Why do so many people cling to the Household analogy for the US Gov.? - Politics Forum.org | PoFo

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Why do so many people cling to the Household analogy for the US Gov.?

1] Before 1971 it made more sense. At that time everyone knew that the world was on the gold standard or that it would return to it after “this crisis” {WWI?} was resolved. At that time there was a significant difference between paper dollars and dollars in a bond. Paper dollars could be traded in at the Treasury for gold and bonds could not. Every nation had to protect its gold supply, so it could not let too many dollars {or whatever the currency was called} be in circulation. It was thought that selling bonds had the long term effect of attaining that goal. [I'm not so sure this was so, but I think the leaders then did think that way.]
. . . So, before 1971 the Household analogy made a certain amount of sense. If all the gold was sucked out of the nation's treasury then ts paper money would not be backed by gold and would therefore be worthless.

2] For a few or many years after 1971 many people were afraid that there would be a lot of inflation. Among them were the hyperconservative leaders of the Arab members of OPEC. IMHO, this led those Arab leaders to drive up the price of oil. They saw some inflation and they feared more so it made perfect sense for them to raise the price of their oil to keep up with or even get ahead of the inflation that they were certain would happen when the dollar was not backed by gold.

3] Now it is 48 years later. For the last 20 or 30 of those years, at least, there has been low inflation. This proves that fiat currency does not cause hyperinflation. This proves that the chartalists were right, money is given value by the fact that many people need some of it to pay their taxes. And many of those people are high income people rather than low income people, therefore the high income people will their trade the stuff they make for the dollars of poor people. And this fact is what makes the economy keep going with “worthless” paper money being used as legal tender.
. . . Now there are economists that say that with a fiat currency a nation can now deficit spend and not worry about its gold supply being drained as a result. And that it doesn't even need to sell bonds to deficit spend. This means, they say, that bond buyers must accept the interest rates and other terms offered by the nation's Gov. or just not buy bonds. This means, they say, that the Gov. is NOT *financially* constrained from deficit spending in ANY way because it can always just spend newly created dollars. However, they also say that the Gov. IS *constrained* by the amount of real stuff and unemployed labor in the economy. As soon as all the labor and stuff is being used for something, any additional deficit spending is likely to lead to inflation and a lot of deficit spending {in this situation} could lead to hyperinflation. This would happen with or without bond sales.

4] So, how is the US Gov. like a household or, more accurately, a company? Some economists have been saying for decades that this is just a fallacy. A story told to keep the population ignorant of the facts. That the US Gov. is now able to spend a lot more to help the little people. Is seems like the top 1% want the little people to be desperate for a job and so willing to work for lower wages.

5] However, actually, the 1% are shooting themselves in the foot. The 1% would make more profit if their customers had more money. The business owners can't pay their workers more if no other businesses do the same. However. if the Gov. makes them all pay more then they all make more profits. Apparently the business owners are so afraid that the workers will get even more power and make them pay them so much that their profits will not be increased by the increased sales. Or, maybe it is a conspiracy to keep from damaging the environment even more than we are already. this
seems unlikely because the 1% *don't* seem to care that the IPCC says we are risking the end of civilization if we don't stop dumping CO2 into the air.

But, this doesn't really matter much for why does so many people believe that the US Gov. is like a household. Unless it is because the 1% use their media power to keep the people ignorant.

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