Household finances only have to account for the needs, wants, aspirations, values and ideology of a very very narrow demographic, i.e. the occupants of that house.

>>1008301
>You can't compare the country's finances to a household's finances! They're fundamentally different because...

because your spending is my income, and my spending is your income. A household can reduce its expenditures. A society that collectively reduces its expenditures all at the same time will also collectively reduce its incomes by the exact same amount.

>>1008317

I think I wasn't clear in my OP. By country I meant government pretty much, since the "you can't compare..." sentence in the OP always is used to justify higher taxation.

So your post right describes a closed system where everyone is spending currency X. Obviously, all spending = all expenditure. The government to household analogy describes non closed systems where debt can accumulate or decrease depending on the level of spending.

>>1008323

*So your post rightly describes...

>>1008323
>he "you can't compare..." sentence in the OP always is used to justify higher taxation.

no it isnt. If anything that sentence is in direct support of stimulatory monetary policy. Increase spending, not taxes. Increasing taxes would slow down the economy, increasing spending via a deficit would stimulate it.

>>1008301

A national economy is more elastic. If you spend more, you actually tend to increase your tax income (usually not by as much as you spent though). The inverse is also true, as are a lot of other interactions. There are also monetary actions that a national government can usually take in order to manage the economy (though being in the Euro massively reduces their options), but it's still not as simple as just balancing the books. On some level it's more like running a company, where slashing your spending results in a shitty product and fewer sales, thus a worsening spiral where you have to keep cutting in an attempt to get back in the black. The economic policies followed by successive Greek governments managed to trash the economy - first through austerity, then through trying to reject austerity.

>>1008335
there's a very good analysis that argues the reason Greece is fucked is because most of its debts are foreign owed, as such the country doesnt have leverage to convince the loan providers to take a cut.

If Greece had pulled a japan and got money domestically it wouldve been in a strong position to negotiate down the debt and escape the debt spiral

>>1008344
I don't think they really had a choice though? correct me if I'm wrong but the investment banks and other financial institutions of Greece were already going down the tubes at the time

would Greece being in the euro experiment along with their creditors (Italy, France, Spain, ECB, etc) give them more leverage as it would be disastrous for Greece to default while on the euro

>>1008301
>>You can't compare the country's finances to a household's finances! They're fundamentally different because...
Okay so this essentially means:
>National debt is fine because.......
And the answer is we can just print money to pay it off, or pull an iceland and refuse to pay up.

>>1008301
Because some states issue debt in their sovereign currency which effectively gives the debtor control over its value. A state makes all the fucking rules.

Plus states are theoretically immortal. They don't need to retire so they can outlast debt even via inflation for 100 years.

Look at the debt the US incurred after WW2. Yes taxes rose, but they kicked the can down the road essentially until that level of debt is laughable.

Greece is different because they don't control their currency, have no stable form of government, and can't dictate all the rules. Read: cuck

>>1008301
>Keynesian answer
Income = Spending.
National Income = National Spending (Consumer+Business+Government+Exports)

A household can cut it's spending without reducing it's income. Say you have a job that pays you 5k a month and you typically spend 4k a month and save 1k. You could cut your spending down to 3k and save 2k while keeping your salary of 5k a month. You were able to keep the SAME level of income while DECREASING your spending.

If a country spends less than it did before as a whole, it's total income drops by that same amount. Say consumers are worried about the future. They decide to spend 50billion and save that 50billion instead. Since consumer spending is a part of how national income is calculated (see above), national income will drop by 50billion. So a drop in spending equates to a corresponding drop in income. This is the opposite of the household which could maintain it's income while dropping it's spending. So what applies for a household can't apply for an economy.

>Chartalist answer
Households can't spend more than their future income without going into debt and. Governments MUST spend more than their future income (taxes) to create the money supply. If a government spends only it's income, they'll be no money left for tax payers to save.

Both answers are equally correct OP.

>>1008301
various government services are economically productive, some in ways that are intangible, indirect or difficult to observe like the military. In effect the government is like a business and arguably businesses have varying capital requirements and varying levels of debt are justified.

However I agree that this can sometimes be used as an excuse to push for excessive borrowing by one administration which leaves the burden to the next. Keynes said that he believes the government has a role to play in the economy but he would prefer the town halls to be filled with critics like Hayek to ensure corruption is difficult and standards are high.

>>1008413

My response is similar to what I previously said in the topic. My OP said country when I really meant government.

So I understand your household example in your Keynes section. Then you take many of these households, draw a circle around them, then obviously all the income in this closed system / circle equals spending.

But government is in this circle. Its spending equals income, unless it wants to go in to debt some more. Why is it suddenly not beholden to the same arithmetic as any other element within the circle (the households)?

