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The Rational National | CNN segment highlights eviction crisis

The Rational National | CNN segment highlights eviction crisis

(11:52) CNN puts a face to the eviction crisis that could hit 30 - 40 million Americans by the end of 2020.
The Rational National YT channel Sep 4, 2020

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WolfPad17 WolfPad17 (27 days ago)

It's the outurn of the capitalist system - you have either got liquidity to keep your head above water or you haven't. Then add a global pandamic and the whole system is thrown into chaos. The gap bewteen those who have and those who havent becomes enormous.

It is the duty of the elected goverment to recognise and intervene to help those who are now endangered by the economic crisis that ensues.

European countries have mostly intervened, devised and implemented a variey of support schemes to help most of the population. The success of these schemes will only be judged with analysis after the event.

However, it does not excuse the super rich from paying their correct taxes so as to assist governements in funding vital public services. It seems to me that, in a lot of cases, the super rich try and find muliple schemes to pay as least tax as possible. A certain amount of hypocrisy  at the very top of some goverments methinks!

 

Original comment

It's the outurn of the capitalist system - you have either got liquidity to keep your head above water or you haven't. Then add a global pandamic and the whole system is thrown into chaos. The gap bewteen those who have and those who havent becomes enormous.

It is the duty of the elected goverment to recognise and intervene to help those who are now endangered by the economic crisis that ensues.

European countries have mostly intervened, devised and implemented a variey of support schemes to help most of the population. The success of these schemes will only be judged with analysis after the event.

However, it does not excuse the super rich from paying their correct taxes so as to assist governements in funding vital public services. It seems to me that, in a lot of cases, the super rich try and find muliple schemes to pay as least tax as possible. A certain amount of hypocrisy  at the very top of some goverments methinks!

 

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Guest: (52 days ago)

It is sad to see people get evicted but that’s not the only side of the story.  Consider the side of the landlord as well.  Many landlords have mortgages and need to pay taxes and insurance.  If they are not getting revenue from tenants, they have no way to make those payments to the bank, the government, and the insurance companies.  

 

Some states have enacted policy of no evictions.  When that policy expires, many months of rent will become due immediately and those who lost their jobs during the pandemic will not have 3 months or more of rent available even if they regained their employment.  This means they will be evicted anyway — just postponed.

 

The landlord not making the mortgage payments will cause a repossession of the property by the bank potentially causing loss of all equity gained throughout the years.  The government has no plans to compensate the landlords for their losses by making those mortgage payments for them.  The credit rating of the landlord will go down the shitter when months of payments are missed making it impossible for them to buy a house in the future.

 

Making it hard to evict tenants are forcing some landlords to sit on their empty properties and refusing to lease them resulting in housing shortages which ultimately causes price increases.

 

Where I live, the government executive has prevented all evictions where the tenant’s income has been affected by the pandemic.  You can still file an eviction through the courts but if the tenant responds with proof their income has been impacted by the pandemic, the court will not approve the eviction.  This does not mean the landlord’s mortgage payment is not due and does not mean the house will not be repossessed by the bank.  That’s where the problem is.

Original comment

It is sad to see people get evicted but that’s not the only side of the story.  Consider the side of the landlord as well.  Many landlords have mortgages and need to pay taxes and insurance.  If they are not getting revenue from tenants, they have no way to make those payments to the bank, the government, and the insurance companies.  

 

Some states have enacted policy of no evictions.  When that policy expires, many months of rent will become due immediately and those who lost their jobs during the pandemic will not have 3 months or more of rent available even if they regained their employment.  This means they will be evicted anyway — just postponed.

 

The landlord not making the mortgage payments will cause a repossession of the property by the bank potentially causing loss of all equity gained throughout the years.  The government has no plans to compensate the landlords for their losses by making those mortgage payments for them.  The credit rating of the landlord will go down the shitter when months of payments are missed making it impossible for them to buy a house in the future.

 

Making it hard to evict tenants are forcing some landlords to sit on their empty properties and refusing to lease them resulting in housing shortages which ultimately causes price increases.

 

Where I live, the government executive has prevented all evictions where the tenant’s income has been affected by the pandemic.  You can still file an eviction through the courts but if the tenant responds with proof their income has been impacted by the pandemic, the court will not approve the eviction.  This does not mean the landlord’s mortgage payment is not due and does not mean the house will not be repossessed by the bank.  That’s where the problem is.

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WalterEgo WalterEgo (51 days ago)

Evicting these people makes no sense. Who is going to move in? The propertiies will stay empty and landlords won't be able to make their mortgage payments. Much better for the government to pay the rents so the chain of renter-landlord-bank is not broken. The money can be paid back later - there's plenty of money around, the stock market is soaring.

Original comment

Evicting these people makes no sense. Who is going to move in? The propertiies will stay empty and landlords won't be able to make their mortgage payments. Much better for the government to pay the rents so the chain of renter-landlord-bank is not broken. The money can be paid back later - there's plenty of money around, the stock market is soaring.

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Guest: (51 days ago)

No plans for the USA government to pay the rent when the tenant is unable due to the pandemic.  Therefore it is better to leave the property empty than take a chance on a tenant that you will be unable to get rid of.  When you say that the money can be paid back later, most people live month-to-month and don’t have enough savings to pay for a $400 emergency.  How do you expect them to save up thousands of past due rent in the future when they get their jobs back?  

When the stock market goes up, that is independent of the economy.  Here’s how the market works:  WidgetsRus goes public and sells a million shares at 1,000 each.  They just got an infusion of a billion dollars.  Stock price goes up to 2,000 the next day.  WidgetsRus still only has a billion dollars of investment.  The only people who benefited from the increase of value are the people who bought the initial IPO and SOLD it to some loser that thinks the company is actually worth that much.  A piece of paper is transferred from one person to the other and $2,000 is transferred.  One person gains $2,000 and one person loses $2,000.  No new money or value was created.

Before the crash in June, valuations of companies were around 16 times earnings and today people are making irrational decisions about prices and creating an unsustainable bubble with valuations of 55+ times earnings.  There is a “much-needed correction” coming.

Knowing that Apple, Microsoft, Google, and Amazon stock prices are at record highs does not help the economy and people who are working pay for their housing, transportation, food, clothing, energy, and water bills. 

Original comment

No plans for the USA government to pay the rent when the tenant is unable due to the pandemic.  Therefore it is better to leave the property empty than take a chance on a tenant that you will be unable to get rid of.  When you say that the money can be paid back later, most people live month-to-month and don’t have enough savings to pay for a $400 emergency.  How do you expect them to save up thousands of past due rent in the future when they get their jobs back?  

When the stock market goes up, that is independent of the economy.  Here’s how the market works:  WidgetsRus goes public and sells a million shares at 1,000 each.  They just got an infusion of a billion dollars.  Stock price goes up to 2,000 the next day.  WidgetsRus still only has a billion dollars of investment.  The only people who benefited from the increase of value are the people who bought the initial IPO and SOLD it to some loser that thinks the company is actually worth that much.  A piece of paper is transferred from one person to the other and $2,000 is transferred.  One person gains $2,000 and one person loses $2,000.  No new money or value was created.

Before the crash in June, valuations of companies were around 16 times earnings and today people are making irrational decisions about prices and creating an unsustainable bubble with valuations of 55+ times earnings.  There is a “much-needed correction” coming.

Knowing that Apple, Microsoft, Google, and Amazon stock prices are at record highs does not help the economy and people who are working pay for their housing, transportation, food, clothing, energy, and water bills. 

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WalterEgo WalterEgo (50 days ago)

Evicting these people only makes the problem worse and solves nothing. Landlords still miss their mortgage payments. Empty properties have an ongoing cost for security and maintenance which will overburden landlords not receiving any rental income. Landlords will be next on the streets and the poor banks won't get their money.

There's plenty of money around - repaying the money can come from a % of share dividends, or a one-off wealth tax, or a cut in the military budget, or a robot tax ... I'm sure you can think of other ways.

Or it may not be necessary to even pay it back. After all, the government printing money to pay someone's rent is just a different way of injecting new money into the economy.

It would be better to pump in new money at the bottom - give money to people directly - like UBI, rather than pump new money in at the top with quantitive easing and hope banks will lend more.

Introduce UBI, invest in new jobs transforming the country for a green future (like the Green New Deal), cancel student debt (so that students spend the money they save straight into the economy) and the US economy will boom.

But first you have to get rid of Trump.

Original comment

Evicting these people only makes the problem worse and solves nothing. Landlords still miss their mortgage payments. Empty properties have an ongoing cost for security and maintenance which will overburden landlords not receiving any rental income. Landlords will be next on the streets and the poor banks won't get their money.

There's plenty of money around - repaying the money can come from a % of share dividends, or a one-off wealth tax, or a cut in the military budget, or a robot tax ... I'm sure you can think of other ways.

Or it may not be necessary to even pay it back. After all, the government printing money to pay someone's rent is just a different way of injecting new money into the economy.

It would be better to pump in new money at the bottom - give money to people directly - like UBI, rather than pump new money in at the top with quantitive easing and hope banks will lend more.

Introduce UBI, invest in new jobs transforming the country for a green future (like the Green New Deal), cancel student debt (so that students spend the money they save straight into the economy) and the US economy will boom.

But first you have to get rid of Trump.

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Guest: (49 days ago)

LMAO that old "print money" solution.  

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LMAO that old "print money" solution.  

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Guest: (41 days ago)

WalterEgo tends to suggest this any time someone is hard up!  Funny.  Magic money tree.  

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WalterEgo tends to suggest this any time someone is hard up!  Funny.  Magic money tree.  

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WalterEgo WalterEgo (41 days ago)

Actually, there is a magic money tree. How do you think hyper inflation happens?

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Actually, there is a magic money tree. How do you think hyper inflation happens?

