Why Donald Trump Can't Balance the Budget

[Dylan Lawrence Moore]

 

I had a discussion today with Nima Mahdjour, editor at beinglibertarian.com and blogger at economicsjunkie.com, about Modern Money Theory and how it applies to the current situation within the US legislative and executive branches.

Did you know that every economic crash in US was preceded by conservative politicians balancing the budget and creating a government surplus? How does that make any sense?

Governments don't operate like households and the words we use to describe budgets, like deficit, debt, and surplus, don't work the same way with governments.

Understanding how money works will be vital for the US moving forward into the future. Come learn for yourself.

 

[DaveR]

Of course he can. He can either end debt-money economics, or else force private credit creation up. He could do both tomorrow. Neither solve the underlying problem of money supply running away from productivity, however. 

[IsaacGage860]

 

 

I had a discussion today with Nima Mahdjour, editor at beinglibertarian.com and blogger at economicsjunkie.com, about Modern Money Theory and how it applies to the current situation within the US legislative and executive branches.

Did you know that every economic crash in US was preceded by conservative politicians balancing the budget and creating a government surplus? How does that make any sense?

Governments don't operate like households and the words we use to describe budgets, like deficit, debt, and surplus, don't work the same way with governments.

Understanding how money works will be vital for the US moving forward into the future. Come learn for yourself.

 

This is a great posting. That's all I can say.

[Dylan Lawrence Moore]

Of course he can. He can either end debt-money economics, or else force private credit creation up. He could do both tomorrow. Neither solve the underlying problem of money supply running away from productivity, however. 

 

I'm not sure you understood the essence of our conversation.

 

What do you mean about ending "debt-money economics"? A part of the conversation was dedicated to noting that even though federal debt is called "debt", it actually isn't because it doesn't have to be paid back.

 

What does "force private credit creation up" mean?

[Goldenages]

Some statements I do not agree with:

In the video its said, that the government does not need our taxes, cause they can print money as much as they want.

While its true that the government can (and does) print money as much as it wants, this money adds to the debt of the state.

This debt is paid back with taxes, and also through inflation. Central banks want to keep inflation around 2%. While this seems to be a pretty low value, it adds over the years - the German D-Mark lost about 90% of its value from the 50´is til the launch of the Euro. Inflation makes it easier to pay back dept and expropriate the savers.

 

A reason why the enormous increase of the volume of money does not result in hyperinflation is due to the invention of new markets such as CO2 bonds. Those bonds are traded in Dollars and are a fortune for the alleged savoirs of the world. (Thats why the invented all that).

 

Its also said that, whenever the government achieves a balanced budget, a depression occurs.

Now thats certainly not true for the crises of 2008, it was Bill Clinton who ordered a state intervention to give loans to everybody to buy a house.

For the other examples mentioned I would say that the depression was caused by deficit spending in the years before, also before central banks were installed it was usual for governments to print money and cause inflation, trashing the savings of people.  Thus nobody can make investments, and economy goes down.

And the very same state that robbed all the money before appears again as the savior.

 

If the national debt is not tamed, sooner or later the interest will kill you.

 

There is an example for the sustainability of a currency, it was the goldstandard currency of the Byzantine Empire. Assuming that emperors back then had less knowledge of money that we have today, also assuming that they were even more corrupt, the empire lastet for more than 1000 years. Gold made it possible.

 

regards

Andi

[Dylan Lawrence Moore]

In the video its said, that the government does not need our taxes, cause they can print money as much as they want.

While its true that the government can (and does) print money as much as it wants, this money adds to the debt of the state.

This debt is paid back with taxes, and also through inflation. 

 

Incorrect. This was a large point of the video. Federal "debt" isn't actually debt, and doesn't need to be paid back. The fact that it is called debt is a misnomer and, if we want to get conspiratorial, probably on purpose to obfuscate its real nature.

 

Taxes don't "pay this debt", because the "debt" isn't a debt and doesn't need to be paid. The two real functions of taxes are:

 

1. To give the money any value at all. The fact that the government demands the money in taxes is what makes it valuable to begin with.

2. To reduce the money supply, specifically the private net savings of a country. "Spending" introduces money into the system, "taxes" remove it.

 

I know this is absolutely bizarre and contradictory to everything we've ever learned about economics, but the point of the video is to help point this stuff out via Modern Monetary Theory.

 

 

A reason why the enormous increase of the volume of money does not result in hyperinflation is due to the invention of new markets such as CO2 bonds. Those bonds are traded in Dollars and are a fortune for the alleged savoirs of the world. (Thats why the invented all that).

 

That may be a reason why, but the main reason why is that the currency isn't backed by anything (it's "floating"), and the needs currency needs of the private sector have not been met, yet. 

 

Its also said that, whenever the government achieves a balanced budget, a depression occurs.

Now thats certainly not true for the crises of 2008, it was Bill Clinton who ordered a state intervention to give loans to everybody to buy a house.

 

We didn't get into this in the video, but there is a BIG difference between money created via the banking system and money created via federal government spending. Loans generated by the banking system create MONEY and DEBT that eventually gets canceled out. Federal spending creates money that just circulates until it's taxed back, which creates a net private sector savings. This is the amount of money in circulation that the private sector has access to without borrowing it. Balanced budgets reduce net private sector savings, and MMT argues that THIS is the main cause of crashes.

 

For the other examples mentioned I would say that the depression was caused by deficit spending in the years before, also before central banks were installed it was usual for governments to print money and cause inflation, trashing the savings of people.  Thus nobody can make investments, and economy goes down.

 

Like I said, deficit spending creates money, and the "debt" doesn't need to be paid back. Printing money to cause inflation is mainly caused when the money is backed to something. When money is backed by gold, increasing the amount of money devalues it in comparison with gold. 

 

If the national debt is not tamed, sooner or later the interest will kill you.

