Part of How Money Works – FAQ

Kathy Heyne says:

For those struggling with MMT, google “money created from thin air”. You’ll get lots of hits, including Bernanke admitting that’s where the $1.3 trillion bank bail out came from, and German banks admitting that’s where credit came from.

There is nothing new about this, it’s been the reality since we all abandoned the gold standard. Trouble is, the ramifications of abandoning the gold standard and using fiat currency were never explained to the people. And no way were governments captured by Neoliberalism ever going to use fiat currency properly. That is, to serve the majority of society.

Governments continued to explain money as a limited commodity with an external value ( like it had with a gold standard) and government budgets as being like household budgets (which they’re not: households can’t create currency out of thin air, but governments can) because it suited laissez-faire faire, Neoliberalist capitalism to keep a huge supply of labour unemployed, underemployed or working poor people, for some perverse, peculiar reason.

I often suspect governments and politicians don’t understand the ramifications of abandoning the gold standard and using fiat currency themselves. Either that, or they are VERY good actors.

John Casper says:

Per former PIMCO chief economist, Paul McCulley,
“Remember, the government sector’s liability is the private sector’s asset!”

If fiscal illiterates want to cut the deficit, they’re removing wealth from the private sector. This brilliant four-page work from Prof. Tcherneva makes it accessible.

“An Antidote to Deficit Phobia”
“There is always a counterpart to the government deficit somewhere in the private sector in the form of a surplus.”

OT, I really enjoy this 12-minute video of Mr. Mosler talking about cars.
There’s nothing about #MMT in it. His brief Carroll Shelby story about being with Lee IaCocca at the 1964 New York Auto Show–right after 5:00-minute mark–is riveting. IMHO, Mr. Mosler’s interest in cars is solely about their performance. He used carbon fiber and the weight reduction allowed him to drive faster. He was decades ahead of BMW and Audi.

Mr. Mosler’s a Renaissance man.