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

There is one taboo of economics that the government is hiding from the public, argues David Graeber: it is the fact that if the government balances its books, it becomes impossible for the private sector to do the same. And, he claims, this inevitable debt often gets landed on those in society least able to pay it back.
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#DavidGraeber #Debt #PublicDebt #PrivateDebt #GovernmentDebt #Economics

[@jackmansfield4453]

More people like David Graeber in the world please.

[@AndyRRR0791]

No. One's enough thanks!

[@sinphus]

Jack Mansfield we’ll there is one less now

[@desi_anarch]

@@sinphus 😞

[@arhansen85]

Ok then! Let’s do it!!

[@tuckerbugeater]

Cope

[@lulu4882]

rest in power

[@bahcsas]

Rest in peace brother.

[@perlefisker]

The combination of taboo and ignorance is why nothing will change - and people WILL suffer. Some thirty years ago I heard on national television the news reporter tell that 5 % of the population of Britain had now become wealthier...and continued: 'in the meantime 5 % of the British population have been poorer' - and he smiled.

[@leighfoulkes7297]

I always had the general concept that "if we stopped getting in debt we, the US, would crash" but I never could rap my mind around it. Thanks to David Graeber for making it obviously clear for me.

[@KWJackson]

So if all the money, IOU's, comes from banks, and we are all paying off someone's loan to a bank, then we are all paying banks, for money that was created on the promise to pay: so we're all paying real value for something made by fiat? Sounds like debt slavery.

[@zainabs2603]

Rest in power, comrade.

[@DoggfatherUK]

Rest in power David. ✊

[@Will-zy3ru]

Great explanation. I think the word '"debt" shouldn't even be used for government spending money into existence. Governments with sovereign currencies aren't in debt when they create currency. That terminology probably confuses people and makes the actual situation harder to understand.

[@NadeemAhmed-nv2br]

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

[@timmy-wj2hc]

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.

[@coolioso808]

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.

[@tuckerbugeater]

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

[@TheSuperRatt]

@@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.

[@MrTrollBeast]

I think he is basically saying in order for the government to be in surplus they need more tax leaving the private sector more in debt and vice versa

[@Redrally]

I...don't understand any of this. I know you explained it, but I still don't understand it.

[@nikzanzev2402]

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.

[@modifiedcontent]

That is because this is illogical BS.

[@benaiahwright937]

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

[@furyofbongos]

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

[@waulie_palnuts]

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.

[@dinnerwithfranklin2451]

Excellent explanation. Thank you.

[@marcomostroso]

this is partially BS, as if you reduce the size of the state you can have lower debt without charging more taxes.

[@mntnwzrd66]

If people understood how debt works, they would stop believing in it as a Moral Obligation. This could change the world.

[@harisnaeem6347]

Miss him every day

[@peterwantspie]

This needs a billion views.

[@n.a.larson9161]

You seem to be saying that once a debt is "created", evaluated/tallied and recorded, it can never be expunged. If private debts are expunged, then public debt is created and vice-versa? As explained at least, that doesn't add up to me.

[@waigonglee]

Rest in Power David

[@mathewsnow7381]

RIP, King

[@Javier-il1xi]

REST IN POWER :(

[@alecesne]

Professor Graeber, I think the part of the equation national politics focuses on is the ratio between national debt and international debt, since that money is leaving the system of control of a given government.

[@TheRepublicOfUngeria]

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.

[@kerryburns1293]

So that should mean that the more a gov't is in debt, the richer its people should be no? But that doesn't seem to reflect reality - both governments and their people seem to be struggling. Can someone explain?

[@HOOTwheelz]

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.

[@tracksuitjim]

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

[@adamthornton7880]

So, what I took from this is that 1 entity being in credit means another entity being in debt, and visa versa, because if I owe money, someone else is owed that money, and if I am owed money, someone else owes that money. That seems like a fairly straight forward, and uncontroversial statement to me, though I'm not sure what you want me to conclude from that.

[@pambennett8967]

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

[@markusklyver6277]

2:46 Why/how does the debt transfer to individuals doing surplus I don't understand the reasoning.

[@pamelathompson6783]

Rest In Peace champ!

