In reply to the Jared Bernstein video.
My understanding of what he should have been able to say:
The government prints money primarily to replace bills and coins in circulation. While It taxes and borrows money to finance government operations. When the government borrows (foreign or domestic) or taxes the public, the money is “coming from somewhere” and so the money supply is not as increased as if the government would finance itself with new money “coming from nowhere” by just printing it. When the government prints to finance operations, essentially every dollar spent is a new dollar and it dilutes the value of all other dollars in proportion to their existence in circulation. AND then when the government pays payroll or pays contracts, that money is put into banks by people and companies and additionally the fractional reserve banking system increases the money supply through the money multiplier effect. (Essentially the government debt held by a bank can then be used as collateral for loans to they bank which they can then loan out at an interest rate higher than the interest rate they are paying, which cascades into a number of other loans. So the loan then gets deposited and loaned again to some limit determined by the policies of the FED and market dynamics)
When the government finances from borrowing, the only inflation that occurs is from the money multiplier effect not on any direct increase in currency in circulation.
When the government finances purely from taxes therefore, no debt created, then there is no inflation.
DefiantDandelion /
npub1pn…rqlgr
2024-05-05 16:18:14
Author Public Key
npub1pncg62q25h704u6qcf56hnmxx46jdlwfpw2t860ld5685s0sjzms9rqlgrPublished at
2024-05-05 16:18:14Event JSON
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"content": "In reply to the Jared Bernstein video.\n\nMy understanding of what he should have been able to say: \n\nThe government prints money primarily to replace bills and coins in circulation. While It taxes and borrows money to finance government operations. When the government borrows (foreign or domestic) or taxes the public, the money is “coming from somewhere” and so the money supply is not as increased as if the government would finance itself with new money “coming from nowhere” by just printing it. When the government prints to finance operations, essentially every dollar spent is a new dollar and it dilutes the value of all other dollars in proportion to their existence in circulation. AND then when the government pays payroll or pays contracts, that money is put into banks by people and companies and additionally the fractional reserve banking system increases the money supply through the money multiplier effect. (Essentially the government debt held by a bank can then be used as collateral for loans to they bank which they can then loan out at an interest rate higher than the interest rate they are paying, which cascades into a number of other loans. So the loan then gets deposited and loaned again to some limit determined by the policies of the FED and market dynamics) \n\nWhen the government finances from borrowing, the only inflation that occurs is from the money multiplier effect not on any direct increase in currency in circulation.\n\nWhen the government finances purely from taxes therefore, no debt created, then there is no inflation.",
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