>>1008433
Because the government is the *currency issuer*. A household is a *currency user*. A currency issuer -a government- must spend FIRST then collect later. A currency user -a household- must collect FIRST then spend later. Households are revenue constrained. They can only spend what they can get a hold of. Governments that issue their own currency (basically every government except for the EU) are not revenue constrained. They must spend more than their income so currency users have money to keep after paying taxes. A household can't indefinitely run a deficit, eventually the debt the household accumulates will be too big to service the interest payments. The same is true for the private sector as a whole. A government can run a deficit (spend more than it collects in taxes) for as long as it wants as long as it's the currency issuer by simply issuing more currency.

So a currency issuing government and a currency using household are in opposite positions.

>>1008413
the whole point of fractional reserve.and.qe.is. to.increase.money supply

why is deficit spending ALSO.necessary you.cretin?

>>1008454
>fractional reserve banking
This is incorrect and not how banks operate.

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf

>qe
This is done to lower interest rates. It doesn't add or subtract from the money supply because it's an asset swap. One type of money is taken out (bonds) and another type of money is injected in (cash).

Deficit spending creates the money supply. You should actually read what central banks say about money creation before jumping to conclusions based on false information with ancient economic textbooks.

>>1008433

You have to understand the theory of money. Money is a placeholder for goods or services. Governments produce goods and services through exports and other means. The GDP of a country is what allows them to take on debt and not have the same functionality of a household. Our GDP can grow depending on basic supply/demand economics and how we can grow our infrastructure to support our demand for product is by taking on debt with collateral being our GDP

>>1008462
bonds soak up liquidity. buy buying out bonds theyre forcing liquidity inyo the market. now, juat because it so happened to be put directly into equities, decreasing liquidity in total, doesnt mean the BALANCE SHEETS havent been expanded. which is money supply, and potential liquidity at all times.

again, just because EXERCISING that liquidity would reduce equities and securities valuations doesnt mean it isnt an expansion.

i mean, you know what.the carry trade.is? carry trade REQUIRES an.expansion in money supply to be viable.

youre arguing that just because there arent.more sequential bills locked in a vault somewhere there isnt expanded.supply? youre stupid.or what?

>>1008469
Yes but you're not counting the bonds as money. Bonds are money. The central banks prints money then UNPRINTS bonds. It takes out of circulation and equivalent amount of securities. From the private sector's of view, their balance sheet is unchanged. So let's say the central bank is going to do 100billion of QE, here's how it would play out:

BEFORE QE

>Private sector assets
>100billion in government bonds

AFTER QE

>Private sector assets
>100billion in cash

The central bank simply replaced bonds with cash to reduce interest rates. It didn't expand the private sector's assets by a penny.

I have no idea why you're talking about equity and security valuations or carry trades by the way.

>>1008478
the other base.argument.for qe.is.that.it."frees.up.money locked away into bonds and puts it into productive investment" this is literally the sales pitch.

im notvsaying the fed.isnt wrong, but youre arguing against the stated goal of qe. tp free liquidity...

the idea that there.is only a.single way to do X is disingenuous at best, and stupid or a lie at worst. there are many ways to create money, value creation being not least among them. anyone who is not a keynesian agrees that private sector does this best. not gov.

thuuuus deficit spending is not the ONLY way to expand money supply, dude

>>1008504
Central banks implement QE to reduce interest rates. By reducing interest rates bondholders may then go and do something else with their money to earn a return but the key was to reduce interest rates like I said. So I'm not wrong and neither is the Fed.

>there are many ways to create money
Of course anybody can create money. Try getting it accepted as a form of payment though. Only the state has this authority.

>anyone who is not a keynesian agrees that private sector does this best. not gov.
This is hilariously wrong. The private sector may be good at creating wealth but not money. I hope you understand the difference between wealth and money? Only the state can get money accepted among all participants by implementing a tax obligation in the money they've created. A private sector can't do this.

> deficit spending is not the ONLY way to expand money supply
Yes it is. The private sector can't expand the money supply. In fact, it's illegal for anyone in the private sector to create money. The best you can get is banks creating credit which is totally separate to money.

Deficit spending is the ONLY way to create the money supply.

>>1008504
>deficit spending
>money supply

Go sign up for Econ 101 at your local community college before starting these arguments

As for OP, the automaker bailout in 2009 is a practical example of why people say that:
>GM goes bankrupt during the credit crunch due to inability to find loans
>Attractive property about to be sold off in pieces or otherwise disappear
>Government spends $70 billion to buy GM and keep it from bankruptcy
>Sells off their stake in the slimmed-down company three years later when things have improved for $60 billion
>Records $10 billion loss on paper
>Received somewhere between $25-$50 billion in excess tax revenue from keeping more workers employed above what would have been expected in a bankruptcy scenario
>Made $15-$40 billion in real profit

The government's revenue is explicitly tied to the economy, and all the money the government spends then goes into the economy. A household's expenditures have no real direct relation with the household's income like that.

