Money Week is weighing in with some advice for the Chancellor, too much debt? Just inflate it away.
However, they don't mention who'd be paying the debt in that case, yes, the poor bloody saver, with the real value of their savings decreasing year on year. Of course, if you own land, like all proper citizens should and are in debt, then it's win win. Your land goes up in value while your debts reduce.
'Twas ever thus, it's even in the Bible, Mark 4:25
"For whosoever hath, to him shall be given, and he shall have more abundance; but whosoever hath not, from him shall be taken away even that he hath."
Thursday, 24 December 2020
They don't own land, charge them money!
My latest blogpost: They don't own land, charge them money!Tweet this! Posted by Bayard at 13:55
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11 comments:
This has been a successful electoral strategy for the past couple of decades...
Debtors versus savers. Easy money camp versus hard money camp.
That article is economically illiterate drivel.
First, it treats the national debt like a MICRO ECONOMIC debt (e.g. a household debt). I.e. the author cannot distinguish between macro and micro.
Second, the author does not get the point explained over and over by MMTers, namely that the national debt is an ASSET as viewed by the private sector (not much different to cash). If the amount of debt / cash falls below what the private sector (e.g. households) want to hold, the latter will then start saving so as to acquire their desired stock of debt/cash, and that causes Keynesian "paradox of thrift" unemployment..!!!!
"That article is economically illiterate drivel."
Indeed, but that won't stop the government acting in precisely that way. Actually, I expected better from MoneyWeek. I thought they were going to suggest LVT.
"namely that the national debt is an ASSET as viewed by the private sector (not much different to cash)."
Indeed, all the cash in circulation is already government debt. There is no difference between a fancy IOU printed on plastic with a hologram and a electronic IOU on a computer somewhere.
RM, sure, govt debt or indeed cash (they are the same as B explains) are an asset to the holder (and a liability for the taxpayer). Thus they dilute the value of cash held by savers, which was L's point.
And either way, inflation is inflation, it transfers from savers to borrowers/land speculators unless interest rates go up to compensate, which again was L's point.
Are you sure more money printing, always, dilutes the existing stock?
This would only be true if banks brought it into circulation through loans, AND people took it all up as loans and spent it, always.
If either of the above didn't happen, how will it effect purchasing power?
RM, if, under MMT, to much government spending results in inflation and too little results in unemployment, how is it possible to have both unemployment and inflation at the same time?
RS, you have to start by thinking, what money actually is, which is a way to make commerce easier by pricing debt. Money is debt and currency is the units of debt, in the same way as temperature is heat energy and Celsius is the unit of temperature. If you go to the US, your debt is measured in dollars and your temperature is measured in Fahrenheit.
Bayard, I thought at its most basic level, money is what you buy things with?
And if no one wants to buy anything with the extra money, more of it cannot reduce purchasing power?
You have to think.
Yes, but why can you buy things with money, it's only fancy pieces of paper or 1s and 0s in a computer?
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