 

The interest doesn't really matter, either, because more money can be printed to pay it back. Again, the taxes aren't paying for anything. They just remove money out of the system and give it value to begin with.

 

There is an example for the sustainability of a currency, it was the goldstandard currency of the Byzantine Empire. Assuming that emperors back then had less knowledge of money that we have today, also assuming that they were even more corrupt, the empire lastet for more than 1000 years. Gold made it possible.

 

The Byzantine Empire also held the monopoly to mint those gold coins until the Ottomans took them out. I would venture that their monopoly on violence is what gave the coins their value and the empire their sustainability, not the gold itself.

[Goldenages]

 

Incorrect. This was a large point of the video. Federal "debt" isn't actually debt, and doesn't need to be paid back. The fact that it is called debt is a misnomer and, if we want to get conspiratorial, probably on purpose to obfuscate its real nature.

 

Taxes don't "pay this debt", because the "debt" isn't a debt and doesn't need to be paid. The two real functions of taxes are:

 

1. To give the money any value at all. The fact that the government demands the money in taxes is what makes it valuable to begin with.

2. To reduce the money supply, specifically the private net savings of a country. "Spending" introduces money into the system, "taxes" remove it.

 

I know this is absolutely bizarre and contradictory to everything we've ever learned about economics, but the point of the video is to help point this stuff out via Modern Monetary Theory.

 

 

 

Yes thats what is claimed in the video, but its not necessarily true

 

Every fiat money is debt per its nature, regardless if I borrow 100 bucks from the bank or if the USA borrows 1000 billions from the FED.

When I borrow 100 bucks from the bank, this 100 bucks are created by the bank, they simply program a +100 into my account.

When I pay back this 100 bucks, this 100 bucks cease to exist again.

So yes the national debt can never be paid back a 100%, otherwise there simply would be no more money in the circuit. I think thats what is meant in the video.

 

 

 

As for the value of money: Lets assume we visit a hunters and gatheres society, a tribe with 50 members. Lets assume they do not know that a world outside the jungle exists.

Now we have a bag of money and donate 1000 Dollars to every member of the tribe. Is anybody getting richer? Certainly not, because there is nothing to buy. And as a matter of fact, there is no need for money, cause they exchange spears against baskets and it worked perfectly for ages.

 

Money is value not because the state commands so. Thats what they tried in the central planning systems and it failed again and again.

Money is value becaues it represents commodities. To find out the value of commodities, you have to have a free market where prices are formed with the supply and demand system. And only thereafter, after the free market figured out a price, one can exchange commodities into money cause its more handy.

 

Money is a commodity, and nothing more.

Money can be produced, it can be traded, there is also a price for money, we call it interest. As with any other commodity, in a really free market the value and the price for money would be figured out by supply and demand. In a mixed economy, as are all economies today, the price for money, and the amount of money produced, ist regulated by the state, according to an idea of Karl Marx.

 

The only reason why the state commands a certain currency to be the only correct one is, that the state wants to have power.

In societies without money its the chiefs who keep their fingers upon certain things of value, be it water or property.

In both cases those who hold power use this commodities to for their advantage.

Here we find the reason why the financial system can be, and is (ab)used by a few.

 

 

 

The interest doesn't really matter, either, because more money can be printed to pay it back. Again, the taxes aren't paying for anything. They just remove money out of the system and give it value to begin with.

 

 

Shure, more money can be printed. But as said before, the value of money can not be printed, it depends on the commodities behind.

So whenever the debtee has reason to assume that the value of a currency is not backed up by any commodities any longer, he will rise interest for borrow.

 

Lets assume all US citizens go on strike for 4 weeks.

Lets assume that the FED tries to compensate this strike with a 10000 trillions of fresh dollars - hey, world, look, no need to worry, we have money like sand grains.

What will happen?

Its the same situation as the tribe in the above example.

 

Taxes can be seen as payment for infrastructure, police etc.etc.

As we all know, taxes are the source of livelihood for a steadily increasing group of people who want to have a good life without being productive, i.e. robbing money from those who are.

 

 

regards

Andi

[Dylan Lawrence Moore]

Every fiat money is debt per its nature, regardless if I borrow 100 bucks from the bank or if the USA borrows 1000 billions from the FED.

When I borrow 100 bucks from the bank, this 100 bucks are created by the bank, they simply program a +100 into my account.

When I pay back this 100 bucks, this 100 bucks cease to exist again.

So yes the national debt can never be paid back a 100%, otherwise there simply would be no more money in the circuit. I think thats what is meant in the video.

 

Actually, this is the bizarre nature of the financial system: IT ALL comes from the Fed. "Private" banks are basically money-lending extensions of the Fed. When a private bank creates money, they do it with permission from the Fed.

 

So no, this is the entire point of the conversation, that the nature of federal spending does not require that it be paid back. They give themselves permission to write money into their own accounts, they don't need it back. Banks need it back because it creates a liability on their books. And reason that for banks it's a liability and for the government it isn't, is because gov't said so and they have more guns.

 

 

As for the value of money: Lets assume we visit a hunters and gatheres society, a tribe with 50 members. Lets assume they do not know that a world outside the jungle exists.

Now we have a bag of money and donate 1000 Dollars to every member of the tribe. Is anybody getting richer? Certainly not, because there is nothing to buy. And as a matter of fact, there is no need for money, cause they exchange spears against baskets and it worked perfectly for ages.

 

If we demanded that they pay taxes in those dollars, then yes, those dollars would instantly valuable. If taxes weren't demanded, it would be useless paper.

 

 

Money is a commodity, and nothing more.

Money can be produced, it can be traded, there is also a price for money, we call it interest. As with any other commodity, in a really free market the value and the price for money would be figured out by supply and demand. In a mixed economy, as are all economies today, the price for money, and the amount of money produced, ist regulated by the state, according to an idea of Karl Marx.

