Thursday, 10 March 2016

Economic Myths: Debt free money

Lots of people who refuse to accept basic principles believe there is such a thing as "debt free money". If you Google it and follow a couple of links you end in a sea of raving gibberish like this from zerohedge:

This organization (Committee On Monetary/Economic Reform) is demanding that our corrupt government and the nefarious central bank which rules above it return Canada’s monetary system to the issuance of debt-free money.

In turn, the phrase “debt-free money” is relatively easy to define: issuing currency from our central bank, into the economy, without (literally) “borrowing it” into existence – i.e. attaching debt to every unit of currency.

Again, some readers not familiar with our current monetary system may require some additional clarification (as they discover the horror/insanity of our present system)… However, at roughly the same time our (now) now corrupt governments began corrupting our economies, they also totally corrupted our monetary system. 


The gold standard was abolished (assassinated by Paul Volcker), and our governments began creating their so-called “money” from debt – i.e. our governments forced themselves to “borrow” our own currencies, from these corrupt central banks, as the mechanism for our money-printing.

As an aside, this person doesn't understand that the government doesn't and can't borrow from the central bank because the central bank is part of the government. You can't borrow from yourself or lend yourself money. He contrasts this with the central bank issuing currency without borrowing it. That is impossible. Whoever issues currency, be that coins and notes, money, bonds, IOUs or numbers on a computer screen is borrowing. He contrasts two scenarios which are exactly the same.

"But it's not borrowing!" squeal the nutters, "The government doesn't ever have to repay its debts, they can just mount up for ever."

Yes, fair point, in practice, governments don't ever repay most of their debts, they just get rolled forward again and again. But if interest is payable on those debts, that't a teeny tiny bit of a bit of a hint of a cluesy-woozy that it's borrowing.

Next argument, "But in today's world, government don't need to pay interest any more, or are even paying negative interest" (which is like a bank charging you an account fee even when your deposit account is in credit, which is not that unusual). That is also true, although this is an unusual situation and we don't know how long it will continue.

Nonetheless, even if the debts are interest-free and will never be repaid, it is still borrowing and that borrowing is debt. The flip side of money is always debt (physical gold is not money for these purposes).

Consider the simple question, everything else being equal, which government is "richer", Government A which has absolutely no public debt or Government B which is drowning in debt (or has issued endless paper money with nothing to back it up like Zimbabwe or Weimar Germany)?

It's not difficult is it? Government A is 'richer'. Why? Because it has no liabilities. Even if Government B never pays interest on its debts or repays those debts, then it has less scope for manoeuvre. If Government A were temporarily strapped for cash, it could issue extra coins and notes, or bonds or whatever and people would accept those as valid, so Government A can procure the services it needs.

Government B no longer has this option, it has already used up its credit line by, er, borrowing. If the absence of something makes Government A richer, the something that is absent is debt or borrowings or liabilities.

Here endeth.

Golden rule: the first person to use the meaningless word 'reserves' has lost the argument. I will delete all comments which include that word.

38 comments:

paul said...
This comment has been removed by a blog administrator.
DBC Reed said...

So we can't mention Fractional Reserve Banking, Full Reserve Banking or 100% Reserve Banking, the usual descriptors of banking practice? Kinda pre-empts the argument don't it!
Am I allowed to mention the 2014 BoE Bulletin entitled "Money Creation in the Modern Economy" which starts with an explanation of how money is created rather than drawn from reserves : "This article explains how the majority of money in the modern economy is created by commercial banks making loans"?

Bayard said...

Money = debt, currencies are just debt denominated in different units, like temperature or mass. In the UK it's pounds, celsius and kilograms and in the US it's dollars, farenheit and pounds. Debt-free money is like heat-free temperature or matter-free mass, all completely meaningless concepts. (I've thought of absolute zero and excepted it, OK?)
You could have a debt-free currency, where the scrap value of the coins was equal to their face value, but that's not money, that's barter.

Mike W said...

Not sure about the lesson MW.I know there are folks who understand the following better than me:

Agreed all money is a debt/asset token.Its value to all the citizens of both states A and B is that they can pay their private debt: Tax, with their state asset money.States A and B isssue it (if they are soveriegn); they have to accept it back.So asset and libality entry makes the token thing,£ or $ money.You taught me that bit.So hope we do not fall out over the next bit!

