The comment is, of course, misleading. There is no chance of the US running out of cash, or defaulting, unless that is what the Republicans choose that it should. The US can in reality create as much money as it wants, subject (if it is prudent) to inflation constraints and, of course, politics.

The Republicans could try to crash the dollar. But let’s be quite clear, that is not necessary. And the impression given that the US is running out of money is false. It can’t do that unless some deeply misguided politicians choose otherwise.

Sigh, if only he knew anything.

The US has a legal debt limit. Congress has passed a law – you know, democracy and all that – which says that the national debt can only become “yea big”.

Every few years they realise how much this is constraining their spendthrift ways and vote again to make the new debt limit “yea plus big”.

The Federal Reserve does not print dollars and send them to Treasury. Instead, financing is done by the Fed buying Treasury bonds (bills, notes) meaning that the debt size is, given the debt cap, a constraint of the number of dollars available to the government.

Congress has, in the past, refused to raise the debt cap. And government has started to close down for lack of money. They do, generally, quickly then raise the debt cap.

The US is one of those places where the national government can actually run out of its own cash.

13 thoughts on “Idiot”

  1. It amuses how regularly he sallies forth, confidently and dogmatically, into legion diverse areas, as unburdened by knowledge of them as dandelion fluff.

    I can imagine the type of response you’d get.

    “Come off it, I live in the real world, not the fantasy neoliberal troll world you inhabit”

  2. The Federal Reserve does not print dollars and send them to Treasury. Instead, financing is done by the Fed buying Treasury bonds with dollars that they just printed

    You say tomato, I say tomato.

  3. And why specifically the Republicans? The Democrats are at least as good at spending money they don’t have…

    When it comes to US government spending there is no Good Guy..
    The rare and few Congressmen/Senators that occasionally try and put their foot down, and try the “maybe it’s an idea to be a bit more careful with throwing money around” get shouted down so fast even light has trouble to catch up..

  4. Interesting to see in that thread the return (as far as I’m aware) of Andrew Dickie, a North Korean sympathiser known previously as one of Murphy’s ‘four horseman of the apocalypse’ and who has apparently learned nothing in the past few years to enlighten himself on economic basics.

  5. When they do close stuff down the first things they close are stuff that people actually see and like – national parks and such.

  6. Technically the US government runs out of money if the debt ceiling is not raised. And note that the process is that the Treasury issues bonds which are sold to market participants such banks, pension funds and foreign governments. The Fed can choose to buy US government debt as part of their open market operations.

    I don’t think the Federal Reserve has a legal limit on the amount of money they can print/create. They are in theory limited by the need to maintain price stability per their goal:

    “The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” S2A Federal Reserve Act.

    https://www.federalreserve.gov/aboutthefed/section2a.htm

  7. When they close down the parks they still seem to find the money to put up temporary fences and have someone there to arrest should you try to go up to see the Washington Monument

  8. Bloke in North Korea (Germany Province)

    “When they do close stuff down the first things they close are stuff that people actually see and like – national parks and such.”

    You can just imagine the riots that would ensue if they stopped funding community organizers, diversity outreachalisation officialators, and trans lesbian street football coordinatanatorizationers.

  9. There was a senator or congressman recently that tried to block the latest federal holiday by suggesting that giving all the govt employees a paid day of work did nothing but cost the govt a lot of money, of course this rather sensible idea was shouted down as racists etc

  10. @BiS “coordinatanatorizationers”

    The worst part of reading that is realising that if it doesn’t exist yet, it will be in someone’s resume soonish. And peeps in HR(M) will actually accept it.

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