Comments by "boz" (@BOZ_11) on "Why Germany Will (Probably) Ditch the Debt Brake" video.

you need a fiscal deficit, since that's the money we use to pay off bank credit. Anyone who doesnt understand this, understands nothing of this topic
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you need a fiscal deficit, since that's the money we use to pay off bank credit. Anyone who doesnt understand this, understands nothing of this topic
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@NotThereJustGone you're conflating different things. If the national income becomes too lopsided (greater percentage into fewer hands, i.e. more billionaires), then it doesn't matter what you do, consumer spending will decline because their share of the national income shrank. Lower incomes also mean lower credit lines. As for my original comment, bank credit is created out of thin air, but only the principal is created, not the interest to pay it off. That's where the fiscal deficits come in; a fiscal "deficit" (so-called) is actually a private sector surplus (more money for you and i); this is basic double entry bookkeeping. The only real limit to bank credit creation are the CET1 capital requirements introduced after the bank bailouts (fractional reserve ratio requirement is now dead, and has been for a decade and a half)
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@NotThereJustGone "But if your logic is correct, then there would be no examples of increasing GDP or improving economic conditions during times of government surpluses" That's right. 99% of the time, when we have a recession, we ALSO have a fiscal surplus or a wafer thin deficit. The only exception in the last 50 years being COVID (since the deficit went into the national vaccine plan and produced no wealth). "My point is simply that government deficits are not a prerequisite to bank credit repayment or economic growth" You've made a baseless assertion, not a point. When bank credit is paid off, it is destroyed, and takes with it the M1/deficit spending that was used to pay off the interest. The only way to remove the necessity for deficits is to either do away with the concept of credit creation (forcing the loan of actual funds), or to create the interest WITH the principal, somehow
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@NotThereJustGone "Is your point that we need government deficit spending to increase money supply so that bank credit can be repaid?" Yes. Again, bank credit is created out of thin air and destroyed on repayment; only the principal is created, not the interest, causing a Ponzi situation unless fiscal deficits exit to meet it.
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@NotThereJustGone "The bonds governments issue to deficit spend have to be purchased by someone—the money doesn't come from the ether." hah, sorry, but where the FUNK did you think fiscal spending came from if Govt bonds DO come from the ether? It's all just created out of thin air, bonds, money, all of it; it's all from the bloody ether. Moreover, the Govt needn't issue a single treasury security to fiscally spend. They could cease all bond issuance tomorrow and the treasury can still service those money bills coming out of parliament, as well as every item on the Chancellor's budget. The Govt could ramp up fiscal deficits to Mars and back TOMORROW; we'd pay for it with inflation, but there's no mechanistic impediment. Get that through your head.
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