The debt hawks are to economics as the creationists are to biology. Those, 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.
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We depend on our doctors to understand medicine. When our doctors err, we are injured. So, wouldn’t you be angry if you learned your doctor never had studied medicine, never even wanted to understand basic medical procedures, and instead followed popular superstitions about curing illness?
We depend on our lawyers to understand the law. When our lawyers err, we are injured. So, wouldn’t you be angry if you learned your lawyer never had studied the law, never even wanted to understand basic legal procedures, and instead followed popular myths about laws, myths based not on legal rulings but on jailhouse rumor?
We depend on our politicians to understand economics. When our politicians pass a bad law, we are injured. It can cost our loved ones and us our fortunes, even our lives. So, wouldn’t you be angry if you learned your political representative never had studied economics, never even wanted to understand the basics of economics, and instead relied on popular myths about economics, based not on science, but on street myth?
Doctors and lawyers are jailed for practicing medicine or law without appropriate licences, which can be obtained only after years of difficult study based on strict criteria. But for politicians, there are no criteria. Any lazy, uneducated fool can be a politician, who once elected, can cast votes on bills that will ruin your life.
Politicians arguably have more impact on us than do doctors and lawyers, yet there are no minimum requirements for this vital responsibility. Able to read? Not necessary. Able to reason? No need. Unwilling to learn? No problem. Honesty? Are you kidding?
Monetary Sovereignty, is the very basis of economics. Anyone who does not understand the implications of Monetary Sovereignty, simply does not understand economics. Would you try to practice medicine without knowing what a germ is? Would you try to practice American law without knowing what precedent is? Yet, politicians vote on your economic future without understanding economics. Monetary Sovereignty, is to economics as arithmetic is to mathematics. It is impossible to understand the later without understanding the former.
I have seen no evidence that any of our Senators, Representatives and even the President has the slightest understanding of Monetary Sovereignty, nor willing to expend the energy to learn. Seemingly, they would rather rely on intuition and Tea Party wisdom than on science, as each day they make decisions that harm millions of us.
So we have the spectacle of ignorance threatening to shut down the government via a useless debt ceiling — no not useless, harmful — unless they are allowed to tax us more and/or reduce Medicare, Social Security, national defense, education, health care, medical research, energy research, the ecology, the infrastructure and indeed depress virtually every aspect of our lives. And why? Because these elected representatives either are too political, too lazy or too ignorant to understand the “federal deficit” is not at all like personal deficit, but rather merely is a synonym for “federal money created.”
These elected representatives either are too political, too lazy or too ignorant to understand the “federal debt” merely is the total of outstanding T-securities, which could be liquidated merely by crediting the bank accounts of the holders, a process requiring nothing more than the press of a computer key.
So we, our children and our grandchildren, must pay today, pay tomorrow and pay well into the future for political ignorance and laziness. And all the politicians need to do is read and understand one page at: Monetary Sovereignty,.
If that makes you angry, and you refuse to take it any more, contact them. Do it now.
Rodger Malcolm Mitchell
http://www.rodgermitchell.com
No nation can tax itself into prosperity, nor grow without money growth.
#Monetary Sovereignty - Mitchell 
Please get your self in focus. Our political leaders (leaders must be replaced by looters) are put in power by the people who have been caused our current economic mess. Most notable is Goldman Sachs. They run ramped in the Treasury, completely run TARP and are the prime movers of Dobb-Frank, Healthcare, and Fannie and Freddie mess. Only the open market can help us. Don’t believe me, then spend an hour listening to this -> http://www.youtube.com/watch?v=KOGdSJgGbkU&feature=player_embedded. Our economy has recovered and is expanding. Not as fast as we wish, but it so despite government (feb included) intervention. Printing money isn’t going to fix anything, producing products will.
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Can’t produce products without money. Taking money from the economy always hurts the economy. Failure to raise the debt ceiling absolutely, positively will be recessive.
It the Tea Party has its way, we will slide into a recession.
Rodger Malcolm Mitchell
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This is another reason why I like defining money as credit created to take positions in assets (though I admit it is professor talk — in fact, I think it comes from Minsky). It helps to clarify the common assertion that “only the private sector creates wealth.” This statement is essentially true, but misleading at the high level of abstraction at which it usually is stated. It is more accurate to say that the private sector creates the assets we use money to take positions in, but the government creates the money. As Bill Mitchell has repeatedly stressed, the private sector’s desire to save part of what gets spent means that a growing economy always will need a growing net supply of money. Part of the problem is that we tend to think of the public and private sectors as playing a kind of zero-sum game — when one grows, the other must shrink. It’s quite silly. A better analogy is to think of them as two sides of the same sheet of paper. They are literally inseparable.
Of course, there is another way the public sector contributes to growth, and that is by creating real assets private-sector entrepreneurs use to create assets. It was actually when I became an entrepreneur and created some jobs that I began to rethink my former affection for anti-government libertarianism. It eventually dawned on me that I was rather glad I didn’t have to teach my employees to read, inoculate their children against diseases, build the roads across which my products were delivered, etc.
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“We depend on our politicians to understand economics.”
There is your problem, right there, Rodger.
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Min,
Yes, that was my point. We should be able to depend on our doctors to know medicine, our lawyers to know law and our politicians to know economics, and we should not shrug our shoulders in acceptance when it doesn’t happen. We should get angry at them, and tell them so.
Rodger Malcolm Mitchell
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After reading blogs like yours, and Billy Blog, and seeing the vast majority of the profession completely miss seeing the global financial crisis coming, instead preferring to talk about “great moderations”, I think the majority of economists need to understand economics as well. After all, politicians are relying on their – typically – bad advice, so you can’t entitrely lay the blame on the political class.
It’s as though the majority of the medical profession were witch doctors, relying on spells and magic potions to cure the patient. Quick to claim credit if the patient somehow recovers, and equally ready to abandon responsibility, preferring to blame the patients “lack of faith”, should their condition worsen, or indeed die, especially if it was the treatment making things worse – IMF anybody…..
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Georgie,
Actually, I don’t understand the concept, “only the private sector creates wealth.” When the federal government pays to build a highway, is that creating wealth? When an army private digs a latrine, or when army personnel erect a fence, is that creating wealth? When the government sends you a Social Security check, is that creating wealth?
No one knows — or at least no one can agree on — the meaning of “wealth,” so I think discussions of “wealth” devolve to sophistry.
“A growing economy requires a growing supply of money” is a tautology: By definition, a large economy has more money than does a smaller economy.
As for the public vs. private sectors, there are two public sectors: The federal and all other. The federal government has no money, but creates money ad hoc, simply by spending. So, it is impossible to say how large the federal government is.
The “all-other” part of the public sector (states, cities), does have money, and in fact, when it taxes the private sector, the private sector’s money shrinks — in a broad sense, a zero-sum game.
Rodger Malcolm Mitchell
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Only people create wealth. Wealth, like money, is a social construct. 🙂
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Min, discussions about wealth make me uncomfortable.
Money is debt and can be measured. The federal government creates money but actually owns relatively little.
The government owns lots of wealth, but no one can measure it.
Many people make assertions about wealth, but I dislike discussions about wealth, because no one can agree on what it is. Is a hunk of wood wealth? What if it’s signed by Picasso? Can a computer create wealth?
To me, such discussions are sophistry.
Rodger Malcolm Mitchell
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