Debt Rattle October 28 2015
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Lewis Wickes Hine Newsies Gus Hodges, 11, and brother Julius, 5, Norfolk VA 1911 • Weak US Business Spending Plans Point To Slower Economic Growth (Re
[See the full post at: Debt Rattle October 28 2015]“Paul Krugman: Canada can show that ending austerity makes sense
Liberals have a great opportunity to show the world truly responsible fiscal policy
… Canada can borrow for 10 years at only 1.5% …”Let me add the ending sentence …
BEFORE THE SHIT HITS THE FAN!
Canada thinks they escaped the crisis, but they only saved it for later on housing bubble and Dutch tar sands disease. How Justin can avoid the fall guy role is hard to see.
Canada has plenty of problems with the oil and commodity bear markets and I believe the great neo liberal corporate/financial/banking world is going to squeeze Canada and Trudeau as much as possible to make things worse. I’ve got no clue what interest rate Canada is paying now for new borrowing but I think it is going significantly higher.
Trudeau isn’t a team player unlike Harper who came straight out of neo liberal central casting. Not to mention his slavish devotion to the American national security state. I mean he signed a ‘free trade’ agreement with Ukraine. How silly is that?
I suppose the wild card is Chinese money continuing to flow there especially the West.
In some future I expect Western Canada to be part of the US or whatever the Western part of America becomes if the US federal system breaks down.
The only places that need to ‘borrow’ are states and members of the EU. A sovereign country never needs to ‘borrow’ it’s own currency. A sovereign country is not revenue constrained because it has, in simplistic terms, ‘a money tree’. It can print money to provide for all this infrastructure. This was how it was done before all this current neoliberal economic argument and economics is politics – nothing more nothing less.
@ Patricia
A sovereign country never needs to ‘borrow’ it’s own currency.
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Iceland? Argentina? Sovereign countries that defaulted on their foreign debt…
They could not print their way out of debt; the U.S. is the holder of the worlds reserve currency; a very unique position allowing many transgressions not afforded the rest of the world…Exactly. They ‘borrowed’ from foreigners. A sovereign country only needs to borrow overseas if they need a foreign currency which when repaid has to be in an acceptable foreign currency. Most of the stuff necessary to build infrastructure can be sourced locally and paid for in the local currency. It is not rocket science.
Ouch. Great point about setting up Justin and the Liberals to be the scapegoat. Otherwise, they could have just kept funding the split in the Liberal opposition parties and just changed Harpy-heads.
Patricia, you may want to remove “money” from your calculations. Everyone says a nation has infinite ability to borrow because they can always issue their own currency, and in fact, this is a “money tree.” If this were so, wouldn’t every nation stop doing any work and simply print themselves to prosperity? Yet it never happens. In the real world, the more they print, the less the value of their currency, which equalizes to something mirroring the wealth, ability, and confidence in that nation–the exception being the reserve currency (insert longer argument here).
If you remove “money” from the equation, then to build internal infrastructure, you’ll find, as you say, demands for steel, concrete, circuits, manpower, etc. And to the extent that they can or are allowed by foreign battleships to be internally sourced, then sure, that’s all “free” money, self-improvement requiring only Time, and a Diversion from other projects that nation already does–which in most nations would be okay, having a lot of employment slack and concrete not being a foreign purchase, unlike, say, advanced weapons.
But no nation is a “money tree”, ultimately not even the reserve nation. To build things takes work, focus, time, organization, energy, and resources. Money is not wealth. Wealth is not money. Money is a token, a counter, a book entry. Cooking your books with more entries does not actually make products, which is what the infrastructure is. You probably know this, but it bears repeating as a constant misunderstanding.
I am not advocating printing money holis bolis because that, as you say Dr Diablo, would cause inflation although I don’t know what society will do when, as they say, in 20 years 50% o all current jobs will be done by Robots. Someone will have to think up a new economic system to deal with the unemployment which will result. However I do believe, mostly because it was done before, that a country can build most of its infrastructure with out borrowing from overseas. It is merely a book entry. After all if Banks print money by merely a book entry so can a Country. In this little country of mine a huge infrastructure was built in the 1930’s when we probably only had about 1m people. Now, today the Government says it can’t do anything!! Economics is a man made system and as such can be altered and adjusted to fit the current situation any time it is needed.
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