What you give as an example is that the folks (private sector) of one state have too many (money)assets and the folks of the other have none! Both states are in trouble in my opinion! Hyper inflation in B and Hyper deflation death spiral in A!!! But; if A and B can issue their own currency they do not have a shortage of money; they can never come to the end of the line.They are not like you and me or your company or Leeds City Council.They just need to carry out practical economic policies of the sort you discuss here.

So..

Depending if A or B can or cannot deal with the issues implied in your lesson then the score card; huge gov debt or no gov debt, is telling the politicians what sort of problem they have to deal with not it being good or bad in itself.

Ralph Musgrave said...

The word "res*rves" has a very precise meaning when used in reference to central banks, money etc. The word is defined in dictionaries of economics as something like "the stock of base money or state issued money held by commercial banks at the central bank".

Obviously the word is used in much looser sense in normal English, but that's neither here nor there.

Ralph Musgrave said...

A few days ago I set out an argument in about 300 words for abolishing debt based money here:

http://ralphanomics.blogspot.co.uk/2016/03/two-sorts-of-money-public-and-private.html

Also set out the argument in more detailed form (3,000 words) here:

http://ralphanomics.blogspot.co.uk/2016/03/the-bank-subsidy-no-one-has-spotted.html

DBC Reed said...

I don't suppose this is the time or place to mention all the articles by Martin Wolf and leaders in the FT recently about "helicopter money".You know: putting monthly unearned income in the bank accounts of all adult citizens to remedy demand deficiency or summat.Go on like this and we'll be back to post war (1914-18)proposals for the Douglas scheme of Social Credit.Socialising credit creation !! Whatever will these monetary madcaps come up with next (or a long time ago).

Random said...

It's written on my money: "I promise to pay the bearer on demand the sum of ten pounds"

That makes my money just an open cheque drawn on the Bank of England. You can't say a cheque at the Bank of England is any different from a cheque drawn on Barclays Bank. It's the same thing.

And "money" is a figure of speech, a metonym if not a metalepsis. By definition, any figure of speech is ambiguous and not proper terminology.

Bayard said...

R, what about "your" coins?

I can sort of grasp the idea of "debt=free money" (money that is not brought derived from government borrowing, or private bank "splitting the zero") but can't help but feel that the terminology is somewhat misleading. The only question I would ask is, in a world of debt-free money, AIUI, how do you increase the money supply?

Mark Wadsworth said...

DBC, you are completely off topic. The post was about the vacuous concept of debt-free money.

B, correct.

MikeW, your example supports my view that there is no debt free money.

"the folks (private sector) of one state have too many (money)assets and the folks of the other have none!"

That's not realistic. The Netherlands has a very low debt-to-GDP ratio (one quarter) and Greece has a very high debt-to-GDP ratio (more than one, I think). Who are richer, the Dutch or the Greeks? Firstly, Dutch citizens could buy Greek debt if they wished, secondly and far more importantly, there are plenty of other things worth owning or investing in.

Further, however 'sovereign' a country is, it can't go on printing money forever, it goes wrong (Weimar, Zimbabwe) and collapses. Government A is further away from this position that Government B.

RM, yes, that is the definition, but people use the word to mean all sorts of things.

I actually agree with you that interposing banks between government and savers is stupid, people should just save directly with NS&I. But there are still assets and liabilities, so the money is not debt free.

DBC< no it's not the time or place, that's completely off topic.

R, yes, good example.

B, the only possible 'debt free money' is precious metal coins as you said yourself. But that's not money at all, that is precious metal. All money = asset + liability.

Random said...

"Further, however 'sovereign' a country is, it can't go on printing money forever, it goes wrong (Weimar, Zimbabwe) and collapses. "

Inflation is due to the *flow* of money. Not the stock. And government spends on an unlimited intraday buffer that settles at the end of the day - so it is always funded by base money ("printing money.")

Too high flows results in hyperinflation and collapse. But that's no reason to pay interest. The interest rate is set by the central bank which is owned and controlled by the government.

If the government doesn't spend enough, then the central bank has to drop the interest rate to zero to maintain aggregate demand.

So you don't pay interest. You pay tax instead - since interest is really just taxation by the back door, but into the hands of (mostly) wealthy foreigners and bankers rather than the representatives of the majority of the population.

"The Netherlands has a very low debt-to-GDP ratio (one quarter) and Greece has a very high debt-to-GDP ratio (more than one, I think). Who are richer, the Dutch or the Greeks?"

