[fallingknife]

MMT does sound like those radio commercials they had back in the 90s saying they would teach you how to "borrow your way out of debt" though.

[neilwilson]

Only because you haven't taken the time to understand what is being said - just the twisted version that isn't actually the case.

Every financial debt has a corresponding financial asset. Why follow the 'debt' and not the 'asset'? Because you have a psychological anchor on the word 'debt' that causes an emotional reaction?

All money is somebody's debt. That's how the accounting works. Rather than looking at the books from the 'credit' side, why not look at it from the 'in credit' side?

What I find amusing is how the bank borrowing from you so you are 'in credit' with the bank is a good thing, but the government borrowing from you so you are 'in credit' with government is a bad thing.

Given those are identical propositions in accounting terms, rationally the view about them should be the same.

[slv77]

Because at some point the credits and the debits need to be settled with real goods and services and when they can’t be someone has to take a loss. The loss either comes through default or inflation but allocating those costs are extremely painful politically. In many cases those costs end up being paid in blood.

[PaulDavisThe1st]

> Because at some point the credits and the debits need to be settled with real goods and services

If that happened all at once, for every credit and every debit, it would indeed be a problem. But that doesn't happen, ever.

[neilwilson]

Money and stuff are inductively connected, like reactive power and active power in electrical engineering.

Assuming the 'power factor' of the economy is one is a category mistake.

[fallingknife]

When you go to the casino and change your cash for chips you are in credit with the casino. If that casino started handing out more chips without taking in cash, those people would be in credit with the casino too. Would you want to be in credit with that casino? You can create an accounting "asset" with the stroke of a pen but not a real one.

[RobertoG]

You get your chips in order to play in the casino. Without chips nobody can play.

What is a 'real asset', when nothing exist outside the casino? At most, you could change your chips for another casino's chips.

[neilwilson]

And when the country requires that you pay the taxes in casino chips - and only those casino chips - what then?

And when the banks decide to peg their liabilities to casino chips to leverage that drive from taxation, what then?

Once you are required to get casino chips, or else, you will offer up real goods and services to get them.

Cash isn't real. It's an accounting fiction.

[MrMan]

I dont agree with the previous poster but I think you should recognize that the bank and the government in your example are not playing symmetric games. The incentives for each are different, even though at a point in time accounting principles can describe their respective balance sheets.

[imtringued]

MMT is just the credit theory of money plus the realization that the government runs its own bank.

I don't know what you are talking about.