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 dollars to pay its bills.
3/8/11: WASHINGTON (Dow Jones)–Any move by Congress to overhaul the Social Security program without addressing the shortfalls in the other entitlement programs wouldn’t come close to resolving the fiscal crisis the U.S. is facing, the co-chairman of a White House deficit commission said Tuesday.
Erskine Bowles, who was White House chief of staff during the Clinton presidency, told a Senate panel that moving forward with changes to Social Security without also tackling Medicare and Medicaid wouldn’t make any sense.
“If we only do Social Security, we don’t come close to solving the problem,” Bowles said in testimony before the Senate Budget committee.
Alright, so Erskine Bowles has not the slightest understanding of Monetary Sovereignty. America can survive a handful of leaders who know nothing of economics. And alright, Bowles would rather create terrible human problems for you who receive, or will receive, Social Security, Medicare and Medicaid benefits, than to encounter the non-problem of a federal deficit.
But for heavens sake, don’t the media care about your hardships? Don’t the politicians care? And what the heck is wrong with the economists? Why are they so dense? Why don’t they look at the basic facts sitting right in front of their noses?
There is no deficit problem. There is no debt problem. The whole charade is based on “Anthropomorphic Economics Disease,” the false belief that federal financing is just like yours and mine. But, federal “deficits,” “debt” and “borrowing” are entirely different from your deficits, debt and borrowing — not even close. Visualize astronomers basing their hypotheses on the astrological signs, and you’ll get the idea.
So why, at least, don’t the economists get it? The facts of Monetary Sovereignty are beyond dispute; but, the discussions are beyond reason; and the situation is beyond comprehension.
Today, your politicians plan the financial destruction of America, with the complicity of your media and the economists, and I haven’t noticed your outrage. I see and hear lots of outrage about abortion. I see and hear lots of outrage about guns. I see and hear lots of outrage about Islam and Pakistan and Egypt and Israel, and the constitutionality of health care insurance and Obama’s birthplace. I even see outrage about Charlie Sheen. But when it comes to the economic future of your children and your grandchildren, you seem strangely passive. Only the Tea Party seems to be making much noise, and they are, to be charitable, Palinesque.
Where are your letters to the editor, insisting that the media understand Monetary Sovereignty, before writing any more foolish articles? Where are your letters to the politicians, telling them the facts? Do you know of even one syndicated columnist who has the vaguest idea about economics?
The whole situation is surreal. Visualize millions of us, heads down, obediently, silently shuffling toward the abyss. The guards stand with whips, urging us on. No one protests until they tumble over the edge. But then, it’s too late.
We shake our heads at the ignorance of people who, out of religious belief, refuse medical attention for their dying children, while we condemn our own children to a future of misery. We wonder at the ignorance of yesteryear, while we plod backwards in time, toward the next economic disaster.
Do you lack the energy to protest, and prefer to accept the fate to which they condemn you? Where is your outrage?
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth.
8 thoughts on “–Economic ignorance unquestioned by the media, politicians, mainstream economists and the public. Where is the outrage?”
No sooner did I finish writing the above post, than I came across an article in the 2/28/11 Newsweek, written by Niall Ferguson. The featured line in the article is: “The U.S. needs to do exactly what it would if it were a severly indebted company: sell of assets to balance its books.”
Here is a man, Mr. Ferguson, who rates a two-page article in Newsweek, and hasn’t a clue about modern economics.
Rodger Malcolm Mitchell
What I don’t get is, why is “Monetary Sovereignty” such a big secret in this country? Why aren’t the mainstream economist, media, politicians, Financial heads taking and supporting it? So there must be something that prevents them from doing so? It can’t be just ignorance. There must be something… what is it?
Even Bernanke says we need to reign in the deficits. Why ?
I’ve followed this subject for many years, and one thing that I’ve come away with is that this is a problem of explanation, not theory or mechanics.
For example, in the public mind the word “deficit” is taken to mean ‘shortfall’ or ‘deficiency’. Most people think those words describe something negative, to be avoided because it’s bad. And when the US was on the gold standard, it was true, so that doesn’t make it any easier to dispel the negative connotations, especially among those over 55.