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WalterEgo WalterEgo (49 days ago)

Money is "printed" all the time. Every time someone gets a mortgage, that's new money (money that didn't exist before) injected into the economy. It's called fractional reserve banking. It's how commercial banks "print" money. Look it up. It really opened my eyes when I found out.

Original comment

Money is "printed" all the time. Every time someone gets a mortgage, that's new money (money that didn't exist before) injected into the economy. It's called fractional reserve banking. It's how commercial banks "print" money. Look it up. It really opened my eyes when I found out.

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Guest: (49 days ago)

FRB is not printing money as such. It is limited by the reserves a bank has so it doesnt actually increase the amount of money.  Google it and open your eyes.

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FRB is not printing money as such. It is limited by the reserves a bank has so it doesnt actually increase the amount of money.  Google it and open your eyes.

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WalterEgo WalterEgo (42 days ago)

In the context of what we are talking about, "printing" money means changing numbers in a database. It is not literally printing dollar bills. I thought that was common knowledge.

FRB is limited by reserves, but "printing" money overall (including QE from central banks and any other ways I'm unaware of) is limitless.

There is no shortage of fiat money. Otherwise, how do you think hyper-inflation happens?

Original comment

In the context of what we are talking about, "printing" money means changing numbers in a database. It is not literally printing dollar bills. I thought that was common knowledge.

FRB is limited by reserves, but "printing" money overall (including QE from central banks and any other ways I'm unaware of) is limitless.

There is no shortage of fiat money. Otherwise, how do you think hyper-inflation happens?

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Guest: (42 days ago)

FRB is not printing or creating money, neither with a print press nor on a database.  It is the re-allocation of existing reserves currently held in a central bank.  QE has lots of limitations such as the availability of financial assets to buy, famously highlighted in the ECB's QE programme.  I thought that was common knowledge.
 

Original comment

FRB is not printing or creating money, neither with a print press nor on a database.  It is the re-allocation of existing reserves currently held in a central bank.  QE has lots of limitations such as the availability of financial assets to buy, famously highlighted in the ECB's QE programme.  I thought that was common knowledge.
 

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WalterEgo WalterEgo (41 days ago)

FRB is not "the re-allocation of existing reserves currently held in a central bank" . According to Wikipedia, it's  "...the most common form of banking practised by commercial banks worldwide,..."  LINK

This is a good video that explains how FRB creates new money. It's only 1 minute long.  LINK

Point is, fiat money is limitless and could be used to pay rents rather than evicting people and making the problem worse.

Original comment

FRB is not "the re-allocation of existing reserves currently held in a central bank" . According to Wikipedia, it's  "...the most common form of banking practised by commercial banks worldwide,..."  LINK

This is a good video that explains how FRB creates new money. It's only 1 minute long.  LINK

Point is, fiat money is limitless and could be used to pay rents rather than evicting people and making the problem worse.

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Guest: (41 days ago)

You should have kept reading. The next sentence from Wikipedia: "Bank reserves are held as cash in the bank or as balances in the bank's account at a central bank. The country's central bank determines the minimum amount that banks must hold in liquid assets, called the "reserve requirement" or "reserve ratio". Banks usually hold more than this minimum amount, keeping excess reserves."

So as I said, FRB is not limitless, and yes, it depends on allocating existing cash reserves.  It is heavily limited beyond that.

Original comment

You should have kept reading. The next sentence from Wikipedia: "Bank reserves are held as cash in the bank or as balances in the bank's account at a central bank. The country's central bank determines the minimum amount that banks must hold in liquid assets, called the "reserve requirement" or "reserve ratio". Banks usually hold more than this minimum amount, keeping excess reserves."

So as I said, FRB is not limitless, and yes, it depends on allocating existing cash reserves.  It is heavily limited beyond that.

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WalterEgo WalterEgo (41 days ago)

I didn't say FRB is limitless. I said it's limited by reserves (savings). You're getting sloppy again.

Fiat money is limitless. So the government can always pay the rent and prevent a homelessness crisis.

I also said that government paying the rent is just a different way of injecting new money into the economy. Just as getting a mortgage, or a bank loan, or UBI, or cancelling student debt ... they are also other ways of injecting new money into the economy. Do you agree with that?

Original comment

I didn't say FRB is limitless. I said it's limited by reserves (savings). You're getting sloppy again.

Fiat money is limitless. So the government can always pay the rent and prevent a homelessness crisis.

I also said that government paying the rent is just a different way of injecting new money into the economy. Just as getting a mortgage, or a bank loan, or UBI, or cancelling student debt ... they are also other ways of injecting new money into the economy. Do you agree with that?

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Guest: (41 days ago)

What?  Where did I say that you said FRB is limitless?  It's not about you!  Are you a child?!  I was just making a point, namely that FRB is not creating unlimited money and neither is QE.  Not everthing is a threat to your ego.  If you could listen instead of trying to score points, you'd understand much more.

Honestly your ideas on economics are childish in the extreme.  Lovely to think that creating free money is a magic panacea but most of us grow out of that.  I have seen people more knowledgeable than me try to teach you with no luck.  

I can't really be bothered with this, but fiat money depends on responsible fiscal policy for reasons that I can't teach you in a comment on Boreme.  Neither the USA nor the UK is anything close.  Fiat money is not unlimited in any pragmatic sense because its value is dependent on the government and that carries a world of issues.  If a government decides to create fiat money to solve minor financial pressures, they deserve the disrespect and devaluation they will get.
 

Original comment

What?  Where did I say that you said FRB is limitless?  It's not about you!  Are you a child?!  I was just making a point, namely that FRB is not creating unlimited money and neither is QE.  Not everthing is a threat to your ego.  If you could listen instead of trying to score points, you'd understand much more.

Honestly your ideas on economics are childish in the extreme.  Lovely to think that creating free money is a magic panacea but most of us grow out of that.  I have seen people more knowledgeable than me try to teach you with no luck.  

I can't really be bothered with this, but fiat money depends on responsible fiscal policy for reasons that I can't teach you in a comment on Boreme.  Neither the USA nor the UK is anything close.  Fiat money is not unlimited in any pragmatic sense because its value is dependent on the government and that carries a world of issues.  If a government decides to create fiat money to solve minor financial pressures, they deserve the disrespect and devaluation they will get.
 

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WalterEgo WalterEgo (40 days ago)

This is what you said: "FRB is not printing money as such. It is limited by the reserves a bank has so it doesnt actually increase the amount of money." That is half wrong. FRB is limited by the reserves a bank holds, but it does create new money. If you get a bank loan, that money did not exist before - ie. it didn't come from another account -  it appeared out of nowhere as a number in a database. Every $1,000 deposited in a bank account has the potential of creating about $10,000 of new money. Just watch that 1 minute video above - it explains it much better than I could.

The problem with having your head glued to a textbook is that it can be difficult to see the bigger picture. Fiat money is limitless, but just printing money willy-nilly can be very problematic, which is why governments don't just print money willy-nilly. 

But there are times when printing money makes a lot of sense - like to fund FDR's New Deal that pulled America out of the Great Depression, or like paying rents to prevent 40 million people face eviction with all the knock-on effects that will entail.  LINK Or is that just a "minor financial pressure".

The point I was making about FRB, is that in a normal healthy growing economy, money is effectively "printed" all the time and no one bats an eye lid. If you think that FRB does not create new money, then tell me where most new money comes from in a normal healthy growing economy. And why that 1 minute video above is wrong.

So the idea of printing money should not have the stigma that it does - because used wisely and creatively, it's an incredibly powerful tool. 

The issue is not how much money is available - because there actually is a magic money tree - but what use money is put to. I find it bizarre that it seems easy to fund a war, or a billionaire's tax break, but when it comes to preventing 40 million people face eviction, there's a problem. That's not a childish thought, it's the very essence.

Original comment

This is what you said: "FRB is not printing money as such. It is limited by the reserves a bank has so it doesnt actually increase the amount of money." That is half wrong. FRB is limited by the reserves a bank holds, but it does create new money. If you get a bank loan, that money did not exist before - ie. it didn't come from another account -  it appeared out of nowhere as a number in a database. Every $1,000 deposited in a bank account has the potential of creating about $10,000 of new money. Just watch that 1 minute video above - it explains it much better than I could.

The problem with having your head glued to a textbook is that it can be difficult to see the bigger picture. Fiat money is limitless, but just printing money willy-nilly can be very problematic, which is why governments don't just print money willy-nilly. 

But there are times when printing money makes a lot of sense - like to fund FDR's New Deal that pulled America out of the Great Depression, or like paying rents to prevent 40 million people face eviction with all the knock-on effects that will entail.  LINK Or is that just a "minor financial pressure".

The point I was making about FRB, is that in a normal healthy growing economy, money is effectively "printed" all the time and no one bats an eye lid. If you think that FRB does not create new money, then tell me where most new money comes from in a normal healthy growing economy. And why that 1 minute video above is wrong.

So the idea of printing money should not have the stigma that it does - because used wisely and creatively, it's an incredibly powerful tool. 

The issue is not how much money is available - because there actually is a magic money tree - but what use money is put to. I find it bizarre that it seems easy to fund a war, or a billionaire's tax break, but when it comes to preventing 40 million people face eviction, there's a problem. That's not a childish thought, it's the very essence.

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Guest: (36 days ago)

OK, maybe I do have to bring it back a few steps and simplify things.  

Like I said, FRB does not create money as such .  That's an oversimplification at best.  Have a think about what it means to create money:  Who does the creating?  Is it a banking system, a monetary theory, a commercial bank, a central bank, a government?  Who do you think should have the authority to create money?  

Within FRB theory, money is created not by banks, but through tightly controlled systematic interactions between them - individual banks are just intermediaries.  I also recommend you find some Youtube videos to clarify the distinction between Fractional Reserve and Credit Creation Theory, and maybe introduce yourself to Financial Intermediary Theory which (contrary to your intimidating Wiki quote) is a better description of worldwide commercial banking today.