 

Kinda. It's actually something a little less. A commodity implies a natural limit. There's only so many trees to cut down right now or oil to pull out of the earth. With money, fingers can be snapped and make it appear out of nowhere.

 

This is the crazy nature of what we're trying to discuss here, and what blew my mind, too. What we're saying is that money implies state. There has never been free market money. I'm not saying it can't happen in the future, and Nima made an excellent argument how BTC fits the requirements for money, even though no force is involved. However, to this point in history, the evidence points that money never existed until a sovereign (king) created it out of nothing and demanded it in taxes. The fact that these taxes were often demanded in gold is arbitrary.

 

 

The only reason why the state commands a certain currency to be the only correct one is, that the state wants to have power.

 

I 100% agree.

 

 

Shure, more money can be printed. But as said before, the value of money can not be printed, it depends on the commodities behind.

So whenever the debtee has reason to assume that the value of a currency is not backed up by any commodities any longer, he will rise interest for borrow.

 

Lets assume all US citizens go on strike for 4 weeks.

Lets assume that the FED tries to compensate this strike with a 10000 trillions of fresh dollars - hey, world, look, no need to worry, we have money like sand grains.

What will happen?

Its the same situation as the tribe in the above example.

 

I'm not confusing imaginary counters (money) for real wealth (goods and services). What I'm saying is that money allows a higher form of organization to help us better produce and determine what to do with goods and services, and that there is a natural demand for it in a modern economy. This is the net private sector savings which I mentioned. Until you hit a certain level of net private sector savings, increases in the money supply, provided of course there's enough freedom in society and that it's not too fast, actually spur innovation and create more goods and services.

 

Imagine making a new settlement out in the middle of Montana with 10000 people. Give them some natural resources to harvest and some (trees and quarries and oil or something) and some production capacity to refine them (mills and refineries or whatnot). Give them all something to do in our new city, but don't introduce any currency whatsoever. The entire system wouldn't work and they would barely be able to create anything, because they would have to figure out some form of barter to survive. Now, have the federal government come in and make a dam nearby with federal spending they created out of nothing (as opposed to moving people in from somewhere else who had money, or borrowing it from banks, which would have to be paid back plus interest). Even if the dam only employs 1000 of the 10000 people, those 1000 people are able to spend their newly created money into the rest of the settlement, allowing everyone else to get to work and produce real things (raw and refined resources). The money created out of thin air actually spurred the creation of real goods and services.

 

Taxes can be seen as payment for infrastructure, police etc.etc.

As we all know, taxes are the source of livelihood for a steadily increasing group of people who want to have a good life without being productive, i.e. robbing money from those who are.

 

I'm not talking about what taxes are seen as. I'm talking about what they are. What they are is a method to remove private net savings from a monetary system, and they give value to the money to begin with. If there was no one forcefully demanding the currency, it would be worthless paper/digital numbers.

 

In addition, I'm saying that what they're seen as is so inaccurate it's causing us problems for coming up with solutions to the problems we already have. The tax system and money printing system is an absolute scam. I'm not saying that's it's not. I'm saying we've inaccurately identified the scam as "debt".

[Goldenages]

 

I'm saying we've inaccurately identified the scam as "debt".

 

 

Yes, certainly I agree a 100% with this

 

I emphasized that "money is a commodity and nothing more" - to be precise, I should have written "real money" or "free market money"- cause in the discussions I have, the idea that no government should take care of money is very, very scary to most of the people. "But if nobody takes care, it will be a mess!" "No, it is a mess, because they take care."

Whatever the governmet "takes care" of, mess and corruption is the logical result.

 

But lets go back to your example with the settler in Montana.

There are examples for free market money, such as fur or spicery. So some smart people should easily be able to invent money with all the necessary properties, such as durableness, easy to divide, easy to store, with inherent value, meaning that it takes effort to create it. And: everybody is allowed to produce his kind of money, which can be transferred into other kinds of money in a free market. Very fast the best money will make its way, and even if, like any other commodities, there are many kinds of money on the market - why not?  We also prefer to choose from different brands of food, cars, etc.

 

Economics in your example, without any government, would be the old fashioned way: First produce value, i.e. make money. Thereafter, when there is enough wealth stored, it can be invested in a dam or whatever.

No debt. No taxes. And for shure much wiser investments will take place, because everbody knows, that many years of hard work are at stake.

 

regards

Andi

[Dylan Lawrence Moore]

I emphasized that "money is a commodity and nothing more" - to be precise, I should have written "real money" or "free market money"- cause in the discussions I have, the idea that no government should take care of money is very, very scary to most of the people. "But if nobody takes care, it will be a mess!" "No, it is a mess, because they take care."

Whatever the governmet "takes care" of, mess and corruption is the logical result.

 

I think there is a big misunderstanding in this conversation. I'm not talking about shoulds, I'm talking about what is. Specifically, I'm saying for the history of money, money has been, by definition, a legal construct. It was created by governments, it didn't evolve from barter. Whether this is scary to the people you're having conversations with is irrelevant.

 

Whether or not the government should be taking care of money is another conversation entirely. Particularly in the FDR forums, the subject should be moot, because the philosophy here centers around anarchy.

 

Fur and spicery aren't/weren't money. They may have achieved advanced barter status, but they weren't money. Because money is an idea, specifically a legal construct, if all human beings were to disappear from the universe, money would no longer exist. Furs and spicery, however, would. The fact that governments have demanded real things for taxes in order to make them money (gold or silver) is arbitrary.

 

The impact of this is that if the free market is to take over money, you can't find free market money examples in history. We only have the state as the example. We will need to figure out what function the state performs in order to create money, then do so without violence. Considering the value of money by the state IS violence (you must pay your taxes with it--or else), this makes for a very interesting conversation indeed.

