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View Diary: Government Financial Asset Addition = “Deficit”; and More (12 comments)

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  •  Receipt for runaway inflation (0+ / 0-)
    monetarily sovereign governments always have unlimited power to issue currency

    A conservative is a man with two perfectly good legs who, however, has never learned how to walk forward. Franklin D. Roosevelt

    by notrouble on Wed Dec 26, 2012 at 01:41:26 PM PST

    •  Receipt? Maybe recipe, but that's wrong, too. (2+ / 0-)
      Recommended by:
      psyched, Letsgetitdone

      Or are you going to go all Weimer-Zimbabwe on us? That get's so old. You do know, don't you, that the supply shock led to the hyperinflation that led to the rampant money printing? You do know that most people have zero understanding of this and get the whole thing just exactly backwards, don't you?

      •  recipe... (0+ / 0-)

        god damn spelling police. I spell it wrong and auto-correct makes it worse. It doesn't make you look smart to correct anyones spelling or grammar. It mostly makes you look like an...

        Please define currency and what gives it value. Describe, in detail, how increasing the available amount of a currency can not effect its value. There is this certain subset of the left that seems to have this odd view, I'd almost describe it as the equal and opposite of "voodoo economics."

        A conservative is a man with two perfectly good legs who, however, has never learned how to walk forward. Franklin D. Roosevelt

        by notrouble on Wed Dec 26, 2012 at 08:01:17 PM PST

        [ Parent ]

        •  See (2+ / 0-)
          Recommended by:
          psyched, Old Surgeon

          notrouble, please see: here, here, here, here, and here. All your objections are answered.

        •  Some answers (0+ / 0-)

          Currency is government debt which can be used to pay taxes or make other payments to the government.

          Of course MMTers agree that if the unlimited power to issue currency is used in an unlimited way, the value of the currency will collapse. But that is not what happens in the real world. Hyperinflation is a rare phenomenon. Hyperinflation coming from reckless money printing is vanishly rare, maybe nonexistent.

          What happens in the real world is the opposite - that governments tend to make their currency so scarce that serious unemployment arises. Unemployment which could be erased instantly, by the simple introduction of a Job Guarantee - a WPA - which is basically a nation with two perfectly good legs that has learned how to and decided to walk forward.  

          The point is that when a nation decides to walk forward, decides to have full employment, then the value of the currency will not decrease. Why? Well, first, the demand for currency will not diminish because the tax system is not changed - increasing government spending will just go back to the government, because the increased economic activity will increase tax uhh receipts :-).  As Keynes said "Take care of the employment, and the budget will take care of itself."

          Second, sane government spending, a JG, a WPA, a New Deal, imposes a cost on the private sector to obtain the new dollars spent - the work it must do to obtain them, under the job program. Nobody is saying that governments should just hand out money. Most of the time, giving it to most of the people,  would be quite inflationary.  So there are natural structural limitations to spending increasing the "money supply"  - the government (tax structure) & the population (limited supply of labor).  Sure spending when labor and other resources become scarce is inflationary. But the idea that spending to set people to work, at a fixed wage, is inflationary is something that only people whose minds "have been fuddled by nonsense for years and years" (Keynes) can believe.
          Forcing people to be idle is inflationary - not allowing them to work and increase their own and everybody else's wealth.

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