Rugoz wrote:Check the source of that quote. It says:
https://www.bostonfed.org/-/media/Docum ... er202m.pdf
Never trust Wiki with such details.
Why? If "net spending" is expenses minus revenue, presumably, the government has to issue bonds to get money to pay for the shortfall.
Sir, thiat last sentence shows that you still don't grok the main point behind MMT.
MMT's main point is that the US is *not* on the gold standard.
Back in the day, govs. *did* have to get gold from somewhere before they could spend it.
The US left the gold standard 50 years ago. Fifty years is, IMHO, long enough for us to *know* that the dollar does not need to be backed by gold to have or even retain its value.
When Pres. Lincoln printed greenbcks and spent them into the economy to pay for the war, he didn't have too (and didn't) sell bonds to do it. The US today has even less need to sell bonds.
You said "presumably",. Well, you were right to be unsure.
One way to maybe undrestand the concept is to assume that counterfitters could print $100 bills that could not be told from real $100 bills by any possible test. If you can grant that assumption for a moment, then if follows that the counterfitters would not need to borrow money to spend. They can just print money.
. . . The US Gov. is very like those coubterfitters. It doesn't need to sell bonds to borrpw dollars from anyone. Yes, there is some risk of inflation. However, Japan and the BoJ have doing a thing that is very like printing money. The BoJ now holds about 40% of Japan's net debt, this debt is now over 234.86% of its GDP**. Thus, it is not 40% of some small debt. Yet, Japan has one of the strongest currencies in the world, there is less than 1% inflation (ignore recent covid situations), sells all its bonds every time, and the interest on those bonds is less than 1%. Now of course, Japan is a net exporter, and this matters.
OTOH, the dollar is the world's reserve currency. The euro can't replace it because Europe normally doesn't offer many new bonds and right now its bonds are paying about 0% interest. Japan is too small to replace the dollar. China might, but right now covid has smeared mud all over its reputation, and who in their right mind would trust the CCP to keep its agreements. Right now, it is very hard to pull your dollars out of China, the gov. doesn't allow that. IIRC.
. ** .
[quote the internet] In 2019, the national debt of Japan amounted to about 234.86 percent of the gross domestic product. Japan's national debt ranks first among countries with the highest debt levels in the world, far surpassing the debt levels of Greece - which ranks number two - whose financial crisis has been in the spotlight recently.