[Anuojat]

I think there is a big misunderstanding in this conversation. I'm not talking about shoulds, I'm talking about what is. Specifically, I'm saying for the history of money, money has been, by definition, a legal construct. It was created by governments, it didn't evolve from barter. Whether this is scary to the people you're having conversations with is irrelevant.

 

Whether or not the government should be taking care of money is another conversation entirely. Particularly in the FDR forums, the subject should be moot, because the philosophy here centers around anarchy.

 

Fur and spicery aren't/weren't money. They may have achieved advanced barter status, but they weren't money. Because money is an idea, specifically a legal construct, if all human beings were to disappear from the universe, money would no longer exist. Furs and spicery, however, would. The fact that governments have demanded real things for taxes in order to make them money (gold or silver) is arbitrary.

 

The impact of this is that if the free market is to take over money, you can't find free market money examples in history. We only have the state as the example. We will need to figure out what function the state performs in order to create money, then do so without violence. Considering the value of money by the state IS violence (you must pay your taxes with it--or else), this makes for a very interesting conversation indeed.

 

https://coinmarketcap.com/currencies/bitcoin/

https://coinmarketcap.com/

https://en.wikipedia.org/wiki/Nxt

https://en.wikipedia.org/wiki/Ethereum

Ect.

 

Possible Canditates then perhaps?Cryptocurrencys employ some aspect of the fiat money but are from the free market even in the absence of state have value for conveniance and for certain anynomynity AND variety of being used for different set of tasks.

 

"How valueable is your education in programming?" "Nothing evidently cause it has no intrinsic value and is completely arbitary if people need it or not."

 

This is not to say CURRENT cryptocurrencies are the way of the future but concept and principle sheds light in my opinion to free market currencies based on USE,  COVINIANCE and PROOF-of-STAKE.

[Dylan Lawrence Moore]

"How valueable is your education in programming?" "Nothing evidently cause it has no intrinsic value and is completely arbitary if people need it or not."

 

That education allows one to create a tangible good or useful service. "Pay me or I'll hit you" doesn't create the same thing.

 

No free market money has ever been allowed in history because it is a direct assault to the sovereign's sovereignty. A government crushes it ASAP. Cryptocurrencies are the first to stick around because there is no one to shoot to get rid of it. I also think that these currencies are going to be the prototype for free market "money" in the future.

[Anuojat]

That education allows one to create a tangible good or useful service. "Pay me or I'll hit you" doesn't create the same thing.

 

No free market money has ever been allowed in history because it is a direct assault to the sovereign's sovereignty. A government crushes it ASAP. Cryptocurrencies are the first to stick around because there is no one to shoot to get rid of it. I also think that these currencies are going to be the prototype for free market "money" in the future.

 

Well information is a good then right? And service is the production and proper communication/delivery of said good? (Programmingwise)

 

Just checking because i dont think i was saying they create the same thing, merely drawing comparison i could come up with similiar qualities to poeple's inevitable objections. I think i should have stated my goal clearly there.

[Goldenages]

 

I think there is a big misunderstanding in this conversation.......

 

 

Hm. I think I said what is. Money is a commodity. Normally all commodities are produced to fulfill their purpose as good as possible. Cars drive, planes fly, radios make noise, money stores value and is a handy means for exchange.

Fur and spicery are of course money, as well as kakao, shells, salt, minerals, metals, etc.etc. There was a time when roman legionaires in the region of todays Austria were paid in salt.

All of these and much more have been used as money, especially as non - state or free market money.

 

 

We will need to figure out what function the state performs in order to create money, then do so without violence.

 

The state just claims his paper is money. That would not cause too much troubles as long as there is enough gold in Fort Knox.

Unfortunately, since the Vietnam War (as every war financed with the printing press) it is not enough, causing President Nixon to cut any connection of the Dollar to gold.

And as we figured out, any fiat money is debt per its nature, and a tool for enslaving citizens.

 

So in a free society, nobody would be allowed to have a monopoly on money. Since money is a commodity and nothing else, everybody is allowed to produce money, exactly as he is allowed to produce anything else. And as any other commodity, the best product, i.e. the best money, will make its way.

 

 

regards

Andi

[Dylan Lawrence Moore]

Hm. I think I said what is. Money is a commodity. Normally all commodities are produced to fulfill their purpose as good as possible. Cars drive, planes fly, radios make noise, money stores value and is a handy means for exchange.

Fur and spicery are of course money, as well as kakao, shells, salt, minerals, metals, etc.etc. There was a time when roman legionaires in the region of todays Austria were paid in salt.

 

What I'm saying, and part of the purpose of the video, is that money is not a commodity. It is an idea, and to date has always been a legal construct enforced by the state.

 

Fur and spices and the other things you listed are and were not money. Just because I exchange something doesn't make it money. If I give you fish for a car, neither the fish or the car are money. That's just barter. Just because salt was so valuable in Roman times that people would accept it for payment doesn't make it money, either. 

 

Money is intrinsically worthless, even if the material that is used for it isn't (i.e. gold or silver), and for all of human history has required the force of the state to hold value. "Use it or else." 

 

The state just claims his paper is money. That would not cause too much troubles as long as there is enough gold in Fort Knox.

Unfortunately, since the Vietnam War (as every war financed with the printing press) it is not enough, causing President Nixon to cut any connection of the Dollar to gold.

And as we figured out, any fiat money is debt per its nature, and a tool for enslaving citizens.

 

The state just claims paper as money in the same way it used to claim gold as money. Saying gold IS money because it has been used to denote money is like saying an inch IS wood because rulers are made of wood. Further, even during times when was "was" money, it was actually just a reserve. There was far more specie in circulation than there was gold ever to back it up.

 

While all money has been a tool for enslaving citizens, as it has always been a decree by the state, it is not debt by nature because it doesn't have to be paid back, which was the point of the video.

 

 

So in a free society, nobody would be allowed to have a monopoly on money. Since money is a commodity and nothing else, everybody is allowed to produce money, exactly as he is allowed to produce anything else. And as any other commodity, the best product, i.e. the best money, will make its way.

