–The amazing ignorance of Sheila C. Bair, Chairman of the FDIC

The debt hawks are to economics as the creationists are to biology. They, who do not understand monetary sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.

In the OMG! category, here are excerpts from an article in the Washington Post. It was written by Sheila C. Bair, the Chairman of the FDIC.

Will the next fiscal crisis start in Washington?

“Even as work continues to repair our financial infrastructure and get the economy moving again, we need urgent action to forestall the next financial crisis. I fear that one will start in Washington. Total federal debt has doubled in the past seven years, to almost $14 trillion. That’s more than $100,000 for every American household.”

This is the old debt-hawk, debt-clock mantra in which federal debt falsely is said to be owed by the people living in America. It’s as though you and I suddenly have become the government. The mechanism by which we people, who never borrowed the money, now owe the federal debt, never is explained.

“This explosive growth in federal borrowing is a result of not just the financial crisis but also government unwillingness over many years to make the hard choices necessary to rein in our long-term structural deficit.”

Total ignorance of Monetary Sovereignty is demonstrated here.

“Retiring baby boomers, who will live longer on average than any previous generation, will have a major impact on government spending. This year, the combined expenditures on Social Security, Medicare and Medicaid are projected to account for 45 percent of primary federal spending, up from 27 percent in 1975. The Congressional Budget Office projects that annual entitlement spending could triple in real terms by 2035, to $4.5 trillion in today’s dollars. Defense spending is similarly unsustainable . . . “

The typical “debt is unsustainable” nonsense, with as always, no factual support for why federal spending is unsustainable.

“Unless something is done, federal debt held by the public could rise from a level equal to 62 percent of gross domestic product this year to 185 percent in 2035. Eventually, this relentless federal borrowing will directly threaten our financial stability by undermining the confidence that investors have in U.S. government obligations.”

Er, ah, excuse me, Madam Chairman, but not only is the debt/GDP ratio completely meaningless, but Japan’s debt/GDP ratio is over 200% and I haven’t noticed the crisis you describe. Again, no substantiation is given – just wild-ass predictions having no basis in reality.

“. . . while we enjoy a uniquely favored status today – investors still view U.S. Treasury securities as a haven during crises – events in Greece and Ireland should serve as a warning.”

Er, ah, excuse me again, Madam Chairman, but Greece and Ireland are monetarily non-sovereign, similar to Illinois, Chicago, you and me. Comparing the U.S. to monetarily non-sovereign nations is ignorant at best and deceiving at worst.

“Recent proposals by the co-chairs of the National Commission on Fiscal Responsibility and Reform and by the Bipartisan Policy Center represent credible first steps toward recognizing and addressing the nation’s fiscal problem. Both propose to reduce and cap discretionary spending, enact comprehensive tax reform, reduce mandatory spending on health care and other programs, and ensure the long-term solvency of Social Security.

“Fixing these problems will require a bipartisan national commitment to a comprehensive package of spending cuts and tax increases over many years. Most of the needed changes will be unpopular, and they are likely to affect every interest group in some way. We will want to phase in these changes as the economy continues to recover from the effects of the financial crisis.”

In short, she wants to enact a package similar to Ireland’s, which will impoverish America for decades to come.

That even the Chairman of the FDIC writes this tripe is ample evidence of the urgent need to continue contacting our Congressional representatives and the media and the mainstream economists, again and again, to educate them regarding Monetary Sovereignty. The truth will set us free.

Rodger Malcolm Mitchell

No nation can tax itself into prosperity. Those who say the stimulus “didn’t work” remind me of the guy whose house is on fire. A neighbor runs with a garden hose and starts spraying, but the fire continues. The neighbor wants to call the fire department, which would bring the big hoses, but the guy says, “Don’t call. As you can see, water doesn’t put out fires.”

