"The financial solvency of governments"
As soon as you hear this phrase, you know that this person does not understand the money creation process.
Governments with a fiat money system are incapable of defaulting. It is literally impossible. They can always print more money to prevent a default.
Labels: default, economics, money creation
posted by Unknown @ Saturday, May 30, 2009
1 Comments
1 Comments:
Yes, it's such a basic error I end up not even wanting to talk to people about these things.
There are lots of giveaways that indicate the person speaking knows nothing about economics. One of the most common lately is to hear people making dire, wry comments about "Zimbabwe" because the US has done some modest keynesian fiscal stimulus in the form of deficit spending (modest relative to the size of GDP & the size of the problem). In the UK a couple months ago the phrase "you can't borrow your way out of debt", applied to the government, became fashionable for a while, despite being meaningless.
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