Rand Paul is talking at the senate floor about the Debt Ceiling.

He is a moron.

The reason half of European governments run a balanced budget is because they have no choice. They don't have a sovereign currency and rely on the European Central Bank for growth. The equivalent in the US is that US states must run a balanced budget. But the federal government doesn't!

Euro is an experiment and will eventually fail.

#finance #economics #politics #DebtCeiling


That’s not how this works. That’s not how any of this works. (To borrow the line)

Banks don’t cause growth. At most, banks support growth as a necessary but not sufficient actor in the environment.

States don’t have to run balanced budgets. And we see in fact that they do issue bonds, they do technically run non-balanced budgets on a cash flow basis all the time. However, states do voluntarily adopt policies whereby they balance their budgets because that is a good thing.

What’s good for states might very well be good for the federal government as well.

It’s merely the idea that anytime a politician wants to spend money he needs to justify that spending against the cost.

One way or another, we do all pay that cost.

@volkris Banks create money (bank deposits) which increases aggregate demand. Banks are CRITICAL to growth. They don't lend other people's money, they literally create money by making loans.

See: bankofengland.co.uk/quarterly-


Keep in mind that economies were growing before there were modern financial systems, showing that no, banks are not so critical.

I hear people making that claim occasionally, and it’s just bunk.

Some banks have the ability to create money, but others have legal restrictions on such things. Modern finance is more complex than I think you’re crediting it for.

By analogy, banks can fertilize the soil, but that’s not sufficient to see plants grow. There still needs to be seeds and sunlight. They can help, but they are not anywhere close to the end of the story.

@volkris It's all about Debt. Banks are a modern institution but debt is very old. There is a great book called Debt the First 5000 Years by David Graeber.



To be clear, debt is not necessary, only better, in light of most transactions.

We absolutely could have economies that operate with zero debt at all, and we would still have economic growth and value for those involved. We could, but it would be far far less growth and less value. We choose to engage debt because it provides that much more value over the alternative.

It’s like, sure we could have a society without mechanized transport. The reason we choose to engage cars and trains and everything else isn’t because they are required, but because they make our lives so much better, enabling so much more.

We apply debt because it so exponentially expands the economic options for us all. And banks help coordinate that technology. But it’s all optional nonetheless.

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