On Nov 24, 2012, at 10:14 PM, Shane Mage <shmage at pipeline.com> wrote:
>> 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.
>
> This is just Austrianism. Why should financing socially desirable expenditure without regard to debt or deficits lead to that inflationary nightmare when the political authority can tighten money (through the Fed's overnight rate target) and constrict demand (through taxation) whenever the economy reaches a state of overcapacity? Meawwhile, as long as the economy is deeply under capacity, deficit-financed demand necessarily raises real incomes without pressure on costs and prices.
This is just poor reading comprehension. "At some point." Can't do it indefinitely.