Comments on: Deficit Spending for Dummies

By: KidDynamite

KidDynamite — Fri, 20 Feb 2009 14:00:42 +0000

this is also known as the Ponzi Scheme of the U.S. Treasury. it works until it doesn’t…

By: David Merkel

David Merkel — Fri, 20 Feb 2009 05:28:19 +0000

Mosler is patting himself on the back before external validation arrives. If we take the case where the Fed buys the debt, well, that’s monetizing the debt, with more inflation than we would have had.

Regardless of who buys the debt, there is an eventual payback, default, or inflation that must occur. There is no free lunch.

By: Mark E Hoffer

Mark E Hoffer — Fri, 20 Feb 2009 05:00:09 +0000

if this “for dummies”, and I don’t get it–thanks Venn, then I guess I’m excluded, like my, above, cohort, from that Group..

this Tripe only reinforces my belief, that anything entitled “…for Dummies” is, safely judging a book by its cover, a total waste of Time, and then some..

By: Mike M

Mike M — Fri, 20 Feb 2009 04:42:30 +0000

This is good because deficits don’t matter.

By: maxpower

maxpower — Fri, 20 Feb 2009 04:15:38 +0000

Quad erat demonstrandum. Congratulations, you’ve just halucinated $100B out of thin air by devaluation of currency, the unmentioned variable. In which vaccuum does Mosler exist? One devoid of assets backing the currency or one devoid of air for the brain?

By: wswainwright

wswainwright — Fri, 20 Feb 2009 00:10:04 +0000

Just to pick nits… the Fed does not pay interest on member bank reserves on deposit with the central bank, even if the reserves exceed the minimum required reserve amount.

Otherwise, this analysis is generally correct and is referred to as the “money mutiplier effect.”

By: Porsche87

Porsche87 — Fri, 20 Feb 2009 00:03:38 +0000

I think a thesis could be written on if 5 is a logical progression from 4. It seems far too simplistic a statement to make without a long list of caveats.

By: Simon

Simon — Thu, 19 Feb 2009 23:45:03 +0000

I wish I clearly understood this process. I guess the end result of increased savings is what the Chinese have been doing to help us out.

Also what I’d like to know is the deviation from this process that the FED could take that would result in real printing, not just credit expansion.

By: dreimer

dreimer — Thu, 19 Feb 2009 23:40:02 +0000

Only problem with the current financial system is that some of that $100B will not end up back in fed coffers because some of it will be shipped overseas to buy the goods that the government bought with the $100B.

By: TrickStyle

TrickStyle — Thu, 19 Feb 2009 23:32:14 +0000

So, I had $100M in cash. And then I bought $100M of notes from the USG. Yay! I’m earning interest. Who is making the interest payment? The USG. Where do they get money to make that payment? They tax me and my business.

When they spend the $100M on infrastructure programs, where do they the money to return my principal. They tax me and my business.

And what does this lack of “economic consequence” (except for the interest payment) do to the longer-term prospects for the currency in which all of this is taking place? On top of that, let’s suppose that it weren’t 100M but 2 trillion. Should we be satisfied to know that we just created 2 trillion of increased savings of financial assets?

I guess I need the “Deficit Spending for Really Big Dummies” to understand why “Mosler’s Law” is worth a lick.