Guest_FaFa!_* Posted November 18, 2013 Share Posted November 18, 2013 http://www.youtube.com/watch?v=qD3XMyNmfeY&feature=player_embedded Quote Link to comment Share on other sites More sharing options...
terryturbojr Posted November 18, 2013 Share Posted November 18, 2013 I tend to agree with that school of thought for the US (and anyone issuing in a currency they have control over). I think some of those tea party lunatics would actually choose to default though. Quote Link to comment Share on other sites More sharing options...
DabHand Posted November 18, 2013 Share Posted November 18, 2013 I tend to agree with that school of thought for the US (and anyone issuing in a currency they have control over). I think some of those tea party lunatics would actually choose to default though. If the debt doesn't matter then neither does defaulting in that case. At some point in the past, the US was no longer able to cover its expenses and borrowing commitments without monetisation (or continuing to issue promises on future productivity that will never be met under anyone's projections). At some point a lot of people will be expecting to collect on those claims and only then will they find out there is nothing for them. The devaluation of the currency is a soft default. Just because a lender gets the nominal payment promised, how different is it from default if its worth less or even worthless. Quote Link to comment Share on other sites More sharing options...
onlyme2 Posted November 18, 2013 Share Posted November 18, 2013 (edited) So, they can't nominally default becuase they have a printing press. No mention of the distorting effect of that newly printed debt, you could wipe out the living standard of 100's millions and as an economist would state that all is well as there has been no default. Looks like we'll find out how this process ends. Edited November 18, 2013 by onlyme2 Quote Link to comment Share on other sites More sharing options...
Butthead Posted November 18, 2013 Share Posted November 18, 2013 Then why do Americans work? Surely the answer is just to print enough dollars to provide enough goods and services for everyone's needs. Why hasn't this foolproof plan and obvious vote-winner been implemented yet...!? Quote Link to comment Share on other sites More sharing options...
erat_forte Posted November 18, 2013 Share Posted November 18, 2013 Then why do Americans work? Surely the answer is just to print enough dollars to provide enough goods and services for everyone's needs. Why hasn't this foolproof plan and obvious vote-winner been implemented yet...!? Social control. Quote Link to comment Share on other sites More sharing options...
(Blizzard) Posted November 18, 2013 Share Posted November 18, 2013 If the debt doesn't matter then neither does defaulting in that case... The devaluation of the currency is a soft default... Exactly. What's the difference between running inflation at 5%/year to meet your debt, or having no inflation and simply defaulting on 5% of your debt each year? It seems to me (as a layman) that this is either a massive market irrationality, which casts doubt on a lot of economic theory, or that this is another one of those ideas that has no real basis in economics but is put about for political reasons (deflation is bad, house price rises boost consumer spending, devaluing a currency boosts exports...) Quote Link to comment Share on other sites More sharing options...
weaker Posted November 18, 2013 Share Posted November 18, 2013 (edited) "When the Gov writes you a check, the Gov does not have to find that money, it sends a signal to your bank" "Because the electricity supply to those computers that send those signals will never be cut off" erm...Zimbabwe owned its own presses too. leads to.. So the argument goes that the USD is THE reserve asset and there is nothing better out there. The BRICS countries are starting to disagree with that assertion. Galbraith sounds conceited, and appears to me to be a deceitful, duplicitous tool in this piece. "The Greeks have to earn Euro in order to pay interest... The US Government does not need to earn dollars to pay interest". BUT The US does have to earn respect and keep it in order to retain the privileged position of reserve currency. Crony capitalism is slowly but surely destroying the "Full faith and Credit" aspect. Edited November 18, 2013 by weaker Quote Link to comment Share on other sites More sharing options...
Butthead Posted November 18, 2013 Share Posted November 18, 2013 Galbraith sounds conceited, and appears to me to be a deceitful, duplicitous tool in this piece... All MMT proponents that I can think of tend to sound conceited and self-righteous. They seem to have this belief that they're above any requirement to explain their theories (we "wouldn't understand them anyway") and deal with objections by growing increasingly arrogant and irritated. FaFa! is a good example as I predict having started the thread with what he thinks is an educational clip for those poor fools at HPC he won't be back to answer any of the obvious criticisms... Quote Link to comment Share on other sites More sharing options...
Butthead Posted November 18, 2013 Share Posted November 18, 2013 The second half of the interview is here, starts at 16:10 Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted November 18, 2013 Share Posted November 18, 2013 At 1.41 in the interview, the Galbraith says that we have recently modernised our money to what is called FIAT system. I stopped listening there and then. Of course, if I issue receipts that are reciepts for nothing, then I can never default...I just issue more reciepts...Its a shame that the people that recieve these receipts and use them as a means of exchange find they become worth less and less Technically, the issuer hasnt defaulted...but whereas yesterday, I could get food on my table for the reciepts, today, I cant. Id call that a default just the same. Indeed, I expect the same guy to argue that inflation does exactly that to old debt...makes it cheap to pay off....THAT is a default in value, if not in legal terms. Quote Link to comment Share on other sites More sharing options...