>>1008522
>Go sign up for Econ 101 at your local community college before starting these arguments
I think that's aimed at me and then fact that you believe anything written in an Econ 101 textbook without further thought is probably why you don't understand deficit spending, the money supply or anything else.

>>1008522
gm isnt an example of deficit spending creating moneyvsupply. its an example of competent asset.management creating money. if gm had been competent in the first pkace that extra moneyvwould have been collected as tax revenue.

FURTHER you pulled a switcheroo on us. is the bailout the PRIMARY mode of deficit spending? no, its not. most deficit spending is medicare. you have to make a separate case for that. medicare is so disastrous it has other.recursive.effects. monetary expansion is mot among them.

>>1008534
Your post is fucking retarded. You can't tell that the guy you're replying to is different to me because you can't seem to check IDs. Even then what you say doesn't make any sense. You should leave this thread.

>>1008468

I (OP) don't think the government produces goods or services, it uses force to take money from the private sector and then spends the money how it wants. Yes, having a big GDP that looks nice is a great way to.build trust so it can borrow more money from other sources so it can spend more than it raises.

You say the government takes on debt but a household can do that too. You say that a government can debt to get invest in infrastructure / investments, but I don't see this as any different from a household's or person's financial situation. Yes, the GDP must inspire lender confidence, but I don't see how this breaks down the household / personal finance comparison with government finance. A person also needs to inspire confidence.

The stuff I've posted previously in this topic regarding closed circles still applies, according to my understanding.

If I'm going to lay out my bias the table, I have seen nothing to convince me that a governments finances can't be compared with a persons. I have seen non sequiturs such as "income = expenditure" from a guy in this topic and varoufakis. This is obviously a triviality based on the movement of money, but it explains nothing. Whenever I see this "you can't compare houses and governments" in media, the next breath of the speaker is to justify deficits, higher taxes etc.

>>1008542
>I have seen nothing to convince me that a governments finances can't be compared with a persons.
Because you don't understand money.

I already explained here >>1008449

The government SPENDS BEFORE earning (taxing). The household SPENDS AFTER earning (wages).

You need to understand the relationship between currency issuing and currency using.

>>1008541
if.you say its dumb it must be true. im sure atoms rearrange themselves.to accomodate your economic.ideas

>>1008542
he is arguing that value added in an economy doesnt increase money supply. which is true in a dictionary sense but false in every other.

>>1008548
but in a credit.based.economy the.household does spend.before.earning...

>>1008555
>but in a credit.based.economy the.household does spend.before.earning...
No. The household must get the credit FIRST before spending. The bank must lend to you before you can spend.

>>1008564
so apparently you didnt hear about the.subprime loans. credit is a right.for.underpriveleged.minorities

>>1008570
You must be the most retarded idiot I have ever come across. What the fuck does subprime lending have to do with anything? The household still has to get hold of credit before it can spend it. I repeat

THE HOUSEHOLD STILL HAS TO GET HOLD OF CREDIT BEFORE IT CAN SPEND IT

THE HOUSEHOLD STILL HAS TO GET HOLD OF CREDIT BEFORE IT CAN SPEND IT

THE HOUSEHOLD STILL HAS TO GET HOLD OF CREDIT BEFORE IT CAN SPEND IT

Do you understand it? Do you understand that subprime lending doesn't change this principle in any way, shape or form?

>>1008570
you know, that doesn't refute his argument

are you just pretending?

>>1008564
also thevprocess of extending credit doesnt.change.the.accounting.balance sheet. families spend.money.BEFORE it is.earned. theoreyical credit.checks dont change.the.accounting reality, whcih is that both gov and.senpaitachi.spend.money which is unearned. which totally isnt a problem, according.to.you. becauuuuse...?

some go further.than you and say the more in debt an actor is, the better. your brain works in strange ways. as if thr government is the only xreator of value, money velocity, only site of circulation controls...

>>1008449

I (OP) don't believe this. A government can't have a deficit indefinitely. Thats absurd. Maybe if the economy and tax receipts grow as well and it inspires lender confidence, but not otherwise. But, again, if my personal debt triples but my salary is quadrupled then im sure the bank will accommodate me. Also households can get loans from all sorts of places so I don't know what you mean about collect first, use later.

Yes, the government prints money for liquidity purposes and some cheeky hidden taxation on people, but look at two extremes.

>government runs up the deficit forever, prints no money

Interest payments fuck the governments shit up

>government prints shitloads of pounds right this second and pays lenders

The currency plummets in value (I think).

