–The debt ceiling, the ultimate expression of Congressional ignorance

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 all are ignorant of many things, but Congress has managed to demonstrate an inhuman, almost surreal level of ignorance in its wrestling with the debt ceiling. Each day, we read statements from otherwise intelligent people, that somehow manage to exceed in ignorance, the statements from the previous day.

The debt ceiling is Congress’s wooly-brained attempt to limit the spending which it itself authorizes. It’s like a person who goes shopping, and intentionally takes less money than they want to spend, because they know that once in the store, they won’t be able to control themselves. What an admission! Congress tells the world, “The majority of us is so foolish, so imprudent, so clueless, we need an artificial control to prevent our running amok — and we are the foolish, imprudent, clueless people guiding America.” As the kids say, OMG!

Those understanding Monetary Sovereignty know, since 1971 the federal government has had the unlimited ability to create dollars. It cannot “go broke” as House Speaker John A. Boehner often claims. Its debt is not “unsustainable,” as the media like to declare. The government could end all taxes and end all borrowing, while tripling its deficit spending, all with no difficulty. It could redeem every T-security (i.e. pay all debt) tomorrow, without breaking a sweat. So what does “going broke” and “unsustainable” mean?

The sole constraint on federal deficit spending is inflation.

So, the sole “purpose” for the purposeless debt ceiling must be to prevent inflation — and we are nowhere near that. Today, millions do not have health care insurance, and millions more have inadequate health care insurance. Millions of children go to poor schools, live in poor housing or on the street. Roads and bridges are falling apart. States are not paying their bills. Small businesses are failing for lack of payment by government agencies. Research and development has been reduced. And we labor with unemployment and the human suffering it causes, which suffering is exacerbated by a debt ceiling, and could be alleviated with federal support.

Here is a question you may wish to put to your Congressperson: “How, on balance, does having a debt ceiling benefit America more than it harms America?” I’ll be glad to publish their answers, here.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity, nor grow without money growth.

5 thoughts on “–The debt ceiling, the ultimate expression of Congressional ignorance

  1. I doubt it’s ignorance. What better way to cripple the middle class and the poor (even further) than to have an excuse to cut spending on institutions such as Planned Parenthood and on basic scientific research?

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  2. I think it’s probably mostly ignorance, apart from a handful of nasty manipulative types happy to exploit that ignorance for their own purposes.

    I’m happy to admit that I shared that ignorance until quite recently when I started reading Bill Mitchell’s billyblog, which led me to Warren Mosler’s site, as well as this one and a few others. Nearly everyone, politicians included, are quite unaware of this idea of monetary soveriegnty, so the idea of taxes funding spending is naturally the dominent paridigm.

    I’m still struggling to completely get my head around the whole concept, as it goes against almost every pre-conception I had about govt spending, but the idea that all these budget constraints are artificial is both liberating and frustrating. Liberating because it means so much is actually possible, and that there is no great debt bogeyman hanging over our heads in the future – frustrating because hardly anyone is aware of this.

    Still if a regular guy like me can stumble accross this knowledge, it means others are as well, and the word will slowly spread.

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  3. Rodger,
    May I ask for your thoughts on “Secretary Geithner Sends Debt Limit Letter to Congress”

    http://www.treasury.gov/connect/blog/Pages/letter-to-congress.aspx
    If the debt limit is not increased by May 16, the Treasury Department has authority to take certain extraordinary measures, described in detail in the appendix, to temporarily postpone the date that the United States would otherwise default on its obligations. These actions, which have been employed during previous debt limit impasses, would be exhausted after approximately eight weeks, meaning no headroom to borrow within the limit would be available after about July 8, 2011. At that point the Treasury would have no remaining borrowing authority, and the available cash balances would be inadequate for us to operate with a sufficient margin to meet our commitments securely.

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