http://joerobertson.com/economy/dmitry-orlov-five-stages-of-collapse RON PAUL 2012 | END THE FED | FIGHT FASCISM Fri, 06 Jan 2012 00:27:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 http://joerobertson.com/economy/dmitry-orlov-five-stages-of-collapse/comment-page-1#comment-2073 Anonymous Sun, 17 Jul 2011 05:08:00 +0000 http://joerobertson.com/?p=508#comment-2073 The problem is that most economists don't recognize the fact that government debt of a currency issuer is not remotely analogous to household debt. Why? For starters, no one in a household is the monopoly producer of money. What exactly is it? Government "debt" of an issuer is the "savings" of the currency users as a matter of accounting. The issuers debt is simply a digital resource - a digital account corresponding to all the users' savings in banknotes, deposits, and treasuries. The issuer's debt creates the supply of currency, or savings, that people either spend or choose to save. A common misperception of our monetary system is that the issuer "borrows" from currency users, such as the US borrows from China. This is not only a complete misunderstanding of our monetary system but leads to catastrophic outcomes when the currency is not managed correctly - just look at our middle class. The correct interpretation of "debt" is that the US government produces the currency that China choses to save.The more China saves the more debt our government takes on. A mutually beneficial relationship with little downsides as long as the currency supply is optimized to the conditions. Most of the academic community continues to trip over itself because of their complete failure to grasp the fundamental nature of our monetary system. The problem is that most economists don’t recognize the fact that government debt of a currency issuer is not remotely analogous to household debt. Why? For starters, no one in a household is the monopoly producer of money. What exactly is it? Government “debt” of an issuer is the “savings” of the currency users as a matter of accounting. The issuers debt is simply a digital resource – a digital account corresponding to all the users’ savings in banknotes, deposits, and treasuries. The issuer’s debt creates the supply of currency, or savings, that people either spend or choose to save. A common misperception of our monetary system is that the issuer “borrows” from currency users, such as the US borrows from China. This is not only a complete misunderstanding of our monetary system but leads to catastrophic outcomes when the currency is not managed correctly – just look at our middle class. The correct interpretation of “debt” is that the US government produces the currency that China choses to save.The more China saves the more debt our government takes on. A mutually beneficial relationship with little downsides as long as the currency supply is optimized to the conditions. Most of the academic community continues to trip over itself because of their complete failure to grasp the fundamental nature of our monetary system.

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