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.
A reader of this blog asked, “What would happen if the U.S. sold its gold reserves?” It was such a timely question, I’d like to share the answer with everyone:
If the government sold its gold reserves, the price of gold would decline (supply and demand), and the total supply of dollars would decline (all money sent to the government is destroyed), which would increase the value of dollars (i.e., a deflation) probably leading to a recession or a depression.
So if anyone suggests the U.S. sell its gold to “pay off the debt,” (which is ridiculous in a Monetarily Sovereign nation), you can tell them what this foolish act would cause.
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 Monetary 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 my future.”