There is no shortage of money

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Thom, I was surprised that Bernie Sanders still subscribes to the neoclassical economics that says government must borrow money, and close the deficit, etc. He expressed that worry in today's closing of his segment, and you didn't correct him.

Where do you think we get the money? Government makes it... out of nothing. There are no commodities backing it, so we don't have to wait until they mine the gold, or catch the cowrey shells, or carve the giant Easter Island heads before we can issue dollars. The dollar is not constrained by a fixed exchange rate, or by treaty, as the euro is.

In fact the entire mechanism by which the U.S. government "borrows" money is a vestige of those old, commodity-backed money days. It is entirely unnecessary. The government does not have to wait for gold miners, or Chinese investors, or even tax collections to make money. It can make as much as it wants any time it wants. It could literally mint a few trillion-dollar coins and retire the entire debt tomorrow.

The government "debt" is even a bizarre use of that word. Families know what "debt" means, but how many families can (legally) mint the money to pay it? Government can. The entire "sky-is-falling-and-we-have-a-deficit" meme is designed to keep inflation completely off the table, and ensure creditors can collect every last nickel they're owed by debtors, no matter how fraudulent the loan.

And what I'm saying is not theoretical, it's already happened. Thanks to the recent audit of the U.S. Central Bank ("The Fed"), we know The Fed issued $16 - $29 trillion to cure the financial system's collapse in the wake of Lehman's bankruptcy. For a sense of proportion: That's more than one year's U.S. GDP. For only $9 trillion, they could have paid off everyone's mortgage.

So the big question is not "Aren't we running out of money?"... That's absurd. It's as ridiculous as asking the scorekeeper in a sporting event if he expects to run out of points.

No, the big question is "Why do the banksters, who crashed the economy, get trillions at the drop of a hat, while safety net programs and revenue sharing with the states get the shaft?" BTW, Paul Krugman will tell you that when you subtract state and local contraction from the Obama "stimulus" ($800 billion, chump change really), there was no net government stimulus.

We don't need to wait for the tooth fairy to bring us more money, we simply have to change our minds about issuing it, or change The Fed's directorate. I'm surprised you haven't come to this conclusion yourself since I saw you interview this century's Keynes, Steve Keen, a Modern Monetary Theorist (MMT economist) who would tell you exactly what I've said above.

Imagine Money as a tool for public service, not an instrument of the banksters... at least in a real democracy / republic that is.

Incidentally, before you get swamped with people horrified that we might spark some awful inflation by issuing currency without borrowing or taxing, remind them that it's been five years since The Fed issued that $16 - $29 trillion. Where's the inflation? Their claim is like the theory that the magical "job creators" will be daunted by regulations and taxes. Corporate profits are at 60-year highs, and corporate tax collections are at 60-year lows. Where are the jobs?

Just FYI, the feared hyperinflation traditionally occurred when there was no slack in post World-War-I Germany's, or post-colonial Zimbabwe's economy. Their productive capacity was at its limit, and Germany had reparations to the allies.

Please get the word out about this. The emporer, and The Fed, have "no clothes."

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adameran
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Jul. 31, 2007 4:01 pm

Comments

The government "can" make it but instead they borrow it from the Federal Reserve Bank, which is privately owned, who actually makes it out of thin air. We are beholding to ficticious money being lent out. I'm waiting for somebody with the cajones to take the bank to court in reference to being forced to pay back real, labor earned money for the counterfeit digital money they received in a loan.

Bush_Wacker's picture
Bush_Wacker
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Jun. 25, 2011 7:53 am
Quote Bush_Wacker:

being forced to pay back real, labor earned money for the counterfeit digital money they received in a loan.

Did you receive a good or service from that loan? If so it is not counterfeit you exchanged your labor over time for a good or service you needed or wanted right now. It is a choice no one forces you to take these loans it is your economic decision.

CollegeConservative's picture
CollegeConservative
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May. 4, 2012 2:22 pm

It is is all so simple when you remove the humanity and just count the money. Nothing about moral context need be applied. Nobody gets swindled and nobody is stupid enough to bet the farm. These things would never occur in a world of moral exchange!

drc2
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Apr. 26, 2012 12:15 pm

Im sorry but it is not the governments responsibility to save you from your mistakes and ill fortune thats life its not fair.

