“I mean, the government definitely prints money, and it definitely lends that money, which is why the government definitely prints money, and then it lends that money by, uh, by selling bonds.” Words that launched seemingly thousands of Tweets. The individual behind the previous sentence, or stream of non-consciousness, is no less than Jared Bernstein, Chairman of President Biden’s Council of Economic Advisers.
That Bernstein mistakes what money is amounts to a statement of the obvious, but what’s equally obvious is that the vast majority of Bernstein’s critics don’t understand money themselves. Still, we will start with Bernstein. He’s putting the cart before the horse. He ignores that no one buys, sells, lends, or borrows with money. As I stress over and over in my book The Money Confusion, underlying all money movements is the movement of actual goods, services and labor.
At which point government doesn’t lend or borrow money as much as our federal government has taxable access to the production of the most productive people on earth, hence its ability to borrow and lend in enormous amounts. If the “government” in Bernstein’s rendering didn’t have legal title to the production of the American people, the money notion that the CEA head mangled would be moot.
Read the entire article at Forbes.
