Many people believe that the federal government needs to tax or borrow to spend. It does not. The people running the 13 colonies Sort of knew that before the American Revolution when they created fiat money, I think.
But lately, MMT — Modern Monetary Theory — has come to our attention and points out that the government spends and then taxes — or doesn’t — to balance the economy in the favour of special interest groups instead of the country’s needs. This video is an Australian professor talking about that and other Australians are also promoting it including Steve Keen and Bill Mitchell. There are prominent Americans also promoting these ideas. Have you heard of it, looked into it, and do you understand it? The implications are profound it seems to me.
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Feel free to reply to any comment by clicking the "Reply" button.You may note that even while Trump has been touting the economy as being so wonderful, he has also cowed the Fed into reducing rates.
First, the tax breaks Trump gave to the wealthy were like a shot of heroin, stimulating the economy momentarily, but boosting the deficit bigly.
Second, the reduced Fed rates are also hugely stimulatory, but undercut the Fed's ability to fight the recession when it comes. The Fed rate is what nibbles away at the deficit, but can only be applied when the economy can sustain it. Forcing the Fed to lower the rate is more Trump manipulation for his own personal benefit, at the expense of the country.
The Fed rate is what controls the amount of money supply for the world, including Australia. When the Fed is manipulated politically, the rest of the world suffers along with the US.
The other reality is the unbelievable stupidity of pretty much everyone in believing Trump and the GOP haven't lied about the economy as they have about everything else.
racocn8
Level 9
Dec 22, 2019
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@ToolGuy OK...
Why this guy is wrong...
Steven Hall talks about how Australia has the highest household debt, but doesn’t say why this is a problem. It does suggest that Australians are overconfident about their ability to repay that debt, and perhaps they’ve been misled by their politicians and their gov’t policies. Where's the press?
At one point, Hall claims that governments invented money. Money certainly has a long history, but currently, it is the banking system that creates and manages money and continues to do so. The Fed is not part of the government. Governments do not control interest rates through bond sales. The banking systems control interest rates. Maybe Australia is different, but I doubt it.
36:16 There isn’t any government debt (in Australia). If that’s so, they needn’t be paying interest to the banks. They do, so, yes, there is indeed government debt in Australia.
Governments become insolvent when the currency is deemed by the citizenry to be worthless and resort to bartering. So in that sense, a government can indeed run out of money or max out its credit card. If a government overspends to the point of spooking its citizens, yes, any government can run out of money.
42:40 You better believe the rest of the world will be hurting when the US financial system collapses because it ran out of money. Steven Hall says hyperinflation isn’t worth worrying about. Wrong. If, for whatever reason, Saudi Arabia or China start dumping dollars, you can be sure Australia will be hurting along with the U.S.
Hall goes on to say that Australia does, must and should run a government deficit. Wrong. That would only be right if you wanted your tax dollars going to pay more and more interest to the banks. Indeed, Hall denounces Clinton for seeking to pay down the U.S. debt, but this absurd canard is but an example of Hall’s political bias. Political bias is the biggest degrader of economic theory; Milton Friedman being among the most disingenuous.
And that’s the problem with economic ‘theory’. It has no grasp of technology’s contribution and it is consistently biased based on (mainly right-wing) politics. At the same time, Hall does have it right when he says that taxes should increase for redistributive purposes. Wealth inequity is the major fundamental structural problem that needs to be addressed to prevent abuse of financial power and corruption of government institutions.
Full employment? Good luck with that!! Increasing government deficits don’t burden future generations? Absurd.
Wealth primarily comes from the effective application of new technology, not from gross domestic production of common goods. Wealth disparity comes from unfair tax and tax evasion policies, coupled with familial dissemination of wealth with interest.
Note Australia’s near absence in this page:
[en.wikipedia.org]
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