tag:blogger.com,1999:blog-7530776363222965313.post468060822281562519..comments2023-10-07T13:16:34.756+02:00Comments on Simon Thorpe's Ideas on the Economy: A message to President ObamaSimon Thorpehttp://www.blogger.com/profile/02605233720415886802noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-7530776363222965313.post-49068532486576762282012-11-09T14:11:54.669+01:002012-11-09T14:11:54.669+01:00I agree that national debts are very different to ...I agree that national debts are very different to household debts. And as others, including Abraham Lincoln, have argued, it is perfectly possible for the US government to create it's own debt free money (Greenbacks in the the case of Lincoln) and use that money to pay off its debt. Now, it could be argued that this could increase the money supply and cause inflation. <br /><br /><br /><br />My view is that it would be perfectly possible to combine debt free money creation by central banks with an FTT to mop up any excess money in the economy. I really don't think that balancing the money taken out of the system by the FTT with debt-free central bank money is beyond the capacity of some intelligent people who decide to fix the system. <br /><br /><br /><br />But, yes. It would require that (a) commercial banks lose their monopoly on money creation, and (b) that all areas of the economy contribute. Currently, only productive parts of the economy like manufacturing get taxed. The vast amounts of speculation that are at the heart of the financial system are not subject to any taxes at all. That is stupid and unfair.<br /><br /><br />SimonSimon Thorpehttps://www.blogger.com/profile/02605233720415886802noreply@blogger.comtag:blogger.com,1999:blog-7530776363222965313.post-67171874920829775002012-11-09T13:49:53.750+01:002012-11-09T13:49:53.750+01:00I’ve no objection to FTT, but I suggest you’ve mad...I’ve no objection to FTT, but I suggest you’ve made a mistake in claiming that the proceeds from it can be used to pay off a national debt.<br />National debts are of a totally different nature to the debt of a household or firm. It’s extremely unfortunate that the phrase “national debt” even includes the word “debt”. It might as well call it “national savings”. <br />Far from the proceeds from the FTT enabling a country to pay off national debt, it could be argued that the FTT would increase the national debt. Reason is that imposing FTT would have a deflationary effect, which would require the relevant country to run a large deficit, which in turn would INCREASE the debt (although a deficit can just as well accumulate in the form of extra monetary base as extra debt, as Keynes pointed out).<br />The above counter-intuitive effects of “fiscal responsibility” are examined in more detailed in “The Economic Consequences of Mr Osborne” by Victoria Chick and Ann Pettifor.Simon Thorpehttps://www.blogger.com/profile/02605233720415886802noreply@blogger.com