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Posted by Winslow R. (69.232.64.180) on 16:07:37 04/05/05
In Reply to: Re: Malpass' WSJ comments re personal savings posted by warren mosler
: ANOTHER ANALOGY MAY BE A CARD GAME WHERE THE HOUSE TAKES 3% OF THE TOP EACH ROUND, AND THE PLAYERS BORROW MORE AND MORE TO KEEP PLAYING
I like the example, but in your example the "HOUSE" is the government which takes the "CUT".
The "HOUSE" may be government because they set the rules and are therefore responsible, but those that take the "CUT" are really SAVERS of financial assets.
Banks and nonbanks allow the "PLAYERS" to keep playing by lending.
The government, so far has been minimally "responsible", by keeping the "PLAYERS" credit worthy by providing them with sufficient income to pay SOME of the interest on their debts. Though the principal and most of the interest is never paid back, the system can continue to function.
Has anyone calculated the break point? The point where income from government is insufficient to cover a sufficient amount of the interest payment that lenders quit lending?
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