But as you and others have shown, those claims do not hold up under scrunity. Whether one looks at the inflation rate, the bond price.
What the deficit actually represents in the real world is the addition of financial resources to the macro economy. Now, most people would think that this is a good thing, meaning “growth” or “relief,” in some cases.
The term “plus” would be one possibility, but that has an Orwellian odor about it.
The term “debt” also has very negative connotations in the public mind. “Debt”, to most people, means ‘an obligation’, ‘something owed’, ‘something to be out of’. It generally is something that most people would avoid, if possible.
As you and others have shown, the US government could “pay off” the debt tomorrow morning if it wanted to do so.
Better, more descriptive terms, with less emotional baggage, would help your cause immensely. If some of the noise that’s out there about “debt” and “deficits” gets translated into actions that effectively take out the increase in new money, the economy is very likely to take a sharp nose-dive. It happened this way in 1936, and in 1937 the economy experienced another sharp downturn.
This is a perilous period. The direction and character of the US in the future is at stake, so the economics profession, especially those who generally agree with you, need to speak up. Those of us out here in flyover land who have tried to understand how the US economy works in a soft-money world also need to contact as many in the media and in the halls of government as possible.
I think the answer to this question is largely the fact that for the 200 plus years during which the discipline of economics developed, money was understood to be an intrinsically valuable commodity. In the absence of a sufficiently powerful world power, fiat money wasn’t natural or practical. The final leg of that world economic system was unceremoniously knocked out in 1971 by the Nixon admin, in response to demands by France that we adhere to the rules of the system we largely created. The expectation at that time was that the link to gold was not broken forever but would be reestablished at some point. Even Reagan during his first presidential campaign paid lip service to re-establishing a gold standard, and my understanding is that he was persuaded out of this by his supply-side advisers. The price of gold remained in a somewhat narrow channel during the first years of Greenspan’s Fed chairmanship, and some have asserted that this was partly the goal of his policy as Chairman.
There was no democratic decision or public consensus to move to a pure fiat system, which is why so much of the institutional baggage from gold-standard system, under which our banking and fiscal system developed, still remains with us. The US cannot default today obviously, because it already did; first in 1933, domestically, then in 1971, internationally. Promises were broken, rightly or wrongly, and a promise already broke can’t be broke again. But this is the reason that so few understand the nature of our present system. It didn’t come about in a planned, public way. This is the only explanation that mnakes sense to me.
I think the problem is baggage. Most people can’t abide being wrong. I find that the more someone has invested in the flawed narrative of money and deficits, the less likely they are to “get” monetary sovereignty and what follows from understanding it. The ones with the most issues are the ones that already “know” how things work. You can’t fill a cup that’s already full!
I agree with Jeff. The problem is what they “know”. “Mainstream” pronouncements are usually diametrically opposed to the truth:
“The U.S. needs to do exactly what it would if it were a severely indebted company: sell off assets to balance its books.”
This is actually true, if you interpret “the US” the opposite of how Ferguson does – as the US economy, the US population, not the US government. The US population is being dragged down by excessive private debt, and its servant, the US government, should do what it was made for, promote general welfare by spending into the economy, by allowing people to sell off the assets of their labor and their resources.
So could it be the case that a pragmatic, or politically expedient change was made back in 1971, going off the gold standard, without most economists or even the people making the change, fully comprehending it’s signifigance?
As a layperson I figure I have an advantage when it comes to understanding this. Whilst I’d always had an instinctive ‘amphropomorphic’ understanding of how the government funds it’s spending, because I’m not an economist I didn’t have a whole career’s worth of beliefs tied up in this understanding, I’m no expert, so it’s much easier to take on board a new explanation of how it all works.
For a professional to have to change some of their core beliefs entails a big hit to the ego.
Yes, if one isn’t emotionally, educationally, reputationally and financially wedded to a belief, changing beliefs is much easier.
Imagine the difficulty Charles Krauthammer and Barry Ritholtz would have in saying, “All these years I’ve given you the wrong information about our economy.” It would take a big man to do that.
Rodger Malcolm Mitchell