David Graeber: debt and what the government doesn't want you to know | Comment is Free 

No. One's enough thanks!

Jack Mansfield we’ll there is one less now

@@sinphus 😞

Ok then! Let’s do it!!

Cope

true but it is debt, as in its destroyed when payed back actually shrinking the money supply

It is debt because governments around the world borrow from their central banks, who are composed of private banks that lend it to the governments at interest.

Even better to understand this would be "The Deficit Myth: The Biggest Lie in Politics" by 1Dime on his channel. Goes further into detail on this.

So you're saying that there's money hack but nobody wants to do it because my capitalism

@@tuckerbugeaterIt's called MMT (Modern Monetary Theory), and yeah, the federal government of the U.S (specifically the Federal Reserve), can and DOES just literally invent money out of thin air.

Look up Steve Keen, Modern Money Theory, Mark Blyth (on why Austerity does not work) and read Graeber's book on Debt. There is also a paper by the Bank of England available online on how money is created. Overall, what this means for you is that if your government runs a surplus, the private sector, meaning you and your family, has to run a deficit, i.e. get into more debt... which is the precise opposite of what politicians and economists (especially of the right wing variety) preach.

That is because this is illogical BS.

Redrally there's nothing to understand it's ressentially a huge scheme.

Read the economist Murray Rothbard's "what has government done to our money" article, free online. It's pretty easy to understand.

He's presenting it in a slightly simplified and sensationalist way so I understand why it'd be confusing. He's basically talking about sectoral balances. That is, the fact that the sum of the deficits and surpluses of the public, private and external (rest of the world) sectors has to equal zero. This means that if the public sector (the government) reduces its deficit, this necessarily has to be balanced by a change in the opposite direction in the other sectors. Seeing as the external sector is unlikely to change (why should austerity fix our trade deficit?), this means the private sector has to increase its deficit (or reduce its surplus). And that means more private sector borrowing. So, less government debt means more private sector debt. When he talks about money being debt what he's really referring to is the fact that nearly all money is actually created when banks make loans. So in order for us to have money at all, we have to go into debt. Hope that makes sense; it would be good if more people understood this.

It's leaving their immediate control, but they still control the underlying terms against which it is leveraged. In terms of the ratio you brought up: The United States peaked in the ratio of internationally held dollars to the total national debt, in 2008, and that ratio has gone down since.

Adam Thornton usury is the cause of all misery is the point

that depends on what people you're thinking about. The private sector includes billionaires and megacorporations as well as lower class individuals. you see the government and their people struggling because the wealth gap is huge, and nothing has been done to draw this gap closer together. I'm not expert though, so don't assume this is a flawless example.

what LIZZIE said, and this stuff is far more complicated than it might appear in this 2 minute video. to rly get it, you'd have to do some reading. i personally struggle to wrap my mind around a lot of this shit. ive only read his book 'debt; the first 5000 years' and plan to reread it and his isn't the only perspective on the issue. this video is meant to introduce the laymen to these ideas/realities, not completely explain them to us

"Productivity note"?!. Would really appreciate if you elaborate a bit on that.

@@FaceWhatIs there hasn't been any productivity anyway total profits are net zero based on environmental degradation

Money exists primarily not as a medium of exchange, but as an instrument that a state/empire uses to assert its dominance over its people, vassals, and sphere of influence. This quality and purpose is inextricable.

Read the economist Murray Rothbard's "what has government done to our money" article, free online. It's pretty easy to understand.

@@furyofbongos ahahahahahahaha, this is a video from an anarchist, namely a libertarian socialist, explaining a post-keynesian economics concept, and you just directed him to Rothbard, an anarcho-capitalist. I gotta say, you are such a smart fox ahahahahahah

@@andreamastroeni3340 True. "Our money". As if the accumulation of money was the ultimate goal of an economy.

@@spiritualeco-syndicalisthe207 besides from that, i commented the guy because it takes some guts to divert a concept from the radical left to the radical right. You've got to be one shameless snake

@@andreamastroeni3340 You mean like stealing the term libertarian?^^

Then any time you issue more chips those already flowing in the system end up being worth less... what we call inflation. Think of it as a fraction. Say there's a total of 100 chips in the system. 1 chip is then worth 1/100. If you add another 100 into the same system (200 total now) 1 chip ends up being worth 1/200 after the fact (half of what it was worth before). Fact is... we're screwed whichever way you put it. XD!!!

you increase taxes to destroy them again.

They "print money" - actually add to bank accounts via keystrokes on a computer all the time. Congress decides who gets the new $. Then they decide who gets taxed. Separate functions. The constraint is running out of resources. And new spending does not automatically produce inflation or worthless dollars. All of that is old gold standard speak which no longer applies.

Words

Stop

Conviently left that part out. There has to be a balance. If we all just printed 1 million dollars each we'd have a dollar each.

