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by bithive123 501 days ago
I hate threads like this because of all the misinformed debt hysteria.

People like to bring up places like Argentina and Venezuela, but their debts weren't denominated in their own currencies, so they had to collect dollars in order to repay debts in dollars. As a currency issuer, since we create dollars, we can never run out of them. Nor do we have to round up dollars and take them back from currency holders before we can repay a debt. Doing so just takes those dollars away from the non-government so that the issuer can zero out a ledger somewhere. The interest is interest we choose to pay, for some reason. The only way we could default on our debt is if we decide to. The only way to "pay off" the "debt" is to take all the dollars away from the non-government, which is _us_.
1 comments
SpicyLemonZest 501 days ago
Respectfully, it's you who's been misinformed by viral but false monetary theories. It's true that the US government can't run out of dollars in the same way that you or I might run out of dollars. It's not true that the government has no fiscal constraints, or that taxes and spending are unrelated parameters.

> The interest is interest we choose to pay, for some reason.

Perhaps this is the best point to talk about, because the precise way in which it's untrue is very concrete. The US government doesn't choose how much interest it feels like paying; it sells securities which promise a specific payout schedule according to an auction-set interest rate. If investors want to buy at a high interest rate, there's no mechanism for the government to demand they accept a lower one.

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bithive123 501 days ago
I never said that we have no fiscal constraints, just that the common misconception is backwards. I also never said that the government chooses the rate. It chooses to pay interest when it chooses to sell securities.

I think the popular misunderstanding is more harmful than some of the misunderstandings you point out (which some people may indeed have) because it leads to people pushing austerity because of their monetarist dogma.

Nobody ever asks who's going to pay for stuff when it's so-called "defense" spending. But if we want health care or education then it's all apoplectic "debt, hyperinflation, enslavement of future generations, where's the money going to come from!?"

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