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 are five headlines and the first lines of their articles, from the May 26th Washington Post. What do these five articles have in common? What is their fundamental premise?
Senate rejects GOP budget plan that would overhaul Medicare
The Senate voted 57 to 40 against GOP Rep. Paul Ryan’s 2012 budget proposal, with all but five Republicans supporting the spending plan.
Plum Line: Senate Dems up pressure on GOP over Ryancare
Senate Democrats are going to hold a vote today on the GOP budget plan that includes the proposal to end Medicare as we know it, in an effort to put Senate Republicans on the spot and keep up momentum after the big Dem victory in NY-26.
2chambers: Ryan says Democrats have ‘lied to’ voters about his budget plan
One day after his party — as well as his 2012 budget blueprint — was dealt a stinging defeat in a New York special election, House Budget Committee Chairman Paul Ryan (R-Wis.) said Wednesday that the election was not a referendum on Republicans’ proposed changes to Medicare, and he argued that Democrats had distorted the issue for political gain.
The California researcher who could save health-care reform — and the budget
Joe Selby has been named director of the Patient-Centered Outcomes Research Institute
Ezra Klein: When ex-budget directors stop being polite and start getting real
Peter Orszag, concluding a column on why Paul Ryan’s Medicare reforms won’t work to control costs.
The fundamental premise is that the federal deficit should be reduced, and not one of these articles even questions it, much less discusses it. Imagine a group of people discussing the best way to sail from Europe to India, without falling off the edge of the world. Many ideas are debated fervently, but the fundamental premise – that one can fall off the edge of the world — never is discussed. When the fundamental premise is wrong, all solutions will be wrong. And that is why there never can be a good solution to our economic problems, no matter how long, passionately and cleverly we debate.
In a Monetarily Sovereign nation, deficits are what supply money to the economy. Without deficits, America would have no money and no economy. Because a large economy has more money than does a small economy, a growing economy requires a growing money supply. So growing deficits are necessary for economic growth. Further, a Monetarily Sovereign nation has the unlimited ability to pay any bills of any size, instantly.
All efforts to reduce the deficit, i.e. reduce the money supply, by necessity must result in recessions and depressions, and that is exactly what history has shown us. (See: Facts about Monetary Sovereignty )
Our economic problems cannot be solved so long as the discussions are based on a faulty premise. Only when we acknowledge the basic truth of Monetary Sovereignty – federal deficit spending is necessary and sustainable — will we create a solid foundation for economic progress.
We can’t find our way home if we take the wrong path.
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.”