Capitalism cannot exist without a state body. Who is going to enforce property law? Who is going to enforce the enclosure of the commons? Who is going to create the legal framework all of this operates on? I could go on and on. Remove the government, but if a society's interest is in reproducing capitalism, they're just going to reinvent the state.

Laffers point is so banal it doesn't need any proving. "at some point taxes are so high it stifles all economic activity that can be taxed" is obvious. Slap 100% tax on everything, and there will be no tax income. Laffer did not himself even think he came up with something new, becasue this is obvious. The problem with the laffer curve is how it has been used in political rhetorics. Since there is some point where reducing tax increases tax income, special interest groups that want to reduce taxes anyway claim that this will always be true. Or rather, they will always claim that this is true for whatever the current tax rate is. But this is not the point Laffer made.

Every bit of currency the central bank creates is produced out of thin air, pulled out of a hat. When it makes short term loans to banks in the overnight market, that money doesn’t come from anywhere, it’s simply keystroked into existence. When the govt moves money from its account at the central bank to another, it too is keystroked into existence. QE is the same, except instead of producing new money out of thin air it’s swapping the one financial asset (currency) for another (long term bonds) in hopes that the banks lend more. The jury is out as to whether that actually helps at all. But there’s no net change in financial assets (money basically) from QE. Hence why the fears of hyperinflation ($20 tn or whatever pumped into the economy!!!!) were flawed.

Yes. The bank used to offer you its IOUs in exchange for gold. Currency, the govt’s IOUS, were gold-backed. It was still debt-based. Always has been, always will be.

David Graeber is not an economist.

@nkrustianschmidt Fractional reserve doesn’t exist anymore Welcome to the age of Modern Monetary Theory and helicopter money

@@Liberty_Freedom_Brotherhood fractional reserves ( liquid ) are part of the capital requirements under Basel III

John Whitesell They tried to simplify this here by not discussing international trade, but you can clearly see it represented in the sectoral balances. But you didn’t quite get that right. If the foreign nation is the creditor, then the government and domestic private sector are debtors! What you mean is that the rest of world is the debtor. If the private sector and public sector is balanced or in surplus, it means the current account is in surplus or balanced, and therefore the country’s capital account is in deficit. This is the case in Germany. Btw perfect equilibrium is completely unrealistic and impossible.

When the government is no longer in debt or is running a budget surplus it is followed by an economic collapse.

it is debt created, not necessarily debt owned by the bearer or lender, but it is debt created into the system either on the private or public side, so yes it is debt

Money must be debt, because you can't eat money. Its only value consists in what it can be traded for. Therefore anyone who prints money must be incurring a debt.

Yes you could say money is a financial instrument, i.e a claim on real resources.

It used to be redeemable for gold *or taxes*. Now it’s just redeemable for taxes. So yes still a debt still a liability.

1. His description IS of a fiat currency system - so in answer to your question it applies to fiat currency systems in pretty much exactly the way he describes (simplified obvs - it's only a 3min vid). 2. There's an element of that yes - however the real limiting factor on a government's ability to "print" money without economic consequences (like inflation) is the productivity of the economy.

Of course, because Germany is a large net exporter. They have money entering the economy from other countries.

Oh no they certainly don’t have low taxation. I don’t know where you got that from. It does however make sense in Germany. Their current account is in major surplus and that allows their government and domestic private sector balance sheets to be in the black. It’s their “rest of world” (capital account) that’s in the red.

Bill Crane What

You should really check out what Graeber says about the history of debt. It's very interesting stuff.

You still having debt there. Lets says I give you a pineapple and you give me a bag of nuts: after I gave you the pineapple and BEFORE you gave me the bag of nuts you were in debt with me. That´s debt, the period of time between you get a product or service and you pay. The more time you wait to give me the nuts, the more nuts I will want in exchange (interests). Debt its time and interest the value of time.

Graeber was an anarchist. I think this video was meant in part to challenge that assumption. What with the state of the guardian, i could imagine they edited out something where he makes it more explicit

That is explained in the first 60 seconds of this vid. The money newly created by the fed gets spent into the private sector - so there's a negative sum on the government's account sheet and a corresponding positive sum on the private sector's account sheet. So by creating money, the government makes the private sector (you and me) richer

@@5ynthesizerpatel The FED is creating a lot of money and for some reason I don't observe my financial riches. Don't I have to be close to the spigot?

@@5ynthesizerpatel not so. The Fed is not the government (it’s privately owned) and it’s creating money out of thin air (not borrowing it as the government has to).

@@52darcey - you just said what I said

Inflation.

corps used to pay 20% of taxes now they pay 2%

@@lutherblissett9070 iluminati

Secretsofsociety He’s talking about the net private sector as a whole. Not individuals. Now what you’re talking about, too many people gambling on all of these assets to inflate their wealth, is EXACTLY what creates the financial crisis. Because their incomes aren’t rising, they have to resort to high risk debt-fuelled ventures. And that creates the bubbles. That last part is actually correct. Quite spot-on.

