Is there any reason why you would expect (or want) the budget of a Government to balance?

Suppose I pick up a valuable rock. My assets have increased but liabilities haven’t. For a company, that counts as profit which is owed to shareholders so for a company the liabilities increase to match.

But for a private individual, and a government, and a reserve bank for that matter, there are no shareholders and so there is no relationship between assets and liabilities. Nor should there be.

This thought is prompted by reading Heinlein’s thoughts about how economics works, and about the stupidity of trying to maintain a favourable trade balance.

mollwollfumble said:

Suppose I pick up a valuable rock. My assets have increased but liabilities haven’t. For a company, that counts as profit which is owed to shareholders so for a company the liabilities increase to match.

That’s not how it works.

Profit is increase in the difference between assets and liabilities. Retained profits are not added to liabilities.

As for the question, the answer is yes and no.

mollwollfumble said:

Suppose I pick up a valuable rock. My assets have increased but liabilities haven’t. For a company, that counts as profit which is owed to shareholders so for a company the liabilities increase to match.

That’s not how it works.

Profit is increase in the difference between assets and liabilities. Retained profits are not added to liabilities.

As for the question, the answer is yes and no.

And another thing:

mollwollfumble said:

This thought is prompted by reading Heinlein’s thoughts about how economics works, and about the stupidity of trying to maintain a favourable trade balance.

If you want deep thoughts on economic theory, I’d recommend Douglas Adams, rather then Heinlein.

the present intervention involving massively pumping the economy would, if it continued past some point (or if that investment didn’t start efficiently looking for returns, and get them), start to cause inflation, because money is subject to scarcity also, should be if it represents value, and more conservative (economic liberal) government don’t like government capital overly competing with private capital, when not needed

the pay down rate of debt reflects the possibility it can be be paid down, so opens up the opportunity for further lending

transition said:

the present intervention involving massively pumping the economy would, if it continued past some point (or if that investment didn’t start efficiently looking for returns, and get them), start to cause inflation, because money is subject to scarcity also, should be if it represents value, and more conservative (economic liberal) government don’t like government capital overly competing with private capital, when not needed

the pay down rate of debt reflects the possibility it can be be paid down, so opens up the opportunity for further lending

Other than equating “economic liberal” with “conservative, I agree.

There are plenty of examples of countries with rampant inflation due to governments paying for things without sufficient income.

The Rev Dodgson said:

transition said:

the present intervention involving massively pumping the economy would, if it continued past some point (or if that investment didn’t start efficiently looking for returns, and get them), start to cause inflation, because money is subject to scarcity also, should be if it represents value, and more conservative (economic liberal) government don’t like government capital overly competing with private capital, when not needed

the pay down rate of debt reflects the possibility it can be be paid down, so opens up the opportunity for further lending

Other than equating “economic liberal” with “conservative, I agree.

There are plenty of examples of countries with rampant inflation due to governments paying for things without sufficient income.

Could money be printed in secret, given to people to take overseas and used to purchase assets that are then owned by our government.
The money printed is not recorded anywhere

The Rev Dodgson said:

transition said:

the present intervention involving massively pumping the economy would, if it continued past some point (or if that investment didn’t start efficiently looking for returns, and get them), start to cause inflation, because money is subject to scarcity also, should be if it represents value, and more conservative (economic liberal) government don’t like government capital overly competing with private capital, when not needed

the pay down rate of debt reflects the possibility it can be be paid down, so opens up the opportunity for further lending

Other than equating “economic liberal” with “conservative, I agree.

There are plenty of examples of countries with rampant inflation due to governments paying for things without sufficient income.

yeah all good, i’m maybe using an idea of economic liberal, and conservative, from way back, way way back, not so much an equating of the two, a tight association, more the philosophy, or philosophies, thought of generously

Cymek said:

Could money be printed in secret, given to people to take overseas and used to purchase assets that are then owned by our government.
The money printed is not recorded anywhere

I think that a little bell just went off in a Chinese government office somewhere, and the name ‘Cymek’ is now on some sort of list.

captain_spalding said:

Cymek said:

Could money be printed in secret, given to people to take overseas and used to purchase assets that are then owned by our government.
The money printed is not recorded anywhere

I think that a little bell just went off in a Chinese government office somewhere, and the name ‘Cymek’ is now on some sort of list.

A good or bad list ?

Cymek said:

captain_spalding said:

Cymek said:

Could money be printed in secret, given to people to take overseas and used to purchase assets that are then owned by our government.
The money printed is not recorded anywhere

I think that a little bell just went off in a Chinese government office somewhere, and the name ‘Cymek’ is now on some sort of list.

A good or bad list ?

You know too much.