"If you get a bank loan, that money did not exist before".  
Hm.  When commercial banks offer a mortgage or a loan, it doesn't come from thin air - in layman's terms, it is a combination of the IOUs from a bank's customers.  That is turning an illiquid asset (the promise of future payments) into a liquid asset, but it would be simplistic and wrong to say that is creating new money.  Basic.  Let's give you benefit of the doubt, perhaps you meant Central Banks create money.  

"Money is effectively "printed" all the time and no one bats an eye lid."
Bizarre claim - money creation is tightly regulated for obvious reasons, and the well-documented situations where this process has been abused caused more than batted eyelids.  But yes, a Central Bank can increase the money supply.  They can buy government bonds, thereby injecting 'new' money into the economy, but the problem with QE is it most definitely isn't unlimited, and that money isn't really new.  It is predicated on the money being paid back, usually collected through taxes, and that is a huge limitation.  Again, it's converting the government's future ability to pay into a liquid asset.  Central Banks don't give money to the government for free - they expect it back, with interest.

Anyway, I know where this is going, so I will try to head it off at the pass:  You don't want QE (not limitless) - you want there to be no debt associated with this spending - the so-called 'free lunch' popular among extreme MMT thinkers and primary school kids alike.  

Logically, this means that you either want a Central Bank to police the spending decisions of a government and decide when they can do this, or more likely just allow them to engage in debtless spending as they see fit.  Every time there's a war, an imaginary vaccine you want put into production, or a housing crisis, you want the Central Bank to create money for the government's account without debt.  Let's take a look...

Politically (and pragmatically), this is crazy and hands way too much power to the state.  So you think the housing crisis is a good use of free money?  What happens when politicians decide that developing our nuclear arsenal is a better use of free money?  There is a reason why Central Banks are independent - so they are not held to the whim (and lack of expertise) of whichever bunch of autocrats currently have power.  Perhaps you trust our leaders more than I do.

Economically, it is also a disaster.  It backs a government into raising taxes in order to control inflation - a clumsy, ineffective, and unjust way to do so.  It also creates risk and distrust on international markets.  If a country is trying to print its way out of domestic financial responsibilities, would you want to trade?  How to Collapse an Exchange Rate, Page 1.   

By the way, for the last 5 decades plus, it has been accepted that FDR's New Deal did not pull "America out of the Great Depression"; it was in fact the huge market opened up by WW2.  I thought that was common knowledge.  It's a really poor example of what you seem to be advocating.  Clearer lessons can be learned from Nixonomics, and there are countless more examples of such methods failing.

"It seems easy to fund a war... but when it comes to preventing 40 million people face eviction, there's a problem".  
Nice emotionalist reasoning there!  As you should know, wars are overwhelmingly funded through borrowing, taxes, and QE, so there is always a debt, and the value of the currency is protected.  In your 'solution', it isn't.  There is no magic money tree - safe money creation is very limited, largely by the legilsation and procedure aimed at preventing the kind of proven consequences I've mentioned.

The problem with having your head glued to Youtube videos and social media is that it can be difficult to see the bigger picture.  Everything is reduced to soundbites, and you never gain a full understanding of where a fragment of a theory fits in.  You get convinced by a fancy animation or a charismatic speaker, and fail to see the complexity of the subject, relying instead on pigeon-holes and memes.  

Original comment

OK, maybe I do have to bring it back a few steps and simplify things.  

Like I said, FRB does not create money as such .  That's an oversimplification at best.  Have a think about what it means to create money:  Who does the creating?  Is it a banking system, a monetary theory, a commercial bank, a central bank, a government?  Who do you think should have the authority to create money?  

Within FRB theory, money is created not by banks, but through tightly controlled systematic interactions between them - individual banks are just intermediaries.  I also recommend you find some Youtube videos to clarify the distinction between Fractional Reserve and Credit Creation Theory, and maybe introduce yourself to Financial Intermediary Theory which (contrary to your intimidating Wiki quote) is a better description of worldwide commercial banking today.

"If you get a bank loan, that money did not exist before".  
Hm.  When commercial banks offer a mortgage or a loan, it doesn't come from thin air - in layman's terms, it is a combination of the IOUs from a bank's customers.  That is turning an illiquid asset (the promise of future payments) into a liquid asset, but it would be simplistic and wrong to say that is creating new money.  Basic.  Let's give you benefit of the doubt, perhaps you meant Central Banks create money.  

"Money is effectively "printed" all the time and no one bats an eye lid."
Bizarre claim - money creation is tightly regulated for obvious reasons, and the well-documented situations where this process has been abused caused more than batted eyelids.  But yes, a Central Bank can increase the money supply.  They can buy government bonds, thereby injecting 'new' money into the economy, but the problem with QE is it most definitely isn't unlimited, and that money isn't really new.  It is predicated on the money being paid back, usually collected through taxes, and that is a huge limitation.  Again, it's converting the government's future ability to pay into a liquid asset.  Central Banks don't give money to the government for free - they expect it back, with interest.

Anyway, I know where this is going, so I will try to head it off at the pass:  You don't want QE (not limitless) - you want there to be no debt associated with this spending - the so-called 'free lunch' popular among extreme MMT thinkers and primary school kids alike.  

Logically, this means that you either want a Central Bank to police the spending decisions of a government and decide when they can do this, or more likely just allow them to engage in debtless spending as they see fit.  Every time there's a war, an imaginary vaccine you want put into production, or a housing crisis, you want the Central Bank to create money for the government's account without debt.  Let's take a look...

Politically (and pragmatically), this is crazy and hands way too much power to the state.  So you think the housing crisis is a good use of free money?  What happens when politicians decide that developing our nuclear arsenal is a better use of free money?  There is a reason why Central Banks are independent - so they are not held to the whim (and lack of expertise) of whichever bunch of autocrats currently have power.  Perhaps you trust our leaders more than I do.

Economically, it is also a disaster.  It backs a government into raising taxes in order to control inflation - a clumsy, ineffective, and unjust way to do so.  It also creates risk and distrust on international markets.  If a country is trying to print its way out of domestic financial responsibilities, would you want to trade?  How to Collapse an Exchange Rate, Page 1.   

By the way, for the last 5 decades plus, it has been accepted that FDR's New Deal did not pull "America out of the Great Depression"; it was in fact the huge market opened up by WW2.  I thought that was common knowledge.  It's a really poor example of what you seem to be advocating.  Clearer lessons can be learned from Nixonomics, and there are countless more examples of such methods failing.

"It seems easy to fund a war... but when it comes to preventing 40 million people face eviction, there's a problem".  
Nice emotionalist reasoning there!  As you should know, wars are overwhelmingly funded through borrowing, taxes, and QE, so there is always a debt, and the value of the currency is protected.  In your 'solution', it isn't.  There is no magic money tree - safe money creation is very limited, largely by the legilsation and procedure aimed at preventing the kind of proven consequences I've mentioned.

The problem with having your head glued to Youtube videos and social media is that it can be difficult to see the bigger picture.  Everything is reduced to soundbites, and you never gain a full understanding of where a fragment of a theory fits in.  You get convinced by a fancy animation or a charismatic speaker, and fail to see the complexity of the subject, relying instead on pigeon-holes and memes.  

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WalterEgo WalterEgo (31 days ago)

"OK, maybe I do have to bring it back a few steps and simplify things." No, no, no, no! You're doing it all wrong. Simplifying doesn't mean going into endless detail trying to sound like you know more than you do. Just look at what you've written - a gazillion words, with fancy ideas like 'Fractional Reserve and Credit Creation Theory'. How is that simplifying anything? Imagine I was a 9-year-old who just glazed over. What would you do then? Break down Credit Creation Theory and hope I understand?

If you can't explain it so a 9-year-old understands, you don't understand it yourself. So let me "bring it back a few steps and simplify things" for you.

--------

All legal fiat money is invented out of thin air - it doesn't grow on trees, it's not dug out of the ground, or brought to us by aliens. Fiat money is the latest update of the system humans  invented thousands of years ago, initially to solve the problem of bartering.

Visualise money in an economy as one giant spreadsheet of all transactions - and trace where new money enters the economy, how that money circulates, and leaves the economy.

All legal fiat money is created by banks/government. I'm not sure the precise relationship between central bank and government, but that's not important here. What's important is to keep in mind that humans designed the system to create money - eg. FRB and QE - and so like any design, it can be improved on.

Once money is in the economy, it works its way around making real things happen. I need my roof fixed, so £1000 leaves my account and goes to the builder's account. Later that night, he spends a bit of that £1000 in a pub, who then use it to pay wages ... and so on. My £1000 filters through the economy making things happen, but it gets smaller and smaller along the way as some inevitably gets used to pay tax.

Paying money to the government, eg. tax, is effectively removing money from the economy. Paying money to corporations who stash it in the Cayman Islands, is also effectively removing money from the economy.

We imagine that the tax we pay is then used to build a hospital - that there's some kind of loop between taxes and government projects, but that's not what really happens.

Think of the economy as an enormous machine full of cogs, where oil (money) enters at one end (via banks/government), swills around lubricating the cogs (businesses), and leaves through the plughole (tax). There's no limit to the oil, but if too much enters the machine, pressure builds up and catastrophic damage can occur (eg. hyper inflation).

A healthy economy is when the rate of flow of oil, is just right to lubricate the cogs, big and small. The problem we currently have is that Covid has stopped most cogs moving, so oil is not moving around and many cogs are seizing up.

If we pump oil into the seized up rent cog, that will turn the landlord cog, which will keep the bank cog happy - important because they created the oil in the first place. That's the smart thing to do.

The alternative is 40 million people facing eviction, landlords facing empty properties, and banks facing bankrupt accounts. That's just dumb.

Why be dumb when we can be smart.

Original comment

"OK, maybe I do have to bring it back a few steps and simplify things." No, no, no, no! You're doing it all wrong. Simplifying doesn't mean going into endless detail trying to sound like you know more than you do. Just look at what you've written - a gazillion words, with fancy ideas like 'Fractional Reserve and Credit Creation Theory'. How is that simplifying anything? Imagine I was a 9-year-old who just glazed over. What would you do then? Break down Credit Creation Theory and hope I understand?

