Originally posted by top-quark Thanks for the links, Jeff. Good food for thought. Totally agree with some of the posits: borrowing now does not necessarily impoverish our grandchildren and trade, all trade (except maybe endangered wild animals and exploited humans), is good.
Disagree fundamentally with the fundamental posit, however. We would have an economy without a government. There was a neolithic axe trade without there having to be a Beaker People Treasury. Money is a proxy for goods and services, nothing more, nothing less. It is the lubricant that allows me to buy something without having to have something that the other party directly wants. This means that it has real value (it is exchangeable) and is finite.
Second major disagreement: taxes were originally raised to finance wars. Regulating spending and redistributing wealth are modern refinements.
Thirdly, government cheques most certainly CAN bounce. The UK government used to send out fortnightly giros to the (plentiful) unemployed. Were I in receipt of one, I could sign my name on the back, take it to the corner shop and exchange for a four pack of beer, a bottle of scotch, a couple of packets of cigarettes and change. But what happens when the shopkeepers refuse to accept government cheques (and government issued currency, for that matter)? This is pretty much what happened in Yeltsin's Russia, what is happening in Mugabe's Zimbabwe and what has always happened when a government has completely debased its currency.
Warren Mosler's is another economic theory among many competing ones. Sometimes these actually get put to the test. His reads suspiciously like command economics which has been extensively tested on unwilling subjects and always found wanting.
Well basically you have the idea BUT (there is always a but) 1) None of it applied til 1972 when we went totally off the gold standard. Anything before this is irreverent. 2) Zimbabwe totally destroyed their "engines of production" (basically stopped producing their one industry .. food) A situation entirely irreverent to the US considering our economy .
3)Russia voluntarily collapsed their currency (On 17 August 1998, the Russian government devalued the ruble, defaulted on domestic debt, and declared a moratorium on payment to foreign creditors) which was completely voluntary.. They NEVER (as fiat producer of their currency) EVER had to "default on domestic debt"...AND..
Quote: Russia bounced back from the August 1998 financial crash with surprising speed. Much of the reason for the recovery is that world oil prices rapidly rose during 1999–2000 (just as falling energy prices on the world market helped to deepen Russia's financial troubles), so that Russia ran a large trade surplus in 1999 and 2000. Another reason is that domestic industries, such as food processing, had benefited from the devaluation, which caused a steep increase in the prices of imported goods.[13][14]
Also, since Russia's economy was operating to such a large extent on barter and other non-monetary instruments of exchange, the financial collapse had far less of an impact on many producers than it would had the economy been dependent on a banking system. Finally, the economy has been helped by an infusion of cash; as enterprises were able to pay off arrears in back wages and taxes, it in turn allowed consumer demand for the goods and services of Russian industry to rise.
For the first time in many years, unemployment in 2000 fell as enterprises added workers. Since the 1998 crisis, the Russian government...........
So bottom line kind of worked
Quote: The UK government used to send out fortnightly giros to the (plentiful) unemployed. Were I in receipt of one, I could sign my name on the back, take it to the corner shop and exchange for a four pack of beer, a bottle of scotch, a couple of packets of cigarettes and change. But what happens when the shopkeepers refuse to accept government cheques (and government issued currency, for that matter)?
DID they stop accepting them???