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 $50 million, they got a problem. And that’s a problem for the lenders. They can’t stop lending us more money.’
But as the first of the comments asked, “If the government can borrow an infinite amount of money, why are we still paying taxes?”
Mathematically an infinite amount of money is worthless as the dollar value tends to zero.
Harold
4 Mar 13 at 1:04 am
C’mon lefties explain that?
And why do the same people that think Uncle Sam is an evil monster ravaging the globe and enslaving billions also think Uncle Sam is a kind and generous benefactor who should be given more money to do with as he sees fit.
Infidel Tiger
4 Mar 13 at 1:11 am
So no worries, we can borrow to infinity and she’ll be apples. At least for those amongst us who claim to have invented the free lunch, and to have inverted the old adage ‘the borrower is servant to the lender’ – who woulda thunk it? – the lender is now, in fact, servant to the borrower. Dammit – why didn’t we realise this before? We could be much further along the path to borrowing ourselves to prosperity by now.
And the beat (of slavery) goes on……
Fire and Ice
4 Mar 13 at 2:27 am
As the US$ 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”
Will
4 Mar 13 at 4:03 am
If the US can owe
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.
Samuel J
4 Mar 13 at 4:44 am
Seems out of context to me, what is … ?
kelly liddle
4 Mar 13 at 5:07 am
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.
Dantanica
4 Mar 13 at 5:20 am
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”.
The Old and Unimproved Dave
4 Mar 13 at 5:50 am
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.
Bruce
4 Mar 13 at 7:07 am
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.
Ellen of Tasmania
4 Mar 13 at 7:39 am
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.
Alfonso
4 Mar 13 at 7:49 am
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
Jazza
4 Mar 13 at 8:21 am
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?
John Comnenus
4 Mar 13 at 9:14 am
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.
MattR
4 Mar 13 at 9:15 am
Sounds like they are working their way towards infinite hubris.
TerjeP
4 Mar 13 at 9:24 am
According to the MMTers, the answer is simple: taxes are a means of controlling demand. They are unnecessary from a revenue perspective.
Mother Hubbard's Dog
4 Mar 13 at 9:38 am
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.
Skuter
4 Mar 13 at 10:05 am
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.
Mother Hubbard's Dog
4 Mar 13 at 10:18 am
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…
Skuter
4 Mar 13 at 10:22 am
That’s OK. I wonder if an MMTer has Bloomberg’s ear.
Mother Hubbard's Dog
4 Mar 13 at 10:37 am
Wanna bet?
Let’s put it in a metaphor as mixed as his thinking.
One day the cows will come home to roost.
Elizabeth (Lizzie) B.
4 Mar 13 at 11:54 am
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.
Fire and Ice
4 Mar 13 at 1:09 pm
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?
John Mc
4 Mar 13 at 1:42 pm
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.
James
4 Mar 13 at 1:53 pm
You’ve just described MMT James.
sdfc
4 Mar 13 at 2:04 pm
In a word, PONZI
Gordon of 2902
4 Mar 13 at 2:15 pm
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.
Louis Hissink
4 Mar 13 at 2:19 pm
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.
Skuter
4 Mar 13 at 3:33 pm
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.
sdfc
4 Mar 13 at 4:00 pm
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.
Skuter
4 Mar 13 at 4:42 pm
Skuter
I’m surprised the MMTers like Mitchell, Wray, Mosler etc, can’t see the disaster their referred policies would inevitably become.
sdfc
4 Mar 13 at 5:41 pm
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.
Grumbles
4 Mar 13 at 6:55 pm
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.
Mundi
4 Mar 13 at 8:44 pm
Well, if Bloomberg hadn’t already made a place for himself in the history books, he has now.
Tel
4 Mar 13 at 9:05 pm
Bitcoin you mean? Agree!
Tel
4 Mar 13 at 9:08 pm
“We are stuffed,” said Hanrahan, “when this acid trip our leaders are on, wears off.”
Winston SMITH
5 Mar 13 at 10:00 am
Thanks Bruce – just put in my order for 500 Trillion Zimbabwean Dollars.
Good Christmas pressies.
Winston SMITH
5 Mar 13 at 10:11 am
Jeff, if you think this place is some sort of neocon love in, you are very lost.
brc
5 Mar 13 at 3:28 pm