4 thoughts on “–The amazing ignorance of Sheila C. Bair, Chairman of the FDIC

  1. From: Thornton Parker
    To: rmmadvertising@yahoo.com
    Sent: Sat, November 27, 2010 4:07:12 PM
    Subject: A suggestion

    Dear Mr. Mitchell,

    Like you, I am skeptical about much contemporary economic thought and I may be the type of person whom you are trying to influence. I recently came across your writings, and you may be interested in my initial reaction.

    Your basic argument, that governments with monetary sovereignty have more options than individuals or other types of entities, makes sense. That view is not widely held and I think you are trying to get people in leadership positions to understand it and its implications. But not only are you pointing to flaws in a wide range of contemporary thought, you are opposing debt hawks, some of whom are primarily driven by the interests of creditors. You are faced with three groups, some who might be susceptible to change, some who will not think deeply about these matters, and some who will resist because of self-interest.

    You will not get far with the last two groups. In order to make any progress, must persuade those in the first group to at least give your argument a fair hearing. I fear , however, that instead of courting them, you are alienating them. For example, Sheila Blair might have been in the first group. But she must be astutely aware of the forces opposing her, having seen how others like Elizabeth Warren have effectively been blackballed by Wall Street. If that were to happen to her, she could become powerless to do any good at all. She might have become an ally, but you may have erected an impenetrable barrier by referring to her “amazing ignorance.”

    Until beginning to read your writings, I too possessed a similar amazing ignorance. And I feel that as I think through your arguments, a few “yes, but”s may remain. But I don’t like to think that makes me a bad person.

    So here is what I suggest: Develop, if you have not already done so, a clear, step-by-step explanation of your basic premise with supporting facts, in a tone that is friendly and inviting, not adversarial. Then summarize it in a paragraph that conveys its meaning for use as the header to your pieces instead on slap-in-the-face that you use now. Instead of saying that those who don’t understand monetary sovereignty don’t understand economics, frame it as building on what they already know, much of which may well be right. If you can get some alleys, then together, you can argue that many of the deficit hawks are slaves to self-interest, which is an entirely different argument than that they are ignorant.

    I hope this is helpful.


    Thornton “Tip” Parker

    I am the author of What If Boomers Can’t Retire? How to Build Real Security, Not Phantom Wealth.


  2. Thanks Tip, your thoughts are much appreciated.

    I have been preaching this same message for 15 years, and over those years have tried every approach I can imagine. And yes, it is wearing on me. So my manner undoubtedly reflects that long-term frustration.

    I’ve done the “clear, step by step explanation.” My book, FREE MONEY is exactly that. If you look at the column at the left, you will see more than 200 explanations. I invite you to browse the titles and read the ones that interest you.

    Yes, the debt-hawks are ignorant, not stupid, just ignorant. They simply do not know, and do not care to learn the facts, of which they are ignorant. Relying on intuition, and parroting the words of others, is so much easier and safer than actually expending the energy and taking the risk of learning something new.

    Recently, I posted What should the U.S. do next?, four short suggestions you might find interesting.

    I do not believe being “nice” to Ms. Bair will accomplish anything. The Sheila Bairs of the world never will have the integrity or the courage to do anything to upset their personal little apple carts.

    My current hope is to create enough outrage among voters, that they will contact their Congresspeople and demand proper action.

    Perhaps you will join them.

    Rodger Malcolm Mitchell


  3. Roger Mitchell, have you read kling’s 250 states proposal for the USA? He argues that our federal government is FAR TOO SMALL to support the population they represent. That instead of roughly 500 coungresspeople, we need maybe 5000 or more, this would make it MUCH more difficult and unprofitable for the lobbyists and others to CORRUPT the few politicians that are there now. That with fewer agents (voters) affecting every election, the politicians will be much more beholden to individual agents than they are now.

    It seems to me his way is right and your way is wrong, I don’t think it matters who we send to washington anymore, they will be corrupted. Jesus himself would be corrupted, so changing politicians, without changing the “system” is a waste of time. Now Kling goes on to argue that changing the US government to have 5000 representatives instead of 500 will probably never happen, so what that means to me is that the USA will fall as a superpower as the corruption eats away at it from the inside and some new society somewhere else will take over as the world leader.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s