Also you're technically right about government being able to do what they want with the currency, but my examples show what is wrong. In other posts we use money as interchangeable for a constant amount of wealth. As soon as we mention money printing we have to stop doing this.

Of course the government isnt revenue constrained because they can print money, which completely breaks down the household to government analogy. But now we must stop talking in terms of money and talk about the government taking peoples wealth through money printing. In which case, yeah, the government is NOT like a household in terms of money but it must "take" its wealth from somewhere, which it does, by manipulating the money supply in its favour. In which case, when it comes to wealth a household and a government are exactly analogous. Wealth taken = wealth given, assuming no accumulation

>>1008573
a household attains credit. it still spends before earning. are you retarded?

the balance sheet is the same for both. a government needs to pass the unappropriated budget as wrll, you know. it isnt automatic. we have many gov shutdowns.

the ORDER in.which the money is spent or cpllected doesnt change the balance sheet or its effects on the economy

>>1008581
exactly

a government CAN do anything it wants

but if it doesnt act like a.household in terms of finances, it debases its currency and introduces.moral.hazard and inefficiency

so congrats, other posters. yeah a.government CAN. but if it does it screws thevpooch. which in terms of fubdamentals makes it LIKE A HOUSEHOLD

>>1008580
>families spend.money.BEFORE it is.earned.
No because the very process of spending credit means the bank must FIRST LEND it to you. What is hard to understand about this? You can't spend money if you don't have it. You have to get money first (either by working, stealing, borrowing, sucking dicks or whatever) before you can spend.

You can't spend unless you get money first. This concept applies to all currency users. They must get hold of the currency -one way or another- before they can spend it.

The government is the opposite. They can only tax or borrow AFTER they've spent. They can't tax or borrow before spending because taxpayers and investors won't have any currency to pay tax buy bonds in. Governments HAVE TO SPEND FIRST. There's no other way.

>>1008581
> A government can't have a deficit indefinitely. Thats absurd.
Every country that issues it's own currency runs a deficit indefinitely.

>Yes, the government prints money for liquidity purposes and some cheeky hidden taxation on people, but look at two extremes.
No, the government creates money so that money exists. You can't have money until the government first creates it.

Every penny of money you have came from the government. Until it's taxed that's the deficit (money spent by the government but not taxed). The ONLY WAY non-government sector to have a surplus (savings) is for the government to run a deficit. And yes the government can a deficit indefinitely.
>>1008586
>a household attains credit. it still spends before earning.
These two statements contradict one another. If a household is spending on credit they must have first EARNED that credit. I swear you must be trolling.

>>1008591
issuing currency is not the same as taking on debt, dude...

>>1008598
When did I say issuing currency was the same as taking on debt?

Every single post -without fail- you say same completely retarded. Whether it's "subprime lending" changing the rules of lending to spending, or the private sector "creating money" better than the government or a household spending "before earning credit" or that QE "reduces equity and security valuations" or talking about carry trades; you always say something utterly retarded.

I understand English is not your first language, but it's so clear you have no grasp of anything you speak of.

>>1008591
>earned credit
nigger,jim smokes weed, has,no,job, and shoots people
nigger jim is extended a line of credit due to dodd frank, which he maxes out
nigger jim just spent money he didnt earn

nigger jim is a net loss PRECISELY because he spent before earning

>>1008607
I'm leaving this thread now because if I read another post you write I might get cancer.

If anybody in this thread wants to understand what I'm talking about then learn Modern Monetary Theory.

Bye.

A country can circulate it's own currency and debt in proportion to it's political hegemony. It effectively has a budget limited by a function of it's imperial power.

But /biz/ doesn't know why this is true so the discussion is pointless.

>>1008413
A nation can also increase income and cut spending through trade liberalization, deregulation, neocolonial private ventures (like IBEC or Fleur Corporation), and other methods. They might not be politically expedient, but they can still do it.

>>1008301

I was actually at that talk, he was a lot more measured than I expected him to be

>>1008301
During the American war of independence John Adams went on an international tour advocating for, among other things, the establishment of hefty American debt.

The peaceful existence between neighbor jim and john has nothing to do with their credit statements, but the peaceful existence between the US and Russia is aided in part through mutual debt ownership.

This is one facet out of a few dozen -- at least -- on why a country and a household's finances cannot be compared.

>>1009836
He's a smart dude. Look past the demagoguery and you'll see a very successful career, and for good reason.

He'll likely be vindicated in the end.

It's complicated.

There is a symbiosis between government monetary policy and central banking policy.

You can compare income and expenditure to household accounting.

The creation of credit through central banking is something us mere mortals cannot do.

>>1008397
>the answer is we can just print money to pay it off
That actually is the correct answer. Inflate the debt away. Which is why governments are so afraid of deflation.