Interesting article I found.
You know you understand modern money when…
- You know the difference between a currency issuer and a currency user.
- You know that the US, UK [or name your sovereign currency-issuing nation] will never be like Greece.
- You know that currency-issuers can never run out of their own money.
- You know that too much foreign-denominated debt can limit a currency-issuing nation’s options, but debt denominated in their own currency cannot.
- You know that interest rates are established by the central bank, not by market forces.
- You know sovereign (currency-issuing) nations will never be forced by “markets” to pay interest rates above what it desires.
- You know that taxes simply remove money that first came from the government when it spent them into existence.
- You know that taxation creates demand for the sovereign currency and influences economic behavior but in no way funds the government.
- You know that China only obtains US Dollars because they sell the US a lot of real goods.
- You know that China holds US bonds so they can earn interest on US Dollars obtained from trade, not because the US needed to borrow money from China.
- You know that it is our real resources that are scarce and that money is always able to be issued to utilize (or preserve) scarce resources.
- You know that involuntary unemployment can be ended anytime with the right kind of tax cuts and spending increases.
- You know that recessions can always be ended with the right combination of tax cuts and spending increases.
- You know that if the government “tightens its belt” during a recession, the recession only gets worse.
- You know that the fiscal policies of a currency-issuing government are nothing like the budgets of a business or household.
- You know that real fiscal responsibility means the currency-issuing government is responsible for balancing the economy, the needs of the people and the sustainability of resources, not balancing the accounting of tax receipts and spending.
- You know that the national “debt” is actually the net savings of the nation’s currency around the world.
- You know that reducing the “debt” means reducing those savings.
- You know that children and grandchildren can never be burdened by the accumulation of such savings.
- You know the government can always pay its bills and any future financial obligations when the time comes, and that what really matters for the future are the real resources needed by the people.
- You know that if a nation has the necessary human and real resources, it can always afford to deploy them for needs such as healthcare or modern infrastructure.
- You know that nations can always afford to invest in their human capital such as education, research & technology development.
- You know that most financial crises are related to too much private debt, not how much money the government had issued into the economy over time (what many call “deficits” and “debt” but are really net injections of new money accumulated as savings).
- You know that businesses grow when they have more customer demand, not because they have less taxes or lower interest rates.
- You know that customer demand comes from growing household incomes that are subsequently spent.
- You know that taxing reduces customer demand and that government spending increases it.
- You know that all sovereign nations can use modern money for the well-being of their people, and you are intent on seeing that happen!
When you understand money you can smile at the future.
Spread the hope!
Source: It’s The People’s Money: You know you understand modern money when…