Re: About National Debt (was For Trucker)

On Sat, 13 Aug 2005 05:37:32 -0700, "The Trucker" <mikcob@xxxxxxxxxxx>
wrote:

>William F Hummel" <wfhummel@xxxxxxxxxxx> wrote in message
>news:qq0lf1t0a0aaldkb5v9jlivj1roseqngcu@xxxxxxxxxx

>> Yes, of course, a citizen can convert his dollars to another currency,
>> but then someone else is holding those dollars.
>
>But what if there is no interest in acquiring dollars (pun intended)?
>Like offering 80% interest on Monopoly money ain't gonna
>work.

The logic is impeccable. The premise is not. Thus we can conclude
that 4 + 4 = 10 if we begin with the premise that 2 + 2 = 5.

Think of dollars as federal tax credits. As long as the government
enforces tax collection in its own currency, that currency will be in
demand.

If the public has more of that currency than it wishes to hold in the
aggregate, the only profitable use of the excess is to buy
interest-earning bonds from the government. Thus deficit spending is
absorbed either by increased demand for government currency or by the
sale of government bonds.

The government will never have a problem selling its bonds to cover
its deficit spending as long as its currency is demand, and demand for
its currency is the automatic result of enforcing tax collection.

>If the Chinese can't use dollars to buy Unocal then
>what good are the dollars? May as well be Monopoly
>money.

If Chinese-owned US dollars were nothing but Monopoly money, then you
must think the Chinese are pretty stupid. Obviously the reason China
backed out of the Unocal deal was purely political. It had nothing to
do with their dollars being worthless.
.

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