[@user-jz2yp9on5g]

rest in power comrade

[@robinhoodstfrancis]

Interesting. It would seem then that the government needs to be in debt, and that it has a different meaning for the government to be that way. I've been focusing on the importance of the local ownership business model. I wonder if a new concept in which money is conceived of as a "productivity note" would make any difference.

[@FaceWhatIs]

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

[@justbrowsingtheweb7791]

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

[@TheSuperRatt]

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.

[@paladinsorcerer67]

This is what I got from this video: selling treasuries/bills/bonds and collecting taxes is govt income and can lead to govt surplus. Then, paying back bonds when they come due can be paid by raising taxes, or short of that, balancing the books through austerity or the fed prints money to give to the banks (who then make interest on loaning that money out to people). Going beyond the video, from what I've heard: tax breaks are supposed to raise GDP through increased spending, but the rich and corporations don't spend it, only those who have a subsistence lifestyle do, so their meager tax breaks don't make much of an effect and unraised GDP doesn't do much for increased income for the Govt. People | Govt ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- (debt) bonds money (debt) taxes money money repay bonds (debt) - "Natl Debt" - use taxes to pay for this, or see next money tax breaks (debt) - "Natl Debt" - use austerity, or fed prints money to pay for this, or reallocate funds from say military to pay for say social security

[@estherphelps3606]

So true

[@johndonald9692]

Genius.

[@maxjackification]

So the more government gets deeper in debt. The less indebted households will be????????

[@Anti-CornLawLeague]

So just have a voluntarily funded government.

[@methuselah.]

If automated machines were able to produce all our goods, and nobody worked, then we could all receive a UBI. That would require government printing money every year, and if it refused to tax it back, then the deficits would just get higher and higher. We could, theoretically, end up with a Debt-to-GDP ratio of 9,999,999.99%. So government would have a ton of debt, and private sector would have a ton of cash/savings. It doesn't matter because it all nets to zero, but it's still an exercise in insanity. The cash is used for initial consumption and then just sits there idly. If you shrink both the idle cash assets and debts at the same time, by say taxing at 100% rate, then your money/debt level would go down to zero. So what percent of our societies (read mega corporations) current vast cash holdings is truly idle and unnecessary? How much of it would lead to massive inflation if they actually tried to spend it? Wouldn't you have to cancel the idle cash against its respective government debt in order to get a "true" Debt-to-GDP ratio? Or similarly, spend the cash in order to cause inflation, which would drastically increase GDP (due to price increases) and hence bring down your debt ratio. Once we know our "true" Debt-to-GDP ratio, we can compare it to our prior ratio to determine how much of our government spending was unproductive and wasteful. Because, after all, you can't just spend your way in to prosperity. You need real production to generate wealth, and money is just the oil in that engine.

[@major600]

Interesting. It sounds like you have proven Arthur Laffer's point. Lowering taxes actually DOES stimulate the economy. The State takes in less, but the people have more. If the State paid off its debt and reduced taxes to a minimum, the people would hold most of the debt in the form of money. BUT does HOLDING debt mean that you are actually IN debt?

[@Taeerom]

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.

[@MrShanechon]

I am innocent 'why central bank print a piece of paper, it is named MONEY; other institutions/private individuals do the same, what is it called?'

[@altagones]

REST IN PEACE GENIUS

[@souravsarkar4760]

what happens when you have an unlimited number of 'chips'.....? as in printing money...

[@lammyjammer6670]

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!!!

[@lutherblissett9070]

you increase taxes to destroy them again.

[@lanadellhatestheclock3325]

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.

[@zwanzikahatzel9296]

Is this mechanism inherent to all economies or is it only relevant to ours because our currencies are backed by debt? If currency was backed by commodities such as gold, electricity or staples, would his notion still hold?

[@andrewprice8820]

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.

[@jsamc]

RIP I'm a suspicious type of person. His death of internal bleeding seems strange to me.

[@smoothsounds8172]

Stop

[@FragEightyfive]

How does this apply to fiat currencies--paper money not backed by gold? Is it just purely a trust in the paper that the government won't over-print it?

[@5ynthesizerpatel]

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.

[@shoulders-of-giants]

THE GOVERNMENT is one thing, but what about corporations and smaller scale capitalists?

[@TheSuperRatt]

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.

[@justaname2422]

Rest in Power David. No gods no masters.