Lol did you realize you just said an iOu is not a debt? 😂

If you run a trade deficit you need to constantly issue more govt or private debt to "refill" the money supply. If you run a trade surplus you can pay off private and public debt simultaneously. So you could argue the trade deficit matters much more than the budget deficit. Modern Monetary Theory covers this quite well and it's something that has been known about for decades but is still not common knowledge.

So someone who is skint then how is he or she supposed to survive???? Money is power..... Tony cuenca

dan j Yeah if it offsets its spending cuts with tax cuts, shrinking government, then it can create a surplus again for the private sector. But nothing net has changed in its balance sheet. What does “actual applied innovations in government thinking” mean? English please.

"Positive Money" is proposing having a democratic body create money without debt which is semi-connected to existing governments, you might want to check them out on youtube. Mutualism (the economic philosophy) offers a similar solution by having mutual credit banks that are democratically accountable which have the priority of making low interest loans with the priority of bettering the whole of society rather than making a few bankers wealthy.

No.

It does it all the time. You mix up net debt with the loans. The loans are always repaid. But new debt is created all the time too. Money origins in credit. So if France would repay its public debt in a way that zero net debt will be the result, it would substract all the money from the private sector. Without money the french economy would cease existance.

@@ThomasVWorm So why doesn’t France pay any interest on the loans then?

@@seanlander9321 it does. Why do you think it does not?

@@ThomasVWorm France has not paid debt or interest on its loans from Britain and America, that’s why the debt doubles every 14.5 years. Not one penny paid since 1931.

@@seanlander9321 you mean loans in a foreign currency? I don't know what those old loans are all about. I thought you were talking about french government bonds in Euro.

where would the money come from to create the government surplus? How would running a surplus allow the government to print more money - surely it would just allow the government to spend the surplus back into the real economy - if the government is just going to spend the surplus back into the real economy then why not miss that step and leave the money in the real economy?

roughly 80% of Americans have consumer debt (not including mortgages). Rent is itself a form of debt. The assertion that we "don't have inflation anymore" is just not true at all. And getting into debt as a poor person in the U.S. is not a choice (and in many contexts the same can be said of utilizing birth control). Eating is not a choice, having a car in a country that necessitates personal transportation to work is not a choice, buying a birthday gift for your toddler is not a choice in any meaningful sense of the term. This is not about "personal responsibility," and it is most definitely not about people not having the "brains" to use birth control (that's a ridiculous thing to argue), it is about a system in which so many people can only survive by taking on increasing debt.

Germany is an exception because like Japan it's an export led economy with a massive trade surplus. Read "Sectoral balances" by "Wynne Godley"

No. Money always was debt. A commodity based money is not "hard" but no money at all. A commodity money is pointless too. You could do barter instead and don't use money at all. Because this is what giving a commodity for a commodity is all about.

@ThomasVWorm Barter has the grossly inefficient *double coincidence of wants* problem. Hard (redeemable in a monetary commodity) currency is not debt-based currency at all. The quantity does not depend on how many tokens a government (or some other entity) creates out of thin air. Instead, it is strictly limited by the underlyiing monetary commodity. Think of it this way: If the US had no "debt" then there would be no US fiat dollars. The earlier hard dollar was limited by the amount of gold in Fort Knox, and could not be arbitrarily inflated by rulers.

" How Much Of That $152Tn Is Owned By Mark Zuckerberg ? ."

Well whether or nots it’s spending on “military or roads” per say, which are productive things often, you’re missing the larger point. That spending ends up in somebody’s bank accounts. If it’s spending less, that’s less money in bank accounts that people have to spend and save. This can be offset by tax cuts, but this means noting net has changed for the government balance sheet. Of course public debt and private debt are connected, because public debt is owed to people in the private sector! And private debt is owed to the private sector and government sector in the form of taxes! So if we owe more to them than they owe to us (put simply) naturally that means we’re in a deficit. Now it’s not that simple because it doesn’t take into account international trade yet, which can offset that. But that’s the gist of it. There’s not a “static amount of value.” We’re talking about financial assets, and these all net to zero.

You're right. The graph is definitely NOT "an exact mirror", as seen in 2007-2008 and 2014-2015. So the guy's whole premise is flawed. I suspect he is attempting to smuggle a Keynesian argument for yet more transfer payments.