Cymek said:

The Rev Dodgson said:

transition said:

the present intervention involving massively pumping the economy would, if it continued past some point (or if that investment didn’t start efficiently looking for returns, and get them), start to cause inflation, because money is subject to scarcity also, should be if it represents value, and more conservative (economic liberal) government don’t like government capital overly competing with private capital, when not needed

the pay down rate of debt reflects the possibility it can be be paid down, so opens up the opportunity for further lending

Other than equating “economic liberal” with “conservative, I agree.

There are plenty of examples of countries with rampant inflation due to governments paying for things without sufficient income.

Could money be printed in secret, given to people to take overseas and used to purchase assets that are then owned by our government.
The money printed is not recorded anywhere

The opposite is espoused by Modern Monetary Theory.

Cymek said:

The Rev Dodgson said:

transition said:

the present intervention involving massively pumping the economy would, if it continued past some point (or if that investment didn’t start efficiently looking for returns, and get them), start to cause inflation, because money is subject to scarcity also, should be if it represents value, and more conservative (economic liberal) government don’t like government capital overly competing with private capital, when not needed

the pay down rate of debt reflects the possibility it can be be paid down, so opens up the opportunity for further lending

Other than equating “economic liberal” with “conservative, I agree.

There are plenty of examples of countries with rampant inflation due to governments paying for things without sufficient income.

Could money be printed in secret, given to people to take overseas and used to purchase assets that are then owned by our government.
The money printed is not recorded anywhere

It doesn’t matter whether the money printing is public or secret. If the available money goes up, with no increase in the available goods and services, then prices and wages go up.

Cymek said:

captain_spalding said:

Cymek said:

Could money be printed in secret, given to people to take overseas and used to purchase assets that are then owned by our government.
The money printed is not recorded anywhere

I think that a little bell just went off in a Chinese government office somewhere, and the name ‘Cymek’ is now on some sort of list.

A good or bad list ?

All Chinese lists are bad.

The Rev Dodgson said:

Cymek said:

The Rev Dodgson said:

Other than equating “economic liberal” with “conservative, I agree.

There are plenty of examples of countries with rampant inflation due to governments paying for things without sufficient income.

Could money be printed in secret, given to people to take overseas and used to purchase assets that are then owned by our government.
The money printed is not recorded anywhere

It doesn’t matter whether the money printing is public or secret. If the available money goes up, with no increase in the available goods and services, then prices and wages go up.

Even if that money doesn’t officially exist, how does the seller know its not already existing recorded money.

Tamb said:

Cymek said:

The Rev Dodgson said:

Other than equating “economic liberal” with “conservative, I agree.

There are plenty of examples of countries with rampant inflation due to governments paying for things without sufficient income.

Could money be printed in secret, given to people to take overseas and used to purchase assets that are then owned by our government.
The money printed is not recorded anywhere

The opposite is espoused by Modern Monetary Theory.

“Modern Monetary Theory” is more like Revived Ancient Wishful Thinking Monetary Hypotheses, as far as I have seen.

Tamb said:

Cymek said:

captain_spalding said:

I think that a little bell just went off in a Chinese government office somewhere, and the name ‘Cymek’ is now on some sort of list.

A good or bad list ?

All Chinese lists are bad.

Yes I did think that

Cymek said:

The Rev Dodgson said:

Cymek said:

Could money be printed in secret, given to people to take overseas and used to purchase assets that are then owned by our government.
The money printed is not recorded anywhere

It doesn’t matter whether the money printing is public or secret. If the available money goes up, with no increase in the available goods and services, then prices and wages go up.

Even if that money doesn’t officially exist, how does the seller know its not already existing recorded money.

The seller doesn’t need to know (and in any case doesn’t check even if the records are available). The seller knows what people are willing to offer, and accepts the highest offer.

The Rev Dodgson said:

And another thing:

mollwollfumble said:

This thought is prompted by reading Heinlein’s thoughts about how economics works, and about the stupidity of trying to maintain a favourable trade balance.

If you want deep thoughts on economic theory, I’d recommend Douglas Adams, rather then Heinlein.

Which Douglas Adams?

Obviously not:
“ Monetary Units: none. In fact there are three freely convertible currencies in the Galaxy, but none of them count. The Altairian Dollar has recently collapsed, the Flainian Pobble Bead is only exchangeable for other Flainian Pobble Beads, and the Triganic Pu has its own very special problems. Its exchange rate of eight Ningis to one Pu is simple enough, but since a Ningi is a triangular rubber coin six thousand eight hundred miles along each side, no one has ever collected enough to own one Pu. Ningis are not negotiable currency, because the Galactibanks refuse to deal in fiddling small change. From this basic premise it is very simple to prove that the Galactibanks are also the product of a deranged imagination.”

mollwollfumble said:

The Rev Dodgson said:

And another thing:

mollwollfumble said:

This thought is prompted by reading Heinlein’s thoughts about how economics works, and about the stupidity of trying to maintain a favourable trade balance.

