Who Really Pays For Our Government Debt?
HTML-код
- Опубликовано: 6 сен 2024
- There is often a lot of alarm and anxiety when we talk about a country’s government debt, but as we will learn, this fear of government debt, sometimes referred to as public debt or the national debt is completely unfounded.
When politicians and journalists talk about the government debt or the public debt or the national debt and the big scary number that we are often told is unsustainable, it is important to remember that this outstanding debt is not a debt to our children or our grandchildren. The government’s debt is simply factored into the Federal budget each year when bonds from previous years mature, meaning the bond holder has their investment returned to them, with interest. Paying off this so-called debt is as simple as crediting accounts at the central bank. So the next time a politician tries to equate the government’s debt with your own household debt by arguing the currency-issuing government ‘needs to tighten its belt’ and ‘live within its means’, you know that they are making a political decision not to spend and that it has nothing to do with their ability to pay for anything the Government could want.
Come discuss this with us on
Twitter / pegsinstitute
Instagram / pegsinstitute
Facebook / pegsinstitute
Watch on Odysee odysee.com/@PE...
Support us on Patreon / pegsinstitute
Sources:
The Deficit Myth by Stephanie Kelton
Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World by William Mitchell & Thomas Fazi
Podcast with Alan Kohler and Professor William Mitchell - • Podcast with Alan Kohl...
Why Do Currency-issuing Governments Issue Debt? - Part 1 by Bill Mitchell
bilbo.economico...
If You Think You Know What ‘Debt’ Is, Read On by Bill Mitchell bilbo.economico...
How the Reserve Bank Implements Monetary Policy - Reserve Bank of Australia - • How the Reserve Bank I...
Treasury, Reserve Bank of Australia and Money - Dr Steven Hail (Part 1) - • Treasury, Reserve Bank...
Hail, S. & Joy, D. (2020). Federal Debt and Modern Money. Global Institute for Sustainable Prosperity. Policy Note No. 121 www.global-isp...
Special thanks to Dr Steven Hail
/ stevenhailaus
Credits:
Written by PEGS Institute
Spoken by Andrew Johnson
Edited by Jackson Winter
Icons made by MD Badsha Meah, www.wishforge.games, Charlie, icon king1, Raj Dev, fengquan li, Free Preloaders, Gayrat Muminov from www.freeicons.io
Tank icon by Freepik from flaticon.com
Confuse by evi1000 from the Noun Project
All other graphics created by Jackson Winter
Music
Lonely Troutman II by William Rosati
Orison by Dan Bodan
1940's Slow Dance (Sting) by Doug Maxwell, Media Right Productions
Thanks for watching! Like and subscribe if you enjoyed this video.
If you like what we're doing please consider donating to us over on Patreon www.patreon.com/PEGSInstitute
or come chat to us on Twitter twitter.com/PEGSInstitute
We're going to be releasing more videos covering economics and other topics, but the more we do the more work it takes to make sure the information is accurate and videos are always improving so any support or feedback is always welcome.
Props to 1Dime for introducing me to this channel.
Wow this video is great! Just subscribed.
Nice. Of course, banks have little incentive to let their savings at the central bank be "time vaulted". The question is really: what would happen if we just let the interest rate drop to 0, and completely abandoned the interest rate as a policy tool? I think Krugman and Kelton had an argument about this. It would be interesting to hear the pros and cons on each side.
We've actually drafted a future video on interest rates, maybe even two. It's a bit topic so we might tackle some of this.
Financial institutions have been buying up negative yielding debt across the world for a while now. Financial institutions bought up the first Australian debt to be issued at negative yields only a few weeks back. Gov debt of a monetary sovereign is the safest storer of wealth there is. That's a very large incentive to have their savings safeguarded under lock and key. Port folio diversification will mean they'll want profits from somewhere else (see what QE and negative rates have done to asset markets in the UK and Australia - QE started here in March), but they'll also want guaranteed safety in gov debt. Krugman is a fraud who is now claiming deficits are okay, after hyperventilating about them for years. I wouldn't trust a word he says. His power is derived from people believing his fantasy economics. Once the curtain is pulled back and he is discredited by the mainstream, he and the current mainstream are done.
