Executive Summary It is common to assert that the US government must go into debt to fund deficits. This is ludicrous and illustrates a lack of understanding of the government’s ability to create money. Introduction The myth of how the government funds itself with debt provided in the following quotation. “You’re not likely to be…
Executive Summary US Treasuries are often described as something special. This quote from Warren Mosler demystifies US Treasuries. Introduction This quotation explains how US Treasuries work. “Next, you need to know what a U.S. Treasury security actually is. A U.S. Treasury security is nothing more than a savings account at the Fed. When you buy…
Executive Summary Mainstream and private banking associated economists often talk of governments defaulting. The reality is that for governments that create their own money, there is no possibility of default. Introduction Governments cannot default on their debt unless forced to. This is explained in the following quotation. “A government borrowing in its own currency need…
Executive Summary Federal spending is often decried as taking money from the public. Federal spending increases savings in private hands. Introduction The following quotation asserts that deficits add to the savings of taxpayers. “Simply put, government deficits ADD to our savings (to the penny). This is an accounting fact, not theory or philosophy. There is…
Executive Summary It is considered common knowledge that one wants a balanced federal budget and that deficits are bad. Balanced budgets are not a good thing for federal governments. Introduction Private banking interests propose that governments should run balanced budgets, and if they need money they should borrow that money from the private central bank…
Executive Summary This article covers a logical risk-free interest rate under the scenario where the government creates its own money. Introduction The explanation for a zero percent interest is found in the following quotation. “Under a state money system with flexible exchange rates, the monetary system is tax driven. The federal government, as issuer of…
Executive Summary The Federal Funds Rates is one of the primary levers the Federal Reserve uses to manipulate interest rates. Introduction This is explained by the following quotation “Whatever the intermediate targets of monetary policy may be, the Fed’s primary instrument for implementing policy is the federal funds rate. The fed funds rate is influenced…
Executive Summary Banks that serve a public service function exist in the US and Germany. These are the US credit unions and the German Sparkasse banks. About Credit Unions of the US Credit unions are local banks that were at one time set up as non-profits. They historically stuck to a narrow range of services…
Executive Summary Economists often talk about the importance of banking reserves. How much do regulators and central banks actually enforce rules around reserves? Introduction Reserves at banks are often referred to in order to try to make it sound like banks are not creating money with an accounting entry, when in reality they are highly…
Executive Summary Forecast accuracy is very important in determining the correctness of economic models. However, in economics, whether the economist conforms with private banking interests is considered far more important than forecast accuracy. Introduction The following quote covers Godley. “Professor Wynne Godley, retired head of Economics at Cambridge University and now over 80 years old,…