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.
Here is one of the more amazing discussions in which I ever have participated. The well-known Barry Rithholz’s blog contained the article by David StockmanI referred to earlier. On Barry’s blog, I quoted Stockman, “. . .if we were serious about deficit reduction, we would be cutting spending EVERYWHERE and RAISING TAXES on not only the top 2%, but the upper and middle classes as well, ” then I wrote,
“1. There is no reason to reduce the deficit. In fact, reduced deficit growth has led to every depression and nearly all recessions. A growing economy requires a growing supply of money. The current myth that the deficit must be reduced is based on the false belief that federal budgeting is like personal budgeting, where debt is a burden.
2. In a Monetarily Sovereign government, there is zero relationship between taxes and spending. If taxes were reduced to $0, or raised to $100 trillion, neither would affect the federal government’s ability to spend. Federal taxes do not fund federal spending.”
In a subsequent comment, I asked, “Why do we need to reduce the federal deficit (or debt)? Any fact-based answers?” and a person called “KJ Foehr” responded:
I agree partially with your premise. The math does appear to indicate current deficits and debt are unsustainable, especially if (when) interest rates rise again. Deficits ARE good (stimulative) now, but I but do believe current levels are bad later (unsustainable long-term).
The problem is many ideologues and their drones do not see the good in it, and therefore, demand that it be reduced NOW. Some apparently actually believe significant cuts in government spending now will help reduce employment and improve the economy! What we have is a crisis of ignorance, not a crisis of government spending.
I responded to several subsequent comments with: “All of the solutions offered on this post involve either cutting benefits or raising taxes, either of which will hurt people and hurt the economy. Strangely, no one wishes to entertain the opposing view, as though hurting people and the economy were a good thing! My complaint about debt hawks is they reject the opposing view, without offering evidence to support their own view.”
The person called KJ Foehr then did an about-face and said,
“I disagree completely with this idea that neither borrowing nor taxes are necessary. If that were the case, then why doesn’t the government just eliminate taxes completely? Or is the sole purpose of taxes to reduce aggregate demand? How ridiculous. Please don’t respond; I don’t have time for wingnut theories and won’t be reading any more of your posts.”
So his “evidence” consists of “why doesn’t the government . . . ” as though the government always does things right. He finishes essentially by saying he doesn’t want to read anything that answers his questions or disagrees with his opinions.
Then someone called “Christopher” said,
“There is no reason to reduce the deficit. Blahbittyblahblahblahblah….. LOLOL.
In essence he seemed to be saying, “My eyes and ears are closed to anything other than what I already believe.” And finally, Barry said, “Dude, you really need to get your own blog.” rather than answering the simple question I posed, “Why do we need to reduce the deficit or debt?”
I wrote, “Barry is an intelligent man, who claims to understand MMT, but who never addresses the fundamentals of MMT. I gave reasons why the deficit and debt should not be reduced, but if you would like to see a more complete analysis, go to SUMMARY. For those who wish to learn, 10 minutes of reading can be worthwhile. Barry, you may wish to look at that page.”
Then, someone called “freemarketeer” asked,
Barry, curious as to what your take on Modern Monetary Theory is. I’ve been reading up on it recently, and it appears to describe our monetary system better than any other theory. It’s certainly bizarre from a traditional econ standpoint, but I’ve always thought traditional econ theories were stupid, full of half-baked behavioral assumptions.
Whatever your opinion of MMT, why would we raise taxes now? The economy isn’t exactly rip-roaring (despite record corporate earnings). I’m still skeptical we’ll keep it going as inflation continues working through the value chain.
Seems like a reasonable request, which I knew Barry would not honor, and I said so, as follows: “As for getting Barry’s opinion on MMT, good luck. He has three standard responses to MMT facts:
“You sovereign guys are dreadful bores”
“For the record, I completely understand your analysis — its just that I think its shite.” (his word)
And his absolute favorite, which he repeats endlessly, “Rodger: To the man whose only tool is a hammer, everything soon begins to look like a nail . . .
Once, when I asked why he felt the deficit and debt were too high, his response was “Telling the public that the federal debt and deficit are too high ? You got the wrong guy, bub.” Huh?? Isn’t that exactly what he is saying?
Anyway at one time, and with Barry’s agreement, I sent him an Email outlining 10 points from Monetary Sovereignty, as a discussion starter. Barry never responded. If you want to see it, I’ll Email it to you. Getting Barry to discuss facts is like getting Rand Paul to discuss . . . well, facts.”
And here is the most amazing response I ever have received from a nationally known columnist:
Barry Ritholtz Says: April 25th, 2011 at 10:21 am
freemarketeer: I have no opinion.
ROGER: Why do you think it is my responsibility to address subjects of your choosing? I get 1000 emails a day asking about this or that, and you make it a big deal that I dont stop doing what I am doing to answer YOR QUESTIONS IMMEDIATELY. If I dont respond to your email, its likely because its a subject that I am not interested in.
Here’s a newsflash: I write about what interest me — and to be blunt, I dont give a flying fuck about what interests you. That is why you have a blog — to write about your passions. I have a blog to write about mine.
Barry was screaming at me, while he redacted my earlier response. It probably was too embarrassing for him. I responded with a note that undoubtedly will not be published: “Gee, Barry, I offered to send you the bullet points and you agreed. If I had known you weren’t interested, I would have saved myself the work. The things of interest to MMT are exactly the things you write about. The fact that MMT (or Monetary Sovereignty) disagrees with some of your points is exactly why you should print them and respond to them with facts, not swearing.
That’s what makes a discussion worthwhile, not just having a bunch of people all repeating the same mantra: “Debt should be reduced; deficit should be reduced.” There are some good, solid reasons the deficit and debt should be increased. Why not discuss them?”
Oops, I just checked his blog and yep, he cut out this last comment. He seems loath to publish anything that disagrees with his views. But I have a prediction: When the world begins to accept Monetary Sovereignty or Modern Monetary Theory, Barry will say he knew it all the time.
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
Think about it: “ignorance, unfamiliarity with empirical data, lack of respect and most of all, civility.” This is what unrestrained ego can do to a man.
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.”