The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
People laughed about T.V. commercials that began, “I’m not a doctor, but I play one on television.” The viewer was expected to believe the actor’s medical expertise because he plays a doctor. Well we have a corollary in the media. It’s “I’m not an economist though I pontificate about economics in the newspapers,” and the latest to join that revered group is Steve Chapman who is “a member of the Tribune’s editorial board and blogs at http://www.chicagotribune.com/news/opinion/chapman/
For those of you who are new to my site, Monetary Sovereignty is the foundation of modern economics, just as arithmetic is the foundation of mathematics. So when someone doesn’t understand Monetary Sovereignty, you can be sure he does not know what he’s talking about, when it comes to economics.
Here are a few quotes from Steve Chapman’s 4/7/11 column titled, “Reforming Medicare for the Real world.”
Critics (of Budget Committee Chairman Paul Ryan’s plan to overhaul Medicare) say its not as sweet as the status quo. But the status quo is too good to last. Mark Pauly, a health care economist at the University of Pennsylvania’s Wharton School, says of Ryan’s plan, “It’s not better than what we have now, but what we have now is not something we can have 20 years from now.”
Let me translate that for you. The plan is worse than what we have now. Americans will have less health care insurance, leading to poorer health care.
Why not? Because it will cost too much for the nation to afford. . . Absent substantial changes, Pauly has calculated payroll taxes would have to triple to pay for all the promised benefits
Here’s where Mr. Chapman’s (and Professor Pauly’s) cluelessness rears its ugly head. Monetary Sovereignty shows that federal spending is not constrained by federal taxes. In fact, FICA could be completely eliminated, while benefits were tripled, and this would not affect by even one penny the federal government’s ability to support Medicare. In short, federal taxes do not pay for federal spending.
Yes, state taxes pay for state spending, and county taxes pay for county spending, and city taxes pay for city spending — but states, counties and cities are not Monetarily Sovereign. The federal government is. This is a fact that Mr. Chapman, along with Congress, the President and most (thankfully, not all) economics professors don’t understand.
I have news for people old enough to be thinking about retirement: Your children may love you, but not enough to be taxed into poverty. Ryan’s detractors pretend we can go on enjoying the status quo indefinitely. But it’s only a matter of time before we hit a fiscal wall, hard.
Translation: Things may not be so great now, but they are going to get a whole lot worse for you. Why? Because your leaders and we columnists are too ignorant and/or lazy to take a few minutes to understand at least the basics of Monetary Sovereignty.
And what is that “fiscal wall” Mr. Chapman mentions? No one knows, least of all him. At one time, the debt-hawks claimed if we ever passed a debt/GDP ratio of 60%, we would be insolvent. We passed that, so the figure hastily was changed to 100%. We’re about to pass that, but we’re nothing compared to Japan, which already has passed 200% and is nowhere near any mythical “fiscal wall.”
As the Congressional Budget Office notes, “Most elderly people would pay more for their health care.” That’s not a terribly enticing prospect. But we might as well stop pretending there’s any alternative. . . The reason people will dislike what Ryan offers is not that he’s needlessly cruel. It’s that his plan confronts reality, and reality bites.
So there you have it folks. The debt-hawks promise you a bleak future, and there’s nothing you can do about it, except to watch America spiral down to 3rd world status. The sky is falling, and your life soon will be crap, and your children’s lives will be worse crap, so live with it.
Uh, well there is one thing: You can learn Monetary Sovereignty, in which case you would discover that the future doesn’t need to bite. It can be a great one, and all it takes is a bit of brains.
You might drop Steve Chapman a note at firstname.lastname@example.org, and ask him why he refuses to learn the basics of economics (i.e., Monetary Sovereignty) but still feels qualified to write about economics.
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetarily Sovereign, and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.
Remember that the next time you’re tempted to ask a dopey teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it screwed up the economy.”