[bootlegga]

BeaverFever BeaverFever:

Martin15 Martin15:

bootlegga bootlegga:

I'm willing to pay the taxes necessary to fund the services I want.

No you aren't.
That's the whole point behind government debt.
You want your gimmees today, but are not willing to pay for them.

So you sell out your family, your community and your country.

Martin thinks having schools hospitals and a functioning sewer system is a “gimme”. He also doesn’t understand that when the greedy conservatives he supports turn this place into a dysfunctional third world shithole, he's rhe one selling out his family community and country.

Not only that, but those very things that conservatives love cutting - education, healthcare, infrastructure maintainance, infrastructure construction, etc. - are the very reasons why corporations can make huge profits and make Canada one of the strongest economies in the world.

[uwish]

I am more worried about personal and business insolvency. I think that is going to be a huge driver in a few months. The stats are now $179 owing for every $100 earned. It isn't looking very good at all. When you consider small business employ > 50% of all working Canadians, if 50% of those go bust, things are going to get shitty very rapidly.

[bootlegga]

uwish uwish:

I am more worried about personal and business insolvency. I think that is going to be a huge driver in a few months. The stats are now $179 owing for every $100 earned. It isn't looking very good at all. When you consider small business employ > 50% of all working Canadians, if 50% of those go bust, things are going to get shitty very rapidly.

I agree with you, which is why I support Trudeau spending like a drunken sailor right now to help keep businesses open and people working (just like I did when Harper spent tens of billions keeping Canadians employed during 2009/10). I don't like the debt and future burden, but I do see it as necessary.

[Thanos]

bootlegga bootlegga:

uwish uwish:

I am more worried about personal and business insolvency. I think that is going to be a huge driver in a few months. The stats are now $179 owing for every $100 earned. It isn't looking very good at all. When you consider small business employ > 50% of all working Canadians, if 50% of those go bust, things are going to get shitty very rapidly.

I agree with you, which is why I support Trudeau spending like a drunken sailor right now to help keep businesses open and people working (just like I did when Harper spent tens of billions keeping Canadians employed during 2009/10). I don't like the debt and future burden, but I do see it as necessary.

Same. It's absolutely necessary. Spending now might increase the deficit and debt, but not spending would turn a really bad depression into a recession. I'm going to try hard to keep my mouth shut about taxes later on because I figure sometime next year or the year after we're going to have to put up with the GST being raised by 3 to 5% points. It's just the way it is. Austerity is not a solution for anything, except to the most demented of fiscal "conservative" minds, but a tax hike when the recovery eventually happens will be able to gain back most of what's been spent.

[BeaverFever]

A tax hike will be totally unnecessary and counterproductive. Tax increases would slow growth that’s the opposite of what you want to do n a post recession recovery.

[Thanos]

Liberals against tax hikes??!?!?!? What's next in this crazed topsy-turvy world, modern conservatives against Trump-grade moral perversity and tribalism?

[BeaverFever]

$1:

M.M.T. Shows the Trillion-Dollar U.S. Deficits Are OK

By Stephanie KeltonJune 9, 2020

Our country’s myth about federal debt, explained.

Dr. Kelton, an economist, is the author of “The Deficit Myth.”

Last week, a bipartisan group of 60 members of the U.S. House of Representatives sent a letter to congressional leadership, raising concerns about mounting debt and deficits that have come as a result of the federal government’s response to the coronavirus pandemic. “We cannot ignore the pressing issue of the national debt,” they wrote. The letter warned of “irreparable damage to our country” if nothing is done to stem the tide of red ink. Senator Mike Enzi, Republican of Wyoming, chairman of the Senate Budget Committee, echoed their concerns.

It’s an ominous sign for the smaller businesses and millions of unemployed Americans whose survival may very well depend on continued government support in this crisis. While these Democratic and Republican lawmakers stopped short of calling for immediate austerity measures, their remarks demonstrate that they have fallen prey to what I call the deficit myth: that our nation’s debt and deficits are on an unsustainable path and that we need to develop a plan to fix the problem.

