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Why government deficit is better?
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Why government deficit is better?
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Steve Keen considers the following as important:
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| why government deficit is better? |
Does the RBA lend money to the treasury and charge interest, and is this the interest that that is being paid on the trillion dollar debt? If the RBA creates the money out of thin air who is the money a debt to?
In brief, the Treasury creates money when it spends more than it taxes: this increases Deposit accounts (money) and bank reserves at the same time. Treasury then sells bonds to the banks, which they buy using reserves. If the RBA buys bonds off the private banks, then interest is not paid on those bonds. It's also misleading to call it debt: I explain it using my Minsky software here: https://profstevekeen.substack.com/p/using-accounting-to-prove-the-core