 

The aspects of money in a free society weren't discussed in the video or anywhere else up until now, so I'm not sure why it's being brought up. However, to re-emphasize, money is not a commodity. It's an idea that for human civilization has been a legal/state-enforced construct.

[Goldenages]

Ok, so money is not a commodity. Fur and spices are not money, even gold is not money. Printed paper is not money, and the money the state borrow from the FED is not debt.

So money is an idea, a legal construction.

Now to find out, what money is, could you explain this idea and this legal construction?

 

regards

Andi

[RichardY]

Incorrect. This was a large point of the video. Federal "debt" isn't actually debt, and doesn't need to be paid back. The fact that it is called debt is a misnomer and, if we want to get conspiratorial, probably on purpose to obfuscate its real nature.

 

Taxes don't "pay this debt", because the "debt" isn't a debt and doesn't need to be paid. The two real functions of taxes are:

 

1. To give the money any value at all. The fact that the government demands the money in taxes is what makes it valuable to begin with.

2. To reduce the money supply, specifically the private net savings of a country. "Spending" introduces money into the system, "taxes" remove it.

 

Money or currency? My understanding is that money is a monetary asset (a momentary instance of something), where as currency is based on monetary assets. (a generalisation) Money according to Ayn Rand must be created before it can be "spent".

 

What is the distinction between money and currency?

 

The Byzantine Empire also held the monopoly to mint those gold coins until the Ottomans took them out. I would venture that their monopoly on violence is what gave the coins their value and the empire their sustainability, not the gold itself.

I think it was more to do with voluntary cooperation throughout the Empire. Internal violence only weakened it. I remember from Stefan's Fall of Rome Presentation that one of the Emperors said "because we have this(a sword) there shall be no shortage of money." Anatolia is fairly arid, people often lived underground(Largest underground former cities in the World), how else is the Empire going to protect various isolated communities if there is no mutual cooperation.

[Goldenages]

All money of a certain currency represents the same value.

You never can exchange one Dollar for more or less than one Dollar.

 

But you can exchange one Dollar for 1.2 Euro today, and maybe 0.8 Euro tomorrow.

 

regards

Andi

[Goldenages]

One more word to currency: The fact that the US government wants to have taxes paid in Dollars does not add any value to the Dollar.

This is magical thinking, how on earth should this occur?  If its so easy, why not speak spells and double the value of the Dollar?

 

The only reason why the government insists on Dollar (or Euro or whatever) is, that they want to canalise all productive work into a means they can control.

 

The value of money, the value of any currency, is based on those who get up in the early morning and go to work.

 

regards

Andi

[Dylan Lawrence Moore]

What is the distinction between money and currency?

 

Getting into the realm of splitting hairs about confusing terms, but I think money is a form of currency. Time, knowledge, and relationships are currencies as well that can be exchanged. I can exchange my time for money. I can use my knowledge to start a business. I can use my relationships to find an investor. Etc.

 

I think it was more to do with voluntary cooperation throughout the Empire. Internal violence only weakened it. I remember from Stefan's Fall of Rome Presentation that one of the Emperors said "because we have this(a sword) there shall be no shortage of money." Anatolia is fairly arid, people often lived underground(Largest underground former cities in the World), how else is the Empire going to protect various isolated communities if there is no mutual cooperation.

 

Nope, it definitely was because Constantinople had the monopoly to mint gold coins. Until the Ottoman's took it out, this was one of the biggest powers to hold within Europe. After Constantinople fell, there was never a central force powerful enough to enforce that monopoly.

 

The Lost Science of Money

 

 

One more word to currency: The fact that the US government wants to have taxes paid in Dollars does not add any value to the Dollar.

This is magical thinking, how on earth should this occur?  If its so easy, why not speak spells and double the value of the Dollar?

 

It IS magical thinking and that's exactly how it works. The government, state, king, priest class, or whoever else is ruling an area as a "sovereign" demands a certain token in taxes. This token can be gold, silver, de-tempered iron, paper, credits, digital currency, or whatever else--it doesn't matter what the material is. Remember, the symbol printed on the money is what makes it money, not the material it's printed on. When gold was used as money it may have been valuable to use another country's gold, because the act of melting it down and putting your own stamp on it was worth it (gold is rare enough). However, after demanding this token, the state is then able to "spend" the tokens it creates within its borders to get it's citizens to do what it wants.

 

It's a violent method of moving resources and is nothing more than speaking spells. The money becomes valuable because it, and only it, can be used to pay the taxes demanded upon you. Paying your taxes comes at a threat of life, liberty, and property, thus the value of paying your taxes is the value of maintaining a certain level of security. Once the monetary unit has value due to the security it provides from the state, it can now be exchanged as money or a currency within the society.

[Goldenages]

 

 

It IS magical thinking and that's exactly how it works. The government, state, king, priest class, or whoever else is ruling an area as a "sovereign" demands a certain token in taxes. This token can be gold, silver, de-tempered iron, paper, credits, digital currency, or whatever else--it doesn't matter what the material is. Remember, the symbol printed on the money is what makes it money, not the material it's printed on

 

 

Yes, thats the way the corrupted state money is intended to work.

But, all the magical thinking can not an will not replace reality.

 

In the video it is stated that the FED does not need the money back, because it actually would not be debt.

As already posted earlier, it is not possible to pay all the money back. But the conclusion, that the money the state borrowed from the FED therefore is not debt, is wrong, cause the FED resells this debt, e.g. in form of government bonds. So there are real debtees expecting real Dollars. Now the FED cannot print any amount of Dollars, because the more Dollars it prints the more debtees are created, and the more the Dollar looses value due to inflation.

So the advice that President Trump can not or shall not aim for a balanced budget or surplus is wrong.

 

To give such advice means to rely on magical thinking.