@@AFW007 No fan of Krugman, but do you have some sources for him "hyperventilating" about deficits?
@@carjaune6793 how's this from his own wiki page: "His columns (IN THE NEW YORK TIMES) argued that the large deficits during that time were generated by the Bush administration as a result of decreasing taxes on the rich, increasing public spending, and fighting the Iraq War. Krugman wrote that these policies were unsustainable in the long run and would eventually generate a major economic crisis." He's a deficit hawk and since about early 2019, he's shifted his position. But for years he and his mainstream chums have mocked MMT, yet consistently misrepresented it. Now he's saying there's nothing new about MMT. This is a standard tactic from the mainstream, who see their careers slipping away from them. Type in "deficit" anywhere into his wiki history and you can see he's been a long time deficit hawk.
Well I have a question, does this all happen in India
Everything you said about money is debt, taxes are destroyed, Central banks electronic currency
I cant thank you enough for these videos. I am 70yrs and love new learning. Thank you
Great video! Understanding MMT reduces the constraints placed on govt spending which we will need to fight the Climate Crisis!
AKA pushing for unsustainable reckless spending with spiralling inflation.
MMT doesn’t work.
@@justsomeguy6336you don't understand MMT.
MMT is about looking at the real constraints of an economy. The constraints are never on the financial side, since it is only bookkeeping.
@@ThomasVWorm MMT doesn’t work anyway.
@@justsomeguy6336 this is a nonsense statement, since MMT is not a programm or recipe. It is a description of the real world, which is obviously working.
Haven't you heard of sovereign defaults?
The things that are exceptionally rare, and if you actually look into them are not actually cases of debt defaults? Most of them are things like they just changed the term of the debt, or they restructured it. The list that is peddled as sovereign debt defaults includes 1970s Cambodia where they literally tried to abolish money.
Treasury Bonds are Junk Bonds
How? There is not a chance the government can’t pay you back.
What if the government can't pay the IOU
What if the IOUs get out of hand and owe too much5
Pages 44-47 will answer that for you www.gc.cuny.edu/CUNY_GC/media/LISCenter/pkrugman/lerner-function-finance.pdf
@@PEGSInstitute link doesn't work sorry.
You miss the point:
"paying" the IOU means replacing it with another IOU, because money is an IOU. The bank, where the money comes from is the central bank, which means, the bank of the state.
So buying the bond back means the state replaces one of its IOUs with another of its IOUs it can create.
So when a bank buys a government bond it must lend from the central bank in order to pay the bond. So the bank owes as much to the state as the state owes to the bank.
And then the government can tax its IOUs back. So it never can owe too much by definition.
algorithm boost comment
Right the US Debt is a political myth. The government as the issuer of the Dollar cannot be in debt to itself.
You’re stupid.
@@justsomeguy6336he is correct. Practically the state is the creditor.
MMT will never hold, its more like an explanation of the current system but the system is terrible. Government spending is unproductive and inefficient, inequality keeps rising, savings are disencentivized. This will not hold!
It is exactly an explanation of the current system, but it also tells us we're operating that system way below capacity and can improve the things you're concerned about without the constraints that classical thinking dictates.
@@PEGSInstitute" it also tells us we're operating that system way below capacity and can improve the things you're concerned about without the constraints that classical thinking dictates." what do you mean?
Many neoliberal governments refuse to spend on social programs because they don't see the profit or they tell us they don't have the budget for it. MMT removes that excuse. Of course they might still resist, but they won't be able to lie that it's a financial problem, MMT will make it clear that it's an ideology problem, and once people know that, hopefully they will cease to vote for the governments that ideologically support inequality.
@@bertlammens4392 Yeah I agree with PEGS
Sounds like someone didn't pay attention to weimar republic or venezuela in 2018.
We're actually writing a video that covers those two, as well as Zimbabwe, and why they're not relevant examples for MMT.
@@PEGSInstitute That's pretty arrogant to think we are immune to a crisis similar to those countries just because of MMT.
Not arrogance at all. They simply don't apply ruclips.net/video/1U7t47toB5E/видео.html
@@PEGSInstitute relying on MMT is a dangerous game. It will come back to bite us if we abuse it.
That's not a danger unique to sovereign fiat currencies operating in a floating exchange. That's true of literally everything.