But Greece is not sovereign. Even if it was, they couldn't enforce tax properly and their government is extremely corrupt.

Take a look at the Japanese population. The Japanese people save excessively and have a high debt to GDP ratio. Does it matter? Not really - unless all Japanese people spent all their savings at once.

Bayard said...

"B, the only possible 'debt free money' is precious metal coins as you said yourself."

Agreed, but I was saying I had an idea what was meant by the expression "debt-free money", not that it meant debt-free money. It's just another of these expressions that doesn't do what it says on the tin, like "free on board".

Mark Wadsworth said...

R, why can't you stick to the topic - whether it is possible to have monetary assets without corresponding monetary liabilities - and compare like with like?

"But Greece is not sovereign. Even if it was, they couldn't enforce tax properly and their government is extremely corrupt."

Neither is NL, they are both in the Eurozone. Perhaps NL government doesn't need to run up debts because its citizens are willing and able to pay tax so it doesn't need to borrow money. The reason why a government has to print/borrow money could be for a number of reasons.

But a country whose government doesn't need to borrow money is the better off i.e. richer country, because debts are debts, and printed money is also debt.

B, true, we are splitting hairs now.

Random said...

Point taken. But how does this apply to the UK?

"But a country whose government doesn't need to borrow money is the better off"

But my point is the government does not have control over that.

MMT talks about the build up of excess savings in the non-government sector - these 'savings net of investment' - and it allows them to build up first in the causal chain. That means that the non-government sector can be seen as 'pushing' money onto the government sector. This is the view that MMT takes and bases its economic model upon - the non-government sector is the one doing the 'net saving' which the government sector then has to react to.

The question is: does anybody get to say NO and make it stick.

Always remember that the only reason you can't spend as much money as you want is because the bank will bounce your cheques (or the central bank/regulator will declare the bank insolvent) *and* the courts and enforcement officials will back that decision up - with force if necessary.

Nobody gets to say 'no' to a sovereign government spend request, because if you do then you are simply replaced with somebody who will say 'yes' - due to the ownership/power over the currency issuer.

There is *nobody* in this system that can bounce a government cheque and there is nowhere else for anything HM Treasury spend to go other than to other accounts at the Bank of England. So it all just bounces back and forward intra-day and settles up nicely at the end of the day (with DMO borrowing back from the banks like any other bank does if they are short of reserves to hit the arbitrary end of day 'clearing' figure).

Everything is always fully funded because the money can't go anywhere else. It's like sitting on a water bed. And that's the key point.

When you look at France, the money there can leak out to Germany - because they are in a fixed exchange system called the Euro. That can't happen here. That's the difference between the UK and the Eurozone.

Random said...

"why can't you stick to the topic - whether it is possible to have monetary assets without corresponding monetary liabilities"

That's not really the important issue IMV.

This whole thing that happened with Greece is about whether entities have the power to say 'no' and make it stick against an elected government. It's interesting because that power struggle is in both directions (does the Greek government get to say 'no' to austerity, and make it stick).

Control points are all about people saying 'no' and making that prevention stick.

Random said...

What I’m saying is that the government’s ability to direct the private banks to create deposits is separate from the central bank, and it is that ability to *force* other banks to create deposits in people’s accounts and *force* them to lend to government that is the function government is actually using.

The central bank account held by Treasury is just a more convenient way of achieving the same goal.

Lola said...

I think there is difference between 'money' and 'currency'. Now bear with me here.

Money is a store of value and medium of exchange and a unit if account.
Money can be debt free. Gold can be money (or any physical thing universally acceptable.) Such money is not debt based. The stuff has an intrinsic value and the market process establishes how much of it is due for each thing that it can be used to transact in. You make sausages. I give you (say) a gram of gold. I got that gold by cutting two other people's hair. There is no debt.

But, I could hold all my gold in a bank and just issue you with a 'note' giving you claim on my gold stock in the bank. Now that is a debt instrument. Usually undated and carrying no interest. I think that that is 'currency'. And clearly it is debt based. As someone else posted above the clue is on the Bank Note - "I promise to pay the bearer on demand..."*

I am ignoring pro tem the effects of 'fractional R banking'.

Or am I barking up the wrong fish?

