• 4 Posts
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Joined 2 years ago
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Cake day: July 5th, 2023

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  • You’re twice addressing whether something is a problem by saying it’s only a problem if someone fucks up. Meanwhile I’m not discussing that because it’s not interesting. Yes problems can occur when people do the wrong thing. And people can and will do the wrong thing. They’ll also do the right thing. I’m discussing the availability of a tool under domestic disposal and what its implications are.

    Similarly, I’m not discussing the obvious case of a government’s ability of selling to its friends, it’s not interesting. I’m discussing the case where the public and its government don’t want to do that but are ideologically committed to balancing budgets without creating new money. Canada was in recession in the early 1980s and the early 1990s. Irrespective of that, the Canadian governments that spanned the 1983-2003 period ran on balancing the budget and austerity+privatization to achieve it and they were not considered friends-selling governments. You can read about the economic policies at the time.



  • Disagree on some of the points but I’ll only address the need for money printing and forced austerity since those are the only ones I can relatively concisely. I agree on the assessment on who gets hurt by inflation and default.

    I’m not sure if you’re saying that governments only need to print more money if they’re bad with it but I’ll address some needs for money printing just in case.

    There are plenty of reasons for governments to print money. For example, population growth. Having growing population and the economic expansion that comes with it, without monetary expansion leads to price instability where prices have to fall in order for the same amount of money to be able to buy more clothes and bread made and consumed by the new people. Price instability is a problem (e.g. deflationary spiral) which is why the government prints money and releases it into the economy to compensate for the increased number of people and goods to keep the prices stable. Critically, the government cannot borrow or tax this money from its citizens because that will remove it from the very economy the government is trying to add money in. End herein lies the clue the government cannot borrow or tax money it hasn’t printed and spent first. Printing and spending has to appear first or a government has nothing to tax or borrow. This is why a government does not need to borrow or tax in order to spend. A government might choose to borrow or tax for different reasons after printing and spending. E.g. it could tax in order to keep inflation in check. I’m not saying all governments understand that and I’m definitely implying that the ones that use the family budget analogy don’t understand how the system works.

    One really important other part of that is that private capital is not able to force austerity. If they have it in your country, the government can just tax them.

    This is only true under the additional assumption that the government in question is not ideologically or financially subservient to private capital. If it is, as many are, it will choose not to tax, in which case it would be forced to cut spending and/or sell off assets, which is austerity. This process has driven austerity and privatization in many places around the world. It’s driven it where I live as well. In Canada, we’ve sold railways, utilities and highways, among others.


  • Domestic capital can be controlled.

    How do you control it once it’s gained power over the government and democracy? I understand how you can control it prior to that, but you’re still giving it power that previously belonged to the workers, you’re making it easier for it to entrench this power, and the right to be paid for it to top it off. I get you’re making the point that it’s the lesser problem than international capital, but it’s still a problem that a people probably doesn’t want to create for itself unless it really needs to. 😀



  • The government has to balance the budget anyway.

    This is neoliberal dogma with bad consequences for the majority. While there are plenty of economists who subscribe to it, there are plenty others who don’t. Economics isn’t a well proven science and as a result there are giant gaps filled with unproven hypotheses. While the primacy of budget balancing has been promoted by neoliberal economists since the 70s, evidence has been piling up against it for a while.

    Given that new money is created every time a private bank gives out a loan, the only real difference between the government having the ability to create new money or not is the difference between whether the government has to seek private capital (and pay interest on it) or not. Therefore removing the ability to print your own currency is simply shifting public policy power to private capital. Most people don’t have enough private capital to participate, therefore it’s an increase in the political power of a minority upper class including international actors. One result of this is private capital gaining the power to force austerity by not lending money in need, then profiting from that policy by buying up government services and operating them for profit, typically as monopolies. E.g. healthcare, power, water utilities. The demand for profit means price increases which means inflation.

    Therefore a responsible government should retain the ability to create its own currency, create it and destroy it by targeting metrics such as inflation and employment, not budget balances.