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.
======================================================================================================================================================================================
Michael Schuman, yet another of those economic commentators who does not understand Monetary Sovereignty, the basis of modern economics, today wrote a column titled, “Could Japan’s earthquake cause a debt crisis.” In this column he said,
Japan already has the largest debt burden of any industrialized country, at about 200% of GDP, and even though Japan is not yet showing signs of following Ireland, Greece and the rest of the euro zone periphery into a full-blown debt crisis . . .
I wonder how much more evidence will be required, before Michael finally understands that Japan, like the U.S., is Monetarily Sovereign, while Ireland et al are monetarily non-sovereign. Monetarily Sovereign nations, having the unlimited ability to create their sovereign currency, never can have a “debt crisis” (assuming “debt crisis” means being unable to pay bills).
What will it take, Michael? A debt/GDP of 300%? 500%? 1,000,000%? At what point will you and the rest of the debt hawks finally come to the realization that debt/GDP is meaningless for a Monetarily Sovereign nation?
By the way, all the collections being taken up world wide to help Japan, while kind-hearted and praiseworthy, are useless. Japan is not short of money. It can create unlimited money. What Japan needs are equipment and people, to clean up the mess and to rebuild. Engineers, doctors, architects, planners + every kind of heavy machinery you can imagine. Japan can buy all the machinery it needs, but buying the people is much more difficult, so anyone truly wishing to help the Japanese people will try to learn what sort of human help is needed, and volunteer.
But save your money. Japan does not need it.
Rodger Malcolm Mitchell
http://www.rodgermitchell.com
No nation can tax itself into prosperity, nor grow without money growth.
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
It is sad that Japan has to suffer a major earthquake and sunami to prove the debt hawks wrong.
I expect the Japanese debt will now grow considerably as they repair all the damage, and their economomy will benefit considerably from spending of all that extra money.
LikeLike
Agreed, Graham, though the deficit spending need not create debt.
“Deficits” are the net difference between taxes collected and spending, aka “net money created.” “Debt,” when referring to a Monetarily Sovereign nation, means the total of government bonds outstanding.
Contrary to popular wisdom, national debt is not the total of national deficits. Each can exist without the other. A Monetarily Sovereign need never issue bonds (borrow), despite its deficits. Similarly, it could issue bonds, even while running surpluses.
“Debt” and “deficit” are related by law, but not by function. The confusion comes from the difference between Monetarily Sovereign and monetarily non-sovereign entities.
Rodger Malcolm Mitchell
LikeLike
Can Haiti create unlimited amount of money too? Why send your hard earned cash to Help Haiti Now? The Americans are a bunch of fools to have raised over $1.3 billion for Haiti.
LikeLike
hohoho
You make a good point. Haiti is Monetarily Sovereign, having the unlimited ability to create its unit of currency, the gourde. Amazingly, there even is a market for their money, though the size of that market may be quite limited.
Haiti’s problem probably is not a lack of money but a lack of reliable government. More on this at Money to Haiti
Rodger Malcolm Mitchell
LikeLike
I think that you will find that just like most other poor countries most of Haiti’s national assets, such as its agricultural land, are owned by foreigners. The Haitians are unable to escape their poverty trap. If a government attempts to nationalise its nations assets then the government will be toppled by foreign powers. As you say Haiti’s problem is a government problem that is unlikely to be solved in our plutocratic world.
LikeLike
Graham,
If Haiti had a government, and if that government truly were Monetarily Sovereign, and if that Monetarily Sovereign government cared about its citizens, it simply could buy and pay for the food, shelter, clothing and even non-essentials. It would not matter who currently owns what assets. No nationalization necessary.
Rodger Malcolm Mitchell
LikeLike
Good point.
Its a shame that so many governments around the world do not act in the best interest of the majority of their citizens, and instead just act in the interest of a select few.
LikeLike