[@strategicgamingwithaacorns2874]

Actually, it IS possible for the Public and Private sectors to both balance their budgets. Either you keep circulating the money so that the money flow to both Public and Private sectors are in equilibrium... Or a foreign nation is the creditor.

[@andrewprice8820]

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.

[@GT-tj1qg]

What do I do with this information?

[@nkristianschmidt]

This private-public debt swap is only true because of fiat money, fractional reserve banking and the 2 pct inflation target that requires monetary volume to increase which requires debt to increase. Were money chosen voluntarily by consumers, it would not necessarily represent debt and there would be no inflation target. The norm would likely be deflation.

[@Liberty_Freedom_Brotherhood]

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

[@nkristianschmidt]

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

[@seanlander9321]

Any idea on why France isn’t made to repay its loans? France hasn’t paid a penny on its sovereign debt since 1931 which puts what’s owed at a trillion and doubling every 14.5 years.

[@ThomasVWorm]

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.

[@seanlander9321]

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

[@ThomasVWorm]

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

[@seanlander9321]

@@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.

[@ThomasVWorm]

@@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.

[@DenianArcoleo]

So it's a 'zero sum game'? Private sector gains so public sector loses and vica versa? How does money out of thin air, i.e. so-called quantitive easing fit into this?

[@andrewprice8820]

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.

[@jemandoondame2581]

R. I. P ...

[@torso99]

i still dont get it.......

[@tuckerbugeater]

Words

[@Pawn-Sac]

Except, the government wasn't always in debt and the country was fine... Does he go into that in another video?

[@coleydavis8456]

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

[@jimilegolas]

Makes sense, but this does not apply to Germany for example. They have both surplus and low taxation.

[@Kropotkin2000]

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

[@andrewprice8820]

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.

[@gent8940]

Sometimes David Graeber is understandable, at times like this he speaks in some kind of economist shorthand that just gets lost. Too bad.

[@nfernandable]

David Graeber is not an economist.

[@lolaargot9138]

Lo podrian subtitular al español?

[@MekkoGekko]

i just don't understand it

[@furyofbongos]

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

[@andreamastroeni3340]

@@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

[@spiritualeco-syndicalisthe207]

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

[@andreamastroeni3340]

@@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

[@spiritualeco-syndicalisthe207]

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

[@HogeyeBill]

Money is debt, but only in the unsustainable fiat regime which started in 1971. Graeber fails to see the solution - hard (commodity based) money.

[@ThomasVWorm]

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.

[@HogeyeBill]

@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.

[@sinphus]

Rest In Peace

[@sgh94644]

Curious about inflation in this regards and printing money

[@behonestwithyourself3718]

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.

[@qpfywebmaster]

Seems like this would only be true in an economy that did not produce goods and instead only transferred existing product for existing currency.

[@andrewprice8820]

Bill Crane What

[@povelvieregg165]

An interesting talk and I am big fan of David Graeber ever since reading his book "Debt: the first 5000 years", however I failed to grasp the point he was making here. Plenty of countries have a surplus and well balanced budgets without necessarily lending that money to its own citizens. My home country Norway e.g. has a huge surplus of money through the oil fund, but that money is primarily lent out to companies all over the world, not to citizens of Norway. I don't see why a government surplus should cause difficulty in lending money for consumers. If government has more money than it knows how to get rid of one would suspect the laws of supply and demand would cause cheap loans. Of course that might be indirectly why Norwegian have such high mortgages on their houses while still having low interest rates. In theory one should also assume that businesses could be soaking up these surplus money as loans as well, not necessarily home owners.

[@TheNefastor]

This video is missing a lot of small print such as "this video assumes you will believe the current economic system is the only one that can ever exist." It sounds profound until you scratch the surface, which you really should.

[@Justin-ib2iz]

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

[@carlosgarciahernandez7201]

Welcome to Modern Monetary Theory

[@ladavis3162]

"Taxes never go down". Not in the US. The top rate is like a forty percent of what it was 50 years ago.

[@lutherblissett9070]

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

[@smashthestateX]

@@lutherblissett9070 iluminati

[@drakekoefoed1642]

Economists look at money so much they never think without using it for the subject. Think of a barter economy. On our little island, I grow nuts, and when I have a crop, I buy shoes and shirts and get my roof fixed. I give the mayor a bag of nuts for each government employee. Everyone has things in inventory if they manufacture, and those who provide services get things when they do a job. Nobody is in debt.