If you can't explain it so a 9-year-old understands, you don't understand it yourself. So let me "bring it back a few steps and simplify things" for you.

--------

All legal fiat money is invented out of thin air - it doesn't grow on trees, it's not dug out of the ground, or brought to us by aliens. Fiat money is the latest update of the system humans  invented thousands of years ago, initially to solve the problem of bartering.

Visualise money in an economy as one giant spreadsheet of all transactions - and trace where new money enters the economy, how that money circulates, and leaves the economy.

All legal fiat money is created by banks/government. I'm not sure the precise relationship between central bank and government, but that's not important here. What's important is to keep in mind that humans designed the system to create money - eg. FRB and QE - and so like any design, it can be improved on.

Once money is in the economy, it works its way around making real things happen. I need my roof fixed, so £1000 leaves my account and goes to the builder's account. Later that night, he spends a bit of that £1000 in a pub, who then use it to pay wages ... and so on. My £1000 filters through the economy making things happen, but it gets smaller and smaller along the way as some inevitably gets used to pay tax.

Paying money to the government, eg. tax, is effectively removing money from the economy. Paying money to corporations who stash it in the Cayman Islands, is also effectively removing money from the economy.

We imagine that the tax we pay is then used to build a hospital - that there's some kind of loop between taxes and government projects, but that's not what really happens.

Think of the economy as an enormous machine full of cogs, where oil (money) enters at one end (via banks/government), swills around lubricating the cogs (businesses), and leaves through the plughole (tax). There's no limit to the oil, but if too much enters the machine, pressure builds up and catastrophic damage can occur (eg. hyper inflation).

A healthy economy is when the rate of flow of oil, is just right to lubricate the cogs, big and small. The problem we currently have is that Covid has stopped most cogs moving, so oil is not moving around and many cogs are seizing up.

If we pump oil into the seized up rent cog, that will turn the landlord cog, which will keep the bank cog happy - important because they created the oil in the first place. That's the smart thing to do.

The alternative is 40 million people facing eviction, landlords facing empty properties, and banks facing bankrupt accounts. That's just dumb.

Why be dumb when we can be smart.

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Guest: (29 days ago)

It’s not about being able to explain everything as if you’re talking to a child.  It’s about being able to grade the explanation to suit the understanding of the listener, and I apologise that I made a mistake on that. 

A gazillion words!  Your classic assumption that something can always be summarised effectively in a short comment, a snappy Youtube clip, or an artless metaphor.  Here’s a gazillion more (but gazillions less than what really ought to read).

You think Fractional Reserve and Credit Creation Theory are just ‘fancy ideas’ in a conversation where we are literally discussing money creation.  Nuts.  Mentioning those concepts is simpifying things because it's breaking down a complex subject into component parts rather than muddling everything together as you're doing.

“I'm not sure the precise relationship between central bank and government, but that's not important here.” 
Mind blown.  It’s incredibly important, and it’s absolutely critical for MMT.  You’ve promoted this theory when you aren’t even clear on the distinction of who or how money is made?  Please figure this out.

“All legal fiat money is invented out of thin air”.
 Already explained.  Changing an illiquid asset into a liquid asset is not the same as inventing money ‘out of thin air’.  It only appears that way to someone who doesn’t get it. 

“Paying money to the government… is effectively removing money from the economy.”
When you repay your bank loan, that removes money from the economy but only in that it fulfils your promise to them to repay them.  Not quite true regarding taxes though; money is only removed from the economy once the government uses your taxes to pay their debt to the BoE and fulfil their promise.

Simplifying doesn’t mean looking for an analogy that is so superficial it hides the controversial aspects of what you’re advocating, but hey if you want to run with your oil-in-a-machine cartoon, let me at least make it more meaningful –

Phrases like “If we pump oil” show a big issue.  Who is we?  (Yes, it matters.)  Oil (money) enters the machine via the machinist (Central Bank and by interactions between banks), not by the owner of the biggest cog (the government).  It leaves the plughole not via government taxation but through the repayment of loans and the ‘making good’ on promises.  The machinist has calculated exactly how much oil is needed by that many cogs, and other machinists respect that.

With QE, the machinist adds more oil, but only in relation to how much would be removed from the system through the plughole (repayment), and how many cogs there are.  If the plughole is small, the machinist doesn’t add too much oil, and that makes sure the machine isn’t flooded.

MMT is where the machinist is sacked, and instead you have the owner of the biggest cog standing by with an oil hose, saying ‘I’ve got unlimited oil, stand back!’ 

That’s “dumb” because we don’t want any cog-owner to be able to decide which cogs to dowse with oil, particularly not the owner that controls military spending for example (political / moral issue). 

It’s also dumb because oil can’t be safely added to the system without being let out, but it can’t be let out unless the plughole is big enough (there’s a viable promise of repayment).  It’s not easy for a cog-owner to increase the size of the plughole (overdependence on fiscal policy or taxation). 

It’s also dumb because the other cog-owners that are flooded with oil may invest less in maintaining their cog, knowing the new oil will hide areas of friction or inefficiency (soft budget constraint). 

It’s also dumb because other machinists look at your machine and think ‘That is one inefficient system, look at how much oil it takes for the same number of cogs as us’, and then no longer wish to cooperate (currency exchange issue).

You like the emotionalist stuff, so consider why depending on taxation to control inflation would overwhelmingly affect the poorest in society.  It isn’t lost on me that the US housing crisis is in no small way due to spiralling property taxes affecting low income families.  Your solution is to create money that will lead to increased taxes, and let’s trust the US government to do the right thing, right?  

“Why be dumb when we can be smart.” (sic). 

Original comment

It’s not about being able to explain everything as if you’re talking to a child.  It’s about being able to grade the explanation to suit the understanding of the listener, and I apologise that I made a mistake on that. 

A gazillion words!  Your classic assumption that something can always be summarised effectively in a short comment, a snappy Youtube clip, or an artless metaphor.  Here’s a gazillion more (but gazillions less than what really ought to read).

You think Fractional Reserve and Credit Creation Theory are just ‘fancy ideas’ in a conversation where we are literally discussing money creation.  Nuts.  Mentioning those concepts is simpifying things because it's breaking down a complex subject into component parts rather than muddling everything together as you're doing.

“I'm not sure the precise relationship between central bank and government, but that's not important here.” 
Mind blown.  It’s incredibly important, and it’s absolutely critical for MMT.  You’ve promoted this theory when you aren’t even clear on the distinction of who or how money is made?  Please figure this out.

“All legal fiat money is invented out of thin air”.
 Already explained.  Changing an illiquid asset into a liquid asset is not the same as inventing money ‘out of thin air’.  It only appears that way to someone who doesn’t get it. 

“Paying money to the government… is effectively removing money from the economy.”
When you repay your bank loan, that removes money from the economy but only in that it fulfils your promise to them to repay them.  Not quite true regarding taxes though; money is only removed from the economy once the government uses your taxes to pay their debt to the BoE and fulfil their promise.

Simplifying doesn’t mean looking for an analogy that is so superficial it hides the controversial aspects of what you’re advocating, but hey if you want to run with your oil-in-a-machine cartoon, let me at least make it more meaningful –

Phrases like “If we pump oil” show a big issue.  Who is we?  (Yes, it matters.)  Oil (money) enters the machine via the machinist (Central Bank and by interactions between banks), not by the owner of the biggest cog (the government).  It leaves the plughole not via government taxation but through the repayment of loans and the ‘making good’ on promises.  The machinist has calculated exactly how much oil is needed by that many cogs, and other machinists respect that.

With QE, the machinist adds more oil, but only in relation to how much would be removed from the system through the plughole (repayment), and how many cogs there are.  If the plughole is small, the machinist doesn’t add too much oil, and that makes sure the machine isn’t flooded.

MMT is where the machinist is sacked, and instead you have the owner of the biggest cog standing by with an oil hose, saying ‘I’ve got unlimited oil, stand back!’ 

That’s “dumb” because we don’t want any cog-owner to be able to decide which cogs to dowse with oil, particularly not the owner that controls military spending for example (political / moral issue). 

It’s also dumb because oil can’t be safely added to the system without being let out, but it can’t be let out unless the plughole is big enough (there’s a viable promise of repayment).  It’s not easy for a cog-owner to increase the size of the plughole (overdependence on fiscal policy or taxation). 

It’s also dumb because the other cog-owners that are flooded with oil may invest less in maintaining their cog, knowing the new oil will hide areas of friction or inefficiency (soft budget constraint). 

It’s also dumb because other machinists look at your machine and think ‘That is one inefficient system, look at how much oil it takes for the same number of cogs as us’, and then no longer wish to cooperate (currency exchange issue).

You like the emotionalist stuff, so consider why depending on taxation to control inflation would overwhelmingly affect the poorest in society.  It isn’t lost on me that the US housing crisis is in no small way due to spiralling property taxes affecting low income families.  Your solution is to create money that will lead to increased taxes, and let’s trust the US government to do the right thing, right?  

“Why be dumb when we can be smart.” (sic). 

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WalterEgo WalterEgo (29 days ago)

Another gazillion words! And a perfectly good analogy totally bunged up with some machinist nonsense. Thanks a bunch. You never were good at analogies and you haven't improved. Can't you practice somewhere else?

If fiat money is not invented out of thin air, where does it come from? 

Please answer so a 9-year-old can understand.

Original comment

Another gazillion words! And a perfectly good analogy totally bunged up with some machinist nonsense. Thanks a bunch. You never were good at analogies and you haven't improved. Can't you practice somewhere else?

If fiat money is not invented out of thin air, where does it come from? 

Please answer so a 9-year-old can understand.

