Yeah let's just print trillion dollar bills to pay off the debt. Zimbabwe had trillion dollar bills if I remember correctly.
Zimbabwe’s economy and currency collapsed because the government stole productive assets and gave them to people who did not know how to do anything with them, basically destroying the productive capacity of the nation within a few weeks.
Recent history of Zimbabwe (<http://imgur.com/a/VdQdD>)
As i understand it, more or less everyone (excluding fringe groups) agrees that:
1. All money is created by the state or other banks acting under state licence
2. Money only has value because the government promises to back it
3. because taxes must be paid in government-issued money
4. Therefore government spending comes before taxation
The bone of contention as i understand it is the 5th tennet:
5. Government deficits are necessary and good because without them the means to make settlement would not exist in our economy
As i understand the argument, it boils down to a disagreement about whether public investment can crowd out private.
EDIT: points from https://www.google.com/amp/s/criticalfinance.org/2019/02/06/...
The only way for the economy to grow if the Government is running surpluses is with increasing private debt (so not really "paying down" anything but just transferring debt from one sector of the economy to another), and/or with a big enough trade surplus to cancel out the other sectors.
In any event, the parents take on 2 is not exactly correct. MMT people say that a primary source of demand for a currency is that taxes may only be paid in that currency. Governments spend money into existence and tax it out of existence.
> [...] a primary source of demand [...]
That indeed sounds much more plausible.
[0] https://www.wnycstudios.org/podcasts/radiolab/articles/more-...
When communism fell, I remember how the west promoted the ‘shock therapy’ to former communist countries, which was devastating to them. Another junk science that lead to a ‘lost decade’ and misery in eastern countries.
It was a ‘rip the Bandaid’ type of approach, which failed as it didn’t account that some countries needed time to adjust to the new capital system and it led to the closure of many lines of production that were actually profitable, as it was a ‘hard reset’
Be very wary when someone peddles a new ‘theory’ which is unproved, as a magical cure. Communism was one of them as well.
But also as an outlay of currency, QE is one of the least effective uses to support or generate productive capacity.
How do we know when we’re getting close to full utilization
You'll know the economy is neat 100% because inflation will kick in.
Also, deflation.
So if your trade + investment balance remains favourable, it's not a problem. If there's a major flight of investors (to where?), capital, or a thing you must import at any price (usually oil), then inflation kicks in even without money printing.
The US need not worry about inflation until a bigger more stable economy comes along, which is a long way off.
You raised a good point about inflation not necessarily being tied to printing money, but you ignored the fact that if you print more money (without an obvious productive place for it to go) then you simply increase supply without increasing demand which causes inflation. It's happening right now in the US by just about every metric, and there is good reason to believe it is about to go up a lot more.
So no, the US not only is currently experiencing inflation like it has not seen for decades but there is likely to be a lot more in the near future. The Fed is printing money like crazy (I believe we've printed approximately 30% of our total money supply in the past ~2 years, so in ~2 years we've printed approximately half as much money as we did in the previous ~200 years) which deflates the value of our currency. I actually rounded all the numbers down to make it seem less problematic than it is - I encourage you to check the data for yourself.
Doesn't that money start disappearing as soon as the QE stops?
War can be profitable. Climate change can be profitable. Making unsafe airplanes can be profitable. Financial system brittleness can be profitable.
With allocation of capital being the primary incentive setter, and the Fed playing a role of removing the pain and sting of artificially inflated assets, I'm not convinced that Market reality even tracks well with reality anymore.
Where is the surge of investment in physical and supply chain investment in light of all of the logistical difficulty we've run into? Where is the funding of domestic manufacture? Where is the wage growth? Where is the transparency in medical cost reduction?
These are all signs that the economy, instead of focusing on getting real work done, is off chasing purely fiscal optimization rather than societal risk mitigation.
So... Beg your pardon, but I think your measures of success and mine are different enough that I can reasonably say that by my metrics, those "experts" are failing to deliver at anything except perpetuating the status quo that keeps them in a job.
That's just me though.