[@christianmiller9980]

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

[@compota334]

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.

[@SometimesCompitent]

You could tell David cared a lot about this because he actually combed his hair.

[@strainddgrayvee]

Wow

[@Sandrine-sr8eq]

unintentional asmr

[@jzno]

Let's assume there is no financial governmental structure left, anything is owned by the industry and banks and "they" are not accountable for debt...who has all the debt now? Actually, I think it's exactly the current process ;)

[@user-jp2nk5nn1h]

"Civil war as in Syria or Ukraine" This aged well

[@Secretsofsociety]

Households are supposed to be net savers. It's financial illiteracy which makes it "impossible for you to balance your" books. You should never be out of balance. Assets should be greater than liabilities or you are insolvent. If that means you cannot own real estate or go to an expensive school well then maybe you cannot own real estate or go to that school. There are plenty of other assets to buy that are cheaper and plenty of cheap ways to get educated. People think stocks are riskier than houses. Stocks are liquid, cheap, and generally appreciate with the market. How can they be riskier than an immobile, illiquid, and depreciates unless you put more money into it? Real estate is a good investment for the rich who have more money than they want to manage but it is a poor investment for the poor except as a store of value. Whether the store of value is worth it to you depends on your personal situation and if you have enough income to both pay the payments and maintain the structure. Prior to recent technological advances it was not possible for the poor to gain equity in the system because of high commissions. Now with brokers like Robinhood who charge no commission, there is no excuse. I'm pretty sure that chart includes corporate debt. It would make sense that corporations would go into debt proportionally to the government surplus. Households should be solvent so more taxes should only mean less asset growth. Again this is a recent possibility, within the last couple of years, so we will see how it plays out. Access to the markets may just lead to the poor gambling more. I still think gambling on equities is more productive for wealth accumulation than lottery tickets though. Sadly, the school systems will fall apart if people stop buying lotto tickets. Also why is the rest of the world in constant surplus? Might it be because western counties produces so much wealth through demand, they are showering it on the world through trade deficits? And everyone complains about that... I'm pretty sure the trade deficit is why the private sector or the government "must" be in debt. If we truly were to balance things, China would get hit the hardest.

[@andrewprice8820]

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.

[@philerus97]

Money now is, for all intents and purposes, no longer debt. Whilst they are known as 'promisory notes', the current use of Bank of England banknotes is not reliant on anyone being in debt. The notes have their own value by fiat and can be circulated freely in an exchange an economy, with transactions not necessarily being the initiation of a creditor/debtor relationship. An example to illustrate this point would be the cigarettes used as currency in an prisoner of war camp. As with pounds, holding a cigarette did not require anyone to return it to an original 'lender' at some future point. The 'promise to pay' sign is just an archaism which has to do with how the practice of paper currency originated, back in the days when a 5 pound note was still redeemable for 5 pounds of gold.

[@jamesram4869]

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

[@angrydachshund]

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.

[@lutherblissett9070]

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

[@andrewprice8820]

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

[@KiNgOfAwEsOmE164]

Shouldn't banks be owned by the government so that no one group profits from piling debt on someone or a country and the country could be more flexible with the economy as they own all the banks. If you would respond I would appreciate it if you would respond politely.

[@Maltcider]

"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.

[@erich2220]

No.

[@pawbard]

Well that video didn't make any sense. Many commenters question, or support, the implicit ideology and set of assumptions. But all one can really take from it is a complaint against the rich.

[@trytwicelikemice7516]

What he says makes mathematical sense in a closed system. But the nation isn't a closed system, we have international trade and debt. Does that not make this whole thing invalid?

[@lutherblissett9070]

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.

[@ritwiknandakumar]

Right now, we have the Federal Reserve pumping newly CREATED money into the system. Now both the players have extra chips out of thin air. Now what?

[@5ynthesizerpatel]

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

[@TheClayCreature]

@@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?

[@52darcey]

@@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).

[@5ynthesizerpatel]

@@52darcey - you just said what I said

[@behonestwithyourself3718]

Inflation.

[@Tom-vy3cb]

RIP David

[@StupidPeasant]

Geewiz Mr. Money Butt, where does wealth come from?

[@dorkofcork1]

This is indeed the dynamic today but social creditors would beg to differ that all money must be debt.

