–If you were President, what would you do about the economy?

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.

Imagine you are President of the United States. What would you do about the economy? To help clarify your thoughts, here are excerpts from two articles that appeared in the 4/28/11 Washington post:

Economic growth slows to 1.8% in early 2011 By Neil Irwin

The economy’s growth slowed at the start of the year, according to new data that show the recovery is so weak that it doesn’t take much to knock it off its stride.

The 1.8 percent pace of increase in gross domestic product in the first quarter, according to a Commerce Department report Thursday, is down from a 3.1 percent gain in the final months of 2010. It is also lower than the level of growth that, over time, would be expected to drive down joblessness. The U.S. economy needs to grow about 2.5 percent annually to keep unemployment steady given continual growth in the labor force and in worker efficiency; even stronger GDP growth is needed to bring unemployment down . . . . at a time when the government is straining for ways to jump-start the economy and when forecasts had called for a strong start to the year, the slowdown came as a disappointment.

So clearly, the economy has not yet recovered from the recession, and may be sinking back into the pit. Millions of Americans have lost their jobs, lost their homes, lost their health care, lost their ability to attend college (or even high school) and lost their futures and their children’s futures. They see threats to Social Security, our infrastructure, our medical and scientific research, our schools and our safety.

Now read this:

More Democrats defiant on debt ceiling By Peter Wallsten

A growing number of Democrats are threatening to defy the White House over the national debt, joining Republican calls for deficit cuts as a requirement for consenting to lift the country’s borrowing limit. Defying the White House, the senators are joining Republicans in calling for deficit reductions as a condition for lifting $14.3 trillion ceiling.
[ . . . ]
And although many lawmakers and aides say a bipartisan deal is likely, the insistence on conditions by a small but pivotal group of Democrats suggests that any agreement would almost certainly have to include substantial cuts in the deficit. . .

The Tea (formerly Republican) Party, and now even the Democrats all want deficit spending to be reduced and the economy stimulated. So, Mr. President, what should you do?

(Can the madness of Congress and the debt-hawks be made any clearer than this?)

Rodger Malcolm Mitchell

No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetarily Sovereign, and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.

Remember that the next time you’re tempted to ask a dopey teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it screwed up the economy.”


9 thoughts on “–If you were President, what would you do about the economy?

  1. Washington Post; 4/28/11: By Rajiv Chandrasekaran:

    “U.S. aid officials have been forced to delay three large development programs intended to support the American military strategy in southern Afghanistan at a critical, make-or-break moment in the war.

    “The initiatives, which are supposed to support local governments, agricultural development and job-training efforts, have been held up by bureaucratic missteps and funding cuts by Congress, according to senior U.S. officials. As a result, the programs will not begin until much of the summer fighting season has concluded.”


  2. “The Tea (formerly Republican) Party, and now even the Democrats all want deficit spending to be reduced and the economy stimulated. So, Mr. President, what should you do?”

    Have the Mint press some $1,000,000,000 platinum coins and have the Treasury deposit them with the Fed. 🙂


    1. Why go to all that trouble? Press a computer key and credit everyone’s checking account — similar to the very first stimulus, which was the best stimulus system we’ve had. It put money directly into people’s pockets — just too, little too late.

      Rodger Malcolm Mitchell


      1. IANAL, but I think that the Congress, which holds the Federal purse strings, does not allow what you propose (which would increase the deficit) without the Treasury issuing bonds. Coining money does not increase the debt. IIUC, it does not increase the deficit, either, the way the gov’t accounting works. (But the key point is that it does not increase the debt.)


        1. Min, You are right. The blockage to more stimulus is Congress. I think the main reason they are against more stimulus is that they think this means more debt – which is nonsense. Deficit can perfectly well accumulate as extra monetary base rather than as extra debt.


  3. Would any of you be tempted to give them exactly the full blown austerity program, and rapid return to surplus they ask for? Make it clear that it’s their idea though.

    However in the interest of fairness it will be achieved by equal spending cuts across all programs and budgets, defence included. After all, who could argue against sharing the burden….


  4. They would deny that’s what they meant. As you will see, “everybody” wants a reduction in the deficit, but nobody wants to eliminate the federal programs — and rightly so.

    Rodger Malcolm Mitchell


  5. Here’s what I would do (assuming I had a compliant Congress):

    – Lower the Social Security eligibility age to 60.
    – Eliminate the FICA tax.
    – Eliminate the corporate income tax.
    – Extend unemployment insurance, with a trigger for it to expire when the unemployment rate falls under four percent.


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