Comments on: Operationally, Government Spending is Not Inherently Revenue Constrained. Any such Constraints Are Necessarily Self-Imposed http://www.mecpoc.org/2010/02/operationally-government-spending-is-not-inherently-revenue-constrained-any-such-constraints-are-necessarily-self-imposed/ A forum for alternative views in economics Mon, 28 Jun 2010 12:56:43 +0200 http://wordpress.org/?v=2.9.2 hourly 1 By: John http://www.mecpoc.org/2010/02/operationally-government-spending-is-not-inherently-revenue-constrained-any-such-constraints-are-necessarily-self-imposed/comment-page-1/#comment-1079 John Mon, 28 Jun 2010 12:56:43 +0000 http://www.mecpoc.org/?p=523#comment-1079 Mr. Mosler - I understand and agree with your explanation of the U.S. monetary system. I also agree that the Gov't is not revenue constrained. I've also watched you explain these things on youtube. However, here's my concern about soft money economics. Perception is reality. Even if our deficits are only paper deficits and we are not going to default because it's our currency and we can just print as much as we want, isn't the constraint that if our, say, Debt/GDP ration becomes big enough, ratings agencies like Moodys will eventually downgrade U.S. paper, then we have to pay higher interest rates to attract people to buy our debt? Eventually then, don't we enter a debt spiral, where higher and higher interest rates that the bond vigilantes will continue to demand, will put us higher and higher in debt, with continued pressure on our debt ratings, etc? So even though soft money theory says we should not fear deficits, I think we have to at some point, otherwise we lose our credibility and ability to borrow. Mr. Mosler – I understand and agree with your explanation of the U.S. monetary system. I also agree that the Gov’t is not revenue constrained. I’ve also watched you explain these things on youtube. However, here’s my concern about soft money economics. Perception is reality. Even if our deficits are only paper deficits and we are not going to default because it’s our currency and we can just print as much as we want, isn’t the constraint that if our, say, Debt/GDP ration becomes big enough, ratings agencies like Moodys will eventually downgrade U.S. paper, then we have to pay higher interest rates to attract people to buy our debt? Eventually then, don’t we enter a debt spiral, where higher and higher interest rates that the bond vigilantes will continue to demand, will put us higher and higher in debt, with continued pressure on our debt ratings, etc? So even though soft money theory says we should not fear deficits, I think we have to at some point, otherwise we lose our credibility and ability to borrow.

]]> By: Robert Searle http://www.mecpoc.org/2010/02/operationally-government-spending-is-not-inherently-revenue-constrained-any-such-constraints-are-necessarily-self-imposed/comment-page-1/#comment-905 Robert Searle Thu, 25 Feb 2010 11:29:30 +0000 http://www.mecpoc.org/?p=523#comment-905 I think when we are talking about banks, and money we are actually discussing ELECTRONIC DATA. This is a simple point but is very important especially in my evolving project of Transfinancial Economics... I think when we are talking about banks, and money we are actually discussing ELECTRONIC DATA.

This is a simple point but is very important especially in my evolving project of Transfinancial Economics…

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