[@dorkofcork1]

debt in reality reflects the difference between prices & net income ,realworld waste

[@ashleywilkes842]

He left out the concept of spending. If government decreases spending to move towards a balanced budget, it decreases the need for increasing government bonds, taxes, etc. Private Industry, operating on a need to profit basis, would increase or retire debt as it sees fit. Also, over taxing property and inventory causes corporations to hide wealth in debt. That is mimic government, which prints money or borrows money and repays with after inflation dollars.

[@mcoletta6736]

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...

[@lutherblissett9070]

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

[@SCAND4LE]

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.

[@francoparnetti]

" 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.

[@SCAND4LE]

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.

[@sharkbytefpv4326]

Purposefully misleading. It is not a balance between "State" and "Citizen" , as we ARE the State. It must be balanced between "State" and "Companies". In a time where companies have more surplus then ever we, the state, needs to start taxing them fairly.

[@andrewprice8820]

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.

[@pio7763]

He have "Hangover" style

[@cpuwrite]

Doesn't work. to use the analogy, assuming that Peter has 20 poker chips and Paul has another 20, this assumes that there are 40 poker chips in all existence and this will never change--that is to say, stepping outside of the analogy, the amount of money available is ZERO SUM. Yet, a little later in the video, the same man says that the banks CREATE money. Now which is it? Can banks create money, or is there only a certain amount to go around and it is distributed between the public and private sectors? Pick one--you can't have both.

[@davelowe1977]

Brad Smith This is more or less correct. When only banks can create currency, and they lend with interest, borrowers can never settle the debt because further debt has to be incurred to generate the interest currency. It's basically a Ponzi scheme with an ever growing currency supply causing inflation.

[@cpuwrite]

not completely what we have. DINObama bailed out the banks. But it IS a property of capitalism that if only lenders generate money and they charge interest then there will never be enough money in circulation to cover all the debt.

[@cpuwrite]

Yep. :(

[@andrewprice8820]

There’s only so much money available at any time. And when new money is introduced, one group or sector still holds the asset and one holds the liability. That cannot change. The banks create money, but they do not create anything net, that’s important. When govt increases deficits, it creates net liabilities for itself and net assets for the private sector. It is zero sum in that sense. If we export more than we import, that also creates net assets for us and net liabilities for foreigners somewhere. It all nets to zero, but it sure as hell is not fixed. I agree that analogy may be lacking. Should’ve had the house come in and introduce more chips into the game or something.

[@andrewprice8820]

Brad Smith It was not an error. Watch and think again. This is just a simplified model. The point is when when one party has more one must have less. When new money is introduced, somebody holds more assets and some more liabilities. That will not change.

[@stoicllc2352]

Um incorrect. Government does have the possibility of reducing expenses in a manner that provides a surplus. Yes people could possibly have less services have to pay more validating your point. However, governments are well know for their redundancy and unnecessary bureaucracy, so the reduction of governmental expense through actual applied innovations in governmental thinking could create a surplus or at least balance the books here in the states.

[@andrewprice8820]

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.

[@jordanknight336]

Wait no this doesn't make sense to me. You're telling me that if the government stops going into debt the private sector starts going into debt to make up for it, as if there's a static amount of value in the world. But actually the government is just spending less on stuff like roads or militaries. Why on earth would the public sector go into debt because of that? And if you can't thoroughly explain how government and private debt are connected, the rest of this falls apart.

[@andrewprice8820]

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.

[@patrickmccormack4318]

Elect David Graeber as Human Being of the Decade. Human Being of The Decade is similar to The Nobel Peace Prize, but off-the-charters cool and Precariat. I listen/hear dead people.

[@lukepowers9472]

Warren Moesler

[@crissd8283]

I don't agree completely. Your Peter Paul argument assumes that the number of chips is set. If the goverment ran a surplus it could in theory print more money without causing inflation because less money is being generated though debt. There is just not a set number of chips. This is slightly risky and it is more stable to run a small deficit but running large deficits like the US is not good either.

[@5ynthesizerpatel]

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?

