Thanks again — I’m still trying to parse through some of your statements, and see if we can find an example of hyperinflation in an economy that is denominated in currency controlled by that same government. I had thought Venezuela and the Weimar Republic were different from Greece, but it seems that by your description, both of them did not have an effective sovereign fiat currency.
government spending is the only “income” source of the private sector (that doesn’t leverage private sector debt)
Given that “GDP = C + G + I + NX”, it seems like what you’re saying is “GDP = G + G + G + NX”, or maybe just “GDP = G”. Obviously, there are some businesses that don’t work directly for the government, but it seems like maybe you’re trying to say that “eventually, that dollar bill came from a moment when some government official paid currency out of the U.S. Treasury for say, a hamburger, which said hamburger maker paid to the candlestick maker, so on and so on.” But then you also have fractional reserve lending, which allows that candlestick maker to start a bank, and “create” 5x the money that was originally spent by the bureaucrat for a hamburger.
I feel like I’m not being precise, but it could be that it’s just the nature of the topic.
It will always be worth what we say it is worth and we can never be forced to default on any obligation.
I’m still not seeing it. Worth and value seem at odds here.
I’m not sure how to simulate 100% deficit spending, and a zero tax rate, but my suspicion is that if I did that simulation, it would show some painfully pathological tendencies.
We would also literally have to sell physical assets to any nation that currently runs a trade surplus against us.
Aren’t they allowed to buy physical assets with the dollars they make?
I guess at the end of the day, it’s still not clear what the limiting factor on debt, for a sovereign fiat currency, is, but I suspect there still has to be some limiting factor — otherwise, every nation would issue a sovereign fiat currency, solve all of its monetary problems, and live happily ever after.
Thank you again for food for thought — I’ll keep chewing :)
Next on my reading list:
At times some document from the past is discovered that no-one much has read or paid any attention to but which offers…bilbo.economicoutlook.net