As a proponent of what’s called Modern Monetary Theory and as a former chief economist for the Democrats on the Senate Budget Committee, intimately familiar with how public finance actually works, I am not worried about the recent multitrillion-dollar surge in spending.

But there was a time when it would have rattled me too.

I understand the deficit myth because in the early part of my career in economics I, too, bought into the conventional way of thinking. I was taught that the federal government should manage its finances in ways that resemble good old-fashioned household budgeting, that it should hold spending in line with revenues and avoid adding debt whenever possible.

Prime Minister Margaret Thatcher of Britain — President Ronald Reagan’s partner in the conservative revolution of the late 20th century — captured these sentiments in a seminal speech in 1983, declaring that “the state has no source of money other than the money people earn themselves. If the state wishes to spend more, it can only do so by borrowing your savings or by taxing you more.”

That thinking sounds reasonable to people, including me when I first absorbed it. But Mrs. Thatcher’s articulation of the deficit myth concealed a crucial reality: the monetary power of a currency-issuing government. Governments in nations that maintain control of their own currencies — like Japan, Britain and the United States, and unlike Greece, Spain and Italy — can increase spending without needing to raise taxes or borrow currency from other countries or investors. That doesn’t mean they can spend without limit, but it does mean they don’t need to worry about “finding the money,” as many politicians state, when they wish to spend more. Politics aside, the only economic constraints currency-issuing states face is inflation and the availability of labor and other material resources in the real economy.

It is true that in a bygone era, the U.S. government didn’t have full control of its currency. That’s because the U.S. dollar was convertible into gold, which forced the federal government to constrain its spending to protect the stock of its gold reserves. But President Richard Nixon famously ended the gold standard in August 1971, freeing the government to take full advantage of its currency-issuing powers. And yet, roughly a half-century later, top political leaders in the United States still talk as Ms. Thatcher did and legislate as though we, the taxpayers, are the ultimate source of the government’s money.

In 1997, during my early training as a professional economist, someone shared a little book titled “Soft Currency Economics” with me. Its author, Warren Mosler, a successful Wall Street investor, argued that when it came to money, debt and taxes, our politicians (and most economists) were getting almost everything wrong. I read it and wasn’t convinced. One of Mr. Mosler’s claims was that the money the government collects isn’t directly used to pay its bills. I had studied economics with world-renowned economists at Cambridge University, and none of my professors had ever said anything like that.

In 1998, I visited Mr. Mosler at his home in West Palm Beach, Fla., where I spent hours listening to him explain his thinking. He began by referring to the U.S. dollar as “a simple public monopoly.” Since the U.S. government is the sole issuer of the currency, he said, it was silly to think of Uncle Sam as needing to get dollars from the rest of us.

My head spun. Then he told me a story: Mr. Mosler had a beautiful beachfront property and all the luxuries of life anyone could hope to enjoy. He also had a family that included two teenagers, who resisted doing household chores. Mr. Mosler wanted the yard mowed, the beds made, the dishes done, the cars washed and so on. To encourage them to help out, he promised to compensate them by paying for their labor with his business cards. Nothing much got done.

“Why would we work for your business cards? They’re not worth anything!” they told him. So Mr. Mosler changed tactics. Instead of offering to compensate them for volunteering to pitch in around the house, he demanded a payment of 30 of his business cards, each month, with some chores worth more than others. Failure to pay would result in a loss of privileges: no more TV, use of the swimming pool or shopping trips to the mall.

Mr. Mosler had essentially imposed a tax that could be paid only with his own monogrammed paper. And he was prepared to enforce it. Now the cards were worth something. Before long, the kids were scurrying around, tidying up their bedrooms, the kitchen and the yard — working to maintain the lifestyle they wanted.

