I've mentioned in many previous posts that government debt is really not like private debt. Instead government bonds are more like another type of currency or money. The key difference between government bonds and paper money is that bonds pay interest and money doesn't. That's about it. But it's a key point because government bonds, … Continue reading More on What Happens If Debt Ceiling Isn’t Raised
money
Government Bonds are Just Like Government Money
Government debt is not like private debt. Government debt, government bonds, are really just another form of the government-issued fiat money obligations - just like paper money. There really is little difference between government bonds and that paper money in your pocket - except that the bonds pay interest and are harder to cash at … Continue reading Government Bonds are Just Like Government Money
The Misunderstood National Debt
A colleague asked for my thoughts on this article/column by Michael Manning in the State News, the Michigan State student newspaper, so I thought I'd post it for all. Basically Mr. Manning reaches the right conclusions with a correct, but weak case. In looking at the issue of the size of the U.S. national debt … Continue reading The Misunderstood National Debt
Tooth Fairy and Money Supply
This is great. I hope James Kwak at Baseline Scenario didn't bite his tongue - it's pretty far into his cheek. Read the whole thing at Paul Ryan Criticizes Bernanke for Failing to Contain Tooth Fairy: In a Congressional hearing today, Representative Paul Ryan (R-WI), chair of the House Budget Committee, strongly criticized Federal Reserve Chair … Continue reading Tooth Fairy and Money Supply
Excess Bank Reserves: Theory vs. Reality
In the macro econ textbooks, the mainstream explanation for money creation is the story of fractional reserve banking where reserves limit the amount of loans made. In the traditional theory, the central bank (The Fed in U.S.) controls the amount of reserves banks have through either reserve reqmts or open-market operations. Commercial banks are supposedly … Continue reading Excess Bank Reserves: Theory vs. Reality
The US Government is NOT like a Household
The US Government (and it's budget) is NOT like a household or a corporation. Anybody who uses this time-worn analogy is simply not telling the truth and is likely either ignorant or is trying to pull the wool over your eyes. Randy Wray explains the many reasons. You (your household) must finance your spending (either … Continue reading The US Government is NOT like a Household
A History of Economists on Money
Fascinating story of the history of money and economists' attempts to explain / theorize money. Long, but an easy read at http://www.monetary.org/bromsgrovetalk04.htm
EconProph 