Reddit mentions of The 7 Deadly Innocent Frauds of Economic Policy

Its not my theory. Its how the financial system works.

So are you now suggesting that the private commercial banking system finances the US government with dollars? So the US government is completely reliant on banks like JP Morgan? LOL! Your logic may have applied 100 years+ ago. Unfortunately most economic textbooks still think we are on a fixed-rate exchange system.

Modern economics since Adam Smith came about during a time when the monetary system was on a gold standard. This means 90-95% of economic monetary pseudo-theory simply does not apply to our monetary system.

Economic textbooks treat the dollar as if it were a scarce commodity ie continuation of gold. This is why you can't understand what I am saying.

The government issues bonds primarily as a result of what went on during the previous 200years+. As I said a relic of the gold standard. A government bond is merely a savings account, its dollars with a term and a coupon. They decide the terms. Its basically a 'risk free asset'. The government never has to issue bonds to finance itself in a fiat-credit system. It can instruct its central bank to Credit accounts for purchases of good/services that it needs to function. As long as someone is willing to accept dollars for something, the government can pay.

The government is the largest buyer of goods/services in the economy.

Government bonds simply remove dollars created by previous deficits out of the system and replace them with dollars + coupon.

There is no such thing as a 'money supply' in our monetary system. Just entries of debts/credits on accounting ledgers. The value of the credit depends on the borrowers ability to repay the debt. ie. labor producing a good/service to satisfy the debt. Labor power backs money in our system.

The banks do not create money because when they issue loans there is a corresponding liability also created. This is different with the government.

When the government deficit spends it creates new dollars that enter the economy the same way when the private sector 'deficit spends' ie borrows money. Its the same thing, the difference is the government never has to repay back its own debt(vertical money) while the private sector has to repay debts(horizontal money).

This is the crucial difference. When the private sector deficit spends ie takes on huge loans, there is almost always a crisis around the corner because the value of the loans exceeds repayment ability primarily due to the 'magic of compound interest'. When the government deficit spends its own currency to make investments it can never be unable to repay the debt.

Here start reading:

https://www.amazon.com/Deadly-Innocent-Frauds-Economic-Policy/dp/0692009590