* I once asked a BoE blokey just what he was promising to pay me on demand. "I guess we'll just give you another tenner for that one". That clearly indicates that they are never going to settle their 'debt'. Even if it is a 'debt'.

Mark Wadsworth said...

L, yes, we can distinguish between money (commodities) and currency (fiat money) but that is not the topic.

The money reformers believe that government debt* is not debt, when quite clearly it is.

'Full reserve banking' is probably a good idea, or at least better than the current shambles, but there are still debts involved.

* Which includes all gilts held by private sector, coins and notes, private bank deposits with BoE, unpaid invoices etc. They are all the same thing really.

Robin Smith said...

Same old problem. Everyone believes in the ideology that Money = Wealth. If the problem is rooted in collective psychology, so must be the solution. And if your involvement provides you too with ideological comfort that will be very hard for you to do. I understand this.

Lola said...

MW. Yes, I understand that. I was trying to clarify the definitions to make it easier to see that government debts are, well, government debts. FWIW the government has no money. What it has is a currency monopoly. If you see what I mean

DBC Reed said...

Since you dismiss helicopter money as off topic (see above) in a discussion about debt free money, perhaps you should define what schemes of the State issuing money without borrowing from the banks you consider debt free in your scheme of things.
Your dismissal of Comer in Canada as fringe nutters is repressive.They are involved in a massive lawsuit with the Bank of Canada headed by their hotshot lawyer, to return the bank to its old covenant of loaning money to the Canadian government free of interest which this Gov used to build the St Lawrence Seaway etc.( I believe these are the facts: I have not been keeping up with the long drawn out case -not surprisingly in view of this story on Net: Canadian media ignoring Titanic lawsuit vs Bank of Canada.)

Mark Wadsworth said...

L, agreed.

DBC, it is strange how people can stay so determinedly off topic for so long:

"perhaps you should define what schemes of the State issuing money without borrowing from the banks you consider debt free in your scheme of things"

1. Of course the government doesn't need to borrow from banks. Where did I ever say that it did? Jesus Christ.

2. The state can "issue" money without banks, but when the state "issues" money it is owed to whoever ends up holding the newly created financial asset.

3. There is no such thing as debt free borrowing or debt free currency issuing. It is hogwash doolally conspiracy fuckwit fantasy lala land.

4. As yes/no question, do you really believe that government debts aren't debts?

Mike W said...

Robin Smith above, I have no idea what you mean.

But its Sunday. So, thanks for the sermon vicar :)

Mike W said...

Lola above,

Lets continue with your off topic 'gold'.

Anecdotal: I one had an old friend who was a brilliant natural historan (engineer and businessman). He could walk round a lake and name everything. It was only sub aquatic stuff and three common trees that allowed me to say anything in an afternoon. But I learned and I liked him a lot. We got on really well except one afternoon, I said, quite without thinking:'Well you know dinosaurs are really just early birds, indeed you may as well classify them as; living avian dinosauria and extinct non-avain dinosauria'. He went ballistic. You could see the horror in his eyes.'You blithering idiot....they were all cold blooded dont't you know, they were lizarads, etc etc'(was describing Crystal Palace). Even later when I presented him with the growing evidence; he would just not have it.

L,Money is a store of value and medium of exchange and a unit if account.
Money can be debt free. Gold can be money (or any physical thing universally acceptable.) Such money is not debt based. The stuff has an intrinsic value and the market process establishes how much of it is due for each thing that it can be used to transact in. You make sausages. I give you (say) a gram of gold. I got that gold by cutting two other people's hair. There is no debt.

Mikew,I do not agree: Gold is a commodity in what you desribe above and you are trading it.It always seems to me that with 'Store of value', 'medium of exchange' 'unit of account', meme; It is not so much a definition of money and currency; but what the holders of metal like about it(their gold and silver). Which in that case; is it not somthing of a tautology? It is certainly not the only definition of money: Consider the debate about: M0, M1, M2 M3. Are the BofE correct to see M0 and M1 as identical? Third, as you know because we discussed Gessel some months ago, the whole point of paper money in his system is that it could not hold its value it should 'rust'. So money should rot and real capital, which has carrying costs, is the real wealth (including storing Lola's Gold).

