The debt hawks are to economics as the creationists are to biology. Those, 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.
Intuition and symbolism are powerful learning devices. Because knowing all the facts surrounding any situation often is impossible, humans have developed intuition and symbolism, in short, metaphor – a quick way to learn.
The atom is a miniature solar system in which the nucleus is the sun and the electrons are the planets. That metaphor helps us to visualize the atom, except for one small detail. The atom is nothing like the solar system, the nucleus is nothing like the sun, the electrons are nothing like planets, and the gravitational force holding the planets in place is nothing like the forces holding the electrons and the nucleus together.
Yet the power of that metaphor is so great, if any of us were asked to visualize the atom, we would imagine something that looks like a solar system. Metaphor precludes our need to understand quantum mechanics.
Metaphorical respect for America’s flag is illogical. As a nation, America may deserve respect, and more accurately, many of its people may deserve respect, but the flag is nothing more than printed cloth or paper, neither of which deserves respect. Yet, so powerful is this metaphor, some wish to jail people who burn, tear or step on that piece of cloth. This vast country of 300+ million people can be visualized as a printed piece of cloth, which is why liars, frauds and cheats are the ones most likely to “wrap themselves in the flag,” a metaphor for claiming love of country more than the people in it.
Religion is a metaphor for morality, to the degree it would be a brave politician indeed, who would admit to not worshiping God. Such an admission would make him/her an immoral person, despite the factual lack of relationship between piousness and morality.
As a species, humans have come to treat many metaphors (and their cousins, similes and analogies) as fact, perhaps influenced by our complex language. Nouns themselves are metaphors for physical objects. Our reliance on metaphors is our strength and our weakness, for metaphors assist our creative ability to visualize and to communicate, but this visualization can be deceptive.
Among the public, and sadly also among many professors and the press, personal finances are used as a metaphor for federal finances, though there is scant similarity between the two. Personal debt is unlike federal debt; personal spending is unlike federal spending and personal borrowing is unlike federal borrowing. To make matters more confusing, personal debt, spending and borrowing are very much like state, county and city debt, spending and borrowing. There are governments and then there are governments, that is, monetarily non-sovereign governments and Monetarily Sovereign governments, and the three “P’s, professor/ press/ politician triumvirate does not understand the difference. As a result, neither does the forth “P,” the public.
The press loves to say the federal debt is a “ticking time bomb,” a colorful metaphor for something that soon will explode, suddenly and disastrously. Though there is nothing about the federal debt that can explode suddenly or otherwise, the metaphor effectively frightens people who properly are afraid of ticking time bombs.
Then there’s “profit.” The government lent Chrysler money and could make a profit on the deal. Profit is good, right? Except, you should ask yourself, what is the effect of profit on a government that has the unlimited ability to create dollars? I’ll tell you the effect. Federal profit removes money from the economy. When the government profits, we all lose. Everyone cheered when General Motors paid much of its debt to the federal government, early yet. Unfortunately, that repayment came out of the economy – out of “your pocket,” to use the metaphor. GM could have used the money to pay salaries and for growth. Now that money is gone.
Speaking of your pocket, the press also loves to say that any federal spending uses “taxpayers’ money.” But, tax collections have no relationship to federal spending. Why would they? Think about it; the federal government creates money at will. What possible use could it have for your tax money? The money you send to Washington is not stored in some vault, nor is it saved in a spending account. That tax money simply disappears at the stroke of a computer key, just as the federal government creates new money, also at the stroke of a computer key. Everything the federal government does with dollars is effected by that computer key.
Consider “surplus, a very good word. But, a federal surplus is an economic deficit. And though the government doesn’t need the money, the economy does. “Save” is another good word and “waste” is a bad word. Yet when the federal government “saves” money, less money goes into the economy, and when the federal government “wastes” money, more money goes into the economy. The infamous Alaskan “bridge to nowhere” would have been far more beneficial to the economy than any spending cut.
Public “servant” is a metaphor for a politician, even when he/she votes against your interests. Some servant.
Those are bad metaphors. There are good metaphors. Warren Mosler uses a good metaphor when he compares federal dollar creation with points on a scoreboard. There are many similarities between the two, particularly the lack of limits and cost. The scoreboard can produce unlimited points at no cost; the government can produce unlimited dollars at no cost. The scoreboard doesn’t need to borrow points nor to levy a tax to obtain points. The federal government doesn’t need to borrow dollars nor to levy a tax to obtain dollars. The scoreboard gives points to each team, and never asks for them to be returned. Why the federal government lends dollars to corporations, then asks for the dollars back, is a mystery.
The right wing engages a bad metaphor in using the word “freedom,” when it really means “anarchy.” In railing against “big” government (whatever “big” means), the right wing expresses the desire to be free from their need to obey laws. Ironically, these same people are very much in favor of laws when the laws apply to other people, for instance undocumented immigrants. Here, the right supports “law and order,” a metaphor for a harsh interpretation and implementation of the law, and in the case of undocumented immigrants, wishes to make the law even harsher and more restrictive.
Unfortunately for immigrants, they are mere humans and not guns. Were they guns, the right would support weaker restrictive laws.
“Socialism” is a currently epithetic metaphor for federal spending, though true socialism requires government ownership, not just government support, else all government spending could be considered socialist. So those opposed to federal support of universal health care insurance describe it as “socialism.” One wonders whether they similarly object to receiving their Social Security and Medicare payments, which are an appropriate model for universal health care.
When you hear “fiscal responsibility,” “budget busting” or “financial prudence,” ask yourself, would the described situation apply equally to people and to the federal government? If the answer is, “Yes,” the speaker probably doesn’t know what he is talking about. The federal government is different from you and me. What applies to one seldom applies to the other.
Metaphors are not reality, though reality can be twisted by metaphors. Ours has been.
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth.