It is both terrifying and uplifting that most users of Nostr will understand money creation, currency debasement and the role played by central banks better than a man who was the chief economist and economic adviser to Vice President Joe Biden under Obama.
He is right that a country which controls its own currency cannot go bankrupt. But that he cannot coherently describe why a country 'borrows' money that it can itself create is nothing short of appalling. It isn't hard to understand that the borrowing itself is in no small way how the money is actually created - because all modern money, other than gold and #Bitcoin , is nothing more than someone else's liability.
The government creates a debt obligation (a bond) and it promises to pay back the buyers of that debt obligation, together with a coupon or percentage rate (fun fact: these used to be actual physical coupons attached to the paper bonds, which is where the name comes from). The new money is backed only by trust that this liability will be repaid.
It's liability money, backed by nothing more than belief.
And it gets worse than this, when we consider how central banks themselves fund governments. When a central bank buys a government bond or makes a loan to a bank, it doesn't pay with cash. Instead, it merely credits the seller's or the borrower's account with new money that it creates from nothing, on a spreadsheet or a ledger it controls.
When creating this new money, from thin air, with a mere keystroke, the central bank dilutes the unit value of all the other money currently in the system prior to that point. The new money floods into the system, being exchanged for less liquid assets, and for goods and services. Inflation results; and prices are driven up in the process.
So what can we do? Is there anything we can do to stop this flywheel?
Not while we continue to use the liability money that they control and debase. But we now have an alternative.
They are fighting us, as hard as they can, because they are desperate that people do not understand how this process works, and how central banks and governments can dilute and debase their national currencies, to the benefit of a few and the detriment of many.
Because the many are beginning to realize that perhaps, after all, they do not need to use only those national currencies that are melting like ice cubes in the sun.
There is a new game in town - a money that can't be diluted, or debased, or issued without cost at the stroke of a key.
Thiers’ law states that good money will drive out bad money. And time is surely up for bad and collapsing monies.
Even if Jared Bernstein won't be able to explain why.
https://twitter.com/RnaudBertrand/status/1786272981058220187?t=8USKnGkviPveE1poYyBUww&s=19
fnew /
npub1wl…dznlx
2024-05-03 14:18:55
Author Public Key
npub1wl39ydk5rpecvtrzhq67afl9ykn2ty2xdxdkfmyan0rss3f3ma5sndznlxPublished at
2024-05-03 14:18:55Event JSON
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"content": "It is both terrifying and uplifting that most users of Nostr will understand money creation, currency debasement and the role played by central banks better than a man who was the chief economist and economic adviser to Vice President Joe Biden under Obama.\n\nHe is right that a country which controls its own currency cannot go bankrupt. But that he cannot coherently describe why a country 'borrows' money that it can itself create is nothing short of appalling. It isn't hard to understand that the borrowing itself is in no small way how the money is actually created - because all modern money, other than gold and #Bitcoin , is nothing more than someone else's liability. \n\nThe government creates a debt obligation (a bond) and it promises to pay back the buyers of that debt obligation, together with a coupon or percentage rate (fun fact: these used to be actual physical coupons attached to the paper bonds, which is where the name comes from). The new money is backed only by trust that this liability will be repaid. \n\nIt's liability money, backed by nothing more than belief.\n\nAnd it gets worse than this, when we consider how central banks themselves fund governments. When a central bank buys a government bond or makes a loan to a bank, it doesn't pay with cash. Instead, it merely credits the seller's or the borrower's account with new money that it creates from nothing, on a spreadsheet or a ledger it controls.\n\nWhen creating this new money, from thin air, with a mere keystroke, the central bank dilutes the unit value of all the other money currently in the system prior to that point. The new money floods into the system, being exchanged for less liquid assets, and for goods and services. Inflation results; and prices are driven up in the process. \n\nSo what can we do? Is there anything we can do to stop this flywheel?\n\nNot while we continue to use the liability money that they control and debase. But we now have an alternative.\n\nThey are fighting us, as hard as they can, because they are desperate that people do not understand how this process works, and how central banks and governments can dilute and debase their national currencies, to the benefit of a few and the detriment of many. \n\nBecause the many are beginning to realize that perhaps, after all, they do not need to use only those national currencies that are melting like ice cubes in the sun. \n\nThere is a new game in town - a money that can't be diluted, or debased, or issued without cost at the stroke of a key. \n\nThiers’ law states that good money will drive out bad money. And time is surely up for bad and collapsing monies. \n\nEven if Jared Bernstein won't be able to explain why.\n\nhttps://twitter.com/RnaudBertrand/status/1786272981058220187?t=8USKnGkviPveE1poYyBUww\u0026s=19",
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