 

regards

Andi

[Dylan Lawrence Moore]

Yes, thats the way the corrupted state money is intended to work.

But, all the magical thinking can not an will not replace reality.

 

Sure it will, if you force everyone to believe in it at the point of a gun.

 

 

In the video it is stated that the FED does not need the money back, because it actually would not be debt.

As already posted earlier, it is not possible to pay all the money back. But the conclusion, that the money the state borrowed from the FED therefore is not debt, is wrong, cause the FED resells this debt, e.g. in form of government bonds. So there are real debtees expecting real Dollars. Now the FED cannot print any amount of Dollars, because the more Dollars it prints the more debtees are created, and the more the Dollar looses value due to inflation.

 

Yea, I get it's called debt, and the terms borrow and selling bonds are thrown around all the time. The point we're making is that these are misnomers, which can be determined by looking at the functionality of the money system. The Fed has the authority to print money from Congress, which it has no limit to do. It doesn't need the money back because it can create it on its own, which is the same with the federal government itself.

 

Government bonds are just a form of no-risk interest-bearing securities. You can't lose the investment if the government can just create the money to pay you.

 

So the advice that President Trump can not or shall not aim for a balanced budget or surplus is wrong.

 

Nope. Because the net private sector savings is roughly equivalent to the federal deficit, to have a budget surplus would be to lesson the ability to save by the private sector, because the government would be taking more money out of circulation than it would be putting in it. The "debt" doesn't need to be paid back. If this is hard to figure out, would you care about anyone paying you back if you could just print as much money as you wanted?

[Goldenages]

 

Yea, I get it's called debt, and the terms borrow and selling bonds are thrown around all the time. The point we're making is that these are misnomers, which can be determined by looking at the functionality of the money system. The Fed has the authority to print money from Congress, which it has no limit to do. It doesn't need the money back because it can create it on its own, which is the same with the federal government itself.

 

Since, as I said before, there are real debtess expecting real money its real debt. There is no way out.

 

If your sentence were true, than magic would work. States could never go bankrupt. And hey, why do you get up in the early morning? The FED shall print its taxes, Trump can double taxes, thats all fine.

Its the mistake that countries like Venezuela made

Its the mistake that everybody makes who does not know what money is: A commodity that holds universal value, is thus universally demanded and can therefore be universally exchanged in any other commodity.

The demand for state money is forced by the government. But it can not hold the promise to keep value, when printing too much in order to follow magic rules instead of reality.

 

 

regards

Andi

[Kikker]

I am still curious about a few things.

 

Isn't it enough for the national debt to stay the same percentage of the GDP?

Why doesn't inflation skyrocket when you're increasing debt relative to GDP?

 

Why would reducing national debt not simply result in deflation of the currency?

Or is deflation exactly the problem what would result in less/negative growth?

 

Am I missing something?

[Dylan Lawrence Moore]

I am still curious about a few things.

 

Isn't it enough for the national debt to stay the same percentage of the GDP?

Why doesn't inflation skyrocket when you're increasing debt relative to GDP?

 

First answer: Imagine that you live in a very bad financial condition. You can't pay the rent, your car is getting repossessed, you have a ton of credit card debt, and you earn minimum wage. Your cashflow is negative, that is, you owe more every month than you're earning. You find that the only way to get out of this situation is to start your own business so you can earn more, however you need to save up some capital in order to do that. Obviously you would need to find a source of more money to start that business, right?

 

Now imagine that the only raise you're eligible for, or the only loans that your eligible for, are tied directly to the amount of money you're making right now (Greece). That is to say, your boss uses your minimum wage earnings as a reason not to pay you more money, because of this arbitrary connection between what you earn (GDP) and what you need to get out of the hole you're in (federal spending). You get stuck in a vicious cycle.

 

Compare this to your neighbor, who is already at a job making $100/hr (Germany). He doesn't have the same level of debt, and the capital for him to start a business is available if he needs it. Tying his production (GDP) to what he has access to (federal spending) doesn't hurt so bad, because the ratio is already in his favor.

 

Basically, it's an artificial limit that serves no purpose, and as it plays out, it seems to be locking countries into whatever economic state they started at when they joined the EU.

 

Second answer: Inflation doesn't skyrocket because the money introduced causes more goods and services to be produced.

 

Think of it like this (I may have mentioned an example like this on this thread or another): let's take 1000 hardworking people from around the US and stick them in some uninhabited place in the middle of, say, Montana. Let's also say this place has lots of raw resources--lumber, oil, copper, whatever. Let's also give these people enough infrastructure, tools, and machinery to get started working. However, we don't introduce ANY money into the system.

 

The community, though hard working, would not be able to create a economically functioning system because they would have to rely on barter. Now if we introduce some money, which is what is done through federal government spending, everyone can now get to work because there is money to work for. The instant people get to work, there is now goods and services available to be purchased with that money.

 

If the money supply increases (albeit not TOO fast), and it is accompanied by an increase in production, then the inflation more or less doesn't occur, because both supply and demand increased at the same time. As we spoke about in another video, Why We Need a National Deficit and Why Austerity is Killing Greece, the reason why countries like Weimar, Zimbabwe, and Venezuela got hit so hard by inflation has more to do with their production being plundered (demand for money drops) than printing the money (supply of money increases).

 

Why would reducing national debt not simply result in deflation of the currency?

Or is deflation exactly the problem what would result in less/negative growth?

 

I'm going to let Nima weigh in on this one. I don't have a good answer.

[Goldenages]

 

Isn't it enough for the national debt to stay the same percentage of the GDP?

 

Shure.

But always keep in mind the reason why they installed a central banking system:

The state can borrow any amount of money, and the taxpayers have to pay for it.

The state can install a welfare system and claim it does not do any harm, because the money spent adds to the debt that future generations will have to pay.

The state buys votes with that money.

