[late]

However, nothing you said there told me what you meant by the original "That".

I was talking about the nature of money.

It can be confusing, but the economic system has a lot to do with what money is, and does.

Something that often happens, when a currency collapses, is people use receipts to replace cash. It's counter-intuitive, awkward, inefficient, but it can be done. One of my favorite moments in American history is Shay's Rebellion, it happened then.

[Steve_American]

That is a tough nut to crack. I'm content with where I'm at, since you are clearly not, you might want to look into it.

OK, now that you have clarified that by "that" you meant "money".

I can say that IMO, I understand money just fine. So, I don't understand why you think I'm not "content with where I'm at when it comes to understanding money."

[Puffer Fish]

Really, how does that work? [That people as a group act as if they think X when as an individual, they don't think X.]

Well you can play a thought experiment, Steve.
You claim individual people do not care what will happen 2 weeks or several months in the future from now, so long as they can get their money now.

But now suppose there was only one or two people in the entire economy. In that case, those individuals very much would have to rely on what they expected to happen in the future. Maybe that will make things easier to clarify in your mind.

You seem to be stuck in the micro perspective of economics, and unable to see the bigger macro picture. That money in the bank account is only worth something because they expect someone else to take it, and that person in turn expects someone else to take it. Ultimately it does depend on a future expectation that someone will actually be able to get money from the bank and the expectation that the loan will be paid off.

You might say the government guarantees money in the bank, but even if that were 100% true (which it is not) then it still would not disprove the argument. Government cannot guarantee all the money if all the loans in the economy were to go bad. And the point is that "money" will still disappear in the overall economy. Where do you think the government is getting that money to pay off someone else's loan?

Steve, I think you need to think about this some more.

[Steve_American]

Well you can play a thought experiment, Steve.
1] You claim individual people do not care what will happen 2 weeks or several months in the future from now, so long as they can get their money now.

But 2] now suppose there was only one or two people in the entire economy. In that case, those individuals very much would have to rely on what they expected to happen in the future. Maybe that will make things easier to clarify in your mind.

You seem to be stuck in the micro perspective of economics, and unable to see the bigger macro picture. That money in the bank account is only worth something because they expect someone else to take it, and that person in turn expects someone else to take it. Ultimately it does depend on a future expectation that 3] someone will actually be able to get money from the bank and 4] the expectation that the loan will be paid off.

You might say the government guarantees money in the bank, but even if that were 100% true (which it is not) then it still would not disprove the argument. 5] Government cannot guarantee all the money if all the loans in the economy were to go bad. And the point is that "money" will still disappear in the overall economy. 6] Where do you think the government is getting that money to pay off someone else's loan?

Steve, I think you need to think about this some more.

1] PF, you know I never said that. The number I gave for the time was 10 years from now. If people somehow knew what would happen in 2 weeks, it likely would change their behavior now. But, most people have no idea what will happen in 2 weeks, except well predicted elections, and sometimes they get that wrong too, see 2016.

2] I strongly assert that no one can prove anything with a false premise like this one is. No economy can have 1 person, that is silly. It's almost as silly to assume an economy has just 2 people.

3] Well 99.99% of the days of an adult's life, everyone can access their money in a bank (now from ATMs). So, mostly this is not on people's minds. When the Silcon Valley bank got in trouble did even 1 person, who didn't work at the bank, see that coming?

4] Here you are just asserting this. This is what you claimed. You can't simply assume it is true to prove it is true. You need to provide a proof, or at least some argument with evidence.

5] Actually, the Gov. does and can pay if every single bank failed on the same day. In this extreme case it would need to simply create a lot of dollars from thin air. These dollars would be replacing the dollars that disappeared. So, they would not be inflationary.

6] I misunderstood this question. I'll answer what I thought you asked and what you did ask.
I'm not 100% sure where the FDIC & Gov. gets the dollars to make good 100% of the insured dollars in the banks. I do know that banks make insurance payments. These are, I think, saved by buying a US bond. If the fund is not enough, the Gov. will sell bonds to get dollars, and if it can't sell bonds, it will just create the dollars. This is not inflationary because they are replacing dollars that disappeared, so that they don't disappear.

You actually asked about a case like the student loan forgiveness program, where the US Gov. pays off the student's loans (partially or in full). In this case MMTers assert that the Gov. will sell bonds, and if it can't sell bonds, it will create the dollars. So far, the Gov. can always sell bonds (for all of my life, but maybe not in 1930). In WWII about 50% of war bonds were sold directly to the Fed Res Bk. Does this count as selling bonds?

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BTW -- I asserted that when a borrower declares bankruptcy or lets the bank foreclose on their house, the borrower still has an income. They can spend that money on something else. The money doesn't go to the bank, it goes to someone else in the economy, so it doesn't disappear from the economy. Yes, they will need to pay more income tax on the dollars that the law changes from a loan to income, and these dollars are removed from the economy, unless the Gov. spends them back into the economy, which it always does.
. . PF and lurkers, I asserted this, and he had no reply to this claim that the dollars that are no longer being paid to the bank have not actually disappeared from the economy, like he asserts. He just ignored my argument.

I see that this thread gets around 100 to 200 plus views a day. So, there are a lot of lurkers.
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