Based on my new understanding of Fiat Money, I’ve concluded that it is both logical and desirable for the U.S. sovereign government to issue and spend MORE dollars than it collects back in taxes. Doing so accomplishes two fundamental goals:
It enables the sovereign government to purchase from the Private Sector goods and services which will benefit society as a whole; and
It enables the businesses and households in the Private Sector to build up a reserve of fiat dollars which can be used to expand the goods and services available in the Private Sector economy. Continue reading →
The President appeared surprisingly upbeat and confident: He grasped the sides of the lectern—not as he often had in the recent past, as if to support and steady himself in moments of national turmoil—but rather as if he were about to lift it up and toss it aside. Adjusting his papers, he quickly made eye-contact with each reporter in the front rows, usually with a quick nod of greeting, but sometimes with a stern hesitation. Continue reading →
Nearly everyone believes that Uncle Sam is like a family that must get money before it can spend. But that is not true. A basic function of any sovereign government is to create and run the country’s money system. Unlike a family, the US government is sovereign. It creates money and can never run out. All the words about America’s financial limits mean nothing.
By Fadhel Kaboub (Cross-posted from Al-Ahram) I read Niveen Wahish’s article ‘Less is more’ (Al-Ahram Weekly, 3-9 November) with a great sense of frustration about the prevalence of the conventional wisdom that tax revenues finance government spending and that “borrowing” is inherently destabilising. If Egypt is going to lead the way in a new era in the Middle East, it must abandon the “sound finance” mythology, which is a relic of the gold standard, and embrace a model of true financial sovereignty. A financially sovereign country prints its own currency, collects taxes in that same currency, and most importantly issues government bonds that are only denominated in that same sovereign currency. As such, Egypt can finance all the national priorities that its people demand. A national debt is always manageable under a flexible exchange rate system and an adequate agricultural and industrial policy. Egypt’s most valuable assets are its people and their ingenuity. The country must also harness support from and cooperation with like-minded nations that are interested in fair trade amongst equals rather than neo-colonialist subjugation. The real burden on Egypt’s economy is the odious debt that was incurred under the Mubarak regime. This debt must be repudiated in the same way that Iraq’s and Ecuador’s debt were. Debt cancellation (not forgiveness) is the least that the West can do today to make up for the ills that Mubarak and his Western supporters have done to the people of Egypt.
Marshall Auerback discusses the latest in Euro woes and the possibility of it spreading beyond the Eurozone. In the first clip Marshall stresses the need for ECB intervention to calm the onset of a debt-deflation dynamic. In the second, he follows up on the likelihood that the crisis will spread to sovereign currency nations like the US, where he explains that insolvency is not a threat.
Watch Stephanie Kelton explain why TINA falls apart as justification to tolerate unemployment once we understand the relationship between the United States and her currency. The lecture took place at Luther College in beautiful Decorah, Iowa on September 28, 2011. Note: if you would like to see the handout featured in the video click here.