MMP Blog #41 Responses
Comments and responses on the Modern Money Primer Part 41.
Even if the government ties its hands behind its back and its shoes together, it makes no difference – the balance sheets still balance.
We will look to the frequent claim that the US is “special”—while it might be able to run persistent government deficits and trade deficits, other countries cannot.
When government deficit spends, some of the claims on government will end up in the hands of foreigners. Does this matter? Yes, according to many.
Since government deficits create an equivalent amount of nongovernment savings, it is impossible for the government to face an insufficient supply of savings.
There are often two objections to the claim that government spending effectively takes place by simultaneously crediting the recipient’s bank account as well as the bank’s reserves.