Working Paper on How the Government finances it's Deficit Spending! Let's Debate!

Alright, here is a Working Paper on how taxes and bond sales do not fund Government spending. It is important to take an accounting approach to this discussion because that is how the economy actually works. And remember there is a major difference between high powered money and bank money.

This paper goes in to details on reserve accounting and how Government spending actually increases the nonbank publics amount of money. Once again, the Government has to spend money first before it can ever tax you or before you can purchase Government debt.

Anyone who wants to have a serious debate over this paper or this theory is more than welcomed. Please no flamebaiters just talking about partisan politics and making red-herrings about Government spending.

http://129.3.20.41/eps/mac/papers/9808/9808008.pdf

 

Awesome quote from the paper...

"An analysis of reserve accounting reveals that all government spending is financed by the direct creation of HPM; bond sales and taxation are merely alternative means by which to drain reserves/destroy HPM. The choice, then, is between alternative methods for draining reserves in order to prevent the overnight lending rate from falling to zero. In light of these findings, it is, perhaps, time to reconsider our definitions of monetary and fiscal policy as well as our treatment of taxation and bond sales as "financing" operations."

HPM is high powered money... as in the money that can be spent on goods and services in the economy. This all makes very logical sense when you think about it and it really makes this debate on the National Debt look incredibly uneducated.

 

No one's got anything on this? If this is how the system works, then the conservatives plan to destroy the Government is actually a plan to destroy us. We should be spending money right now, not working on ways to eliminate more jobs and more money from the private sector.