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Balancing the Budget Wouldn't Be That Difficult

I’m not feigning ignorance at all. In fact, I will readily admit to being much more knowledgeable on this subject than yourself.
😂
I’m not sure you really understand how questions work. They aren’t something one ‘believes.’

Also, I generally find ableist slurs in poor taste. Though I suppose if it is a reappropriation of the term, that’s alright.
I can’t take someone who thinks trillion dollar deficits aren’t a problem seriously.
 
I’m schooling you on where it comes from, and why it’s not infinite and why you can’t print your way out of debt. But, as an MMT proponent, you dwell outside fiscal and economic reality.

School me one more time, please, and explain where money comes from, and why it's finite. I must have missed it the first time you explained it.
 
Basic overview


Ah. Investopedia, the Picture Dictionary of economics. Not a great source of information.

But they are correct on some of what they say. The Fed does create reserves by buying bonds (or other assets) by marking up the reserve accounts of banks, thus creating new reserves. (No mention of any limitations here, btw.)

Where they get it wrong, very wrong, is their claim that banks then go on to lend out these reserves. They do not. Reserves are used for interbank settlement, and for satisfying customer demands to hold cash. That's it. Banks create new M1 money by creating loans 100% from credit. Reserves play no role here until it's time for interbank settlement. Banks create new money much like the Fed does - by buying assets in return for account balances. You get a loan, the bank buys your promissory note.


Here is another good article that explains away the fractional reserve idea pretty clearly. Carney gets into capital requirements, reserve requirements (written when we still had one), and bank accounting in general.


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The reason I'm going through all of this trouble is to establish (for the sake of the thread) that money is not a limited resource, and it's pretty easy to create, both by the government and by banks.

Nor is the money in our bank accounts somehow "recycled" into the economy. It just sits there (just numbers, really) until we decide to spend it. It's important to understand that the income we don't spend or invest does nothing for the economy, and is in fact a demand leakage.

This matters when you consider the circular flow of income in the investment-production-consumption cycle. The money that moves through the economy, buys our stuff, pays our bills, and invests in future production comes from our past production, which is our income. If we spend 100% of our income on consuming our production, that's enough for 0% growth, a steady state - but we never spend 100% of our income. We save some of our income, which is good for the individual who is saving, but bad for the economy in the aggregate. That lost demand must be made up for, through increased private sector debt, federal deficit spending, or both. That's how we grow the economy; and here in the U.S., where we always run a significant trade deficit, federal deficit spending is an absolute necessity.

That's why I said earlier that no matter how you shuffle around tax burdens and spending within a balanced budget, you are still going to end up killing the economy. Certainly there are better tax-and-spend options to talk about, options that give us the greatest benefits for the least tax burden, but you still need that deficit for the sake of maintaining/growing GDP.
 
Ah. Investopedia, the Picture Dictionary of economics. Not a great source of information.

But they are correct on some of what they say. The Fed does create reserves by buying bonds (or other assets) by marking up the reserve accounts of banks, thus creating new reserves. (No mention of any limitations here, btw.)

Where they get it wrong, very wrong, is their claim that banks then go on to lend out these reserves. They do not. Reserves are used for interbank settlement, and for satisfying customer demands to hold cash. That's it. Banks create new M1 money by creating loans 100% from credit. Reserves play no role here until it's time for interbank settlement. Banks create new money much like the Fed does - by buying assets in return for account balances. You get a loan, the bank buys your promissory note.


Here is another good article that explains away the fractional reserve idea pretty clearly. Carney gets into capital requirements, reserve requirements (written when we still had one), and bank accounting in general.


*************************************************

The reason I'm going through all of this trouble is to establish (for the sake of the thread) that money is not a limited resource, and it's pretty easy to create, both by the government and by banks.

Nor is the money in our bank accounts somehow "recycled" into the economy. It just sits there (just numbers, really) until we decide to spend it. It's important to understand that the income we don't spend or invest does nothing for the economy, and is in fact a demand leakage.

