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View Diary: Shutdown ended, but the economic whacking it gave us is far from over. Where is the long view? (131 comments)

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  •  I hear you Blades, the reality of monetary (4+ / 0-)

    operations can certainly be overwhelming to people hearing it for the first time.  Thats because the people have been so badly misinformed by so many for so long.  Going off the gold standard was one of the biggest events in American history and yet very few people changed their understanding when the paradigm shift occurred.  Its amazing actually.  But its clearly understood when described as succinctly and concisely as the great John Galbraith did in this Nation post I've quoted before.

    "For ordinary people, public budget deficits, despite their bad reputation, are much better than private loans. Deficits put money in private pockets. Private households get more cash. They own that cash free and clear, and they can spend it as they like. If they wish, they can also convert it into interest-earning government bonds or they can repay their debts. This is called an increase in "net financial wealth." Ordinary people benefit, but there is nothing in it for banks.

    And this, in the simplest terms, explains the deficit phobia of Wall Street, the corporate media and the right-wing economists. Bankers don't like budget deficits because they compete with bank loans as a source of growth. When a bank makes a loan, cash balances in private hands also go up. But now the cash is not owned free and clear. There is a contractual obligation to pay interest and to repay principal. If the enterprise defaults, there may be an asset left over--a house or factory or company--that will then become the property of the bank. It's easy to see why bankers love private credit but hate public deficits."

    http://www.dailykos.com/...

    MMT = Reality

    "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

    by Auburn Parks on Thu Oct 17, 2013 at 02:46:06 PM PDT

    [ Parent ]

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