What is money?
Money is credit. Any of us can create money, the problem is getting it accepted, because always and everywhere money is a credit-debt relationship. It is a promise to pay someone back and is only good if that promise is upheld. The most acceptable form of money is a debt or IOU of the state. Bank money is usually the next most acceptable form of money. Taxes are what create a demand for state money, because state money is needed to pay taxes. If the taxing power of the sovereign state is sabotaged, or there is widespread tax evasion, then demand for money falls apart and inflation goes haywire.
Where does money come from?
It essentially comes from nowhere. It is an agreed upon debt-credit relationship. Governments who are monopoly issuers of their own currency and who tax in that currency literally create money out of nowhere. It is not so much 'printing money' as it is 'changing numbers in bank accounts'.
What about government debt?
TOTAL US DEBT = TOTAL DOLLAR SAVINGS
Deficit Reduction Takes Away Our Savings, SO PLEASE DON’T TAKE AWAY OUR SAVINGS!
Yes, it’s called the national debt, but US Treasury securities are nothing more than savings accounts at the Federal Reserve Bank.
The Federal debt IS the world’s dollars savings- to the penny!
The US deficit clock is also the world dollar savings clock- to the penny!
And therefore, deficit reduction takes away our savings. SO PLEASE DON’T TAKE AWAY OUR SAVINGS!
A GOVERNMENT SURPLUS IMPLIES A DEFICIT IN THE PRIVATE SECTOR. And the private sector, unlike the public sector, cannot survive when it’s running a deficit.
Government Deficits allow the private sector to net save financial assets. Balance the budget, and the private sector loses financial assets. Run a government surplus, and you drive the private sector into deficit.
Can the government go bankrupt?
No sovereign government that issues its own currency can go bankrupt, without voluntarily declaring it.
There is NO SUCH THING as a long term Federal deficit problem.
The US Government CAN’T run out of dollars.
US Government spending is NOT dependent on foreign lenders.
The US Government can’t EVER have a funding crisis like Greece-
there is no such thing for ANY issuer of its own currency.
The risk of too much spending when we get to full employment
is higher prices, and NOT insolvency or a funding crisis.
It can default on payments voluntarily.
Is the U.S. facing a fiscal debt crisis like Greece?
The U.S. government cannot be compared to Greece or any other nation that is not sovereign in its own currency.
Members of the EU are more comparable to U.S. state and local governments who can go bankrupt because they do not issue their own currency.
So any politician who says we need to have more responsible government finances or we will end up like Greece is making a useless comparison.
What is Quantitative Easing?
It is an asset swap. It is not “printing money” and it is not a very good anti-recession strategy. Quantitative easing merely involves the central bank buying bonds (or other bank assets) in exchange for deposits made by the central bank in the commercial banking system – that is, crediting their reserve accounts. So quantitative easing is really just an accounting adjustment in the various accounts to reflect the asset exchange. The commercial banks get a new deposit (central bank funds) and they reduce their holdings of the asset they sell
What is a gold standard?
What gives money its value?
What causes hyperinflation?
A Ph.D. student's perspective on Catholic Social Teaching and economics.
