[Steve_American]

If you can imagine that MMT is correct, and the national debt doesn't matter, then the debt crisis is totally crazy.
Whether or not MMT is correct, what the Repuds in the House and everyone who agrees with them are doing is to cause a default now in order to avoid a default later.
If you can get yourself to see that MMT is correct, then this becomes, the Repuds in the House and everyone who agrees with them are doing is to cause a default now in order to avoid an imaginary default later. Imaginary because it will never happen.


Now, let me explain why MMT is correct.
1] The key point with MMT is that we are off the gold standard.
, , a] This means we should or must reevaluate all economic theories to remove all parts that are no longer valid, because the gold standard has ended.
. . b] The US issues the dollar. It doesn't need to get dollars to pay its bills or to buy anything. So, it can always pay off every bond when it comes due. It can always pay the interest on the debt when that comes due. It will always do these things somehow, because the Constitution and laws are not a suicide pact. It is crazy to think otherwise.

2] Selling bonds is an example of the practice that began under the gold standard. England found that selling bonds to the rich was easier than taxing the rich, and it was already taxing the non-rich as much as it could. Over time, it was realized that the economy worked better because this allowed the functional money supply to grow as the population and economy grew. There were 2 kinds of money; bills/gold coins and bonds. Bonds could not be used to demand gold. Selling bonds was better than printing bills because nations needed to protect their gold supply, and printing too many bills would allow their holders to drain all the gold away.

3] Bonds are not needed for this purpose now that the gold standard has been ended. However, bonds now have other functions like being held by insurance corps and pension plan departments, etc.

Get it through your head that bonds are just another form of money/dollars. They are not a debt anymore. The Gov. chooses to have 2 sorts of money. It chooses to pay interest on part of the money supply and not pay interest on the other part.

Note: the fact that the Gov. (with the laws that govern banking) allows banks to create dollars with every loan, means that it isn't just the US deficit that seems to add to the money supply.

So, worrywarts should not just worry about the US Gov deficit. They should also worry about the amount of bank lending. They don't because MS Econ theories falsely assert that banks don't create dollars when they make loans. This assertion is part of the theory of how deficits suck savings away from investment into corps for their growth or improvements in productivity. False premises lead to false conclusions.

In conclusion, the Repuds are crazy to make the Gov. default now to avoid a very unlikely default sometime in the future.

[Steve_American]

In order to disagree with MMT on this part of its theory, you need to assert that we are on the gold standard
or explain why being off gold does not change anything.

IMHO, it is clear that being of gold was a huge change.
It allowed the massive growth in the national debt.
IMHO, if we were still on gold, the debt would be much smaller.
The fact that well over half of the debt has been added while Repubs and Repuds have been President shows that they knew that being off gold changed everything. They just continued the lie to help them move wealth from the middle class to the 1%, and income from the 99% to the 1%. The figures show clearly that those moves of wealth and income did happen since 1981, and that they were massive moves.
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[Puffer Fish]

The Federal Reserve (the USA's Central Bank) is afraid of continuing to artificially hold down interest rates because they know it will contribute to more inflation.
(And indeed, the more inflation there is, the more holding down interest rates will cause inflation)

With interest rates rising, it's soon going to get more expensive for the U.S. to borrow.

Over the last couple of years it's mostly been the Federal Reserve buying up government debt, essentially printing money to pay for the government's deficit spending, but they know that causes inflation.

[Steve_American]

The Federal Reserve (the USA's Central Bank) is afraid of continuing to artificially hold down interest rates because they know it will contribute to more inflation.
(And indeed, the more inflation there is, the more holding down interest rates will cause inflation)

With interest rates rising, it's soon going to get more expensive for the U.S. to borrow.

Over the last couple of years it's mostly been the Federal Reserve buying up government debt, essentially printing money to pay for the government's deficit spending, but they know that causes inflation.

So, you think that the Gov., through its tool the Fed, should hold down inflation by raising interest rates. Fine. [BTW, MMTers assert that high interest rates are a cost, so they can cause cost push inflation. They also reduce investment in more production to soak up the excess dollars. Corps can increase prices or increase production, right?]
Now, maybe there are better ways to hold down inflation.
I would suggest a graduated tax on corp profits. Or, better yet, a tax on revenues less wages paid to Americans. With this tax te Gov. takes dollars out of the economy which you think will reduce inflation. It will also take more out as a corp gets more revenue. Part of my goal is to break up the huge corps because they pay higher taxes than smaller corps do. I do not like corps with monopoly pricing power.

Anyway, you said that the Gov. can act to hold down inflation. It could also use price controls. Or, other things. Then, we could also have low interest rates.
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