On Nov 24, 2012, at 3:52 PM, nathan tankus <somekindofheterodox at gmail.com> wrote:
> okay I just listened to that section. guys, he's talking about basic
> reserve accounting. I'm surprised I have to explain that here.
> People need to read volume three of capital more carefully:
No he's not talking about that at all. The passage from Marx is about short-term cyclical stuff, not structural deficits of close to 10% of GDP. This is MMT la-la land, where you can just print money without bad consequences. The U.S. government is running a deficit of something like $1 trillion a year. This will shrink as the economy recovers, assuming it does, but it's still facing years of vast deficits. The Fed could print the money if it wanted to, but at some point it'd end up like a Latin American country in the 1970s with a 1,000% inflation rate. We're nowhere near that now, of course, but you can't do that shit forever. When half your deficit is financed from abroad, you actually do have to worry about what your creditors think.
Doug