Re: Keynesian State of the Union

["Gary Santos" <evs@xxxxxxxxxxx>]

> every dollar the government spends provides the essence for the non-govt
sector to pay its taxes not the other way round.< > We have to break this
notion that government spending needs to be financed.<> The only constraint
o government spending is real - the ability/willingness of the
non-government sector to exchange goods and services in return for
government issued currency...<
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It seems to me that the change in monetary system (into fiat) and the huge
debt overhang are two defining factors of the "reality" as to who finances
who. With a loss of faith in fiat, the "reality" will change. And, as debt
is increased, these credits on future taxes can be seen to exceed all
possible future taxes. (Although I think the mechanism of loss of faith will
be from a different perspective.)

In the final analysis, the reality of who finances who will be determined by
the conventional wisdom of the markets, whatever that wisdom is composed of,
as it is they who are the exchangers of goods and services. Government, this
is to say, today's government-Fed combination truly creates all money but it
does not create value. Only labor applied to land and technology creates
value. I think this is one immutable component of conventional wisdom.