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Guest: (28 days ago)

Honestly, I wouldn't bother trying to explain monetary policy or MMT to a 9 year old if they didn't understand a range of more basic economic concepts, certainly not in a single comment.  To do so might require too much explanation for their attention span, and I'd be accused of using 'gazillions of words'.  Not everything can be accurately explained without using more words than you find comfortable.  You didn't bother doing your homework from last time, so I suspect I'm wasting time.

I made your hopeless analogy actually reflect the pressures that the economy suffers, and you suddenly don't like it any more.  Funny.  You're no good with analogies - they're not just a way to hide from complexities you can't address.  Well done on ducking every single uncomfortable criticism though.  Excellent evasion!  Every time I try to get you to apply your abstract principles to the real world (who makes that money, who decides how to spend it, how easy is it to control the inflation, how fair is that method of controlling inflation), you peter out, and revert back to oversimplifications that can't solve the problem you were trying to address.  

Still, I will try one last time with a better-known analogy:

-----------

Walter goes to a hipster cafe for the first time and wants to pay with a £5 Walter-IOU.  The owner says "No, I don't know you, you may never pay me."  

Walter is sad.  He was looking forward to his decaf skinny latte with oat milk.

He tells his tale of woe to his carer TheBob.  TheBob knows Walter pretty well and trusts him, so he says "That's OK Walter babe, the cafe owner knows me - give me your £5 Walter-IOU, and I'll give you a £5 TheBob-IOU."  

They swap IOUs, and Walter goes back to the cafe, buys his latte, and the owner is quite happy.  He knows TheBob and believes he wouldn't give out IOUs unless he could pay them.  His coffee supplier knows TheBob too, in fact TheBob's IOU can be used to pay for many things, and so the new IOU is accepted.

To you, TheBob has just created £5 'out of thin air'.  Where has that £5 come from to buy Walter's latte?  Is it magic?  Has it come from nothing?  

Obviously not.  He has actually just converted Walter's promise-to-pay-£5 into his own promise-to-pay £5.  The only reason it works is that the cafe owner trusts TheBob, and trusts in TheBob's ability to decide which IOUs he can accept.  Even if TheBob gets that wrong and Walter doesn't fulfil his promise, the owner knows that TheBob has enough cash to pay it off on his own.  To the cafe owner, that £5 IOU really is worth £5 in cold cash.  

If TheBob started to write more IOUs than he could actually pay off, or exchanged them too readily with people he didn't know could repay him, then the worth of his IOUs would collapse because he would no longer be fairly exchanging them for something with a value.  Without that trust, his IOUs mean nothing.

That's the same when a bank (not a government!) creates money.  The money created is based on the financial value of promises of repayment, and that is not the same as creating it from thin air.  It is an exchange, and not all exchanges are tangible.   
-----------

Still no?  Ah never mind.  Stick to Youtube.  

Original comment

Honestly, I wouldn't bother trying to explain monetary policy or MMT to a 9 year old if they didn't understand a range of more basic economic concepts, certainly not in a single comment.  To do so might require too much explanation for their attention span, and I'd be accused of using 'gazillions of words'.  Not everything can be accurately explained without using more words than you find comfortable.  You didn't bother doing your homework from last time, so I suspect I'm wasting time.

I made your hopeless analogy actually reflect the pressures that the economy suffers, and you suddenly don't like it any more.  Funny.  You're no good with analogies - they're not just a way to hide from complexities you can't address.  Well done on ducking every single uncomfortable criticism though.  Excellent evasion!  Every time I try to get you to apply your abstract principles to the real world (who makes that money, who decides how to spend it, how easy is it to control the inflation, how fair is that method of controlling inflation), you peter out, and revert back to oversimplifications that can't solve the problem you were trying to address.  

Still, I will try one last time with a better-known analogy:

-----------

Walter goes to a hipster cafe for the first time and wants to pay with a £5 Walter-IOU.  The owner says "No, I don't know you, you may never pay me."  

Walter is sad.  He was looking forward to his decaf skinny latte with oat milk.

He tells his tale of woe to his carer TheBob.  TheBob knows Walter pretty well and trusts him, so he says "That's OK Walter babe, the cafe owner knows me - give me your £5 Walter-IOU, and I'll give you a £5 TheBob-IOU."  

They swap IOUs, and Walter goes back to the cafe, buys his latte, and the owner is quite happy.  He knows TheBob and believes he wouldn't give out IOUs unless he could pay them.  His coffee supplier knows TheBob too, in fact TheBob's IOU can be used to pay for many things, and so the new IOU is accepted.

To you, TheBob has just created £5 'out of thin air'.  Where has that £5 come from to buy Walter's latte?  Is it magic?  Has it come from nothing?  

Obviously not.  He has actually just converted Walter's promise-to-pay-£5 into his own promise-to-pay £5.  The only reason it works is that the cafe owner trusts TheBob, and trusts in TheBob's ability to decide which IOUs he can accept.  Even if TheBob gets that wrong and Walter doesn't fulfil his promise, the owner knows that TheBob has enough cash to pay it off on his own.  To the cafe owner, that £5 IOU really is worth £5 in cold cash.  

If TheBob started to write more IOUs than he could actually pay off, or exchanged them too readily with people he didn't know could repay him, then the worth of his IOUs would collapse because he would no longer be fairly exchanging them for something with a value.  Without that trust, his IOUs mean nothing.

That's the same when a bank (not a government!) creates money.  The money created is based on the financial value of promises of repayment, and that is not the same as creating it from thin air.  It is an exchange, and not all exchanges are tangible.   
-----------

Still no?  Ah never mind.  Stick to Youtube.  

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WalterEgo WalterEgo (27 days ago)

Your analogy is almost perfect. Just swap IOU for 'dollars.'

Walter visits a hipster cafe and wants to pay with Walter dollars. The cafe refuse payment because nobody accepts Walter dollars - in this hood, everybody accepts TheBob dollars. As it happens, TheBob thinks Walter is a genius so he swaps some TheBob dollars for Walter dollars - and now Walter can enjoy his mushy avocado coffee.

So, where did Walter dollars come from? Answer: thin air. 

And where did TheBob dollars come from? Answer: thin air.

That's because both Walter dollars and TheBob dollars are fiat currencies. The difference between them is that people believe that in the future, TheBob dollars will still be accepted but not Walter dollars. Like the difference between the US dollar and the Zimbabwean dollar.

So I ask you again - if fiat money is NOT invented out of thin air, where does it come from? 9-year-olds don't need a gazillion words, just a few will do. Like: Fiat money comes from the moon. Or, fiat money comes out of a rhino's arse.

Please answer on the dotted line: Fiat money comes from ...........

Original comment

Your analogy is almost perfect. Just swap IOU for 'dollars.'

Walter visits a hipster cafe and wants to pay with Walter dollars. The cafe refuse payment because nobody accepts Walter dollars - in this hood, everybody accepts TheBob dollars. As it happens, TheBob thinks Walter is a genius so he swaps some TheBob dollars for Walter dollars - and now Walter can enjoy his mushy avocado coffee.

So, where did Walter dollars come from? Answer: thin air. 

And where did TheBob dollars come from? Answer: thin air.

That's because both Walter dollars and TheBob dollars are fiat currencies. The difference between them is that people believe that in the future, TheBob dollars will still be accepted but not Walter dollars. Like the difference between the US dollar and the Zimbabwean dollar.

So I ask you again - if fiat money is NOT invented out of thin air, where does it come from? 9-year-olds don't need a gazillion words, just a few will do. Like: Fiat money comes from the moon. Or, fiat money comes out of a rhino's arse.

Please answer on the dotted line: Fiat money comes from ...........

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Guest: (27 days ago)

Ooh interesting!  You're nearly there! 

Yes, 'IOU' is a direct analogy for the fiat money.  But the really important bit you totally missed is the exchange .  It's critical.  Read it again carefully and see if you can spot it, and where I answered your question.

Firstly, consider if Walter got an IOU out of TheBob for nothing, out of thin air?  Answer:  no.  Walter has given TheBob an asset of future payments - maybe even cold cash - and in return, in a direct exchange , in a swap, TheBob has given him an IOU.  See?  

That IOU is not backed entirely by an immediate physical commodity like gold, but it IS backed by an asset which has a well-defined financial worth.  Maybe that's where you're getting confused.  To TheBob, that IOU is a contract that is worth exactly £5.  Without the asset that Walter offered, TheBob doesn't offer an asset in return, because the assets are worth the same.  See?    

Did TheBob's IOU come from 'thin air'?  Answer:  no.  It is a direct exchange.  There is no extra value that appears from anywhere.

Now, if TheBob didn't receive IOUs from Walter (so no assets) or didn't evaluate the financial worth of such promises (risky assets), or didn't have money to back them up (no physical commodities), yes - he would be creating his own IOUs from nothing - out of thin air.  It would not be a swap, so his IOUs would be meaningless and no one would accept them.  

But that's not how fiat money works in an economy, thank goodness, because banks (includng the central bank) want to give IOUs that people will accept.  Therefore, when fiat money is created for the purposes of a commercial bank loan for example, it comes from the value of your contractual obligation to repay it... with interest.  Like TheBob's and Walter's IOUs, that contract is an asset.

So, one last go, hoping you may twig this time ...
The IOU comes from.... the value of whatever is being exchanged.

Yay!  

Now we've established that in practice, fiat money necessarily comes from the value of assets, I wonder if you can figure out why it isn't a solution to societal problems, and can't be a bottomless government purse.

Have a go at any of the problems I've mentioned that trying so hard to ignore.  Don't hide behind your clumsy mantra - how would it work?    

I won't hold my breath.   

Original comment

Ooh interesting!  You're nearly there! 

Yes, 'IOU' is a direct analogy for the fiat money.  But the really important bit you totally missed is the exchange .  It's critical.  Read it again carefully and see if you can spot it, and where I answered your question.

