Professional Documents
Culture Documents
Great Advice...
.....Unless Everyone in the economy tries to follow it Paradox of Thrift Paradox of Deleveraging
I+G+X
Saving
Investment
Taxes
Government Spending
GDP
S+T+M
Imports
Exports
Customer Killers
Republicans say, "We have a spending problem!" Democrats say, "We have a revenue problem!"
Continued...
There is a ne line between solvency and insolvency Once the debt gets too high, creditors will grow weary They may downgrade your credit rating, and your borrowing costs may spike You could end up like Greece -- unable to pay your bills
http://www.stlouisfed.org/publications/re/articles/?id=2157
[A] government cannot become insolvent with respect to obligations in its own currency. A at money system, like the ones we have today, can produce such claims without limit
~Alan Greenspan, 1997
The modern monetary system is very different from one based on gold Banks create money out of thin air when they make a loan They are capital constrained
Banks do not lend other people's money Banks are not reserve constrained The US government is not nancially constrained like a household or a private business
"I'll wash Mitch McConnell's car. I'll walk John Boehner's dog." ~President Obama
CB&PP
Kelton's Chart!
Government Decit
Government
$$$
Non-Government
Their Decit is Our Surplus! or Their red ink is Our black ink!
There it is again!
It's not "printing" money (gold standard term) In the modern era, government spending is
accomplished through electronic keystrokes (Bernanke)
Money is No Object
As Chairman Bernanke explained on 60 Minutes in 2009: (PELLEY): Is that tax money that the Fed is spending? (BERNANKE): Its not tax money. We simply use the computer to mark up the size of the account.
A Common Reaction
Understandable! Pervasive distrust of government Afraid of what might happen if they discover they have this power
By looking down the list you can see what isnt there and, strikingly, what you dont see are any instances of central banks gone mad in otherwise-productive economies. As Cullen Roche says, hyperinflation is caused by many things, such as losing a war, or regime collapse, or a massive drop in domestic production. But one thing is clear: its not caused by technocrats going mad or bad.
http://blogs.reuters.com/felix-salmon/2012/09/03/why-you-wont-nd-hyperination-in-democracies/
Especially Oil
And, of course, private banks have a license to printand they do most of the printing
"Companies are awash with cash. And what they've been missing are enough customers out there to prompt demand and justify them investing in more plant and equipment." ~President Obama
CONGRESS
Same debt levels were sustainable when they had sovereign currency
Create Customers!
http://www.economist.com/blogs/freeexchange/2013/01/safe-asset-shortage
To Get There, We Need A Better Understanding of How Money, Decits and Debt Really Work
Thank Y
u!
@decitowl