I know these concepts and have seen them better presented. - I recommend Dr. Richard Werner about _Debt and Interest free Money._ And a pdf published by the Bank of England: _Money Creation in a Modern Economy._ - both well presented, well explained, not too time consuming. positivemoney(dot)org has short videos with everything to do with money. (I know the balance concept from a presentation of German economists - I am also not clear about the blue (the world) - British trade surplus/deficit likely). Anyway - it is like in double bookkeeping. you shift the plus and minus around between the accounts. So it is not math - it is arithmetics. Some WILL have the surplus and the others will have the debt - and the are mirrored. If the graph is not exact - they get the real data and there may be some flaws (like that the fortunes of very rich people is estimated, the foreign part). Of course the people that have the naive understanding that the government should "just reduce its debt" (in our current system where money is created in form of debt) do not realize it is a zero sum game. Reducing debt is another way of saying the government runs a surplus in this year = it takes more in in form of tax revenue than it spends. Well then the corporations and / or the households will hold the debt, that is not only plausible - it is the law of the accounting that strikes. In our time the companies do not acquire debt (big highly profitable multinationals that dominate 60 % of the economy are sitting on cash). Corporations only take out loans if they think the debt financed investments will result in creating products they can sell, that means there is enough consumer demand. The high profits of the companies result from tax cuts and evasion, stagnant wages at home and even lower in the poor countries. That does not make for robust consumer demand. In the German presentation I saw the debt of the German corporate world in the Era of the Economic Miracle. (Then the government and private households had the surplus or were around zero and the corporations had the debt). As indoctrination would have it - my first reaction was negative (As a private citizen I do not like debt). Which is interesting because at that time I already knew many of these concepts that break with the conventional wisdom. Well, that was a time of increasing prosperity for the majority of citizens and a time of economic stability. So Corporate Debt is not bad after all ? It meant that companies were confidently asking for loans (expecting they would produce more with the loans - and be able to sell the stuff, too. While banks equally confidently granted those loans. Well actually commercial banks use their legal privilege to CREATE money when they give a loan. Naive understanding is that one must "have" the money to lend it to someone else (that is how it works between individuals. _Banks grant access to the (untapped) resources of the economy_ (with the money of the loan one can buy workforce, patents, rent offices, buy equipment, materials. Consumers get access to homes, cars,...). The creation of money (it is an accounting entry) either triggers the production of goods and services - or they were recently produced and can be bought off the shelves. It is not talked about that banks create most of the money they lend (approx 90 %). - and then there is ALSO the possibility that the government together with the central banks creates money (in digital form). That we are not supposed to know at all. It is usually reserved for times of crisis. It was done in the form of QE for finance (to the tune of trillions in the UK, U.S. and the Euro zone). But not a peep about QE For The People - the unwashed masses would get excited. Next thing they demand social housing be financed in that way (or renationalizing the railway, or renewables, or funding the NHS, ....) a) the banks like to be the only ones to use the privilege of money creation b) the landlord class could extract so much rent from the citizens. (more competition). There could be non-profit developers. Community owned housing. Never again could austerity be sold to the sheeple. Or WW1 Brixton pound. or long time ago the talley sticks.

What?

Really? How much money do you have in your bank account?

It’s a balance held between public and private sectors. If you “tax then fairly” their surplus will grow. And the public deficit will grow with it.

smallfaucet Only for socialists.

Ashley Wilkes Bingo! David also never addresses the private interests that benefit from government debt (the crux of the matter)...a situation the USA founding fathers wanted to avoid by only allowing Congress to issue currency. The most wealthy capitalists of all are those lending fiat money (read: issuing debt) to goverments at interest. Having the power to print & issue the world reserve currency out of thin air has made a handful of private interests wealthy beyond anything ever seen in history...

Government spending = private income. A governement does not need to tax to spend.

Except government spending doesn't vanish in ashes, it's actually injected in the economy via wages and contract bills. If you cut government spending you'll have a hard time running your economy due to loss of education, health, security, infrastructure, etc. The private sector does a terrible job at fulfilling certain public needs.

" If you cut government spending you'll have a hard time running your economy due to loss of education, health, security, infrastructure, etc. The private sector does a terrible job at fulfilling certain public needs." What? the private sector, thanks to competition, can very well fulfill this tasks. The best Universities are private, the best hospitals are private, etc. No government needed whatsoever.

The only goal of private corporations is to maximise their profits. This works out fine for some sectors, but won't work for sectors that cannot yield profits by nature. The US spend 16% of their GDP on health. France spends 12%. In the US health is privatised and less efficient in both costs and quality. On the matter of "best" universities, turns out out of the top 10 universities 5 are private and 5 are public. Even though I'm quite skeptical on what "best" means in terms of education, if we take that ranking, your argument isn't as clear cut. As to "no government needed whatsover", History tells otherwise. Most of the technical and social progress of the last two centuries have required governments. If not, countries like Somalia or Zimbabwe would be the best places to live in. Thing is production is a collective thing. No individual creates in a vacuum by himself. There would be no Steve Jobs if it weren't for the society in which he grew up.

William Nichols The amount of money, debt, does not change in this circumstance. How is this relevant?