PM Thatcher lied, there are 2 kinds of money for the UK & US, etc. - Politics Forum.org | PoFo

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When PM Thatcher became PM, the world had been off the gold standard for about 10 years. The sky had not fallen, but the oil crisis had caused inflation.

For thousands of years there had actually been 2 sources of money to govs. The main one was taxes paid by taxpayers, the other was gold and silver mined by the gov. with slaves. IIRC, Athens used this 2nd source for many years. The Romans did it too with its gold mines in Spain.

IIRC, during the ACW Pres. Lincoln ha to resort to just printing "greenbacks" because the rich slowed their buying of war bonds. I have never heard that this resulted in massive damage to the US economy, never.

In 1971 Nixon took the world off the gold standard. From that moment on there has existed a new source of money to govs. because all money was now "fiat money". The govs. could just print or create money digitally like Lincoln had.
. . . [In fact, it is possible that this is what the Roman Empire was doing when it started to add copper to the gold and silver coins. It needed there to be more money in the Empire but the gold mines were starting to be 'played out'. It is possible that the inflation of the Late Empire was caused more by a reduction in production than by an increase in the supply of money (alloyed gold and silver coins). I have a book all about how for thousands of years the center of civilization has been moving because the topsoils have washed away in heavy rain storms. This reduced the food supply locally and so the local gov. lost military power compared to newer regions. Egypt was the exception because of the mud from the Nile flood waters. I was told in college that in the Late Empire the mines in Span were push so deep that it became impossible to pump the inflowing water out to keep up with it. No matter how many slaves they had working the pumps they could not pump enough water all the way up and out of the mine. When the mines played out the price of metal rose and we call that inflation. So, both food and metal were rising in price because there was a shortfall in production. Note, that at the same time there was a fall in population as food supply fell. People were also dying from epidemic and new endemic diseases, but normally a well fed population is glad and happy to produce enough children to double the population every 20-30 years, but this didn't happen in this period, because the food supply fell. (An example of how population recovers from a big hit can be seen in its recovery after the Black Death and WWI & WWII).]
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So the actual sources or kinds of modern money for govs. are ---
1] Taxpayer money.
2] Newly created fiat money which takes 2 forms ---
. . . a] Money created directly and spent in the economy, like Lincoln did.
. . . . . Isn't OE a type of this. The Fed. is buying bonds (US or corp.) from the private sector. How is this different from the Gov. buying jet planes from a corp. IStM, that both are the Gov. buying a thing (bond or plane) for cash.
. . . b] Money spent into the economy and *then* borrowed back out of the economy. I know that Econ-101 denies this, but this is actually how it works in the US & UK.

Type 2a and type 2b are not really all that different in their impact on the US or UK economies now.

ECON-101 has tried to change the definition of the word "inflation" from "a continuing general rise in prices" to "an increase in the money supply". Using this definition then by definition increasing the money supply is inflation, EVEN IF THERE IS *NO* INCREASE IN PRICES.
. . . Right now there has been an increase in the money supply in almost every nation on earth and yet there is no inflation and there may be deflation.

MMT teaches us that in the world we live in now, the Gov. must replace the dollars that are saved or used to buy foreign imports. I the Gov. does not replace these dollars with deficit spending then incomes and therefore (by definition) GDP will fall.
. . . Dollars must be saved in a properly functioning economy. Examples are :: insurance comp. saving and investing to fund their liabilities as they sell policies, and upper-middle class people saving for their retirement or to put their kids thru college. Dollars are also being used to buy stuff from the rest of the world because we stopped making it here.

Therefore, I can say 2 things ---
1] The US Gov. should have a large deficit every year until it stops buying stuff from the world.
2] This deficit will *not* cause inflation now or ever, because it is being saved ot moved out of the nation.

Now, I will say here that --- IMHO the US needs to make more of the stuff it uses. It was a *huge* mistake to move our factories to Mexico and China. The whole economic theory that suggested doing this was a pack of lies. IMHO, every naton should strive to have a balanced trade amount. They all should sell as much as they buy. This is because it is not stable to buy more than you sell because someday you will not be able to make the payments and then you can't buy critical stuff that you must have.
. . . After WWI, German got used to selling more than it bought because the US for decades was willing to buy more than it sold. This meant that many nations sold more to the US than it bough from the US, meaning it had a surplus of dollars to buy stuff from Germany. In 1971 there was a crisis and Nixon had to take the US and therefore the world off the gold standard. The world went on as if there had been no crisis. The US could, and did, continue to buy more stuff than it sold; and the world was glad to sell it more stuff and accept paper dollars in payment.
. . . You can also see this sort of thing going on between the states. Some states pay the US Gov. more in taxes than the Gov. spends in that state. Many other states see the US Gov. spending more in that state than it pays in Federal taxes. This has been going on for many, many decades. You would expect that the people and comps. of those states should be getting wealthier as the US Gov. lows dollars into those states. However, most of those states are getting poorer. Why is this? It is because (unseen because of the free flow of stuff & money across state lines) there is a net flow of stuff into those states matched by a net flow of dollars out of those states to pay for the stuff. In fact the flow of stuff & dollars more than offsets to money being pumped into those states.
. . . It so happens that the rich states are mostly the Dem states and the poor states are the Repud states. The people of those Repud states don't understand that the US Gov. deficit spending into their states is what is keeping them from going totally broke even faster. So, they vote for neo-liberal conmen (politicians) who want to reduce the net flow of US Gov. dollars into their states, while working for the big corps. that are sucking dollars out of their states.
. . . It turns out that "ear marking" was very good for the Repud states. I think we ought to go back to that system in Congress.
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