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If the Gov't cuts costs, who gets the money?
- Thread starter nutmeg
- Start date
M
morganist
nobody, In fact it will decrease private savings
Government Deficits adds to net private savings
Government surpluses decreases net private savings
http://articles.businessinsider.com...993505_1_sector-budget-surplus-budget-deficit
Government Deficits adds to net private savings
Government surpluses decreases net private savings
http://articles.businessinsider.com...993505_1_sector-budget-surplus-budget-deficit
Quote from morganist:
Most of it will go to paying the deficit. So whoever has bought treasury bonds in theory.
treasury bonds get paid off by the fed debiting and crediting accounts at the fed. It is not taken from anywhere
According to conventional wisdom, the Federal government spends taxpayers' money. In reality it creates all the money it spends, and recaptures it with taxes and the sale of bonds. In the long run, however, it must spend at least as much as it recaptures. Otherwise it would drain the monetary base backing credit money, which is the main part of money supply on which the economy runs. In order to influence the amount of credit money that banks issue, the government must control the cost to banks of acquiring base money.