[@jimschroeder1176]

THE HONOURABLE WILLIAM ABERHART, M.L.A., B.A. Premier of Alberta, Edmonton, Alberta, Canada. Strictly Confidential to Executive Council of Alberta DEAR MR. ABERHART, This seems to be a suitable occasion on which to emphasise the proposition that a Balanced Budget is quite inconsistent with the use of Social Credit [i.e., Real Credit--the ability to deliver goods and services “as, when and where required”] in the modern world, and is simply a statement in accounting figures that the progress of the country is stationary, i.e., that it consumes exactly what it produces, including capital assets. The result of the acceptance of this proposition is that all capital appreciation becomes quite automatically the property of those who create an issue of money [i.e., the banking system] and the necessary unbalancing of the Budget is covered by Debts. C. H. Douglas London, England

[@shuuyakano2390]

Wait but in Germany we take in more tax money than we need for maintaining current standards. Debt rate and poverty rate are pretty low tho so if the government now used this money to pay off the national debt how would we people be in debt? I don't think that the things here explained make sense if you look at one country, but if you look at the world as a whole

[@lutherblissett9070]

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

[@shamimb1y]

MONEY DOES NOT COME FROM BANK'S,, THE IOU GETS PRINTED INTO CURRENCY PAPER NOTES OR COINS THAT HAVE NO VALUE OTHER THEN WHAT THEY ARE MADE OF

[@andrewprice8820]

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

[@ohhhSmooth]

what I still don't understand tho, is why there isn't more debt than money in total? all money comes from the central bank (normal banks too oc thanks to cheating, but same thing), so every pound has been lent, but WITH INTEREST, say the central bank gives every bank a 100 pound loan, and wants back 102 pounds.. where are the 2 pounds supposed to come from? anyone?

[@aliecat1999]

that's just new money, as if somebody had printed it

[@ohhhSmooth]

so there is in fact always more debt than money in the system?

[@52darcey]

@@ohhhSmooth ok so firstly, there IS more debt than money. At the time of writing, US has $29T government debt and there there is only money of $15T - and that’s not counting private debt. Secondly, all money is NOT coming from the central bank - most of that 15T was produced by private banks issuing loans. But finally the problem you have detected IS a problem - in our debt-based money economies, money is created from loans and so there is not enough money created to cover the interest. Which means new money needs to be created. Which gets created by creating new debt. Which creates more interest liability not covered by money supply…which means we need more money …and debt …rinse and repeat ad finitum. Debt based money is literally a pyramid scheme ….

[@cellocovers3982]

How did he die?

[@pyalot]

money isnt debt. fiat currency created for deficit spending is debt. theres a difference.

[@andrewprice8820]

Florian Bösch This is Money.

[@52darcey]

Not so. Money is created by banks issuing debt.

[@johnsmith1474]

Nice presentation, I will be watching more Graeber. But while I am interested, I'm not a devotee. Is the fact that the "private debt" is almost completely held by those with wealth important? That is, the vast majority of ordinary people really don't have either wealth, or debt. They might pay on a house, but they'd otherwise have rent. So the impression that debt is put on the 90% of ordinary people is ... wrong. Notice we don't have inflation anymore, and yet the debt is huge. Poor people in America who have the brains to practice birth control and not use credit cards lead very comfortable lives compared to any time in past history.

[@blahblahblahblahblahblah8033]

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.

[@213kidangel]

Fiat money is debt but not fiduciary money (gold backed IOU notes)

[@andrewprice8820]

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

[@smoothsounds8172]

More money>more debt. Less money>less debt>more freedom 🙂

[@craphead9842]

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

[@Spar19row]

What if you invest your money in corporations? That doesn't create debt. That creates equity. Which is also known as capital as in Capitalism.

[@andrewprice8820]

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

[@advwharton]

not a taboo. mercantilist view of money supply still has many supporters, and because it tells a simple story, makes great copy. sometimes the guardian really sucks.

[@andrewprice8820]

What?

[@bobbybobby3232]

Is David Graeber saying that if government is in debt its good for the general public? Or that the government needs to be in debt, so that the people can have more money. Lets just assume that a government owns 50 trillion dollar, and the interest on that loan is 1%. The interest that the people have to pay is 500 billion dollar a year.

[@bobbybobby3232]

Grahamhg I am sure that the private sector doesn't want that.

[@cmndante6698]

Because the private sector won't be the one indebted as the video describes

[@samb2945]

I disagree David. You're too close to the mechanism to see the broader picture. Interest on borrowing means that there will never be enough money in circulation to pay back loans without causing new debt. It's a rigged system and totally unnecessary.