Owing an infinite amount of money is apparently not a problem

This may be exactly what they’re all thinking but never say. The mayor of New York now has said it and you have to wonder whether anyone is going to point out not just that he’s wrong but also explain why.

While saying the federal deficit does indeed need to be curtailed, Mr. Bloomberg argued the United States could owe ‘an infinite amount of money’ and there is no specific amount that would cause the country to default.

‘We are spending money we don’t have,’ Mr. Bloomberg explained. ‘It’s not like your household. In your household, people are saying, “Oh, you can’t spend money you don’t have.” That is true for your household because nobody is going to lend you an infinite amount of money. When it comes to the United States federal government, people do seem willing to lend us an infinite amount of money. … Our debt is so big and so many people own it that it’s preposterous to think that they would stop selling us more. It’s the old story: If you owe the bank $50,000, you got a problem. If you owe the bank $50 million, they got a problem. And that’s a problem for the lenders. They can’t stop lending us more money.’

But as the first of the comments asked, “If the government can borrow an infinite amount of money, why are we still paying taxes?”

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38 Responses to Owing an infinite amount of money is apparently not a problem

  1. Harold

    Mathematically an infinite amount of money is worthless as the dollar value tends to zero.

  2. Infidel Tiger

    But as the first of the comments asked, “If the government can borrow an infinite amount of money, why are we still paying taxes?”

    C’mon lefties explain that?

    And why do the same people that think Uncle Sam is an evil monster ravaging the globe and enslaving billions also think Uncle Sam is a kind and generous benefactor who should be given more money to do with as he sees fit.

  3. Fire and Ice

    So no worries, we can borrow to infinity and she’ll be apples. At least for those amongst us who claim to have invented the free lunch, and to have inverted the old adage ‘the borrower is servant to the lender’ – who woulda thunk it? – the lender is now, in fact, servant to the borrower. Dammit – why didn’t we realise this before? We could be much further along the path to borrowing ourselves to prosperity by now.

    And the beat (of slavery) goes on……

  4. Will

    We could be much further along the path to borrowing ourselves to prosperity by now.

    As the US$ is the worlds reserve currency, and the Chinese and US Fed Reserve show no signs of reluctance to lend to the US, there is an element of truth to what Bloomberg says.

    as in ‘hey, everybody just keeps giving me money to spend”

  5. Samuel J

    If the US can owe

    an infinite amount of money

    it may as well print money until the cows come home. Why should the US Government deny its populace untold wealth? Just keep printing the money – why shouldn’t ever US citizen be a billionaire – why not even a trillionaire? Why shouldn’t each American have a googleplex of US dollars sloshing around? It seems that Mayor Bloomberg has found the way around unlimited wants and limited resources. We can now have unlimited wants and unlimited resources. Economics is officially redundant. Every American citizen can be satiated.

  6. people do seem willing to lend us an infinite amount of money. …

    Seems out of context to me, what is … ?

  7. Dantanica

    Bloomberg is possibly right, for now!
    Lenders have been known to call in the chips sometime or other.
    The trouble is; working out when it may happen. That’s of course, if that hasn’t started already.

  8. The Old and Unimproved Dave

    An old Australian political cartoon published around the onset of the Great Depression and referencing the banks went:

    Old Mother Hubbard
    Lost the key to the cupboard
    On which she had sponged for her meat;
    “Well”, she said to the pup
    “Our old loafing game’s up
    Henceforth we must earn what we eat”.

  9. Bruce

    I wonder if he will have this problem because of printing these.

    His city workers might not thank him, being forced to unclog NY’s sewer system, if the public finds their dollar bills worth less than loo paper.

  10. Ellen of Tasmania

    it may as well print money until the cows come home.

    They seem quite happy to do that for now. They’re just not prepared to deal with the consequences of cow-homecoming.

    At the moment a lot of their inflation is being exported. How many countries seem determined to devalue their own currency in line with the devaluation of the $US? And at the rate they’re printing, our own dollar still isn’t deemed to be worth more than around that $US1.05 mark.

    Fiat currency sucks.

  11. Alfonso

    Bloomberg is my little helper.
    He clearly also wants gold @ $3000/oz. asap.
    Go Mikey, push that infinite money thing with Oby at every op.

  12. Jazza

    Sorry mate, that is screwed logic
    Taken to its extension, the world in time will run out of money to borrow or lend.
    Surely there must come a time when the lender call s”enough” and asks for repayment?
    That’s when the pain will be felt all over

  13. John Comnenus

    So the guy who wants to regulate how much fat, salt and sugar is in your food can’t seem to regulate how much borrowed money is in his spending plan. I always knew Bloomberg was an idiot, this statement of access to an infinite line of credit that doesn’t actually exist, proves it. I wonder if Mike Bloomberg expects his debtors to pay him back? If not, why would you loan him any money?

  14. MattR

    Apparently inflation isn’t a problem, has never been a problem and won’t ever be a problem. We can simply borrow forever as it’s worse for the bank if we don’t pay them back!

    Goodness, what a fool, with financially illiterate idiots like this in charge it’s no wonder the US has such a massive fiscal problem.

  15. TerjeP

    Sounds like they are working their way towards infinite hubris.

