What is your prediction on the raising the US #DebtLimit? (Boost for bigger sample)
1) #Biden caves; increase tied to spending cuts
2) #Republicans cave; Clean debt limit Increase.
3) US Government Default
@antares @ 3, a government that has debt in the currency it issues can only default if it chooses to, there's not really any risk of default. That myth just works to limit the possibility of government policy making to actually implement policy.
"The Deficit Myth: The Biggest Lie In Politics | 1Dime"
https://www.youtube.com/watch?v=75udjh6hkOs
"The Problem With Taxing The Rich | 1Dime"
https://www.youtube.com/watch?v=zBk78wG1U9U
@athousandcateaus Yes, I see from the comments that I should have added a choice for Monitizing the Debt and the resulting hyperinflation to the list. I just didn't think anyone would seriously think the US would pull a Zimbabwe. I have clearly underestimated the internet.
@antares well having a higher deficit doesn't even necessarily mean hyperinflation. Also the overwhelming majority of US debt is in USDs which the US can create, in situations with Zimbabwe, they owed a lot of debt in foreign currency and attempted to print more money to cover it which devalued their own currency and caused hyperinflation. The situation in the US is much different.
"Why "Printing Money" DOESN'T Lead to Inflation"
https://www.youtube.com/watch?v=ihPtDyS6RkU
"What Caused Hyperinflation In Weimar, Zimbabwe And Venezuela?"
https://www.youtube.com/watch?v=1U7t47toB5E
@athousandcateaus There is a big difference between having a higher deficit and monetizing debt. You don't hear anyone in economic circles worrying about the US debt to GDP ratio if congress fixes the statutory borrowing limit we are fine (choices 1 or 2).
On the other hand fixing a legal fiction with real dollars will absolutely have economic consequences. Perhaps not 10,000% inflation, but certainly double digit inflation, especially if market participants start to believe that it will be the standard solution to a debt limit impasse.
Now as your first video points out we could raise taxes to the point that income = spending, which is another way governments can handle unpaid debt. I think new taxation is particularly unlikely in the current political climate. There is also the slight problem of popular revolution. I would remind you what happened when the government of King George III tried to raise taxes to pay off the debt of the French and Indian war.
“Now as your first video points out we could raise taxes to the point that income = spending”
This is so key when addressing MMT. We see that, for all practical purposes, we can’t actually do that :)
MMT seems to rely on that being true, but it isn’t practically true now, and won’t be any time soon.
Maybe when that world arrives we can consider the MMT form of fiscal governance, but until then, we need to clearly say that MMT cannot work because it misses this key piece.
