I ask this question with genuine sincerity: Can't we just print more? Why do people think we can't just print more?
- Yes 2. People have been brainwashed by decades of austerity hawk propaganda. This leads people to believe that the US budget is like a personal budget where you can only spend the amount you make as income (taxes), when in reality they have an infinity money printing machine that they’re more than happy to use as long as it’s going to massive corporations.
She's talking about the debt ceiling. They can print more if Congress raises it.
Would there actually be any adverse economic consequences of doing that? This stuff is definitely not my domain
I'm pretty sure it just exists so Republicans can threaten to self-destruct the government if they don't get their tax cuts or whatever
Not any immediate and violent ones. The conventional wisdom around printing money is it causes inflation, but I think if you're the USA's treasury secretary there's probably a thousand different incentives and consequences beating down your door.
If the end conclusion is that the US just can make the printer go brrr because they have the largest standing army on earth, and not due to any real monetary considerations, I'd say that's pretty telling
It's not my area of expertise either, but people whose takes on this I respect seem to indicate that it would be catastrophic for the US to violate its debt ceiling (and therefore it's a good idea to get rid of the debt ceiling altogether).
Printing money you can probably just do although try to tax it back at some point.
Because "muh inflation Weimar Germany had to burn paper money to stay warm ect ect"
there is truth to this but for a country like the US they can mostly print money without many consequences. Inflation only happens if there is too much money backed by too little real economic assets. Since the US is the biggest economy and they have the biggest military (no international debt collectors will hound them about debt) they have a lot of room to play with fiscal and monetary policy.
This article is about fiscal stuff, which is what Congress and the government spends. That is a looot of money, but in the US, inflation really grows or falls off the back of monetary policy which is the federal reserve's thing. They deal with banks and how banks can loan their money and how much. Jerome Powell has been very loose with the money printer and interest rate due to the Coronavirus, and inflation has gone up because of that. They like to have to about 2% inflation annually but it is 5.4% right now. Generally you want your inflation to match your annual GDP growth rate. Well we had a GDP contraction of -3.51% in 2020, though this year we are expected to bounce back with like 6% growth or something, which is pretty close to our inflation this year.
The point is that people with money (capitalists) smell trouble when your inflation and GDP growth is too far apart, it is a sign that your currency does not reflect the truthful value of your economy. If you are small country with no influence, this is when the creditors start demanding IMF neoliberal structural reform, payment in USD, downgrade your national credit rating, force floating exchange rates and all that imperialist shit. If you say no, they say they can't trust your economy and pull out everything and ruin you (unless you successfully decouple your country from foreign influence like the DPRK).
Generally you want your inflation to match your annual GDP growth rate.
Holy fuck, does that immediately imply that the rich get richer and the poor get poorer?
Given the fact that most of that growth gets distributed to the top, what, 10%, if even that? So the the goal is to cancel overall growth with inflation, but the growth was concentrated in one sector. Then relatively speaking, wealth was funneled from the non-fast-growing sector (the poors) to the fast-growing sector (the non-poors).
Those two together just seem to imply they consciously said “yeah it’s ok if the masses are always worse off as time progresses (since they’re only worse-off relatively speaking)”. It just seems seems like such a bad idea to play with fire like that but go off ya fucking landlords I guess lol
does that immediately imply that the rich get richer and the poor get poorer
considering that debt is especially sensitive to inflation, yes definitely. With high inflation, debtors can pay back their debt easier since inflation eats a percentage of the principle every year. (You pay the same amount but that amount is worth less in real terms). Banks and capitalists obviously mald because they are losing a couple percent of profit (not losing money mind you, they still charge interest!! in fact some really awful loans make your interest rise with inflation)
The Gold Standard was originally there just so rich British bankers could literally put a hard cap on money and thus inflation. They even caused deflation, to the determent of the rest of the economy and especially poor debtors, just because they felt like making more money.
Yes but thats not the problem here
The problem is the debt ceiling, the performative, procedural, nominal limit on how much the government can borrow through issuing securities to investors. It gets raised every time because the US government can borrow however much it wants to pay its budget because we're the global reserve currency, and neither party is going to countenance raising taxes on the rich or cutting hundreds of billions from the defense budget as a means of balancing expenditures to revenues.
The Republicans don't have problems raising the debt ceiling when they're in charge. When Democrats are in charge though they've concern trolled about it since 2012. The goal is to get a pretext to spread propaganda through their machine about how fiscally irresponsible the Democrats are and that your taxes are going to go up with them im charge.
In fairness, Dems also concern troll about it when the GOP is in the White House, but they always back down much more easily.
