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Cake day: December 25th, 2023

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  • pearable@lemmy.mltoMemes@lemmy.mlthe debt
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    7 months ago

    That sort of thing can happen in extreme situations. Zimbabwe and Weimar Germany are the most prominent examples. Both examples involved not having enough stuff. When there aren’t enough necessary goods to buy and people have plenty of money you’re going to get inflation. Using the right combo of subsidies, government run production, purchase quantity limits, reserves, vouchers, and price fixing you can ensure the supply is stable and eliminate inflation even if there’s lots of money.

    That’s true. That happens because people are stuck in the narrative of the government needing a balanced budget, just like a household. It also happens because the owners and the corpos use all their money and power to ensure workers pay taxes and thus decrease worker money and power.

    Yeah, if the population was educated on MMT the ability to bring corpos to heel would be significantly increased. People arguing for it are fundamentally arguing for a change in how we think about money.













  • I didn’t say they can’t, I said it was fraught. A better phrasing is “can cause issues a non-euro country does not have.” This quote explains what I mean:

    So, in the eurozone a national (federal) government cannot run out of money as long as:

    • tax revenues are high enough to bring the Treasury account back to zero or
    • bond revenues are high enough to bring the Treasury account back to zero or
    • tax and bond revenues together are high enough to bring the Treasury account back to zero.

    This means that a eurozone national government does not run out of money until it has exhausted its tax revenues and bond revenues

    The United States, Great Britain, Japan, and every other fiat currency country don’t have this problem. They are incapable of running out of money. They are capable of making so much money it is completely debased like Weighmar Germany or Zimbabwe. However, those cases are rare and extreme. As long as they ensure the supply of goods people want to buy us sufficient they can spend as much as they want. This enables them to pay off their debts on a whim (if they want to collapse the safest store for money that investors use to outweigh risks).

    Sources:

    The Deficit Myth I’d give you page numbers but I listened to the audiobook https://www.intereconomics.eu/contents/year/2022/number/2/article/modern-monetary-theory-the-right-compass-for-decision-making.html