If you want deep thoughts on economic theory, I’d recommend Douglas Adams, rather then Heinlein.

Which Douglas Adams?

Obviously not:
“ Monetary Units: none. In fact there are three freely convertible currencies in the Galaxy, but none of them count. The Altairian Dollar has recently collapsed, the Flainian Pobble Bead is only exchangeable for other Flainian Pobble Beads, and the Triganic Pu has its own very special problems. Its exchange rate of eight Ningis to one Pu is simple enough, but since a Ningi is a triangular rubber coin six thousand eight hundred miles along each side, no one has ever collected enough to own one Pu. Ningis are not negotiable currency, because the Galactibanks refuse to deal in fiddling small change. From this basic premise it is very simple to prove that the Galactibanks are also the product of a deranged imagination.”

I wonder what would be galactic currency, technology would be wanted by the less advanced, would our culture be our currency if we wanted access to higher technology and knowledge.

mollwollfumble said:

The Rev Dodgson said:

And another thing:

mollwollfumble said:

This thought is prompted by reading Heinlein’s thoughts about how economics works, and about the stupidity of trying to maintain a favourable trade balance.

If you want deep thoughts on economic theory, I’d recommend Douglas Adams, rather then Heinlein.

Which Douglas Adams?

Obviously not:
“ Monetary Units: none. In fact there are three freely convertible currencies in the Galaxy, but none of them count. The Altairian Dollar has recently collapsed, the Flainian Pobble Bead is only exchangeable for other Flainian Pobble Beads, and the Triganic Pu has its own very special problems. Its exchange rate of eight Ningis to one Pu is simple enough, but since a Ningi is a triangular rubber coin six thousand eight hundred miles along each side, no one has ever collected enough to own one Pu. Ningis are not negotiable currency, because the Galactibanks refuse to deal in fiddling small change. From this basic premise it is very simple to prove that the Galactibanks are also the product of a deranged imagination.”

Why obviously not?

That is indeed the Douglas Adams to whom I referred.

Although that is only a small part of his commentary on monetary theory of course.

Cymek said:

I wonder what would be galactic currency, technology would be wanted by the less advanced, would our culture be our currency if we wanted access to higher technology and knowledge.

I used to think of money as a measure of man hours. But that’s not right because a lot of people put in a lot of work and don’t get paid for it at all.

Heinlein’s take is that currency is anything that is freely convertible into goods and services. He specifically excludes gold, because a lot of of places don’t accept payment in weight of gold.

mollwollfumble said:

Cymek said:

I wonder what would be galactic currency, technology would be wanted by the less advanced, would our culture be our currency if we wanted access to higher technology and knowledge.

I used to think of money as a measure of man hours. But that’s not right because a lot of people put in a lot of work and don’t get paid for it at all.

Heinlein’s take is that currency is anything that is freely convertible into goods and services. He specifically excludes gold, because a lot of of places don’t accept payment in weight of gold.

I used to think of money as a units of labour too. But it doesn’t work out that way. In the end the value of something is how much somebody is willing to pay for it.

mollwollfumble said:

Cymek said:

I wonder what would be galactic currency, technology would be wanted by the less advanced, would our culture be our currency if we wanted access to higher technology and knowledge.

I used to think of money as a measure of man hours. But that’s not right because a lot of people put in a lot of work and don’t get paid for it at all.

Heinlein’s take is that currency is anything that is freely convertible into goods and services. He specifically excludes gold, because a lot of of places don’t accept payment in weight of gold.

Gold and precious metals/gems could become far less valued say if you find an asteroid with thousands/million of tons of it.

Cymek said:

mollwollfumble said:

The Rev Dodgson said:

And another thing:

If you want deep thoughts on economic theory, I’d recommend Douglas Adams, rather then Heinlein.

Which Douglas Adams?

Obviously not:
“ Monetary Units: none. In fact there are three freely convertible currencies in the Galaxy, but none of them count. The Altairian Dollar has recently collapsed, the Flainian Pobble Bead is only exchangeable for other Flainian Pobble Beads, and the Triganic Pu has its own very special problems. Its exchange rate of eight Ningis to one Pu is simple enough, but since a Ningi is a triangular rubber coin six thousand eight hundred miles along each side, no one has ever collected enough to own one Pu. Ningis are not negotiable currency, because the Galactibanks refuse to deal in fiddling small change. From this basic premise it is very simple to prove that the Galactibanks are also the product of a deranged imagination.”

I wonder what would be galactic currency, technology would be wanted by the less advanced, would our culture be our currency if we wanted access to higher technology and knowledge.

As we are made of meat, probably us.

Cymek said:

mollwollfumble said:

Cymek said:

I wonder what would be galactic currency, technology would be wanted by the less advanced, would our culture be our currency if we wanted access to higher technology and knowledge.

