Yes it is natural to get very angry when you realize that your country is run by a criminal banking cartel and your currency is simply an electronic ponzi scheme.
I appreciate Warren Mosler in getting the word out, educating people on how fiat currency and currency issuers is simply old fashioned debt slavery practiced for thousands of years by European Kings and Queens.
I wonder if we will have another Victor Hugo and Awaking on the masses to how there is no democracy in bank run capitalism.
When the truth about Santa Claus is revealed, some kids make a quick assessment and start working on mom and dad and continue to grow; others however, get stuck in a permanent temper tantrum forever blaming and fearful of any authority.
If US government debt boomed since 2008, yet demand is low still because of the recession, does that mean when the recession comes to an end or fades off, the economy should come back much, much stronger because of all the new money now in existence?
All of that debt equals our savings, right? So at some point when things look brighter for the private sector, shouldnt it go on a spending binge?
Tom and Leverage,
Spending equals income. Income is taxed. Taxes function to regulate aggregate demand and control inflation. So increased private sector spending will result in increased taxes, not to mention lower govt spending on unemployment and other safety nets. Both will act to control inflation. I think your inflation fears are not well thought out.
‘Fiscal space’ as the semantic solution in the article, is too vague. Sounds like ‘the bridge to the 21st century’.
Instead, simply start talking about the ‘inflation tax’. The inflation tax is real AND intuitive. See Keynes’ famous quote about it.
So, government spending equals actual tax revenues, plus the inflation tax, plus a possible free lunch from any existing output gap, plus another free lunch from foreign governments pursuing mercantilist policies.
Wait, what? So they don’t just shred you’re tax money. ;)
Having said that I do wish people would clearly state when they are telling ‘lies to children’. Otherwise it’s very hard to tell what’s actual fact and what’s a simplification to help explain a concept.
“yes they can/do/would” (create money out of thin air)
As a matter of interest, how “would” they? (We know that they both can and do, now – but we don’t have full-reserve banking now).
If the intent were that no loan which created money (ie wasn’t backed by funds already owned) was to be legally permitted – given also that to take demand deposits onto banks’ balance-sheet were also prohibited – how would they then be able to create money?
Or are you really just saying that they’d break the law?
Well, as an slightly off-beat way of looking at it, I think that the banks do not create money out of thin air, it is the customer that walks into the bank requesting the loan that creates the money out of thin air, by signing a contract to pay a certain amount of money over a certain amount of time, and he backs that contract with his labour.
in longhand – after customer signs the loan agreement, the bank swaps a nominal contract for labour (the loan/loan agreement) for bearer contracts for labour (the government dollar bills) at parity, and then deposits the dollar bills in the customer deposit account.