Comments on: Don’t be fooled: the government’s plan to “live within its means” is a dangerous con

By: ggg

ggg — Tue, 31 Oct 2017 02:42:00 +0000

It seems like that all went over Edward Douglas’ head. Government debt does not matter because that is how money is created, tax is how money is destroyed, and if you know anything about history, governments with fiat currency never default. So yes, you’re wrong and your wrong ideas about the economy hurt many people, because eliminating public debt or the deficit always means cutting crucial infrastructure. The only partially valid point you made was about the supposed ‘tax’ of inflation. That has NEVER been a major issue caused by merely government deficit spending thankfully (since inflation is proportionally a matter of too much money chasing too few goods and services, hence the benefits of adding healthcare, jobs provisions, arts and sciences add goods and services to the national economy), and only has been an issue in countries plagued by war (extreme shocks to supply side, as in Weimar with their loss of productivity post ww1, or Zimbabwe with their ~45% loss of agricultural capacity and accompanying issues in other sectors). It doesn’t matter if a central bank keeps the debt floats at a relatively smooth level, as long as there is a proportional increase in productive capacity.

By: Paul Hayes

Paul Hayes — Thu, 26 Oct 2017 17:39:00 +0000

In important ways it’s quite unlike private debt and it’s very unlike the household private debt of the “austerity con”.

https://www.niesr.ac.uk/blog/three-facts-about-debt-and-deficits
https://www.lrb.co.uk/v37/n04/simon-wren-lewis/the-austerity-con

By: Edward Douglas

Edward Douglas — Thu, 26 Oct 2017 16:51:00 +0000

Can not default? So, your central bank “floats” the debt away? This is similar to the scheme in the USA with the federal reserve and devaluing of the currency. It is a tax, because the consumer no longer has the same purchasing power with the same amount of money. Government debt matters, just as private debt does.

By: Richard Phillips

Richard Phillips — Thu, 26 Oct 2017 16:30:00 +0000

No, UK does not have to borrow to spend. It’s just how it’s always been done. UK with its powerful sovereign fiat currency can always service its debts where they are denominated in £, it cannot default. Private debt however, can. Taxes are needed to control spending behaviour and give value to currency through demand.

By: Edward Douglas

Edward Douglas — Thu, 26 Oct 2017 09:50:00 +0000

Public debt does not matter? Well, that is a relief, because there should not be a need to pay taxes. Government debt does matter, because just like private debt, it does eventually have to be paid back.