Those of you who read, “It is 2019, and the phony federal debt “time bomb” still is ticking“, are aware that at least since 1940, and surely before, scaremongers have been calling the federal debt a “ticking time bomb.” Eighty years of being wrong. Still no explosion.
Those of you who read, “More scare nonsense from the CRFB,” know that this organization, funded by rich folks, wants you to believe what simply is not true: That the federal government can run short of its own sovereign currency, the U.S. dollar.
It can’t. It created the very first dollar, and continues to create dollars, ad hoc, every time it pays a creditor.
Even if all tax collections totaled $0, the federal government could continue paying its bills, forever.
Now that the latest CRFB (Committee for a Responsible Federal Budget) nonsense has been published, I feel obligated to demonstrate that it is . . . well, nonsense. If they keep publishing the lies I’ll keep publishing the truth.
Committee for a Responsible Federal Budget
CBO: Debt Still on Unsustainable Path, January 28, 2019The Congressional Budget Office (CBO) released its Budget and Economic Outlook for the next decade this morning, which warned that our debt is headed to uncharted waters (1).
Under current law, CBO projects debt will rise from 78 percent of the economy today to almost 93 percent by 2029 and over 152 percent within 30 years.
Under CBO’s Alternative Fiscal Scenario, which assumes the continuation of current policies, debt would reach 105 percent of the economy by 2029 and exceed record levels set after World War II by 2030 (2).
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
“You need to go no further than this report to see the real state of the union – our national debt is rising rapidly, and trillion-dollar deficits are just on the horizon.
Numbers don’t lie, and anyone with a calculator on their phone can see that debt is a problem that can’t be ignored. (3)
“The debt doesn’t just burden future generations, (4) it also stands in the way of economic and political progress today. (5)
With the government now reopened, it is time for the new Congress and the President to work to put the country on more solid fiscal ground. (6)
“CBO’s annual report is a reminder that the situation is getting worse, not better. (7)
Lawmakers should come up with a plan now while the economy is strong to put our debt on a downward path and phase it in to avoid the much more disruptive choices that procrastination will bring. (8)
Look at the CRFB’s comments, point by point.
(1) Actually, these waters have been “charted” — by Japan, whose Debt to Gross Domestic Product ratio is above 250% — and there’s no sign it is “a problem that can’t be ignored.”
The waters also have been “charted” by the U.S. after WWII, and the chart shows the U.S. economy has grown quite well since WWII:
Federal debt has been “sustainable” since WWII, and has not been a “problem.” Numbers don’t lie, but liars lie about numbers (3). Federal debt and GDP have grown together, which would not be the case if the debt were “a problem.”
Federal debt cannot “burden future generations” (4), because taxes do not fund the debt. The federal government pays off the debt every day, simply by returning the dollars that reside in those T-security accounts.
It is the lack of federal deficits that burdens generations:
Growing debt and has not stood in the way of economic and political progress. (5). We aren’t sure what “political progress” the CRFB means, but the relationship between debt growth and economic growth is clear.
The country is on “solid fiscal ground” (6) when deficits are growing, because deficits pump more dollars into the economy.
The country is on shaky fiscal ground when deficits are reduced, because a growing economy requires a growing supply of money.
All depressions have been introduced by reductions in federal debt, and most recessions have been introduced by reductions in deficit growth.
Depressions and recessions have been cured by debt growth.
(7) “The situation” is getting better because deficits are increasing, which means the federal government is pumping more dollars into the economy.
Putting federal debt on a downward path repeatedly has proven to cause depressions, by taking dollars out of the economy.
There is no reason to do this, however. The federal government is not like state and local governments, and not like you and me. It uniquely is Monetarily Sovereign.
Unlike state and local governments, and unlike you and me, the federal government cannot run short of its own sovereign currency.
Unlike us, the federal government does not have to “save up” to pay its bills. It does not need to wait for the economy to be strong. The U.S. federal government has the unlimited power to pay all its bills, whether the economy is growing, shrinking, or standing still.
Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
Alan Greenspan: “Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. A government cannot become insolvent with respect to obligations in its own currency.”
St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.
As always, the CRFB functions mostly as a shill for the very rich, to convince you your federal benefits — Social Security, Medicare, Medicaid, aids to poverty, aids to education, etc. — are unaffordable and must be reduced.
All the similar talk about the Social Security Trust Fund running short of dollars, and Medicare-for-All being unaffordable are outright lies, meant to keep you down.
If you’re tired of the lies, don’t stand for them. Tell your national representatives that you know the facts.
- You know: the government cannot run short of dollars
- You know that growing deficits are necessary to grow the economy
- You know that the federal debt is not real debt, but rather is the total of deposits into T-security accounts, similar to savings accounts or bank CDs.
- You know the federal government easily can afford comprehensive Medicare-for-All
- You know the federal government could provide free education for everyone
- In short, you know the federal government can afford the Ten Steps to Prosperity (below).
Tell them to cut the crap rather than cutting budgets, because you know the truth and you’re not going to stand for their lies any longer.
Or, just keep accepting their lies. Your choice.
Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell
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The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity:
1. Eliminate FICA2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone
3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)
4. Free education (including post-grad) for everyone
5. Salary for attending school
6. Eliminate federal taxes on business
7. Increase the standard income tax deduction, annually.
8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.
9. Federal ownership of all banks
10. Increase federal spending on the myriad initiatives that benefit America’s 99.9%
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 