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.
Paul Ryan, the Tea (formerly Republican) Party hero, was interviewed in the May, 2011 Money Magazine. Here are a few excerpts (Money Magazine comments in red) :
Ryan is as free market as it gets – he’s cited Ayn Rand as an influence
For those of you not familiar with Ayn Rand, she believed in Objectivism. It could be known as the Gordon Gekko, “Greed is good” school of thought, in which the powerful receive all and the weak receive nothing. One of her followers was Alan Greenspan. Need I say more?
Should we be focused on the deficit when we’re still recovering from recession? Yes. There’s a neo-Keynesian school of thought that says to run deficts when you have a bad economy. But chronic, deficit spending, plus the huge debt, adds to more uncertainty to the economy and means higher taxes around the corner.
“Around the corner” is one of many debt-hawk phrases, along with “ticking time bomb” and “unsustainable,” in which no specifics are given, thus avoiding the Harold Camping, “world-is-ending” embarrassment. Ryan fails to mention there is no historical relationship between federal taxes and federal deficits.
Think about it: Without actually committing to anything specific, he seems to support deficits to grow the economy, when the economy is bad. So why wouldn’t one wish to grow the economy, when it’s good?
Businesses are holding back from hiring and investing because of uncertainty created by government.
No, businesses are holding back because profits don’t warrant expansion. Why? Insufficient federal spending has prevented recovery from the recession.
You’ve said the deficits could “crash” the economy. How so? The Congressional Budget Office (CBO) has a long-term forecasting model, and their computers can’t conceive of the economy continuing with the ongoing deficit. Their projection is, we are on an unsustainable path. We see this crisis coming. We can’t duck the responsibility of tackling it now.
It was a great question, which he never answered. No surprise there. No debt-hawk ever has answered that question. Federal money creation won’t crash the economy; lack of money creation will. And oh yes, there’s that weasel word “unsustainable,” again.
Are tax hikes one part of the answer? No. Raising revenue just takes pressure off the real cause of our problem, which is spending.
Double talk. Financially, cutting spending = raising taxes. Either way, less money enters the economy. To say that raising taxes is economically bad but cutting spending is economically good, makes no sense. Classic gobbledegook.
Does that mean future retirees would be spending more of their savings on health care? Yes, you have to do that. Medicare spending will grow at a slower rate under my plan. That’s how you keep Medicare solvent.
That also is how you make older Americans insolvent. His plan cuts spendable income each year. The way to keep Medicare solvent is the same way we keep Congress, the Supreme Court, the White House, the military, and the thousand other federal departments solvent. Our Monetarily Sovereign nation funds them.
Do you think Republicans have an stomach for cutting Medicare? We’re not cutting Medicare . . . we’re going to reform Medicare for future generations.
Translation: “Yes, we are cutting Medicare for people under 55, but we’re going to call it ‘reform,’ and in that way you won’t notice. Everyone loves reform, don’t they?”
For all you folks who hate big government (but really don’t know why), and are concerned about your children and grandchildren (but not concerned enough to make sure their health care is a good as yours), the Tea (formerly Republican) Party / Ryan proposal is perfect. Of course, not understanding Monetary Sovereignty is the first step.
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.”