  16. Mother Hubbard's Dog

    “If the government can borrow an infinite amount of money, why are we still paying taxes?”

    According to the MMTers, the answer is simple: taxes are a means of controlling demand. They are unnecessary from a revenue perspective.

  17. Skuter

    According to the MMTers, the answer is simple: taxes are a means of controlling demand. They are unnecessary from a revenue perspective.

    Yes of course. The government can just print more and more currency and force you to pay taxes with it, ergo there is always some demand for the currency. So, deep down, the MMTers really do always need someone to pay taxes, otherwise their shitty logic breaks down. Taxes to an MMTer are a ‘demand management’ tool in another way. They apparently force you to demand fiat currency. So what do you think would happen to taxes if the demand for currency was falling and more production shifted into the black market? Expect to see an ever more totalitarian state levying more taxes and coercing compliance in more draconian ways. God damn the MMTers shit me…they can’t see that Lerner’s theory of control is the road to hell.

  18. Mother Hubbard's Dog

    Skuter, I wasn’t supporting the MMT view, more making fun of it.

    Alternative currencies are on the rise. PayPal is just the tip of the iceberg.

  19. Skuter

    Sorry if I seemed like I was accusing you of supporting MMT MH’s Dog. Didn’t mean to. I was just having a rant about the insanity of MMT…

  20. Mother Hubbard's Dog

    That’s OK. I wonder if an MMTer has Bloomberg’s ear.

  21. Elizabeth (Lizzie) B.

    They can’t stop lending us more money.’

    Wanna bet?

    Let’s put it in a metaphor as mixed as his thinking.

    One day the cows will come home to roost.

  22. Fire and Ice

    I just saw a cow fly past the window. It told me it has been subcontracted out, the pigs can’t fly back home to roost any more because they have been tied up doing deals with their bankers for infinite debt.

  23. John Mc

    Why couldn’t Greece keep borrowing money? Why do we need bailouts at all? Or is it only the United States that has the capacity to keep borrowing?

  24. James

    The government could operate by not taxing directly but rather printing the money it needs and spending it. This is still a tax though as the value of everyone’s money goes down when the government makes more of it.

    It’d also be an unfair tax, hitting investers the hardest.

  25. sdfc

    You’ve just described MMT James.

  26. Gordon of 2902

    In a word, PONZI

  27. Louis Hissink

    It might help to consider that these people also believe that the Deity created everything from nothing at some point in the past. So an infinite money supply is, at least, consistent.

  28. Skuter

    James, sdfc,if the state doesn’t impose taxes, how does it force people to use fiat currency? If people can’t be forced to use the intrinsically worthless currency, then the ‘logic’ of MMT falls down. A trustworthy currency based on something with intrinsic value and with supply out of the control of any one group will emerge…if there is no compulsion to use worthless fiat currency, at some stage it won’t be used if the supply continues to increase beyond demand.

  29. sdfc

    Skuter

    Contrary to appearances I am not an advocate of MMT because of the long term inflationary consequences of leaving money creation in the hands of politicians.

    We already have privately created money, though not a private currency. I don’t see what the benefits would be of introducing credit risk into the currency.

    The currency does not rely on the Commonwealth’s taxing powers as far as I know. That payments have to be denominated either in $A or the currency of another country is basically the law.

  30. Skuter

    The currency does not rely on the Commonwealth’s taxing powers as far as I know. That payments have to be denominated either in $A or the currency of another country is basically the law.

    Perhaps you are correct about that sdfc. I am not sure. I am only going by my recollection of how Bill Mitchell justifies MMT – essentially, he invokes the state theory of money and posits that, no matter how much money the state creates, there will always be a demand for it, that is, to settle tax liabilities.
    On the inflationary consequences of leaving money creation in the hands of politicians, I suspect we are in furious agreement.

  31. sdfc

    Skuter

    I’m surprised the MMTers like Mitchell, Wray, Mosler etc, can’t see the disaster their referred policies would inevitably become.

  32. Grumbles

    Louis, an infinite supply of credit has nothing to do with a belief in God. Most true Libertarians are believers in God, but don’t confuse this with a belief in the church. Most have lost just as much faith in those institutions as we have with the government.

    True knowledge comes from God. From this knowledge comes both self resposibility and a compassion for those in need around us. Macro capitalism and micro socialism, is what it’s all about.

  33. Mundi

    No one cares about government debt. They care only about revenue.

    The reason we pay taxes is so that there is revenue, and thus the possibility of repaying the debt is at least plausible.

    Once revenue collapses, that’s when the velocity of money increase and triggers hyperinflation.

    The USAs revenue is still gigantically higher than its interest payments.

  34. Tel

    Our debt is so big and so many people own it that it’s preposterous to think that they would stop selling us more.

    Well, if Bloomberg hadn’t already made a place for himself in the history books, he has now.

  35. Tel

    We already have privately created money, though not a private currency. I don’t see what the benefits would be of introducing credit risk into the currency.

    Bitcoin you mean? Agree!

  36. “We are stuffed,” said Hanrahan, “when this acid trip our leaders are on, wears off.”

  37. Thanks Bruce – just put in my order for 500 Trillion Zimbabwean Dollars.
    Good Christmas pressies.

  38. brc

    Jeff, if you think this place is some sort of neocon love in, you are very lost.

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