All conservatives should gain a basic understanding of dual entry spreadsheet accounting.
That’s an interesting comment, because so many liberal policy positions seem to require an ignorance of basic accounting. But let;’s not digress.
Yes, what you’re positing is that the nation has a balance sheet. I have no quarrel with that. The world has a balance sheet, too, and I suppose someday we’ll create one for the solar system and the universe. But what matters is a firm understanding of what money, fiat or otherwise, actually is.
It’s a proxy for value.
The government imposes a tax obligation onto the people and must spend the currency into the private sector before it can collect.
I have no idea what that means. I just paid my taxes, it went into the Treasury General Fund. It’s collected. No spending was required.
The tax drives the demand for the currency, but it is deficit spending that enables resources to be driven to the private sector.
I pay my taxes to Treasury. Treasury calls Staples and buys pencils with it. No deficit spending.
This is how all sovereign currencies are created and managed.
All government created currencies are tax credits and their value is maintained by the sovereign’s ability to levy and collect taxes.
To some extent. Fiat money’s value is maintained IN PART by the ability to levy and collect taxes, and also by the productive capacity of the economy.
Uh, no. The US is not a closed economic system.
Actually, it is.
Cant’ be. See above: Currency is a proxy for value. When Exxon fracks a field out in West Texas and drags oil out of the ground, they’ve put value into the economy that wasn’t there before. That value is then converted into currency when it gets sold to the downstream retailer.
If the idiots in Congress get their wish and create a balanced budget amendment this will all become real clear to everyone real quickly.
Depends on how it’s written. If it drastically decreases the money the feds spend into the economy, you’re right. If we are allowed to grow our way out of the debt, not so much.
In my experience, conservatives mistrust their federal government and deeply resent the fact that it can create currency on demand.
You’re mixing two different things there. Yes, we tend to believe that we are better at managing our money than the government is; I think the government has pretty much proven that point over the decades. However, the latter contention, that it can create currency on demand, is only resented by the “gold bugs”, of which there are not many.
That said, there is reasonable concern when the Fed grows it’s balance sheet. We remember what happened in the late 70’s, and it appears that the Fed does too, because it’s now shrinking it’s balance sheet, with the goal of getting it back to historical levels.
In their effort to hobble and cripple the government in any way they can they twist the facts in their own minds to fit the system they would prefer where private business creates money and the government must then “get” it from someone to fund its functions.
Yes, we’re all about crippling the government (laughs at you).
But (and I hate to break it to you) about 100% of Republicans and about 98% of Democrats believe that businesses create (or add) value, and then the government taxes it (and us) to fund its operation. Your points about the US balance sheet and the roundtripping of money have some validity, but IN PRACTICE, what you’ve said is how the economy works. And it cannot work any other way, because it works that way throughout the entire world, and if we were to become the “one-off” in that world, then the entire house of cards would come tumbling down.
This was not a simple misunderstanding and has been cultivated by the establishment right wing in a constant string of misleading statements and our fiscal policy.
And then the Nobel committees had the nerve to give out Economics prizes to the scholars espousing it. Horrors. :-)
Interest paid on bonds representing deficits may become problematic at some point, although it is no more difficult to create currency to pay it than it is for any other purpose.
Which would then drive up interest rates further, creating a “circling the drain” effect.
If this is the driving issue keeping us from a sensible fiscal policy that properly funds the private sector then we should curtail the sales of bonds
Which would of course destroy the world economic order. One shudders to think about the famine and misery that would cause.
, not destroy the economy with senseless austerity policies that create misery and death for the people the government is charged to serve and protect.
Well, we’ve never done austerity, so I’m not sure what you;re referring to. Even when Mr. Clinton ostensibly “balanced the budget” the amount of money the government spent never decreased.
The federal government can create currency at will and spend it directly to reserve accounts at the Fed, bypassing the Treasury.
Dr. Krugman suggested, in 2008, the minting of a “trillion dollar coin(s)” to address the financial crisis. It reminded me of an excellent book I read some years back.
I know that would be a burr under the saddle of any current conservative, but reality doesn’t adapt itself to your ideology just because you “believe” it is other than it is.
Well, it’s a burr under the saddle of any conservative, RINO, DINO, and any “progressive” who still believes in a market economy. Where we diverge in our views is rather simple:
- You believe that when it comes to Money Matters, the government can do whatever the hell it wants to do without any repercussions whatsoever.
- I disagree.