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.
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My predictions:
To cope with its tsunami problems, the Japanese government will be forced into massive spending. This will increase Japan’s debt/GDP ratio from its current 200%. That ratio could reach 300%, 400%, 1,000% — who knows how high.
The results will be:
–On-line “debt clocks” madly will tick ominous warnings.
–John Boehner and the Tea Party, who have no understanding of Monetary Sovereignty, will tell everyone Japan is “broke,” just as they have been telling everyone the U.S. is “broke.”
–If Japan does not have a debt ceiling, some in their government will insist they institute one, to prove they know as little about economics as U.S. politicians.
–The Japanese economy will recover.
–Sometime in the very distant future, Paul Krugman, Charles Krauthammer, Barry Rithholtz, Robert Samuelson, Stephen Gandel, Joseph Stiglitz and the editors of the Wall Street Journal will proclaim they always knew federal deficit spending was necessary for a growing economy, and that, in 2011, the so-called “debt” really was not too high.
Rodger Malcolm Mitchell
http://www.rodgermitchell.com
No nation can tax itself into prosperity, nor grow without money growth.
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
hello
I read your blog and i wonder where did you get those informations from.
you wrote ” The U.S. has created many trillions of dollars, simply by pressing computer keys, and will continue to do so. It does not “owe” anyone for creating these dollars.”
Its known that US doesnt have soveregnty over the dollars, since US actually borrow money from the FED which is private.
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And where does the Fed get the dollars you say it lends to the U.S.?
Rodger Malcolm Mitchell
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prints them out of thin air… they dont have even the coverage of the full ammount they lend out. In a normal society, the national bank should print money for the government and the government should ( at worst) pay only the paper they use to print those money. While just the fact that your country must give the promise to pay the full ammount back to the FED, makes it clear..
Anyways i realized that i wrote inthe wrong blog.. sorry about that´.. i posted the same blog also in the right place where you are talking about the monetary soveregnty of US…
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Even with such a high debt, the interest on Japan’s national debt is only about 23% of revenue (see http://www.mof.go.jp/english/budget/e20101224b.pdf). I think that is the ratio to watch. If the servicing costs were to exceed 100% of revenue, then the debt would quickly skyrocket out of control. There is a limit, Japan just hasn’t reached it yet.
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“. . . out of control.”
Why? Interest is just another cost. This merely would increase Japan’s deficit.
Japan, like the U.S., could eliminate all its debt tomorrow, simply by not borrowing. For a Monetarily Sovereign nation, “debt” is not the total of “deficits.” It is the total of borrowing, which Japan does not need to do.
Rodger Malcolm Mitchell
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