weaker Posted November 18, 2013 Share Posted November 18, 2013 All MMT proponents that I can think of tend to sound conceited and self-righteous. They seem to have this belief that they're above any requirement to explain their theories (we "wouldn't understand them anyway") and deal with objections by growing increasingly arrogant and irritated. FaFa! is a good example as I predict having started the thread with what he thinks is an educational clip for those poor fools at HPC he won't be back to answer any of the obvious criticisms... Yeah, looks like you are right! FaFa! - come back and answer for your assertions. Quote Link to comment Share on other sites More sharing options...
onlyme2 Posted November 18, 2013 Share Posted November 18, 2013 Technically, the issuer hasnt defaulted...but whereas yesterday, I could get food on my table for the reciepts, today, I cant. Id call that a default just the same. Indeed, I expect the same guy to argue that inflation does exactly that to old debt...makes it cheap to pay off....THAT is a default in value, if not in legal terms. That's why he thinks the debt isn;t serious, but real serious issues are energy, climate and foreclosures. Of those three. i) Energy - yes that is a big issue ii) Climate - favourite of the pliticians, the economists have pulled rank on that one, they are little more than political excuse makers anyway, there is nothing in the US climate that is historically all that different than recent history going back deacdes. iii) Bad for banks and market value of various bonds, but jsut a market working clearing out the excess that the economist so favoured before. No mention of income distribution (probably worse now than the 30's), 50 million plus on food stamps, 60,000 shuttered manufacturing plants (done so during the latest FIAT money, no correlation there at all nosiree), inflation, devaluation, funding rolling wars around the globe to keep the USD a safe bet against other currencies (until that finally fails). Quote Link to comment Share on other sites More sharing options...
Biggus Posted November 18, 2013 Share Posted November 18, 2013 The United States cannot print money. That power lies with the Federal Reserve. That is why the United States owes the Federal Reserve trillions of dollars. So, basically, the guy is talking rubbish. I've read a couple of his father's books, though, and they are good. Quote Link to comment Share on other sites More sharing options...
R K Posted November 18, 2013 Share Posted November 18, 2013 "When the Gov writes you a check, the Gov does not have to find that money, it sends a signal to your bank" "Because the electricity supply to those computers that send those signals will never be cut off" erm...Zimbabwe owned its own presses too. leads to.. So the argument goes that the USD is THE reserve asset and there is nothing better out there. The BRICS countries are starting to disagree with that assertion. Galbraith sounds conceited, and appears to me to be a deceitful, duplicitous tool in this piece. "The Greeks have to earn Euro in order to pay interest... The US Government does not need to earn dollars to pay interest". BUT The US does have to earn respect and keep it in order to retain the privileged position of reserve currency. Crony capitalism is slowly but surely destroying the "Full faith and Credit" aspect. No. It doesn't. If China (for instance) decided to change its model from accumulating surpluses, which essentially means USD obligations, then it de facto means the US will need to print fewer dollars. The mechanism of the US running trade deficits will be reversed and the problem of the USD as global reserve currency will resolve itself. The simple fact of the matter is that neither the Euro, nor the Renminbi are anywhere near capable of replacing the US as 'benevolent hegemon'. (See my Kindleberger thread for more) Without a global reserve currency there can be no surplus recycling, and China (and India, Russia etc) would have been unable to enter the global trading system. Comparing US to zimbabwe is a ridiculous conceit. Zimbabwe hyperinflated not due to printing money but due to a massive output shock which resulted in them printing money. Quote Link to comment Share on other sites More sharing options...
Guest_FaFa!_* Posted November 18, 2013 Author Share Posted November 18, 2013 (edited) BUT The US does have to earn respect and keep it in order to retain the privileged position of reserve currency. Crony capitalism is slowly but surely destroying the "Full faith and Credit" aspect. RK said what I was going to say. The interesting point if the video IMHO is the assertion, repeated by RK, that the US runs its deficit/has this much debt due to owning the international reserve currency and currency of trade. So it isn't really a choice, but simply a reflection of how global trade is currently constructed. Edited November 18, 2013 by FaFa! Quote Link to comment Share on other sites More sharing options...
Guest_FaFa!_* Posted November 18, 2013 Author Share Posted November 18, 2013 FaFa! is a good example as I predict having started the thread with what he thinks is an educational clip for those poor fools at HPC he won't be back to answer any of the obvious criticisms... Galbraith isn't MMT. I look forward to you backing your assertion that I run away from threads with some links. Otherwise I look forward to you withdrawing the accusation of cowardice and apologizing. Quote Link to comment Share on other sites More sharing options...
Guest_FaFa!_* Posted November 18, 2013 Author Share Posted November 18, 2013 Yeah, looks like you are right! FaFa! - come back and answer for your assertions. I posted this at 5am which means (i) I work irregular hours or (ii) I am in a different timezone. So I cannot be expected to always respond to threads as quickly as I would like. You can perhaps join VoR in giving some links where I ran from a thread, or perhaps just admit you assumed VoR was right because his point of view fit with your prejudices. I note you put a link to a 50 page document in response to me on the goldbug thread, I assume you wont start clamoring for a response soon. It will take me a while to get round to reading it and digesting it. Quote Link to comment Share on other sites More sharing options...
