wonkmonk
7 HN mentions · mentioned in 6 months, 2017–2026
1:36 · 83K views · Mar 24, 2014
A two-minute clip from a March 2005 House Budget Committee hearing in which Paul Ryan asks Alan Greenspan about personal retirement accounts and social security solvency. Greenspan replies that nothing prevents the government from creating as much money as it wants.
HN commenters use it as a primary-source clip for the argument that a currency-issuing government cannot go bankrupt in its own currency.
7 comments from Hacker News
>I've paid Social Security and Medicare taxes for 25 years, since my first paycheck, and it's not likely I'll ever receive anything from these programs based on current projections. This is a purely political decision. When Paul Ryan made this assertion in Congress to justify privatizing the system Alan Greenspan shot him down[1]. The government chooses how many dollars to allocate to Social Security and Medicare. Whether those dollars come from taxes elsewhere is almost entirely irrelevant. The only factor is whether seniors will get enough from the program to buy what they need to live. This has as much to do with the prices of goods as it does with the size of the benefit itself. We will need to ensure we have the production we need to meet the demand by investing in sustainable, productivity amplifying technologies. The reality is with population aging or stagnating we will need one worker to be able to produce what two or more was able to to keep prices stable. I think the pressure to do this is already being felt by workers here in the US. It's one of the main reasons why there is so much apathy from the ruling classes when it comes to ensuring workers can earn a living wage from one job. The people in charge would rather we keep the conditions such that one worker must work three jobs to scrape by than make the costly investments to increase productivity. 1. this video
Modern monetary systems function through two main channels: government spending and bank lending. Every dollar in circulation originates from one of these sources - either government fiscal operations (deficit spending) or bank credit creation through loans. This means all money is fundamentally based on debt, though "debt" has very different implications for a currency-issuing government versus private borrowers. Government debt operates fundamentally differently from household debt since the government controls its own currency. As former Fed Chairman Alan Greenspan noted to Congress, the U.S. can always meet any obligation denominated in dollars since it can create them. The real constraints aren't financial but economic - inflation risk and the efficient allocation of real resources. this video The key question then becomes one of political priorities and public understanding. If public opposition to beneficial government spending stems from misunderstanding how modern monetary systems work, then better education about these mechanisms could help advance important policy goals. The focus should be on managing real economic constraints rather than imaginary financial ones.
I knew I'd get this kneejerk reaction to "simply create and allocate the currency," I was holding out hope that responders would finish reading the sentence. What I said was: >a nation-state... can create and allocate the currency to serve this purpose. I totally agree with you in a general sense. Creating and allocating currency and distributing it to the general population equally will cause the scenario you describe. "More dollars chasing fewer goods," as Greenspan described[1]. However, if we take the hypothetical scenario that the government agrees to pay exactly the current cost of the procedure at Narayana for medical procedures , none of what you described will come to pass. Wait times at Narayana might increase because more people might come in to have the services performed, but it will not cause runaway across-the-board inflation. 1. this video
National currencies are not really in risk. Suppose that bitcoin or similar are used as currency in practice (that it's very far of happening, by the way). Even if you are able to do all your operations in a cryptocurrency, you will need to pay taxes. Governments only accept their own currency, so, you need to get it to pay taxes, so, demand of national currency is going to exist always. >> "economic vessels like national bonds and other treasuries that nations rely on to borrow money?" This is only an institutional arrangement. Nations with their currency don't really need markets to get money. For instance, in the case of USA, the FED can produce so much money as they think is appropriate (1). I think that cryptocurrency fans suffer from that old illusion that economy can be separated from politics. (1).- Video of Greenspan explaining it: this video
Mainstream economic theory is considered garbage by the majority of mainstream economists :) Joking aside, what MMT says is pretty easy to understand from reading ~100 pages and watching some YT lectures/debates, where mainstream economists also voice their opinion. A reasonably intelligent person can make up their own mind, irrespective of what others think. Finally, if you watch debates on YT, it's not true that mainstream economists say it's garbage. They usually say "MMT is essentially accounting truisms". Here's Paul Ryan asking Alan Greenspan about this: this video