The state can declare war, and the only winners of war are the bank and the military sector.

 

So why should they ever stop printing? They create troubles that some unknown people in the future will have to deal with.

In Austria we had Bruno Kreisky in the 70´ies, he was a poster socialist, and he was the first one who increased the national debt enormously.

Today people still vote for the socialist party, dreaming of the "good old days". Unfortunately they have no clue that today they are paying taxes for the debt of the "good old days", and thats one of the reasons why prosperity today is less.

 

 

Why doesn't inflation skyrocket when you're increasing debt relative to GDP?

 

First, it takes some time til the money hits real economy.  Huge amounts of money are held up in the air by e.g. climate bonds and in the financial system.

Second, the official calculation of inflation is a fraud, because it takes into account only a few commodities.

The artificial rise of the stock market whenever a central bank prints money is actually inflation, because this rise is not really backed up by any improvements or greater output of the companies itself. It is just a bubble that can collapse any second.

 

Third, the new money enters the market from above, meaning those close to banks get the money first, and invest e.g. in property. So when the prices for property rise because of that, making them unavailable for the average citizen, this is inflation, but its not taken into account by the official inflation calculation.

 

 

Why would reducing national debt not simply result in deflation of the currency?

Or is deflation exactly the problem what would result in less/negative growth?

 

Deflation is a problem only for those who have debt. Inflation makes it easier to repay debt, deflation makes it harder.

Since the central bank system is tailored for the needs of the state, as said before, the state (i.e., its citizens) is the biggest debtor ever. This is the reason why the state - literally - will do everthing to avoid deflation.

If we had real money not controlled by the state, or a goldstandard, deflation would not cause that much problems. I never heard anyone complaining about sinking prices.

 

 

 

 

 

 

 

 Basically, it's an artificial limit that serves no purpose, and as it plays out, it seems to be locking countries into whatever economic state they started at when they joined the EU.

 

It serves the purpose of honesty. It is an outright fraud to waste money and thus enslave the next three, or even more, generations. Its all the socialist gibberish form equal opportunities and social justice.

What chances and which justice will the next generation find, when they have to deliver 60 or 80% of their income to the state?

Just for the reason that some lunatics want to appear in history as the builders of an "United Europe" - while they are actually destroying it.

 

regards

Andi

[Dylan Lawrence Moore]

Andi,

 

How can you "waste" money when you have the power to create it out of nothing?

 

If you're not going to address the central principles of what Nima and I have been talking about, why are you posting in response?

[Goldenages]

 

How can you "waste" money when you have the power to create it out of nothing?

If you're not going to address the central principles of what Nima and I have been talking about, why are you posting in response?

 

 

I already adressed the central principle of the MMT and it is obvious that it is dead wrong.

Or am I only allowed to post here if I stick to the wrong premises of a wrong theory?

 

Money is made by those wo work productively.

The so-called power to create money out of nothing is in fact the power to enslave others: Lets say I buy your car. So I simply print the money for this and hand it over to you, and I drive away with your car. Thats fine for me, but you, on the other hand, have to work for the debt for the money I printed and bought your car with.

In other words, you work for the value of the money I bought your car with, or, you work for my ability to betray you.

Such is the nature of the power to create money out of nothing.

 

regards

Andi

[Dylan Lawrence Moore]

Money is made by those wo work productively.

The so-called power to create money out of nothing is in fact the power to enslave others: Lets say I buy your car. So I simply print the money for this and hand it over to you, and I drive away with your car. Thats fine for me, but you, on the other hand, have to work for the debt for the money I printed and bought your car with.

In other words, you work for the value of the money I bought your car with, or, you work for my ability to betray you.

Such is the nature of the power to create money out of nothing.

 

What part of anything either I or Nima have said disagrees with that?

 

In none of the videos have we made so far, we haven't discussed the ethics of way money is created, we have only discussed the function.

 

You can't "waste" money when you have the ability to infinitely create it.

 

 

I already adressed the central principle of the MMT and it is obvious that it is dead wrong.

Or am I only allowed to post here if I stick to the wrong premises of a wrong theory?

 

Addressing that it's wrong and showing the evidence and having the arguments that it's wrong are two separate things.

 

You can post where ever you want, but you look really silly if you keep completely ignoring the principles discussed in the topic of the thread.

[Goldenages]

 

Addressing that it's wrong and showing the evidence and having the arguments that it's wrong are two separate things.

 

You can post where ever you want, but you look really silly if you keep completely ignoring the principles discussed in the topic of the thread.

 

I did bring arguments that MMT is wrong, and for evidence just have a look at Venezuela or the Sowjetunion.

 

So I might suggest that you bring forward some arguments for this theory, not only claims such as debt is not really debt and can be paid using the printing press.

I am pretty curious how this should work in reality, when you either tell the creditors that they cannot expect any money back, or destroy the value of money when printing the debt.

 

 

 

Goldenages, on 06 Mar 2017 - 10:45 AM, said:

Money is made by those wo work productively.

The so-called power to create money out of nothing is in fact the power to enslave others: Lets say I buy your car. So I simply print the money for this and hand it over to you, and I drive away with your car. Thats fine for me, but you, on the other hand, have to work for the debt for the money I printed and bought your car with.

In other words, you work for the value of the money I bought your car with, or, you work for my ability to betray you.

Such is the nature of the power to create money out of nothing.

 

What part of anything either I or Nima have said disagrees with that?

 

In none of the videos have we made so far, we haven't discussed the ethics of way money is created, we have only discussed the function.

 

You can't "waste" money when you have the ability to infinitely create it.

 

 

 

So obviously you agree with what I wrote in above quote.

Just to repeat the example with the car once more: I give you 30.000 Dollar, freshly printed, and take your car. Now I tax you til you have paid back this 30.000 Dollar. But its invain, because meanwhile I printed another 5 billion Dollar for welfare and the military and the environment to buy votes. Again I tax you for this new debt, but its invain cause meanwhile.....