MikeW, Relating this to the anacdotal above: I know that you hold to a 'market theory' of money from Adam Smith: barter, coin and debt. Which arised in the market and the market alone because it was a perfectly natural force of nature etc etc.
Why can't you accept the The State Theory of money which does not invoke a mythical sequence that has never been shown to exist and that it State Theory of Money has pushed back the bounds of how debt and later money and gold coins actually came to be fom about 5,000 to 7,000 years ago.Simply the idea that State first market second is too much to swollow?

L,But, I could hold all my gold in a bank and just issue you with a 'note' giving you claim on my gold stock in the bank. Now that is a debt instrument. Usually undated and carrying no interest. I think that that is 'currency'. And clearly it is debt based. As someone else posted above the clue is on the Bank Note - "I promise to pay the bearer on demand..."*

Mikew, Agreed: not in a bank. In the above you are the bank.

L,I once asked a BoE blokey just what he was promising to pay me on demand. "I guess we'll just give you another tenner for that one". That clearly indicates that they are never going to settle their 'debt'. Even if it is a 'debt'.

Mikew Yes, but you can use it to settle YOUR tax debt which is certain to come.

Look old chap here's the deal:If you read Graebers Debt: the First 5000 years, over the next three months. I will read any Gold bug work that you specify in the same time frame.Or perhaps you would like to go over the agile bird v stupid lizard thing with me instead.
Best,
Mikew

Bayard said...

"You make sausages. I give you (say) a gram of gold. I got that gold by cutting two other people's hair. There is no debt."

Yeah, but isn't that just barter? If you wanted to buy your wife a gold ring and you took that gold to a goldsmith and said "make me a ring out of this" and he said, "I'll keep hold of some of the gold in exchange for making the ring, the rest will go into the ring" then that gold isn't money, because you'd have the same conversation if you were talking about a platinum ring.

Lola said...

MW. Your analysis is contradictory. You say "Why can't you accept the The State Theory of money ...", which immediately begs the question " why can't you accept that the State Theory of Money is nonsense?"

The point of my comments was to discuss a possible definitional confusion between 'money' and 'currency'. These terms are commonly used used as substitutes for each other and I thought (think) that this might be a confusion.

BTW I have read around your points and I still think that they are nonsense. And as you are welded to your opinions we will just have to agree to disagree. Which is just dandy as differences are what drives us forward.

Lola said...

See previous post - i mean MikeW of course

Mike W said...

Bayard above, sausages for gold yes it is a clear example of trade or barter isn't it.


Lola above,Yes, in the end I am happy to learn ,engage and argue with many voices as I assume we are here to drive Henry George and LVT forward rather than any other pet interest.But note, I never used the word 'nonsense' to describe what you said or what I labelled as your long held 'market theory of money'.

But I took it for granted that we were all agreeing that if money was a 'unit of account' it had an asset and a liability side. Money cannot therefore be debt free which is where you were reasoning from.

There is no general confusion between between 'money' and 'currency'.

From State theory of money view, which I ask no one to 'believe' but sensibly engage with: Money, £ or $ is the unit of account, currency is the 'token thing' M0 M1, notes or coins, cheques etc that are acceptable in clearing the liability. That quote about the state deciding on what the unit of account is and claiming the right to 'edit the dictionary' springs to mind.

This is all empirically testable; ask your local farmer to drop half a ton of carrots at his HMRC office as payment on last years outstanding VAT bill!

I hope we are fine and dandy

Ralph Musgrave said...

There’s a very simple flaw in the idea that state issued money (base money) is a debt. The state can grab base money off the private sector whenever it wants via tax. If you owed your bank $X in respect of a mortgage, but you were entitled to raid the bank and grab money out of it’s safe with a view to reducing the mortgage, then your so called “debt to the bank” would be a strange sort of debt, wouldn’t it?

Ralph Musgrave said...

There’s a very simple flaw in the idea that state issued money (base money) is a debt. The state can grab base money off the private sector whenever it wants via tax. If you owed your bank $X in respect of a mortgage, but you were entitled to raid the bank and grab money out of it’s safe with a view to reducing the mortgage, then your so called “debt to the bank” would be a strange sort of debt, wouldn’t it?

Mark Wadsworth said...

RM, you are not consistent.

Govt debts are repaid out of taxation = agreed.

There is a limit to how much governments can raise in tax.

Therefore a heavily indebted country has less room for manoeuvre than a lightly indebted one.

Fail.

Mark Wadsworth said...

RM, in the alternative…

High govt debts lead to higher taxation (say you).