Firstly, consider if Walter got an IOU out of TheBob for nothing, out of thin air?  Answer:  no.  Walter has given TheBob an asset of future payments - maybe even cold cash - and in return, in a direct exchange , in a swap, TheBob has given him an IOU.  See?  

That IOU is not backed entirely by an immediate physical commodity like gold, but it IS backed by an asset which has a well-defined financial worth.  Maybe that's where you're getting confused.  To TheBob, that IOU is a contract that is worth exactly £5.  Without the asset that Walter offered, TheBob doesn't offer an asset in return, because the assets are worth the same.  See?    

Did TheBob's IOU come from 'thin air'?  Answer:  no.  It is a direct exchange.  There is no extra value that appears from anywhere.

Now, if TheBob didn't receive IOUs from Walter (so no assets) or didn't evaluate the financial worth of such promises (risky assets), or didn't have money to back them up (no physical commodities), yes - he would be creating his own IOUs from nothing - out of thin air.  It would not be a swap, so his IOUs would be meaningless and no one would accept them.  

But that's not how fiat money works in an economy, thank goodness, because banks (includng the central bank) want to give IOUs that people will accept.  Therefore, when fiat money is created for the purposes of a commercial bank loan for example, it comes from the value of your contractual obligation to repay it... with interest.  Like TheBob's and Walter's IOUs, that contract is an asset.

So, one last go, hoping you may twig this time ...
The IOU comes from.... the value of whatever is being exchanged.

Yay!  

Now we've established that in practice, fiat money necessarily comes from the value of assets, I wonder if you can figure out why it isn't a solution to societal problems, and can't be a bottomless government purse.

Have a go at any of the problems I've mentioned that trying so hard to ignore.  Don't hide behind your clumsy mantra - how would it work?    

I won't hold my breath.   

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WalterEgo WalterEgo (24 days ago)

"The IOU comes from.... the value of whatever is being exchanged." You didn't answer the question, or you're trying to spin out of it. Your analogy is of a transaction between between two fiat currencies within an economy.

I'm asking, where did Walter get Walter dollars from in the first place? 

Also, the value of a currency and the quantity are not interchangeable. The value of 5 Walter dollars can be anything. 5 Walter dollars is a fixed quantity with a varying value. I'm asking: where did 5 Walter dollars originate from, not why was 5 Walter dollars created rather than 3.

If you're saying that fiat money is not new because we pay it back later (ie. our children will pay back what we print today), that is not correct, because we cannot in principle pay back the national debt.

The easiest way to understand this is to move from textbook mode to first principles mode.

All legal fiat currency enters the economy via the banking system, and leaves the economy when a payment is made to government - eg. taxes. So when a company makes a profit - that is NOT new money - it is a redistribution of money already in the economy as a whole.

The books are balanced by creating a debt. So we print money to build a hospital, and pay back that money from tax. Therefore no new money is created. Right? Wrong. Because we can't pay back the money even if we could - because if we did, there would be no money in the economy.

Unless you can show me where else new money legally enters the economy, then it's just simple maths. If we pay back the money that's created to balance the books, there is no money left to run the economy. And if we pay it back with interest, where does the interest come from?

The requirement to pay off the national debt is just a constraint that we adhere to because it's so ingrained that nothing comes for free. Yet creating a new account in a database is free - it comes from thin air. All that is required is a decision to do it.

So back to the original question, where did Walter get Walter dollars from? Did he just invent them out of thin air, or did he convert something else into Walter dollars?

Original comment

"The IOU comes from.... the value of whatever is being exchanged." You didn't answer the question, or you're trying to spin out of it. Your analogy is of a transaction between between two fiat currencies within an economy.

I'm asking, where did Walter get Walter dollars from in the first place? 

Also, the value of a currency and the quantity are not interchangeable. The value of 5 Walter dollars can be anything. 5 Walter dollars is a fixed quantity with a varying value. I'm asking: where did 5 Walter dollars originate from, not why was 5 Walter dollars created rather than 3.

If you're saying that fiat money is not new because we pay it back later (ie. our children will pay back what we print today), that is not correct, because we cannot in principle pay back the national debt.

The easiest way to understand this is to move from textbook mode to first principles mode.

All legal fiat currency enters the economy via the banking system, and leaves the economy when a payment is made to government - eg. taxes. So when a company makes a profit - that is NOT new money - it is a redistribution of money already in the economy as a whole.

The books are balanced by creating a debt. So we print money to build a hospital, and pay back that money from tax. Therefore no new money is created. Right? Wrong. Because we can't pay back the money even if we could - because if we did, there would be no money in the economy.

Unless you can show me where else new money legally enters the economy, then it's just simple maths. If we pay back the money that's created to balance the books, there is no money left to run the economy. And if we pay it back with interest, where does the interest come from?

The requirement to pay off the national debt is just a constraint that we adhere to because it's so ingrained that nothing comes for free. Yet creating a new account in a database is free - it comes from thin air. All that is required is a decision to do it.

So back to the original question, where did Walter get Walter dollars from? Did he just invent them out of thin air, or did he convert something else into Walter dollars?

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Guest: (21 days ago)

Let's move from Youtube clips mode, to basic textbook mode, just until we nail some of those fundamentals. 

Comments like "All legal fiat money... leaves the economy when a payment is made to government".  Once more, paying your taxes does not cause money to leave the economy.  Look at it like this: the government has an account with an independent Central Bank and it can use your taxes to pay off that debt.   You don't destroy money by paying taxes - the Central Bank does as the government's debt is repaid (an ongoing 2-way process).  Either you're failing to grasp this essential fact, or you're being deliberately obtuse because you know it proves your 'solution' would be unworkable.  

Sorry, that little cafe analogy was about as simple as I can make it.  One last time:

Walter got his IOU from the value of his assets

An IOU is a means of exchange - the quantity is irrelevant; it's about value.  Maybe TheBob's assets are other IOUs, maybe they are physical commodities, maybe they are the value of future assets.  He can't create an IOU from thin air if he wants it to be worth anything.  Simple (or so I thought).

"First principles mode" .  Another meme of yours (almost self-parody when used so sloppily).  Your claiming a first principle might be "Money leaves the economy when a payment is made to government" shows that you're not taking FP thinking to heart - that isn't an accurate principle of any kind, and even if it was, it wouldn't be a first principle.  Looks like you're using FP as a shield to deflect complexities.  Let's get back to basics - I'll indulge you with a real fundamental first principle:

Money is a medium of exchange - for it to have value , it has to be exchanged with something of value (even debt).  

Build outwards from that.  Let me start you off:  For money to function, its exchangable value needs to be conveyed to the recipient.  Have a think about what it would mean for a medium of exchange to be created 'out of thin air'.  How is its value conserved?  What happens if it isn't?  This alone should allow you to answer half your questions.

If (and only if). you've absorbed that one...

-Increasing money supply without increasing productivity creates inflation - you have more money for the same amount of 'stuff', so money becomes less valuable.  Again, quantity is irrelevant.

Now, promise me you'll stay away from Youtube animations until you've cracked those.  Take your time, particularly with that first one.

In a nutshell, MMT has been panned by pretty much every leading economist and with good reason.  Genuine advocates who understand it have put forward a more coherent case than your soundbites and mantras, but the simple truth is that money creation cannot practically solve any of the problems you want to solve.  I see why reducing it to simplified analogies might make you feel better, shielding you from the practical complexities, but you're faced with a real world issue that needs a real world answer. 

Why be dumb when we can be pragmatic?

Original comment

Let's move from Youtube clips mode, to basic textbook mode, just until we nail some of those fundamentals. 

Comments like "All legal fiat money... leaves the economy when a payment is made to government".  Once more, paying your taxes does not cause money to leave the economy.  Look at it like this: the government has an account with an independent Central Bank and it can use your taxes to pay off that debt.   You don't destroy money by paying taxes - the Central Bank does as the government's debt is repaid (an ongoing 2-way process).  Either you're failing to grasp this essential fact, or you're being deliberately obtuse because you know it proves your 'solution' would be unworkable.  

Sorry, that little cafe analogy was about as simple as I can make it.  One last time:

Walter got his IOU from the value of his assets

An IOU is a means of exchange - the quantity is irrelevant; it's about value.  Maybe TheBob's assets are other IOUs, maybe they are physical commodities, maybe they are the value of future assets.  He can't create an IOU from thin air if he wants it to be worth anything.  Simple (or so I thought).

"First principles mode" .  Another meme of yours (almost self-parody when used so sloppily).  Your claiming a first principle might be "Money leaves the economy when a payment is made to government" shows that you're not taking FP thinking to heart - that isn't an accurate principle of any kind, and even if it was, it wouldn't be a first principle.  Looks like you're using FP as a shield to deflect complexities.  Let's get back to basics - I'll indulge you with a real fundamental first principle:

Money is a medium of exchange - for it to have value , it has to be exchanged with something of value (even debt).  

Build outwards from that.  Let me start you off:  For money to function, its exchangable value needs to be conveyed to the recipient.  Have a think about what it would mean for a medium of exchange to be created 'out of thin air'.  How is its value conserved?  What happens if it isn't?  This alone should allow you to answer half your questions.

If (and only if). you've absorbed that one...

-Increasing money supply without increasing productivity creates inflation - you have more money for the same amount of 'stuff', so money becomes less valuable.  Again, quantity is irrelevant.

Now, promise me you'll stay away from Youtube animations until you've cracked those.  Take your time, particularly with that first one.

In a nutshell, MMT has been panned by pretty much every leading economist and with good reason.  Genuine advocates who understand it have put forward a more coherent case than your soundbites and mantras, but the simple truth is that money creation cannot practically solve any of the problems you want to solve.  I see why reducing it to simplified analogies might make you feel better, shielding you from the practical complexities, but you're faced with a real world issue that needs a real world answer. 

Why be dumb when we can be pragmatic?

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WalterEgo WalterEgo (14 days ago)

"Money is a medium of exchange - for it to have value , it has to be exchanged with something of value (even debt). Build outwards from that." Yes, but no. What you're on about is WITHIN the economy. Rather than building out, step outside and look at the whole. 