This, broadly speaking, is how our monetary system works. It is true that the dollars in your pocket are, in a physical sense, just pieces of paper. It’s the state’s ability to make and enforce its tax laws that sustains a demand for them, which in turn makes those dollars valuable. It’s also how the British Empire and others before it were able to effectively rule: conquer, erase the legitimacy of a given people’s original currency, impose British currency on the colonized, then watch how the entire local economy begins to revolve around British currency, interests and power. Taxes exist for many reasons, but they exist mainly to give value to a state’s otherwise worthless tokens.

Coming to terms with this was jarring — a Copernican moment. By the time I developed this subject into my first published, peer-reviewed academic paper, I realized that my prior understanding of government finance had been wrong.

In 2020, Congress has been showing us — in practice if not in its rhetoric — exactly how M.M.T. works: It committed trillions of dollars this spring that in the conventional economic sense it did not “have.” It didn’t raise taxes or borrow from China to come up with dollars to support our ailing economy. Instead, lawmakers simply voted to pass spending bills, which effectively ordered up trillions of dollars from the government’s bank, the Federal Reserve. In reality, that’s how all government spending is paid for.

M.M.T. simply describes how our monetary system actually works. Its explanatory power doesn’t depend on ideology or political party. Rather, the theory clarifies what is economically possible and shifts the terrain of policy debates currently hamstrung by nagging questions of so-called pay-fors: Instead of worrying about the number that falls out of the budget box at the end of each fiscal year, M.M.T. asks us to focus on the limits that matter.

At any point in time, every economy faces a sort of speed limit, regulated by the availability of its real productive resources — the state of technology and the quantity and quality of its land, workers, factories, machines and other materials. If any government tries to spend too much into an economy that’s already running at full speed, inflation will accelerate. So there are limits. However, the limits are not in our government’s ability to spend money or to sustain large deficits. What M.M.T. does is distinguish the real limits from wrongheaded, self-imposed constraints.

An understanding of Modern Monetary Theory matters greatly now. It could free policymakers not only to act boldly amid crises but also to invest boldly in times of more stability. It matters because to lift America out of its current economic crisis, Congress does not need to “find the money,” as many say, in order to spend more. It just needs to find the votes and the political will.

Stephanie Kelton, a professor of economics and public policy at Stony Brook University, is the author of “The Deficit Myth,” from which this essay was adapted.

https://www.google.ca/amp/s/www.nytimes ... s.amp.html

[BeaverFever]

Another great explanation on this blog (excerpt below)

https://pluralistic.net/2020/05/14/ever ... ficit-myth

$1:

Modern monetary theory is an economic lens for understanding how money works. It starts from the commonsense assertion that national governments are money-issuers, and the rest of us are money users, and that money works differently when you are in charge of creating it.

But this challenges accepted wisdom, like the idea that national deficits cause inflation and saddle our descendants with debt. If governments are the source of money, then they don't tax us in order to spend. They spend (which puts money into the economy) and then tax back.

If the government runs a "balanced budget" that means it's taxing as much money of out existence as it is spending into existence, leaving behind no money for the rest of us to save or spend. Balanced budgets starve the private sector of the money it needs to operate.

When that happens, banks create private money (lending money that they don't have on deposit, something that they are allowed to do as part of their deal with the national government), and then they get to charge interest for those loans.

So the finance sector hates public money – which benefits everyone – and loves private money – which benefits them. But of course, banks inevitably overspend and since they aren't national governments, they risk defaulting, so they need public money to bail them out.

Governments can't default on debts owed in currencies they issue. They just type more zeroes into a spreadsheet at the national bank and they can pay off any debt they want. They are not "monetarily constrained."

The constraint on governments is resources, not money. If the government tries to buy things the private sector is using, it gets into a bidding war and prices go up. That's inflation.

Likewise, if the private sector has too much money, it bids against itself and again, prices go up – inflation (think of the 2008 crisis, when banks created too much money and we got a speculative housing bubble, leaving governments to create money to bail them out)....