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Remind us what happened in Zimbabwe?
Yawn. It's like economic ignorance bingo. Do a search on this website. Have a look on twitter. Read some books about how money works. We've gone over this ad infinitum and repeatedly people come back and say 'what about Zimbabwe?'.
Ok so a sovereign nation can't technically become bankrupt. It can however default on repayments which stops everyone else lending to you. If you cant service your debt yuo can always print your own money but then your currency tanks whuch means no one else will take it. You can print as much (worthless) money as you want but it wont buy in things from other countries like emergy, fuel, food, clothes, medicine, all things we can't produce enough of internally.
So this mistaken belief we can pretty much do as we please financially is up there with the far right and far left thinking we can do what we want now we've left Europe.
I'm sure one of the magic money tree brigade will helpfully explain why I'm so wrong in a clear unpatronising post.🤔
So this mistaken belief we can pretty much do as we please financially
That's not what's being said. They are saying that whilst yes, we can print money, we need to tax to avoid inflation. But, tax or interest are not the only inflationary/deflationary pressures. Inflation is high now because of external pressures, so cutting taxes would have increased inflation further.
Am I right?
What is being said is "countries with their own currency can't go bankrupt". Not "shouldn't go bankrupt if they manage their economies in a particular way" but can't because they can print money to resolve the issue (however unwisely the economy has been managed).
To understand Zimbabwe you need to look at the exigencies of the IMF and ther World Bank. Anyway, UK inflation has external sources, aggregate demand is falling there's no reason to think that tax cuts would be inflationary.
We've now migrated away from the thread title into considerations of orthodox and heterodox economic and monetary theory.
That's one way to enliven an otherwise dull Friday afternoon.
What is being said is “countries with their own currency can’t go bankrupt”. Not “shouldn’t go bankrupt if they manage their economies in a particular way” but can’t because they can print money to resolve the issue (however unwisely the economy has been managed).
Nicely put. The nuance has been missing in many of the posts suggesting we "can't" go bankrupt.
can’t because they can print money to resolve the issue
Until such point that no one is willing to accept your currency as payment, so it becomes necessary to borrow in other currencies to finance your imports and then you can.
Inflation is high now because of external pressures, so cutting taxes would have increased inflation further.
Am I right?
Yes, because the current situation is caused by "shortage" of energy supply like oil which is the basic commodity.
Recently Biden administration was trying to get Saudi to increase production but MBS rejected and Biden admin threatened the Saudis, which IMO will backfire like the sanctions. Biden admin seems to ignore the fact if it backfires then 70% of the oil production will be controlled by others. Even if Murica increases its oil production it is but a drop in the water, hence they Biden admin is trying to court Venezuela to increase production but that too is a drop in the water.
Oh yes country can print as much money as they wish but it will be worthless as the value is so low other countries will not accept them.
@veganrider - feel free to enlighten us or are you just going to continue to spout shite in your unconvincing trolling style?