Paranoid drivel selling snake oil!
MODERN MONEY MACROECONOMICS
Our economy has rarely been in a state of full prosperity but we can and should have a normally prosperous economy. How we can make that happen? Read on to find out how and where Congress’ money flows through our economy.
When Congress spends on infrastructure, it creates new dollars out of thin air, circulating the money in the domestic private economy. (Also, out of thin air, banks create credit, which private industry uses to build physical things (real assets) but, with loans repaid, cannot create new dollars (financial assets).
Dollars exit circulation either as federal tax payments to the Treasury (where they are destroyed before they can be used) or, as deficit spending (adding to federal debt), eventually saved in private bank accounts, domestic or foreign.
From savings, dollars may re-enter circulation for more consumption, may buy federal debt or private debt/equity, or may be invested in municipal bonds to create public infrastructure. Thus, Congress’ deficit spending yields infrastructure, savings, and consumption - all the ingredients of prosperity! So, the more deficit spending we have (until the onset of harmful inflation), the more prosperity for us!
The Fed, by controlling bank interest rates, can contain harmful inflation caused by bank credit. Thus, Congressional spending is limited only by the availability of goods and services it can buy in the market without harming private commerce.
So, Congress can indeed afford free healthcare and expense-paid education for all because these goods and services are either available in the marketplace now or can be duly produced by our industry, much more capable now than during its “miraculous” World War II expansion, effected mostly by women and old men.
So, when electing a Congress, citizens v**e for their future economy: either for prosperity, if they v**e for the big spenders, or for recession, if they v**e for the deficit hawks. May they choose well, with their grandchildren in mind!
Federal debt? With Congress’ OK, the Fed can buy any amount of deficit spending directly from the Treasury, as Japan’s central bank is doing and as former Fed Chair Ben Bernanke has recommended. Being no longer on the gold standard, Congress has no financial need to borrow from the private sector but, for commerce, our treasuries are still convenient tradeable assets. Foreign exporters own about half of our federal debt and we benefit from the trade deficit!
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