Butthead Posted November 18, 2013 Share Posted November 18, 2013 Galbraith isn't MMT. I look forward to you backing your assertion that I run away from threads with some links. Otherwise I look forward to you withdrawing the accusation of cowardice and apologizing. I might apologise if you actually answer any of the obvious criticisms from the posts on the first page. How about my point; "Why do Americans work"? If the US can just issue dollars in exchange for goods then why don't they do that exclusively? Quote Link to comment Share on other sites More sharing options...
Guest_FaFa!_* Posted November 18, 2013 Author Share Posted November 18, 2013 I might apologise if you actually answer any of the obvious criticisms from the posts on the first page. How about my point; "Why do Americans work"? If the US can just issue dollars in exchange for goods then why don't they do that exclusively? 1. No, you called me a coward - back the assertion up 2. Why should I answer your strawman? Galbraith didn't discuss government spending or make that assertion. He observed that the US has the debt/deficit it has directly due to its role in the global system and this situation is sustainable as long as the system remains as is. Only weaker appears to have grasped that point. Quote Link to comment Share on other sites More sharing options...
weaker Posted November 18, 2013 Share Posted November 18, 2013 (edited) RK said what I was going to say. The interesting point if the video IMHO is the assertion, repeated by RK, that the US runs its deficit due to owning the international reserve currency and currency of trade. So it isn't really a choice, but simply a reflection of how global trade is currently constructed. Sure, there is extra demand because the US is the current "benevolent hegemon". But there is no way that this: "the US runs its deficit due to owning the international reserve currency and currency of trade" accounts for the dramatic shift in 2008! Deficits moved from, what, $250 Bn in 2001-2007, to over $1 Tr (on average) since? No, that's money printing. Pure and simple Deficit Spending. Did they give ET an Obamaphone? Of course, the Fed began monetising the debt at that step-change. In fact, one could argue there has been a shift away from the "benevolent hegemon" view since 2008; the BRICS are clearly unhappy with Cronyism. Edited November 18, 2013 by weaker Quote Link to comment Share on other sites More sharing options...
Butthead Posted November 18, 2013 Share Posted November 18, 2013 1. No, you called me a coward - back the assertion up No, what I said was ...They seem to have this belief that they're above any requirement to explain their theories (we "wouldn't understand them anyway") and deal with objections by growing increasingly arrogant and irritated. FaFa! is a good example... 2. Why should I answer your strawman? Galbraith didn't discuss government spending or make that assertion. He observed that the US has the debt/deficit it has directly due to its role in the global system and this situation is sustainable as long as the system remains as is. Only weaker appears to have grasped that point. Thanks for proving my point! ...and this situation is sustainable as long as the system remains as is... So there's no crisis in the public debt until there is a crisis in the public debt then...? Quote Link to comment Share on other sites More sharing options...
Guest_FaFa!_* Posted November 18, 2013 Author Share Posted November 18, 2013 Sure, there is extra demand because the US is the current "benevolent hegemon". But there is no way that this: "the US runs its deficit due to owning the international reserve currency and currency of trade" accounts for the dramatic shift in 2008! Deficits moved from, what, $250 Bn in 2001-2007, to over $1 Tr? Of course, the Fed began monetising the debt at that step-change. In fact, one could argue there has been a shift away from the "benevolent hegemon" view since 2008; the BRICS are clearly unhappy with Cronyism. The BRICs would know a lot about cronyism given their countries exemplify it. The idea they would want a shift away from the system which enables their elites to concentrate the wealth in their hands is unlikely IMHO The deficit/debt in 2008 would be due to the bailout of the banks and the collapse in the tax take. It doesn't remove Galbraiths central point and indeed his assertion that the deficit will reduce as the economy recovers is backed by the very chart you posted. Quote Link to comment Share on other sites More sharing options...
Guest_FaFa!_* Posted November 18, 2013 Author Share Posted November 18, 2013 No, what I said was ...They seem to have this belief that they're above any requirement to explain their theories (we "wouldn't understand them anyway") and deal with objections by growing increasingly arrogant and irritated. FaFa! is a good example... Thanks for proving my point! So there's no crisis in the public debt until there is a crisis in the public debt then...? Galbraith did not say that you can simply print all the money you need and no one needs to work and neither did I. I dont believe that to be the case. Could we stick to what the video said (which I posted with no commentary) rather than me having to defend points I never made? Quote Link to comment Share on other sites More sharing options...
Butthead Posted November 18, 2013 Share Posted November 18, 2013 Galbraith did not say that you can simply print all the money you need and no one needs to work and neither did I. I dont believe that to be the case. Could we stick to what the video said (which I posted with no commentary) rather than me having to defend points I never made? But a logical extension of "The US exports dollars and imports goods" is the point I made. Do you agree that the US exports dollars and imports goods? Do you agree that the US can't just print dollars to import whatever it wants? If yes to both, let's explore the point at which the situation would lose balance and whether we are currently on a path to that scenario coming to pass. Quote Link to comment Share on other sites More sharing options...
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