the banking model is designed/evolved for expensive fiat, i.e. for the Gold Standard, which had the effect of eliminating monetary sovereignty.
Wray and the others need to face that inexpensive fiat and the current banking model are not compatible - unless their hidden agenda is to save the current banking model from itself, and not promote the general welfare and economic justice.