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The top states that would be hit are California, Maryland, Virginia, Massachusetts and Washington D.C.

Source: Discovery News

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RE: Keep cutting!
By BigDH01 on 11/27/2012 2:11:43 PM , Rating: 2
He's referring to MMT, a theory that explains modern monetary policy. It is derived from the understanding that sovereign debt and sovereign debt instruments do not behave like household debt, although people make the analogy (usually people seeking power) because it makes sense to the laymen even if it's totally inaccurate. When you realize that the Fed could simply buy US bonds and not collect interest on them then you truly realize that the US can spend unlimited amounts of US dollars. When you accept that to be true, you realize that the only thing that limits gov't spending is inflation, specifically demand-pull (too much money chasing too few products). Fortunately for the US, capacity utilization is low and unemployment high which makes demand-pull inflation unlikely.

Greece is another beast in the sense that its fiscal and monetary policy are detached. They have local fiscal control but are beholden to Europe's monetary authority. The other countries have imposed steep cuts upon them which have only served to increase their unemployment without closing the spending gap all that much, which kind of makes sense. If a large part of their GDP was public spending and they simply cut that spending then they also reduce their GDP and their tax revenue decreases opening up a new hole, which they continue to chase. Greece's best bet is to move off the Euro and regain some monetary independence. This will probably mean more expensive imports for them, but in the long run it will bring back employment.

And one thing you need to remember is that those countries you listed held debt denominated not in their own sovereign currency, something not true of the US debt. And many conservatives implicitly understand that the treasury could eliminate the debt tomorrow if it simply printed (rather digitally fabricated) the money. The concern is and always has been inflation and not some arbitrary debt or deficit number.

It has nothing to do with a "debt-based" economy or anything of the sort and more to do with the fact that the US operates its own sovereign currency that is non-convertible. When the currency became non-convertible (and really even before), monetary policy began playing a whole new ball game even though traditional thinking about sovereign debt hasn't moved away from its household debt metaphor even if the two have nothing in common.

RE: Keep cutting!
By PontiusP on 11/27/2012 3:43:57 PM , Rating: 2
Is that you Cullen?

RE: Keep cutting!
By BigDH01 on 11/27/2012 4:11:37 PM , Rating: 2
If you're referring to Pragmatic Capitalism... no. My primary introduction to MMT came from Mitchell and Wray.

As far as I can tell, the primary use of measuring the debt and deficit is as a weapon against the other guys.

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