CollegeConservative's picture
CollegeConservative
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May. 4, 2012 2:22 pm
Quote CollegeConservative:
Quote Bush_Wacker:

being forced to pay back real, labor earned money for the counterfeit digital money they received in a loan.

Did you receive a good or service from that loan? If so it is not counterfeit you exchanged your labor over time for a good or service you needed or wanted right now. It is a choice no one forces you to take these loans it is your economic decision.

Hell no I didn't. I exchanged a good or a service for money which I used to REPAY the loan. All the bank did was add a couple of digits to my checking account. Go back to college.

Bush_Wacker's picture
Bush_Wacker
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Jun. 25, 2011 7:53 am

You took out the loan to pay for education a car a house or something u needed or wanted didnt u?

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CollegeConservative
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May. 4, 2012 2:22 pm

CC: You don't really believe that bullshit you're spouting, do you? Keep spouting though. You're helping fertilize the minds of all the reasonable people who stroll through Thom's pasture. Nothing goes to waste. It's all good.

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Laborisgood
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Jul. 31, 2007 4:01 pm

How is that bs Yyou only take out a loan to pay for a product u do not have the means currently to pay for. The banks dont force you to take the loans you sign a contract and you are responsible for holding that contract or i will seize the equity you purchased with my money wether it be a car or a house. Untill you pay back the loan you are putting up your possesions as collateral if you cant pay. Nothing Im saying here is radical its how the banking and economic system works.

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CollegeConservative
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May. 4, 2012 2:22 pm
Quote CollegeConservative:

Nothing Im saying here is radical its how the banking and economic system works.

Your use of the word "works" is such a benign way of describing how we pay through the nose for "goods and services" minus the humanity and morality necessary to ascribe meaningful value to them. Yes, that is how the system works. Keep spouting CC.

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Laborisgood
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Jul. 31, 2007 4:01 pm

if there was no profit in lending why would anyone take the risk and lend?

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CollegeConservative
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May. 4, 2012 2:22 pm
Quote CollegeConservative:

if there was no profit in lending why would anyone take the risk and lend?

If there WERE...

I've always been taught that it is also acceptable to say "If there BE..."

chilidog
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Jul. 31, 2007 4:01 pm
Quote adameran:

Just FYI, the feared hyperinflation traditionally occurred when there was no slack in post World-War-I Germany's, or post-colonial Zimbabwe's economy. Their productive capacity was at its limit, and Germany had reparations to the allies.

What is the idled productive capacity in the USA? I see lots of empty tables at Applebee's but I don't see how you make that "productive." Unless we pay foreigners to visit us for tourism.

chilidog
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Jul. 31, 2007 4:01 pm
Quote CollegeConservative:

if there was no profit in lending why would anyone take the risk and lend?

That's the whole point. What is the risk if you aren't really loaning your own assets? The bank sits on 1 million dollars of other people's money and they can loan upwards of 10 million dollars based on that money that's in the bank. They are risking you not paying back something that they didn't really have in the first place.

If you or I loan somebody some money, it's real money that belonged to us. Banks don't have that worry. If you take out a loan for $500 dollars from a bank, the bank just adds $500 dollars to your account with a few key strokes. Now you go and buy $500 dollars worth of food at the grocery store with your debit card. The bank adds $500 dollars to the grocery store's account. There's no real money anywhere to be seen. You however must work or sell an asset in order to get real money to pay back the loan. The only real money involved is the money YOU earn. The bank gets back real money in exchange for their key strokes.

I am in no way shape or form saying that you should ever default on a loan. I have never missed a mortgage payment or loan payment in my life nor will I ever. I'm just trying to get people to understand how the system works. To me it's a big scam that falls on the shoulders of anyone who takes out a loan. Whether that be an individual or a business. That's why bankers rule the world.

