Woolleybugger
Mayor
- The sovereign “deficit” is not a debt which the citizens have to repay with future taxes. Instead, the sovereign “deficit” is simply the balance sheet accounting of the fiat Dollars the sovereign has issued and paid to the citizens. What is written as a “deficit” on the sovereign side of the balance sheet is a financial “asset”—Dollars earned—on the citizen’s side. The citizens then use those Dollar assets to pay for goods and services amongst themselves.
Now there is much more to this new way of thinking about money but this is a great start. As long as we have excess capacity in the nation in terms of labor, resources and capital, we are under utilizing our ability to perform at peak levels. The only way we can increase our demand is to export more than we import or spend/earn more ourselves. If we cannot export our way to full employment and we do not have enough money to increase domestic demand, the only place to go is the government. The deficits over time represent the amount of money we allowed to be spent filling this gap. We will never pay it back, why should we? Who would we pay back anyway? We would be paying ourselves. No, the deficit is completely immaterial to economic well being unless we are operating at peak employment. The day we are fully employed meaning that everyone that is capable to have a job has a job doing something important to all of us is the day we will no longer need to replace that demand from fiat money. Now where does this extra demand come from? The government. They just spend enough money to keep everyone participating in the economy in a meaningful way. We have millions of college kids out of work. Put them to work. We have millions of over 50 folks that got laid off and can't find a job. Give them a job. We force kids to go into debt to educate themselves, absurd. We should be funding them 100%. No, austerity and the traditional way of viewing money and deficits is wrong. Read the blog.