I used to think of money as a measure of man hours. But that’s not right because a lot of people put in a lot of work and don’t get paid for it at all.

Heinlein’s take is that currency is anything that is freely convertible into goods and services. He specifically excludes gold, because a lot of of places don’t accept payment in weight of gold.

Gold and precious metals/gems could become far less valued say if you find an asteroid with thousands/million of tons of it.

The cost of retrieving the gold would literally be astronomical.

But then again, if a solid gold asteroid got to Earth by its own power, then gold would definitely then be worthless. (As would everything)

Dark Orange said:

Cymek said:

mollwollfumble said:

I used to think of money as a measure of man hours. But that’s not right because a lot of people put in a lot of work and don’t get paid for it at all.

Heinlein’s take is that currency is anything that is freely convertible into goods and services. He specifically excludes gold, because a lot of of places don’t accept payment in weight of gold.

Gold and precious metals/gems could become far less valued say if you find an asteroid with thousands/million of tons of it.

The cost of retrieving the gold would literally be astronomical.

But then again, if a solid gold asteroid got to Earth by its own power, then gold would definitely then be worthless. (As would everything)

Astronomical, apt. ;)

party_pants said:

mollwollfumble said:

Cymek said:

I wonder what would be galactic currency, technology would be wanted by the less advanced, would our culture be our currency if we wanted access to higher technology and knowledge.

I used to think of money as a measure of man hours. But that’s not right because a lot of people put in a lot of work and don’t get paid for it at all.

Heinlein’s take is that currency is anything that is freely convertible into goods and services. He specifically excludes gold, because a lot of of places don’t accept payment in weight of gold.

I used to think of money as a units of labour too. But it doesn’t work out that way. In the end the value of something is how much somebody is willing to pay for it.

Indeed. And even though our currency is no longer based upon gold, gold is still the primary global currency. When things start looking grim, those with “Money” exchange it for gold.

Dark Orange said:

party_pants said:

mollwollfumble said:

I used to think of money as a measure of man hours. But that’s not right because a lot of people put in a lot of work and don’t get paid for it at all.

Heinlein’s take is that currency is anything that is freely convertible into goods and services. He specifically excludes gold, because a lot of of places don’t accept payment in weight of gold.

I used to think of money as a units of labour too. But it doesn’t work out that way. In the end the value of something is how much somebody is willing to pay for it.

Indeed. And even though our currency is no longer based upon gold, gold is still the primary global currency. When things start looking grim, those with “Money” exchange it for gold.

I am not sure if that still is correct. Certainly some people do this, but I understand that about 3/4 of all the gold mined today ends up as bling. Plus there is a sizeable proportion that ends up in computers and electronics. Leaving the bullion market a bit of a minority niche market.

party_pants said:

Dark Orange said:

party_pants said:

I used to think of money as a units of labour too. But it doesn’t work out that way. In the end the value of something is how much somebody is willing to pay for it.

Indeed. And even though our currency is no longer based upon gold, gold is still the primary global currency. When things start looking grim, those with “Money” exchange it for gold.

I am not sure if that still is correct. Certainly some people do this, but I understand that about 3/4 of all the gold mined today ends up as bling. Plus there is a sizeable proportion that ends up in computers and electronics. Leaving the bullion market a bit of a minority niche market.

Gold money and gold bling are two highly overlapping sets.

transition said:

the present intervention involving massively pumping the economy would, if it continued past some point (or if that investment didn’t start efficiently looking for returns, and get them), start to cause inflation, because money is subject to scarcity also, should be if it represents value, and more conservative (economic liberal) government don’t like government capital overly competing with private capital, when not needed

the pay down rate of debt reflects the possibility it can be be paid down, so opens up the opportunity for further lending

Agree. But let me first use Heinlein’s words, and then dumb it down into mollwollfumble’s words. Heinlein actually proves this, by playing a game not dissimilar to business simulation video games. The game includes depreciation, producers/consumers, entrepreneurs, banks, bank interest, government, dependants etc. and actual fake money is exchanged in simulation of what happens in a real country.

“A production cycle creates exactly enough purchasing power for its consumption cycle. If any part of this potential purchasing is not used for consumption but instead is invested into new production, it appears as a cost charge in the new items of production, before it re-appears as new purchasing power. Therefore, it causes a net loss of purchasing power in the earlier cycle. Therefore, an equal amount of new money is required by the country”.

“This money must be new issue, not borrowed from the backs, for there is no way to pay it back. To tax the country as a whole is to destroy necessary purchasing power at a later date.”

He cites personal bank savings as “investment in new production”, and the equivalent of GST as “tax the country as a whole”.

In mollwollfumble’s terms, if an economy is to grow (investment in new production) then the government must not have a balanced budget (new money is required by the country).