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Bush_Wacker
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Jun. 25, 2011 7:53 am

No its not the bank pays you to use your money for these loans thats why we receive intrest payments in the first place. The whole key stroke analogy doesnt really fit because there are finances being exchanged the reason it seems like nothing because our currency has no intrinsic value outside of what the government says it does. For example you have to buy a house with cash it is illegal for me to pay you in gold, why is that? Is it because they want us beholden to a monetary system that they directly control through the fed and the treasury ?

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CollegeConservative
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May. 4, 2012 2:22 pm

The bank doesn't loan YOUR money. It remains in your bank account.. They loan money by simply crediting other accounts with money. For every buck in an account, they can create 9 bucks in additional accounts with a simple accounting entry. It's called fractional reserve banking.

The entire money supply is based on debt. No debt....no money..

The federal government creates money in the same way. It borrows it into existence. It could just spend it into existence.

If money created exceeds the productive capacity of the nation, we have inflation. That's so whether it's borrowed into existence or spent into existence.

Sovereign nations don't have to borrow their own currency into existence....and they haven't always done that. In the historical time-line, it's a fairly recent development.

Retired Monk - "Ideology is a disease".

polycarp2
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Jul. 31, 2007 4:01 pm

Then maybe it would be preferable to ground our currency in something like gold or silver

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CollegeConservative
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May. 4, 2012 2:22 pm

Why? When Spain issued nothing but gold coins, it plunged into inflation and a stagnant economy that lasted for two centuries. Circulating money and the production of stuff have to be equal. Anything can be used as money as long as that's kept in mind.

Get an education from somewhere other than bankster propaganda.. World class economist Michael Hudson is a beginning:

http://www.youtube.com/watch?v=5hCB4iazb9E

If you want a march into what Hudson appropriately calls, "neo-feudalism"...stay the course. The pied pipers of the two wings of the Corporate/Financial Party are leading you right to it...Same thing the several wings of the Corporate/Financial European Party are doing in Europe...

.Retired Monk - "Ideology is a disease"

polycarp2
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Jul. 31, 2007 4:01 pm

ok so i guess 2000 years of gold being used as perfered currency doesnt mean anything?

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CollegeConservative
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May. 4, 2012 2:22 pm

I suppose it's not impossible for an economy to re-experience Spain's problem: We could discover gold on our moon, or some other moon, and then the supply of gold suddenly explodes.

chilidog
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Jul. 31, 2007 4:01 pm
Quote CollegeConservative:

ok so i guess 2000 years of gold being used as perfered currency doesnt mean anything?

poly replies: Anything can be used as money as long as the amount of it circulating doesn't exceed the production of stuff to buy with it. One of Englands most prosper periods (several centuries) is when it used notched sticks called chits.

Rome's most prosperous period was when it used cheap copper coins. When it switched to gold, the circulating money supply shrank and the economy tanked.

Retired Monk - "Ideology is a disease"

polycarp2
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Jul. 31, 2007 4:01 pm

What happens when you can't discover any new gold? Doesn't that now limit growth? If the available monetary wealth cannot expand then eventually it all ends up in the hands of the few. Once wealth is limited then production is limited. How does that work in an ever expanding population? 1 gazillion dollars divided by 1 gazillion people doesn't bode too well for the populace.

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Bush_Wacker
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Jun. 25, 2011 7:53 am

The government does not create our money supply. it is the private banks that create our money supply, and they do it by loaning it into circulation, so all that created money is chased by debt. Do not allow the private bank to have a hand in the central banks, and suddenly al the profits they reap through these arrangements are back in the economy.

hans nel
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Jul. 31, 2007 4:01 pm
Quote Bush_Wacker:

What happens when you can't discover any new gold? Doesn't that now limit growth? If the available monetary wealth cannot expand then eventually it all ends up in the hands of the few. Once wealth is limited then production is limited. How does that work in an ever expanding population? 1 gazillion dollars divided by 1 gazillion people doesn't bode too well for the populace.

That shouldn't be a problem if a loaf of bread that cost 0.00002% of 1 gazillion dollars last year, will cost 0.00001% next year.

My wage might not change, but my purchasing power should increase due to my increased productivity (if applicable.)

The problem is that the wage of next year's inexperienced new hire must be less than the wage of last year's inexperienced new hire.

People like inflation.

chilidog
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Jul. 31, 2007 4:01 pm