Therefore govt debt becomes a private liability again in the moment the tax is collected.

Therefore govt debts are still debts.

Ralph Musgrave said...

Mark,

Your statement that “a heavily indebted country has less room for manoeuvre than a lightly indebted one” is quite obviously true, but what’s the relevance of that? Countries that issue their own currencies, regardless of whether they are in debt to other countries or not, issue base money and make no promises to repay anything in respect of that money. Those countries / states CAN CHOOSE to give something in return for base money, e.g. you get health care as a result of your NHS contributions. But apart from specific agreements like the latter NHS one, the British government makes no promises to give you anything in respect of your £10 notes. Quite the reverse in fact: government has the right to grab those £10 notes off you and give you NOTHING in return. That’s called “tax”.

In contrast, in the case of privately issued by (e.g. issued by Lloyds, Barclays, etc) they promise to give you something in respect of your private bank “funny money”: they promise to give you a better or more secure form of money, namely base money (aka legal tender). That happens every time you go to an ATM for cash. Moreover, private banks have no right to grab money off you, except in exchange for services performed, like dealing with cheques etc.

There’s a big difference between those two forms of money.

Mike W said...

Ralph,Mark above,

Clearly there is more going on in the background between the two schools than I am familiar with. But Mark,Ralph this is simply a extended question not telling or arguing with either of you:

In the world of my limited political activity I support a Steve Keen conditional Dept Jubilee and am a member of Robin Hood (We all know it as Tobin Tax here) The two run together in my advocay.

So when I argue in my circle; I assert there needs to be a Debt Jubilee.I am asked:
How do you do it?
Well the government can increase base money, and despite what you think, can credit any account in the economy denomanated in £ that it wants.
Silence.
Won't this lead to massive inflation?
No?
Most of the Steve Keen money must be used to pay down existing Bank Debt, only those left staning with cedit balance can then spend the new money into the economy.
Well you will stiil get some surge in inflation?
No; have you heard of Robin Hood Tax on Banks? We will charge a sort of VAT tax ( I know but it helps explain) that is attached to each gamble and each loan the banks make.
So the Tobin Tax is a balancing tool to target the governments inflation target?
That's right.
Win Win I say.

As yo can see I am dead set on using 'debt free money' money in the above manner. Except of course it is not debt free. I am being honest about who is taking the liability of the Keen Jubilee. The Banks.

If you take the Robin Hood bit out of my model.Then you get the inflation back. Government has to get back on target. Someone other than the banks are now paying!

What don't I understand Ralph?

Neil Wilson said...

"Therefore a heavily indebted country has less room for manoeuvre than a lightly indebted one."

Not really. A 'heavily indebted country' is just a country with a lot of safe government savings - as Japan demonstrates every day. A 'lightly indebted country' is a country with less safe government savings.

Government debt is repaid by issuing more government debt - probably at a different interest rate. Or by QE'ing the lot away with 'zero interest perpetual bearer bonds' - another form of government debt that doesn't need rolling over.

Generally in an economy with a trade deficit you rarely see a tax surplus - simply because the private sector prefers to save more than it borrows overall in the state's currency.

You can treat government interest payments as rights to welfare payments that are transferrable. If you happen to own the right you get the welfare payments at that point in time. That's no different to receiving a state pension - except that the transferability of a state pension is more limited (generally to your spouse when you die).

People who earn interest spend it into circulation where it is taxed and saved like any other government spending. So the charging and paying of interest is just a distributional issue - like any other welfare payments.

In a good chunk of cases the state's 'debt' is actually held as an asset of a private pension fund, and the coupon funds the pensions in payment.

Mark Wadsworth said...

RM and NW, you keep trying to change the topic as if you were disagreeing with my basic point, but even you keep saying that govt debts are in fact debts.

Of course there is a matching private asset, a debt wouldn't be a debt if there weren't. You can't owe something to nobody.

It is totally irrelevant that govt debt is less damaging that some forms of debt and more damaging that other forms of debt. So what? That is not the topic.

Random said...

Look, every asset has a liability. 'Debt' is just a pejorative term for a liability. So you are very much correct Mark.

"irrelevant that govt debt is less damaging"

This is the important topic.

How is government debt damaging though? Government can always 'pay its bills' as its debts are denominated in its own currency it issues. There is no control point in the system as I said earlier.

To me what is damaging is depressed output.

Random said...
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