So its pretty clear what a waste of money means.

The more money is wasted the more the productive are enslaved.

The more money is printed the more the bank pauperises all citizens.

 

This MMT blanks out very basic facts about inflation and just claims that debt is not debt, i.e. claims that nobody who holds government bonds expects any interest, or can at least resell those bonds and get his money back.

And this is simply wrong.

 

regards

Andi

[Dylan Lawrence Moore]

I did bring arguments that MMT is wrong, and for evidence just have a look at Venezuela or the Sowjetunion.

 

We specifically addressed Venezuela in the "Why We Need a National Deficit Video". Venezuela has plundered production, therefore reducing the goods and services available for money, and has tied its currency to the US dollar, so when it prints money, the USD to Venezuelan currency ratio changes radically. When a money isn't tied to anything, there isn't a ratio like this to affect.

 

 

I am pretty curious how this should work in reality, when you either tell the creditors that they cannot expect any money back, or destroy the value of money when printing the debt.

 

I'm not talking about creditors. I'm talking about the federal government. They operate differently. One has to earn money it lends, the other creates it out of nothing. It's like you're not even listening to the information in the videos we're posting.

 

 

Just to repeat the example with the car once more: I give you 30.000 Dollar, freshly printed, and take your car. Now I tax you til you have paid back this 30.000 Dollar. But its invain, because meanwhile I printed another 5 billion Dollar for welfare and the military and the environment to buy votes. Again I tax you for this new debt, but its invain cause meanwhile.....

So its pretty clear what a waste of money means.

 

That was about as clear as mud.

 

 

 

This MMT blanks out very basic facts about inflation and just claims that debt is not debt, i.e. claims that nobody who holds government bonds expects any interest, or can at least resell those bonds and get his money back.

 

Wrong on all accounts.

 

MMT acknowledges inflation by pointing out that massive inflation is caused by loss of production, which again we pointed out very specifically in our last video. Furthermore, an increase in the money supply generates more production in a free-enough society. If goods and services increase with the supply of money, usually a small amount of inflation occurs, but not enough that the society can't handle it. Venezuela and the Soviet Union don't meet the "free-enough" standards.

 

MMT claims federal debt that was generated from a central bank is not debt. All other debt, whether from state or local governments, or private citizens, is real debt. You are either deliberately conflating or you don't understand at all what we've been saying.

 

Regarding interest on bonds, Nima has specifically addressed that in the videos. It's simply guaranteed interest for rich people who want to be lazy. There is no risk that the government won't pay the bond-holder back, because the government can always just print the money (i.e. they can simply write the number into your bank account).

 

Seriously, every time you post it's like you either haven't listened to or haven't in the slightest understood anything we talked about in our videos.

[Goldenages]

 

When a money isn't tied to anything, there isn't a ratio like this to affect.

 

So do you see any upper limit for the national deficit, given that a currency is not tied to anything and there is enough freedom?

 

 

If goods and services increase with the supply of money, usually a small amount of inflation occurs, but not enough that the society can't handle it

 

 

Shure, a society can handle a certain amount of inflation. But this does not alter the fact that inflation is robbery.

A society can also handle a certain amount of crime and terror. Nevertheless it is not a wise idea to induce a certain amount of crime and terror and claim this is necessary to keep a society functional.

 

 

 

MMT claims federal debt that was generated from a central bank is not debt.

....There is no risk that the government won't pay the bond-holder back, because the government can always just print the money (i.e. they can simply write the number into your bank account).

 

 

And what this means in reality is, that this "not debt" is paid back via inflation, and has an impact on everybody. Or more clearly, since inflation is robbery, this debt is paid back through robbery. It does not get better because its claimed its just a little robbery that can be handled by a "free" society.

How free is a society thats constantly robbed?

 

 

Which brings me back to my first question: Do you see any upper limit for national dept?

 

regards

Andi

[ofd]

 But this does not alter the fact that inflation is robbery.

 

Inflation for goods can happen naturally as well. There are three cases. 1 A good becomes more scarce the demand stays the same. 2 A good is in higher demand 3 Money supply by banks is increased thus goods raise in price.

 

Which of those 3 do you consider robbery?

[Goldenages]

 

Inflation for goods can happen naturally as well. There are three cases. 1 A good becomes more scarce the demand stays the same. 2 A good is in higher demand 3 Money supply by banks is increased thus goods raise in price.

 

Which of those 3 do you consider robbery?

 

Inflation is defined as an increase of the volume of money. Means a bigger amount of money chasing the same number of goods. This effect is seen as rising prices.

 

Of course there are other reasons why prices change, such as less or increased demand, improvement of productivity etc.

But all these effects are effects of the free market, and have nothing to do with inflation.

 

Inflation must be considered robbery as soon as it is applied intentionally to influence economy. This is the case both with Central Banking and this so-called Modern Money Theory. The latter is even more careless.

 

And this influence is huge: The Dollar lost more than 90% of its value during the last decades.

 

This equivalent was directly transferred to the state and to close-state institutions.

 

Nevertheless the national debt of the US is unprecedented high.

If thats not robbery - what is it?

 

regards

Andi

[Dylan Lawrence Moore]

I'm not sure when the topic switched from whether or not the national debt is debt to whether or not the national debt is robbery.

 

I believe the technical term for that is moving the goalposts.

 

Of course it's robbery. We're anarchists here. Anything the government does is robbery by definition. But just because it's robbery, doesn't mean that it is debt. Federal "debt" does not need to be paid back, like a private debt or debt to a lower government agency (state or municipal or whatever). If we're going to have a plan to stop the robber, we need to accurately understand how the robbery is occuring.

 

To the point of the video: I'll take a 3% a year robbery over an economic crash that would occur if the budget were balanced, or a surplus was created. Better to get robbed 3% than have nothing to rob at all.