This is Modern Monetary Theory (MMT). I recommend “The Deficit Myth” by Stephanie Kelton
It helped me to realize that a federal government that’s in control of their own money doesn’t use or even have money, and basic terms that we take for granted mean something different in that context. A federal government creates money through spending and destroys money through taxes. It is necessary for a federal government to spend money in order for money to exist in the economy. So a national debt just means that the federal government is creating more money that is destroying
Not very easily. Concise, easy to understand and correct explanations of how modern money (arguably since 1971) works are not easy to come by, and also the system just is a bit weird and counter intuitive. (Concise, easy to understand, but wrong explanations are, of course, all over the place. Almost everybody thinks they know how money works. Almost nobody actually does.)
One source that explains some of it would be “Debt: The first 5000 years” by David Graeber, but a) it’s a fairly lengthy book with quite a lot of historical background and b) it has a fairly strong politicial spin to it.
Very short, commercial banks loan money from national banks. That creates money. It has to be paid with interested. Where does the money for that interest comes from? From other loans. So the whole thing becomes an ever increasing pile of loans.
And government loans from national banks to spend money, so creating and distributing money. If government pays back the loans, money disappears.
And because the whole thing is loans on loans, if population would decrease (what is starting to happen) and growth stops, loans decrease and the whole thing starts to wobble.
Can you give a short explanation or give me something where I can read something about it? I’m not sure what to search for to find something useful
This is Modern Monetary Theory (MMT). I recommend “The Deficit Myth” by Stephanie Kelton
It helped me to realize that a federal government that’s in control of their own money doesn’t use or even have money, and basic terms that we take for granted mean something different in that context. A federal government creates money through spending and destroys money through taxes. It is necessary for a federal government to spend money in order for money to exist in the economy. So a national debt just means that the federal government is creating more money that is destroying
Not very easily. Concise, easy to understand and correct explanations of how modern money (arguably since 1971) works are not easy to come by, and also the system just is a bit weird and counter intuitive. (Concise, easy to understand, but wrong explanations are, of course, all over the place. Almost everybody thinks they know how money works. Almost nobody actually does.)
One source that explains some of it would be “Debt: The first 5000 years” by David Graeber, but a) it’s a fairly lengthy book with quite a lot of historical background and b) it has a fairly strong politicial spin to it.
Very short, commercial banks loan money from national banks. That creates money. It has to be paid with interested. Where does the money for that interest comes from? From other loans. So the whole thing becomes an ever increasing pile of loans.
And government loans from national banks to spend money, so creating and distributing money. If government pays back the loans, money disappears.
And because the whole thing is loans on loans, if population would decrease (what is starting to happen) and growth stops, loans decrease and the whole thing starts to wobble.