The debt hawks are to economics as the creationists are to biology. They, who do not understand monetary sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.
In the OMG! category, here are excerpts from an article in the Washington Post. It was written by Sheila C. Bair, the Chairman of the FDIC.
Will the next fiscal crisis start in Washington?
“Even as work continues to repair our financial infrastructure and get the economy moving again, we need urgent action to forestall the next financial crisis. I fear that one will start in Washington. Total federal debt has doubled in the past seven years, to almost $14 trillion. That’s more than $100,000 for every American household.”
This is the old debt-hawk, debt-clock mantra in which federal debt falsely is said to be owed by the people living in America. It’s as though you and I suddenly have become the government. The mechanism by which we people, who never borrowed the money, now owe the federal debt, never is explained.
“This explosive growth in federal borrowing is a result of not just the financial crisis but also government unwillingness over many years to make the hard choices necessary to rein in our long-term structural deficit.”
Total ignorance of Monetary Sovereignty is demonstrated here.
“Retiring baby boomers, who will live longer on average than any previous generation, will have a major impact on government spending. This year, the combined expenditures on Social Security, Medicare and Medicaid are projected to account for 45 percent of primary federal spending, up from 27 percent in 1975. The Congressional Budget Office projects that annual entitlement spending could triple in real terms by 2035, to $4.5 trillion in today’s dollars. Defense spending is similarly unsustainable . . . “
The typical “debt is unsustainable” nonsense, with as always, no factual support for why federal spending is unsustainable.
“Unless something is done, federal debt held by the public could rise from a level equal to 62 percent of gross domestic product this year to 185 percent in 2035. Eventually, this relentless federal borrowing will directly threaten our financial stability by undermining the confidence that investors have in U.S. government obligations.”
Er, ah, excuse me, Madam Chairman, but not only is the debt/GDP ratio completely meaningless, but Japan’s debt/GDP ratio is over 200% and I haven’t noticed the crisis you describe. Again, no substantiation is given – just wild-ass predictions having no basis in reality.
“. . . while we enjoy a uniquely favored status today – investors still view U.S. Treasury securities as a haven during crises – events in Greece and Ireland should serve as a warning.”
Er, ah, excuse me again, Madam Chairman, but Greece and Ireland are monetarily non-sovereign, similar to Illinois, Chicago, you and me. Comparing the U.S. to monetarily non-sovereign nations is ignorant at best and deceiving at worst.
“Recent proposals by the co-chairs of the National Commission on Fiscal Responsibility and Reform and by the Bipartisan Policy Center represent credible first steps toward recognizing and addressing the nation’s fiscal problem. Both propose to reduce and cap discretionary spending, enact comprehensive tax reform, reduce mandatory spending on health care and other programs, and ensure the long-term solvency of Social Security.
“Fixing these problems will require a bipartisan national commitment to a comprehensive package of spending cuts and tax increases over many years. Most of the needed changes will be unpopular, and they are likely to affect every interest group in some way. We will want to phase in these changes as the economy continues to recover from the effects of the financial crisis.”
In short, she wants to enact a package similar to Ireland’s, which will impoverish America for decades to come.
That even the Chairman of the FDIC writes this tripe is ample evidence of the urgent need to continue contacting our Congressional representatives and the media and the mainstream economists, again and again, to educate them regarding Monetary Sovereignty. The truth will set us free.
Rodger Malcolm Mitchell
No nation can tax itself into prosperity. Those who say the stimulus “didn’t work” remind me of the guy whose house is on fire. A neighbor runs with a garden hose and starts spraying, but the fire continues. The neighbor wants to call the fire department, which would bring the big hoses, but the guy says, “Don’t call. As you can see, water doesn’t put out fires.”