When Congress directs the US treasury to do something that requires new money be created, what is the process of that new money coming into existence? This article is based on this interview with Warren Mosler. https://youtu.be/480sGei5ZsA The mechanics of how the US treasury creates new money Step 1: The US treasury sells bonds to … Continue reading How the US Treasury creates new money
When a nation has a sovereign currency, measuring national wealth in dollars makes no sense. Money is created (and destroyed) by the banking system (which in the US includes the US Treasury and the Federal Reserve Bank) as needed. When we ask things like "How are we going to pay for it"?, we're misleading ourselves. … Continue reading The Wealth of a Nation is Not Measured in Money, but in Productive Output
Someone shared the tweet thread below with me on either Facebook or Twitter (can't remember) and it's EXCELLENT. So I've recreated it here, as faithfully as possible to the original as I can. I learned stuff and I hope you do too. To see the original tweet thread, click here. Tweet Thread About Reserve Accounting … Continue reading Understanding How Modern Money Works, Requires Knowing Reserve Accounting
We are not borrowing money from China...... What the Government is doing is creating its own financing to activate idle resources. Just like the private sector does.The Cowboy Economist (aka John Harvey Ph.D.) In this video lesson, the Cowboy Economist explains how the federal government finances its deficits. But before you watch this, you really … Continue reading Cowboy Economist Tells Us How the Government Finances Its Deficits
Did you know commercial banks create money out of thin air every time they loan money? You may have thought that when you take out a $30,000 car loan, the banks takes $30,000 from their vault, and loan you other people's savings. This is not the case. They literally create $30,000 out of thin air, … Continue reading Cowboy Economist Tells Us How the Private Sector Finances Its Deficits
The Cowboy Economist is John Harvey, PhD, who has started making really funny educational videos about econonmics. They're worth sharing, so I am. John draws a distinction between big S socialism (Karl Marx) and small S socialism (Bernie Sanders) in a way that clearly distinguishes them. The two definitions are below. As he says, they're … Continue reading Cowboy Economist Tells Us How to Recognize a Socialist
This is really a question or inquiry from me. I'm not an economist. Both of these terms are new to me. Adam Smith spoke about Economic Rent. Rent-seeking is an individual's or entity's use of company, organizational or individual resources to obtain economic gain without reciprocating any benefits to society through wealth creation. As defined … Continue reading Is Economic Rent (Adam Smith) and Fictitious Capital (Karl Marx) the Same Thing?
I listened to an interview of Warren Mosler by Bob Murphy, for episode 18 of The Bob Murphy Show podcast. A link to the full interview is at the bottom of the post. The interview is easily divided into three sections, which can be listened to independently if desired, so I broke the interview audio … Continue reading Warren Mosler Interviewed about Modern Monetary Theory (MMT)
Stephanie Kelton provides a really good answer to the question of How Can We Afford Medicare for All? She points out that the US currently pays TWICE what others industrialized countries pay. At first glance, it seems weird to ask how we'll pay for something that costs significantly less than what we're currently paying. The … Continue reading How Can We Afford Medicare for All?
To be clear, this applies to currency issuing governments ONLY. This is true of the US Federal government. This is not true of the government of Texas. The US is the currency ISSUER. Texas is a currency USER, just like you and me. Having said that, the reason we have money is because the currency … Continue reading Government Deficit Spending Creates Private Sector Surpluses