The problem with building out is this. Every step is biased by the step before. So when you build out, detail biases the bigger picture - eg. your understanding of the economic system as a whole is biased by a textbook description of inflation. 

Much better to step outside the whole and look in. So then, your understanding of inflation is biased by your understanding of the economic system as a whole.

We've been here before when we discussed 'context'. I was arguing that when someone utters the n-word, context matters. It is the context that dictates the meaning of the word. It's the same idea in first principles thinking, that the outer layer biases the inner layer.

It's like you are drawing a face and you started by detailing the eye. And now you have a beautifully drawn eye, better than I could ever draw. Then MMT comes along and points out that the eye is too far to the right. Since you invested so much in drawing the eye, understandably you are reluctant to move it. So you distort the rest of the face to fit. If you sketched the face out in the first place, you wouldn't have made that mistake.

Fiat money is not an IOU because it can never be paid back. If it was paid back, there would be no money to run the economy. 

It's like the oil in the machine. The machine (economy) requires oil (money) to run. If you drain the oil to give back to the oil company (pay off the national debt), the machine seizes up. And where did the oil company (bank) get the oil (money) from in the first place? Answer: thin air, aka magic money tree.

Original comment

"Money is a medium of exchange - for it to have value , it has to be exchanged with something of value (even debt). Build outwards from that." Yes, but no. What you're on about is WITHIN the economy. Rather than building out, step outside and look at the whole. 

The problem with building out is this. Every step is biased by the step before. So when you build out, detail biases the bigger picture - eg. your understanding of the economic system as a whole is biased by a textbook description of inflation. 

Much better to step outside the whole and look in. So then, your understanding of inflation is biased by your understanding of the economic system as a whole.

We've been here before when we discussed 'context'. I was arguing that when someone utters the n-word, context matters. It is the context that dictates the meaning of the word. It's the same idea in first principles thinking, that the outer layer biases the inner layer.

It's like you are drawing a face and you started by detailing the eye. And now you have a beautifully drawn eye, better than I could ever draw. Then MMT comes along and points out that the eye is too far to the right. Since you invested so much in drawing the eye, understandably you are reluctant to move it. So you distort the rest of the face to fit. If you sketched the face out in the first place, you wouldn't have made that mistake.

Fiat money is not an IOU because it can never be paid back. If it was paid back, there would be no money to run the economy. 

It's like the oil in the machine. The machine (economy) requires oil (money) to run. If you drain the oil to give back to the oil company (pay off the national debt), the machine seizes up. And where did the oil company (bank) get the oil (money) from in the first place? Answer: thin air, aka magic money tree.

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Guest: (13 days ago)

Wonderfully contradictory!  You make a poor analogy, I add context to reflect the 'whole picture', and suddenly it's all about First Principles.  I use a genuine First Principle, and suddenly I'm missing context.  

Your drawing analogy describes your Youtube approach pretty well.  You eat up a fragment of a theory, and accordingly you sketch out a cartoon eye without reference to the surrounding factors.  I look in, highlighting these to you, but because the only bit you recognise is the eye, you get confused, frantically draw more eyelashes and witter about textbooks.  Textbooks have the breadth, credibility, and references to give you that bigger picture - they show you how to draw the whole face; Youtube videos don't.  Great for watching keyboard cat, not so great for understanding economic theory.  

Looking inwards, building outwards.  As this conversation has progressed, you're drawn more to abstract and subjective visuals that avoid the real issues.  Evasion.  The way I see it, you have tried to 'build outwards' from your mantras, but I guess they bias the bigger picture - eg. a Youtube animation on MMT biases your understanding of the economic system as a whole.  See?

Another way to look at it is premises and conclusions.  The root of FP thinking is that people too often end up with conclusions that aren't entailed by the fundamental premises.  Unfortunately, you've done just that.  You've started with a conclusive assumption (that fiat money can be practically used to pay government costs) and you're still trying to figure out what the premises must be for that to be true.  That is a great definition of bias and the opposite of FP.  

Anyway, I digress.  Money is a medium of exchange, in an economy, out of an economy, in all contexts.  That really is a first principle, and if whatever theory you conjure up breaks away from that, you know you're on the wrong lines.  In a fiat economy, money is still a medium of exchange, and that dictates its value.  If you try to create from 'thin air' instead of exchanging it with assets, it loses its value.  

Sorry, but you have singularly failed to back up your point: Every time you mention MMT or money creation to solve a real world issue, you have been at a loss to demonstrate how it can practically work, or avoid any of the overwhelming and catastrophic consequences that it would entail.  There are some important lessons to learn from MMT, but naively championing it as a solution without understanding the repercussions does it a disservice.

Original comment

Wonderfully contradictory!  You make a poor analogy, I add context to reflect the 'whole picture', and suddenly it's all about First Principles.  I use a genuine First Principle, and suddenly I'm missing context.  

Your drawing analogy describes your Youtube approach pretty well.  You eat up a fragment of a theory, and accordingly you sketch out a cartoon eye without reference to the surrounding factors.  I look in, highlighting these to you, but because the only bit you recognise is the eye, you get confused, frantically draw more eyelashes and witter about textbooks.  Textbooks have the breadth, credibility, and references to give you that bigger picture - they show you how to draw the whole face; Youtube videos don't.  Great for watching keyboard cat, not so great for understanding economic theory.  

Looking inwards, building outwards.  As this conversation has progressed, you're drawn more to abstract and subjective visuals that avoid the real issues.  Evasion.  The way I see it, you have tried to 'build outwards' from your mantras, but I guess they bias the bigger picture - eg. a Youtube animation on MMT biases your understanding of the economic system as a whole.  See?

Another way to look at it is premises and conclusions.  The root of FP thinking is that people too often end up with conclusions that aren't entailed by the fundamental premises.  Unfortunately, you've done just that.  You've started with a conclusive assumption (that fiat money can be practically used to pay government costs) and you're still trying to figure out what the premises must be for that to be true.  That is a great definition of bias and the opposite of FP.  

Anyway, I digress.  Money is a medium of exchange, in an economy, out of an economy, in all contexts.  That really is a first principle, and if whatever theory you conjure up breaks away from that, you know you're on the wrong lines.  In a fiat economy, money is still a medium of exchange, and that dictates its value.  If you try to create from 'thin air' instead of exchanging it with assets, it loses its value.  

Sorry, but you have singularly failed to back up your point: Every time you mention MMT or money creation to solve a real world issue, you have been at a loss to demonstrate how it can practically work, or avoid any of the overwhelming and catastrophic consequences that it would entail.  There are some important lessons to learn from MMT, but naively championing it as a solution without understanding the repercussions does it a disservice.

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WalterEgo WalterEgo (9 days ago)

"Money is a medium of exchange, in an economy, out of an economy, in all contexts.  That really is a first principle, and if whatever theory you conjure up breaks away from that, you know you're on the wrong lines."  

Just step outside your textbook for a moment. I'm asking where does the trillions of dollars in bank accounts all around the world come from? If it's an IOU, then who is the money owed to, and when can it be paid back?

Here's a pretty good analogy that even an 8-year-old should fly through.

In Monopoly (I hope I correctly remember the rules), the bank is 'outside' the game. When a player passes GO, they receive new money for free from the bank. Apart from the occasional gift card or when a house is sold back to the bank, new money only enters the game from players passing GO. 

Money leaves the game through fines, utility bills or when houses are bought (ie. any time money is paid to the bank). There is no link between a player buying a house (paying money back to the bank) and a player passing GO (a player receiving new money from the bank). The house purchase is not required to finance the player passing GO, because the bank can never run out of money (there really is a magic money tree). WITHIN the game, money acts how your textbook describes. When a player pays rent, money moves from one player to another. No new money is created or lost by transactions within the game. 

MMT could be Monopoly Money Theory. I think we ask the wrong question. It shouldn't be "can we afford a new hospital?", it should something like "is a new hospital a good idea considering limited manpower, time and resources." If so, the money is there to make it happen. 

Original comment

"Money is a medium of exchange, in an economy, out of an economy, in all contexts.  That really is a first principle, and if whatever theory you conjure up breaks away from that, you know you're on the wrong lines."  

Just step outside your textbook for a moment. I'm asking where does the trillions of dollars in bank accounts all around the world come from? If it's an IOU, then who is the money owed to, and when can it be paid back?

Here's a pretty good analogy that even an 8-year-old should fly through.

In Monopoly (I hope I correctly remember the rules), the bank is 'outside' the game. When a player passes GO, they receive new money for free from the bank. Apart from the occasional gift card or when a house is sold back to the bank, new money only enters the game from players passing GO. 

Money leaves the game through fines, utility bills or when houses are bought (ie. any time money is paid to the bank). There is no link between a player buying a house (paying money back to the bank) and a player passing GO (a player receiving new money from the bank). The house purchase is not required to finance the player passing GO, because the bank can never run out of money (there really is a magic money tree). WITHIN the game, money acts how your textbook describes. When a player pays rent, money moves from one player to another. No new money is created or lost by transactions within the game. 

MMT could be Monopoly Money Theory. I think we ask the wrong question. It shouldn't be "can we afford a new hospital?", it should something like "is a new hospital a good idea considering limited manpower, time and resources." If so, the money is there to make it happen. 

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Guest: (8 days ago)

Haha!  I didn't think you really liked First Principle thinking.  What a shame.  Once again, instead of a first principle you've tried to reduce it only as far as an analogy that you think can sidestep every real issue that I raised.  Head in the sand.  Why won't you respond to any of those points?  I think I know the answer; do you?

Monopoly is a basic rendition of real estate trade, but as an economic model it's obviously hopeless, even for an 8 year old...