This matters when you consider the circular flow of income in the investment-production-consumption cycle. The money that moves through the economy, buys our stuff, pays our bills, and invests in future production comes from our past production, which is our income. If we spend 100% of our income on consuming our production, that's enough for 0% growth, a steady state - but we never spend 100% of our income. We save some of our income, which is good for the individual who is saving, but bad for the economy in the aggregate. That lost demand must be made up for, through increased private sector debt, federal deficit spending, or both. That's how we grow the economy; and here in the U.S., where we always run a significant trade deficit, federal deficit spending is an absolute necessity.

That's why I said earlier that no matter how you shuffle around tax burdens and spending within a balanced budget, you are still going to end up killing the economy. Certainly there are better tax-and-spend options to talk about, options that give us the greatest benefits for the least tax burden, but you still need that deficit for the sake of maintaining/growing GDP.
MMT proponents are almost as ignorant as libertarians.

Money isn’t infinite. You can’t print your way out of debt. And yes, the US debt is real debt.

Otherwise, let’s just eliminate all forms of taxation, and triple the annual budget. Let’s spend 25 trillion a year. After all, money is infinite and it’s not real debt. 😂
 
MMT proponents are almost as ignorant as libertarians.

Money isn’t infinite. You can’t print your way out of debt. And yes, the US debt is real debt.

So how much money is there? If we are going to hit that limit, it sure would be great if you could give us some insight into that number.

Otherwise, let’s just eliminate all forms of taxation, and triple the annual budget. Let’s spend 25 trillion a year. After all, money is infinite and it’s not real debt. 😂

There's another poster who gives this same flip answer - Fletch. You are in good company.
 
So how much money is there? If we are going to hit that limit, it sure would be great if you could give us some insight into that number.

There's another poster who gives this same flip answer - Fletch. You are in good company.
Why can’t we eliminate all taxes and just spend 25 trillion dollars annually?
 
Why can’t we eliminate all taxes and just spend 25 trillion dollars annually?

I've answered this before. Because demand would swamp the domestic economy's ability to meet demand.
 
I've answered this before. Because demand would swamp the domestic economy's ability to meet demand.
How? We have infinite money to build as many factories as we need to meet the demand. Money is infinite. It’s not debt. We can print as much money as we want to fund any and all projects we want to build as many production facilities that we want to meet whatever demand we have.

See where the fiscal stupidity breaks down for your ideology?
 
How? We have infinite money to build as many factories as we need to meet the demand. Money is infinite. It’s not debt. We can print as much money as we want to fund any and all projects we want to build as many production facilities that we want to meet whatever demand we have.

See where the fiscal stupidity breaks down for your ideology?

I'm seeing some stupidity, but it's not mine.

Real resources - labor, materials, energy, expertise - are finite. Money is not.

Look, I've been patient with your dumb questions up to this point. You obviously don't know enough to be a serious part of this debate, yet you throw around insults and make wild, unsupported assumptions as if you do.

Read up on the subject. I've provided five or six very good papers that would help anyone understand how money works. Use some critical thinking skills to integrate what you read into a coherent body of knowledge, then come back and we can talk.
 
I'm seeing some stupidity, but it's not mine.

Real resources - labor, materials, energy, expertise - are finite. Money is not.

Look, I've been patient with your dumb questions up to this point. You obviously don't know enough to be a serious part of this debate, yet you throw around insults and make wild, unsupported assumptions as if you do.

Read up on the subject. I've provided five or six very good papers that would help anyone understand how money works. Use some critical thinking skills to integrate what you read into a coherent body of knowledge, then come back and we can talk.
Nope. Since money is infinite and debt doesn’t exist, we can print as much money as we want and build as many factories as we want to produce what we need. And we also won’t have to pay taxes anymore!!!!!

You should publish an economic paper. This is revolutionary. Every nation on earth for all of human history has been getting it wrong. You will get a Nobel for sure!
 
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