Jared Bernstein - Biden's chief economic adviser - in the documentary “Finding the Money” struggles to explain why governments need to borrow money since they can print it.
I am not an evonomist, so you do not have to believe me. But my answer is that money is usually mostly created as loans, because when the loan is paid back the money created is effectively and actually annihilated. This ensures that money is a limited resource in the economy. If money was just printed, it would actually accumulate and the value of it would be reduced fast. Interest is to control the demand for the money which is temporarily created. Money is only a means to create property or "value" and as such are only of temporary value themselves. The solution is to create it as a loan and destroy it in the repayment. A government could print all the money it needs, if it made sure to tax it completely back, thus preventing its accumulation.
I am not an economist either, however, if my understanding is correct, what you are describing falls within the classic monetary theory and it is correct, but up to a certain point, for a variety of reasons.
First of all, most currencies and especially the US dollar are fiat money, i.e. they are not backed by a precious metal, such as gold or silver, since the end of the Bretton Woods system in 1971.
Secondly: the de-industrialization and financialization of western economy, meaning that debt-to-equity ratios have increased tremendously and financial services now account for an enormous share of national income relative to other sectors (mainly production and supply of real goods and services).
Third point: the accumulation of money and wealth in the hands of very few people, what we call oligarchs in Russia, but philanthropists in the West... and there is no way to stop this, since they have corrupted and bought our governments, who refuse to tax them, thus preventing wealth accumulation in the hands of the few.
Fourth point: US debt has been increasing almost exponentially in the past ~(30 - 50) years.
Thank you for your answer, I am not unaware of the points you make.
The reason I posted anything, was that the heading of your article posed the question of why do governments borrow money instead of just printing it. And the answer it gave was that it was so the lenders would accrue interest on the loan. That certainly is a feature of the money system. But the overarching reason for not just printing money is because it would expose money as no more valuable than the paper it is printed on, it is not really complicated. The person stuttering in the video seems not to know that or has forgotten it. Modern money is just means to an end. One can attribute all kinds of intentions to the system, but the lending component is a real control element of the system's stability as it is conceived. But as you point out in your answer to me, there are many factors that affect the stability of the system and we cannot expect smooth sailing ahead, probably worse than in the past.
I am not an evonomist, so you do not have to believe me. But my answer is that money is usually mostly created as loans, because when the loan is paid back the money created is effectively and actually annihilated. This ensures that money is a limited resource in the economy. If money was just printed, it would actually accumulate and the value of it would be reduced fast. Interest is to control the demand for the money which is temporarily created. Money is only a means to create property or "value" and as such are only of temporary value themselves. The solution is to create it as a loan and destroy it in the repayment. A government could print all the money it needs, if it made sure to tax it completely back, thus preventing its accumulation.
I am not an economist either, however, if my understanding is correct, what you are describing falls within the classic monetary theory and it is correct, but up to a certain point, for a variety of reasons.
First of all, most currencies and especially the US dollar are fiat money, i.e. they are not backed by a precious metal, such as gold or silver, since the end of the Bretton Woods system in 1971.
Secondly: the de-industrialization and financialization of western economy, meaning that debt-to-equity ratios have increased tremendously and financial services now account for an enormous share of national income relative to other sectors (mainly production and supply of real goods and services).
Third point: the accumulation of money and wealth in the hands of very few people, what we call oligarchs in Russia, but philanthropists in the West... and there is no way to stop this, since they have corrupted and bought our governments, who refuse to tax them, thus preventing wealth accumulation in the hands of the few.
Fourth point: US debt has been increasing almost exponentially in the past ~(30 - 50) years.
Fifth point: every day less and less money is spent on welfare, healthcare, education, etc., whereas more and more money is invested in the (US) war machine (this is closely linked the 4th point above). On this topic I suggest you this reading: https://southfront.press/martin-armstrong-west-governments-need-war-because-their-debts-are-no-longer-sustainable/
...as well as the movie/documentary "The Forecaster" and this video: https://www.youtube.com/watch?v=7Oi5n0-5G70
I think you are probably getting the picture now.
If you are interested in the topic, I strongly recommend this reading: https://treeofwoe.substack.com/p/running-on-empty-part-i
Thank you for your answer, I am not unaware of the points you make.
The reason I posted anything, was that the heading of your article posed the question of why do governments borrow money instead of just printing it. And the answer it gave was that it was so the lenders would accrue interest on the loan. That certainly is a feature of the money system. But the overarching reason for not just printing money is because it would expose money as no more valuable than the paper it is printed on, it is not really complicated. The person stuttering in the video seems not to know that or has forgotten it. Modern money is just means to an end. One can attribute all kinds of intentions to the system, but the lending component is a real control element of the system's stability as it is conceived. But as you point out in your answer to me, there are many factors that affect the stability of the system and we cannot expect smooth sailing ahead, probably worse than in the past.