Monopoly money does not need to be exchanged for anything in order for it to retain its value (or for the bank to have it in the first place), because there is no possibility of inflation, the prices of properties are all permanently set, there are no competing economies, the bank is controlled by a player, etc. etc.  There is literally a set amount of money available at the beginning of the game which keeps things simple.  Even so, if players refused to buy properties, the random repayment devices wouldn't indefinitely cover the players passing GO and the bank would run out of money.  

It wouldn't be so fun to play, but we could change the game to make it more accurate and help you evaluate your idea in the real world:  

For example, if you add multiple Monopoly boards (representing different economies), then creating new money would be a mistake, because the Monopoly cash on your board wouldn't be worth as much as that on the other boards, and your properties won't offer value to those other players.

Add to the game the idea that prices of the properties may fluctuate or rise in response to everyone getting extra new money.

Add the idea that opportunities to buy property or pay taxes are no longer just pure luck, but the result of the value of the money and the debt that the players (and the banker) have.

Add the idea that one random player gets to choose how much money is given to different people when they pass GO (your idea).  Sounds good?

I could go on, but you get the picture.  Once more, the closer we make the analogy reflect the economy, the more ludicrous your 'solution' gets.

In the economy, the bank isn't outside the game and money isn't created for out of thin air.  Its value is inherently tied to whatever assets it is being exchanged for, so the question is always "Could we have enough assets for a certain project?"

Step outside Youtube videos and animations for a moment, and delve into a basic textbook, just to get the slightest whiff of the complexities involved.  Trust me, 'Economics for Dummies' will offer you a better grounding than board games and cartoons. 

Original comment

Haha!  I didn't think you really liked First Principle thinking.  What a shame.  Once again, instead of a first principle you've tried to reduce it only as far as an analogy that you think can sidestep every real issue that I raised.  Head in the sand.  Why won't you respond to any of those points?  I think I know the answer; do you?

Monopoly is a basic rendition of real estate trade, but as an economic model it's obviously hopeless, even for an 8 year old...

Monopoly money does not need to be exchanged for anything in order for it to retain its value (or for the bank to have it in the first place), because there is no possibility of inflation, the prices of properties are all permanently set, there are no competing economies, the bank is controlled by a player, etc. etc.  There is literally a set amount of money available at the beginning of the game which keeps things simple.  Even so, if players refused to buy properties, the random repayment devices wouldn't indefinitely cover the players passing GO and the bank would run out of money.  

It wouldn't be so fun to play, but we could change the game to make it more accurate and help you evaluate your idea in the real world:  

For example, if you add multiple Monopoly boards (representing different economies), then creating new money would be a mistake, because the Monopoly cash on your board wouldn't be worth as much as that on the other boards, and your properties won't offer value to those other players.

Add to the game the idea that prices of the properties may fluctuate or rise in response to everyone getting extra new money.

Add the idea that opportunities to buy property or pay taxes are no longer just pure luck, but the result of the value of the money and the debt that the players (and the banker) have.

Add the idea that one random player gets to choose how much money is given to different people when they pass GO (your idea).  Sounds good?

I could go on, but you get the picture.  Once more, the closer we make the analogy reflect the economy, the more ludicrous your 'solution' gets.

In the economy, the bank isn't outside the game and money isn't created for out of thin air.  Its value is inherently tied to whatever assets it is being exchanged for, so the question is always "Could we have enough assets for a certain project?"

Step outside Youtube videos and animations for a moment, and delve into a basic textbook, just to get the slightest whiff of the complexities involved.  Trust me, 'Economics for Dummies' will offer you a better grounding than board games and cartoons. 

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WalterEgo WalterEgo (5 days ago)

You forgot to answer the question. Where does the trillions of dollars in bank accounts all around the world come from? If it's an IOU, then who is the money owed to, and when can it be paid back?

To answer this effectively, you NEED to step outside the contents of your textbook. Please keep your answer short. My attention span is inversely proportional to the number of your words.

Original comment

You forgot to answer the question. Where does the trillions of dollars in bank accounts all around the world come from? If it's an IOU, then who is the money owed to, and when can it be paid back?

To answer this effectively, you NEED to step outside the contents of your textbook. Please keep your answer short. My attention span is inversely proportional to the number of your words.

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Guest: (5 days ago)
Latest comment:

I didn't forget to answer the question - I "bypassed" it as I have answered it before, and instead responded to the bulk of your post which was your dodgy Monopoloy.

But I'll answer your question (yet again) if you answer any of my questions (for the first time).  Be patient - not everything is reducible to soundbites.  (You'd do well to improve your concentration span and the Youtube animations don't help that.)

- Where does the money in bank accounts come from?  
It is created in exchange for promises and IOUs (liabilities) - ie. from other assets with a discernable value.

- Who is it owed to?  
It's owed to a lot of different entities.  Sometimes other banks, sometimes companies, sometimes individuals.  When you get your loan from the bank, you have given them an IOU for the repayments which is worth more than the loan.  When the government get money from the Central Bank, they have given them an IOU as well.  

- When can the IOUs be paid back?  
They are constantly being paid back and constantly being renewed.  Assets are continuously exchanged in this way in any functioning economy.

Now, your turn!  See if you can answer these questions that I've asked:

- What happens to the value of a medium of exchange if it is no longer being exchanged for anything?
- If your currency loses value, how does that impact the economy, and trade with other economies?
- Who creates money?  Yes it matters.
- Who do you think should have the right to create free money when they see fit, and specifically who do you think is currently up to that responsibility and power?
- Why would taxation (notoriously unpopular, notoriously slow to implement, and notorious for victimising lower earners) be an effective and just way of controlling inevitable inflation?

Warning:  To answer any of these effectively (and you would need to answer all of them to make MMT a credible solution), you NEED to look outside of MMT Youtube videos. 

Any basic textbook would have taught you the answers to the above, because unlike videos they start from the basics. 

Please write enough detail to explain the practical issues at stake - I'm used to reading after-all.  No mantras, no simplifications, no memes, no evasions; just your best answers to explain why your solution could work. 

Can't wait!

Original comment
Latest comment:

I didn't forget to answer the question - I "bypassed" it as I have answered it before, and instead responded to the bulk of your post which was your dodgy Monopoloy.

But I'll answer your question (yet again) if you answer any of my questions (for the first time).  Be patient - not everything is reducible to soundbites.  (You'd do well to improve your concentration span and the Youtube animations don't help that.)

- Where does the money in bank accounts come from?  
It is created in exchange for promises and IOUs (liabilities) - ie. from other assets with a discernable value.

- Who is it owed to?  
It's owed to a lot of different entities.  Sometimes other banks, sometimes companies, sometimes individuals.  When you get your loan from the bank, you have given them an IOU for the repayments which is worth more than the loan.  When the government get money from the Central Bank, they have given them an IOU as well.  

- When can the IOUs be paid back?  
They are constantly being paid back and constantly being renewed.  Assets are continuously exchanged in this way in any functioning economy.

Now, your turn!  See if you can answer these questions that I've asked:

- What happens to the value of a medium of exchange if it is no longer being exchanged for anything?
- If your currency loses value, how does that impact the economy, and trade with other economies?
- Who creates money?  Yes it matters.
- Who do you think should have the right to create free money when they see fit, and specifically who do you think is currently up to that responsibility and power?
- Why would taxation (notoriously unpopular, notoriously slow to implement, and notorious for victimising lower earners) be an effective and just way of controlling inevitable inflation?

Warning:  To answer any of these effectively (and you would need to answer all of them to make MMT a credible solution), you NEED to look outside of MMT Youtube videos. 

Any basic textbook would have taught you the answers to the above, because unlike videos they start from the basics. 

Please write enough detail to explain the practical issues at stake - I'm used to reading after-all.  No mantras, no simplifications, no memes, no evasions; just your best answers to explain why your solution could work. 

Can't wait!

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Guest: (51 days ago)

Most countries in Europe do not have this problem in any way the same extent. Because if you do not have enough money you get social help. This helps the landlords it helps the renters and it alows for the social stability. It also reduces crime then in turn saves costs for the country. European countries do not do this out of love they now it works.

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Most countries in Europe do not have this problem in any way the same extent. Because if you do not have enough money you get social help. This helps the landlords it helps the renters and it alows for the social stability. It also reduces crime then in turn saves costs for the country. European countries do not do this out of love they now it works.

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Guest: (51 days ago)

The USA also has social help for people that don’t have a lot of money.  

Section 8 housing - Subsidized housing, housing vouchers, and public housing programs,

SNAP (Supplemental Nutrition Assistance Program), 

Medicaid and CHIP (Children’s Health Insurance Program), provides free or low-cost healthcare benefits,

LIHEAP (Low Income Home Energy Assistance Program), 

TANF (Temporary Assistance for Needy Families) and Welfare,

SSI (Supplemental Security Income) provides cash to low-income seniors and low-income people with disabilities,

CARES (Coronavirus Aid, Relief, and Economic Security) offers help to individuals and businesses affected by the pandemic

I’m sure there are more programs to help but I cannot be bothered to research them right now.

Original comment

The USA also has social help for people that don’t have a lot of money.  

Section 8 housing - Subsidized housing, housing vouchers, and public housing programs,

SNAP (Supplemental Nutrition Assistance Program), 

Medicaid and CHIP (Children’s Health Insurance Program), provides free or low-cost healthcare benefits,

LIHEAP (Low Income Home Energy Assistance Program), 

TANF (Temporary Assistance for Needy Families) and Welfare,

SSI (Supplemental Security Income) provides cash to low-income seniors and low-income people with disabilities,

CARES (Coronavirus Aid, Relief, and Economic Security) offers help to individuals and businesses affected by the pandemic

I’m sure there are more programs to help but I cannot be bothered to research them right now.

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Guest: (50 days ago)

And they work like a charm.

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And they work like a charm.

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WalterEgo WalterEgo (50 days ago)

Scrap all those programs and replace with UBI - a beautifully simple 21st centrury solution that will come about through necessity.

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Scrap all those programs and replace with UBI - a beautifully simple 21st centrury solution that will come about through necessity.

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