The Earth is not flat!

And Sovereign Governments:
Issue fiat money which  is not backed by gold or anything else.
Aren’t like a household or your family. They don’t have to balance their budgets.
Don’t tax first then spend later.
Don’t have to rely on raising taxes to cover their spending.
Don’t save their tax revenue. They destroy it.
Don’t spend money like we do. They create new money as they need it.
Aren’t users of their own currency. They are issuers.
Can’t ever run out of their own money .
Can’t borrow their own money (their own IOUs).
Can’t save up their own money for a rainy day.
Can’t have their own money or not have their own money.
Don’t sell bonds to fund deficits. (John Armour)
Debt does not burden future generations.
Do not have direct control over their budget  deficits
Deficits aren’t dependent on the willingness of the Chinese to fund them.
Deficits do not raise interest rates or reduce private savings.
(they increase them!)
Don’t ever have to worry about not being able to sell their bonds.
(or having to offer more interest than they choose to)
Aren’t living beyond their means.
(if there is any significant level of unemployment in their economies)

Commercial Banks:
Don’t lend out their reserves (Government issued Money) to borrowers.
Don’t take in money from savers (depositors) and hand it over, or lend it out,  to    their borrowers. *see also comment from John Armour below
Don’t ‘hold your money’ on deposit. They swap whatever you give them for their own IOUs.
Don’t grow money on trees but they can create it from nothing when they lend.

Central Banks (like the US Fed, or Bank of England) are not independent from government.

Furthermore:
Quantitative Easing is not inflationary and does not add to Government spending. It is an asset swap.
The National debt is not like a mortgage or a car loan which has to be repaid.
Private Savings do not create investment. They can cause Government deficits!
Base interest rates are not decided by the laws of supply and demand.
Cutting spending in the public sector does not create jobs in the private sector.
The private sector and the public sector cannot both ‘tighten their belts’ at the  same time.

And: the Sun doesn’t go around the earth!

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9 responses to “The Earth is not flat!

  1. That should nail it down Peter, and nicely put.

  2. Except that if you use negatives the brain tends to screen out the ‘not’.

    Don’t think of a pink elephant!

    • If it is generally thought the Chinese have to be persuaded to lend money to the UK and US govts, I’m not sure how else can you put it? The point I’m trying to make is many, if not most, people would believe these statements if the ‘not’ were removed. Except for the first and last of course!

      I’d include myself in that up to a year or so ago when I started looking into economic questions. Before that, I genuinely thought banks handed out the money they took in then maybe borrowed a bit extra from elsewhere if they were short.

      When I finally did realise how it all worked I must admit I felt a bit let down by the BBC who’ve been responsible for introducing me to many scientific and political concepts which I then went on to study further. But on economic issues they’ve contributed absolutely nothing. It is high time they made an effort to put that right and try to educate the public in the same way they do on other issues.

  3. I’d probably re-word ” don’t borrow money from savers and hand it over to their borrowers. and replace it with “don’t use savers deposits to fund loans” or something, to both dispel the widely held myth and avoid confusion with other bank “products” where the act of borrowing by the bank is overt. Most depositors wouldn’t see their funds as “loans”, despite the bank booking them as liabilities, especially when guaranteed by the government.

    I’d also add “don’t sell bonds to fund deficits”.

    It’s easy to sit here and tack on “after-thoughts” after you’ve done all the hard work. Thanks Peter.

    I have concerns about your Heliocentric delusions however.

    • Thanks. If you, or anyone else, can add to the list I’ll include it with an acknowledgement.
      I’ll have to take another look at the arguments re the shape of the Earth and its orbit in case I get challenged on those questions!

  4. Pingback: The Earth is not flat! | SteveB's Politics &amp...

  5. If Governments can’t save up their own money for a rainy day, can they save someone else’s money, gold or stocks maybe?

  6. Central banks SHOULD be 100% controlled by the peoples government!!
    And interest is created by the devil.
    Economist think otherwise, start rewinding you mind, and start from scratch.

  7. Pingback: It’s all a game of Monopoly really | Think Left

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