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Understanding Government Liabilities

beebee
edited March 2021 in Other Investing
I keep running into a strange issue in macroeconomic discussions – no one seems to agree on how we should account for government liabilities. For instance, Gold standard economists believe government issued cash is not a liability (even though the Federal Reserve specifically shows it as a liability on their balance sheet). MMT economists say government “debt” is an IOU, but not borrowed debt. They also, at times, refer to government debt as equity.¹ Other people think the government’s debt needs to be repaid. Other people think it’s some sort of debilitating liability, as if there isn’t an asset side of the equation that balances out. There’s even a whole new monetary movement designed to argue for “debt free money”. Anyhow, I want to try to explain this in a simple way that hopefully clears up some of the confusion. Let’s get into it.
understanding-government-liabilities

MMT - The Good, The Bad, and The Ugly:
https://pragcap.com/mmt-good-bad-ugly/

Comments

  • Sven
    What happen when no one wants to buy the new treasuries due to the low yields?

    European and Japanese government debts are yielding even lower, often with negative yields.
  • JonGaltIII
    @Sven excellent? Crypto?
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