I was wondering if someone could give me a hand with this guys blog post - he seems to think that the US Government is not Revenue Constrained - And can basically print money forever with no downside - he is of the mind that even taxes are theoretically not necessary. Also he thinks that the USA …

It is not revenue constrained… until the dollar goes out of circulation. This is why spending should be attacked rather than taxes. Taxes only matter because they are spent.

So what would lead to the dollar to go out of circulation? By this guys reaonsing, couldn’t the US Federal Government just pay off everyones debt? That would be monetizing the debt - correct? And he seems to claim that the US does not owe anyone any money - is this guy a monetarist? Thanks.

If money inflates too quickly, people won’t want to use it. They’ll change currencies to Euros or Pesos (lol) but more likely gold. The trick is for the government to keep inflation low enough where its cost of forcing people to use it is low. If everyone just put up with inflation, then yeah the go…

So effectively they are slowly stealing from us. That is why the Canadian Government keeps inflation at 2% and it is considered a good thing. So what is the benefit of this system? Simply that Governments can spend as much as they like? Taking into account Inflation? And what is the point of a Fe…

Modern economists think that inflation is needed to keep pace with growth. They are terrified of deflation because they associate it with depressions. There is a lot of Austrian literature countering this assumption Yeah the government can basically just print whatever money it needs, but its a b…

Modern economists think that inflation is needed to keep pace with growth. They are terrified of deflation because they associate it with depressions. There is a lot of Austrian literature countering this assumption So this is why they have the large economic meetings and call for Austerity or sp…

Fractional reserve banking can’t be practiced on the free market. Banks make loans and have many customers, so their checks get distributed around amongst many banks. If Bank A had a higher reserve ratio than Bank B, when the Banks call in eachother’s checks, Bank B goes bust. So you need a central…

So you need a central bank to keep the fractional reserve ratio about the same so that banks can inflate safely. Interesting point - Canadian Banks have absolutely no reserve requirements. The can be leveraged 100% - What would I ask my banker? what are your cash reserves? I want to stump them. W…

Just because they can doesn’t mean its a good idea. Reserves are kept in order to meet demand for withdrawls. Whether a reserve requirement is mandated or not, failing to have enough on hand to keep up with demand is a death sentence, even with nets like the FDIC.

Vertical and Horizontal Monetary Creation???

Economics Economics Questions

Think_Blue July 27, 2010, 9:27pm 5

This theory is known as Chartalism:

http://en.wikipedia.org/wiki/Chartalism

More information can also be found on this thread:

[url]Public deficits = net private savings]

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Vertical and Horizontal Monetary Creation???

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