Sovereign governments can never run out of money.
True. But what is often forgotten (or naively ignored, which I think is more often the case) is that in fiat money system, a dollar acts essentially as a share of stock in the U.S. of A. , which is traded on an enormous stock exchange (many times larger than the NYSE) called the FOREX.
If we crank up the printing presses, the value of the dollar comes under downwards pressure; ultimately, depending on other variables, it becomes less valuable in comparison to other currencies around the globe.
If this were the 1800’s, that wouldn’t matter. We were a domestic economy, producing domestically what we consumed domestically. But it’s not the 1800’s; we are a global economy that not only imports large quantities of essential products from overseas…..we have lost the ability to produce many of those essential domestically.
If the dollar buys less of something, US consumers (both end users and business consumers) pay more for that thing. This is inflationary; we start to pay more for……everything that’s not US produced. This is…..not good, especially for lower income and fixed income citizens, as they are most vulnerable.
And on a personal note, the citizen, in this scenario, becomes a prisoner in their own country. You’re not going to have very many vacations in Europe when a small, Euro-style room at a budget chain is $500 a night.
Nobody ever asks ‘can we afford it’ when it comes to military spending, or government healthcare, or the range of subsidies you get for being in the public service.
Hmmmm. Actually, people DO ask if we can afford it when it comes to military spending….but the hawks in both parties shout them down when we do. And when it comes to healthcare, the problem is that we actually CAN’T afford it, or will not be able to in a very few number of years into the future.
But let’s not digress. Inflation would exacerbate both of those matters, so “let’s crank up the printing presses” would force MORE military spending and make healthcare LESS affordable to the masses, so let’s be careful for what we wish for, shall we?
I think it wise to not engage in Money Mischief, lest we become the authors of our own demise.
Sovereign governments can never run out of money. Every dollar they spend is a new dollar going into the economy. If every government in the world paid off its debts tomorrow the entire economy would crash. Don’t believe the bullshit.
Right back atcha. Nobody is talking about “paying off all debts tomorrow”; that’s as big of a straw man that’s ever been created. Except for a small minority who are a bit deranged, deficit hawks want budgets to be on a glide path to balance over time, not to balance tomorrow. That’s why getting back to 3% GDP growth is so important. Without growth, there’s not only no balance…..ever….but the US will get to choose between inflation or markedly reduced social spending, as entitlements, debt service, and other hard commitments crowd out all other budgetary items.
What you’re doing here, quite unfortunately, is engaging in a logical fallacy; if A is bad (paying off all debts tomorrow) then B must be good (not worrying about the debt and just printing up money as we need it). The point here is that NEITHER of those two extremes is good, as both result in a different sort of insolvency.
There’s no win there. For anyone.