Levy Economics

We argue that unlike individual U.S. states and members of currency unions, the U.S. federal government can run deficits indefinitely without becoming “insolvent” in any sense or being forced to default. The government has this ability because the United States uses paper money that is not convertible to a fixed amount of gold or foreign currency. Multiplier Effect

If we can avoid default then why are we operating the Congressional budget on the edge of shutdown?

Answer: Yes, the little city around Washington DC will not go into default, unfortunately the rest of government will. The printed money they want does not make it to the periphery, it gets replaced with barter and Bitcoins.

Many economists have that problem in their theory, the Federal government is not a fixed point. We have central banking only to the extent that the government economy can adapt.