“Deficits Don’t Matter!” – Modern Monetary Theory Economist Stephanie Kelton (Jimmy Dore)

A video on the fiat monetary system. Money is not backed by gold anymore, but is printed out of thin air, as a loan from the Federal Reserve, which is backed by the ability of the taxpayer to service the loan. The money-debt system is the heart of the problem when it comes to out of control deficits. 

You can run a workable fiat monetary system provided money is loaned out responsibly, such as one might expect from a public bank. Loans would need to be made with the mindset they can be paid back, and would do what they did in the past in building infrastructure and supporting other responsible activities. In such a system taxpayer money plays a big role in providing capital funds, thereby placing limits on spending.  With the Federal Reserve System the excessive loaned money becomes a long term burden and a noose around the taxpayer's neck where the ability to pay it back far exceeds the abilities of the taxpayers operating in the real economy.  

A key issue with this loaned money is that it causes inflation as it enters they system irresponsibly. Big institutions commonly get it, and so it fuels inflation at the high end of town. It's why the rich got richer during the last financial crisis when everyone else took a hit (the bankers were bailed out). Government also gets this money, which creates wealthy bureaucrats while everyone else suffers on minimum wage. It leads to a two tiered system.

Ordinary private sector people trying to keep up with the capital inflows, that go to the higher end of the economic spectrum, end up working harder and/or going into debt, in order to keep up. Debt levels for ordinary people in today's world are through the roof. The problem is that when things go bad they lose their assets. They are the victims of this irresponsible fiat system. 

Also, in today's (Western) world inflation is being driven by high energy costs thanks to green energy policies (the closing of coal power stations) plus the inflated price of oil, further eroding the wealth of ordinary folks.  

The one positive thing about this mess is that the money owed to the Federal Reserve can be voided. The Fed created it out of nothing and the debt can be cancelled. The problem is that the people running the system don't want to do this and want to use the fiat system to; support elitist banking interests, as leverage over the Government, who feeds off it, and against ordinary workers who are taking on high levels of debt, sucking the blood out of them, who are actually the engine of the real economy. It's a scam, and it's not set up to help the general population (at least how it functions today). 

[Posted at the SpookyWeather2 blog, May 12, 2024.]