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MMT friendly. Favorite lines: Money is created in one of two ways: by the government making payments (Uncle Sam writes you a check, the bank then credits that to your account) or the bank extending a loan, in which case the bank credits money to your account against a contract saying you’re going to pay it back. The government extinguishes money by taking in taxes; the bank extinguishes it by taking in loan repayments. The question of how much money is created is determined by how much activity the public and private sectors are willing to animate. How many loans does the banking sector wish to extend? How much spending will the public sector approve? Regarding the title, I would not say debt "forgiveness" but "restructuring." Only debts that cannot be repaid need to be discharged.
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Mike Norman considers the following as important:
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MMT friendly. Favorite lines: Money is created in one of two ways: by the government making payments (Uncle Sam writes you a check, the bank then credits that to your account) or the bank extending a loan, in which case the bank credits money to your account against a contract saying you’re going to pay it back. The government extinguishes money by taking in taxes; the bank extinguishes it by taking in loan repayments. The question of how much money is created is determined by how much activity the public and private sectors are willing to animate. How many loans does the banking sector wish to extend? How much spending will the public sector approve? Regarding the title, I would not say debt "forgiveness" but "restructuring." Only debts that cannot be repaid need to be discharged.
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Mike Norman considers the following as important:
This could be interesting, too:
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The Intelligencer
We’ll Need Mass Debt Forgiveness to Recover From the Coronavirus
Eric Levitz
Money is created in one of two ways: by the government making payments (Uncle Sam writes you a check, the bank then credits that to your account) or the bank extending a loan, in which case the bank credits money to your account against a contract saying you’re going to pay it back. The government extinguishes money by taking in taxes; the bank extinguishes it by taking in loan repayments.
The question of how much money is created is determined by how much activity the public and private sectors are willing to animate. How many loans does the banking sector wish to extend? How much spending will the public sector approve?
Regarding the title, I would not say debt "forgiveness" but "restructuring." Only debts that cannot be repaid need to be discharged. This would reduce or prevent Chapter 7 bankruptcies and evictions, that can cascade and produce a domino effect. Other debts can be restructured, which is what Chapter 11 is about. This would apply to essential production and services, for example.
The trick is to head off systemic risk that results in a deep recession or even a debt-deflationary depression.
This could be avoid by an economic snap-back, a so-called V-shaped contraction. However, absent an quite recovery, debt can become a problem.
We’ll Need Mass Debt Forgiveness to Recover From the Coronavirus
Eric Levitz