The lie that the election was stolen from Donald Trump is pretty big. Still, it’s a lie that was started by “30,000+ Lies Trump,” promulgated by Fox News, QAnon, and other lying sites, and is believed only by the increasingly ignorant and twisted MAGA crowd.
By contrast, there is a really, really BIG LIE that began at least in 1940 or earlier, a lie promulgated by virtually every news medium, politician, and economist in America, and a lie that is believed by possibly 99% of everyone.
We refer to the BIG LIE that:
- Federal financing is like personal, business, and state/local financing
- The federal government can run short of dollars.
- Your federal taxes fund federal spending.
One of the prominent purveyors of that BIG LIE is the Committee for a Responsible Federal Budget (CRFB). The lies which we have quoted many times on this site.
Here is what they say now on their own site:
Why High and Rising National Debt is a Problem
High and rising national debt will threaten economic growth and the standard of living for all Americans. High debt will slow the growth of the economy and wages.
As debt rises, higher interest payments will crowd out important investments in areas like education, infrastructure, and research that can help grow the economy.
Getting the debt under control once the crisis is over will be very beneficial for generations to come, from higher wages to increased investment to lower borrowing costs for families and businesses.
The Congressional Budget Office predicts that the economy will grow faster with debt on a declining path as opposed to a rising one.
Every single sentence in the above quote is a CFRB lie, with the possible exception of the last one. That one, if true, would be a Congressional Budget Office lie.
Let’s go through the lies, point by point.
“High and rising national debt will threaten economic growth” and “slow the growth of the economy.”
Wrong: Economic growth generally parallels federal deficit spending (aka “national debt,” except during recessions when debt increases to cure the recession.
The reason for the parallel is quite simple. Federal deficit spending adds dollars to the economy, and dollar growth yields economic growth. A growing economy requires a growing supply of dollars.
And as for the national debt “slowing the growth of wages,” it simply isn’t true. It’s just a part of the Big Lie.
Adding dollars to the economy doesn’t slow the growth of the economy or of wages. Instead, federal debt growth stimulates economic growth.
Moving on to the next LIE:
“As debt rises, higher interest payments will crowd out important investments in areas like education, infrastructure, and research that can help grow the economy.”
Translation: The federal government has only a limited amount of money, so spending on interest payments reduces the amount the government can spend on other things.
This lie assumes the federal government is like you and me, businesses, and state/local governments. It isn’t. The federal government uniquely is Monetarily Sovereign. A Monetarily Sovereign entity has the unlimited ability to create its own sovereign currency. It never unintentionally can run short.
Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency.”
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.”
Quote from former Fed Chairman Ben Bernanke when he was on 60 Minutes:
Scott Pelley: Is that tax money that the Fed is spending?
Ben Bernanke: It’s not tax money… We simply use the computer to mark up the size of the account.
Statement from the St. Louis Fed:
“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.”
Press Conference: Mario Draghi, President of the Monetarily Sovereign ECB
Question: I am wondering: can the ECB ever run out of money?
Mario Draghi: Technically, no. We cannot run out of money.
Not only do federal interest payments not “crowd out” other investments, but by adding dollars to the economy, federal interest payment increase the private sector’s ability to invest in “education, infrastructure, and research that can help grow the economy.”
Now for the next lie:
“Getting the debt under control once the crisis is over will be very beneficial for generations to come, from higher wages to increased investment to lower borrowing costs for families and businesses.”
Translation: “Getting the debt under control” requires reducing the federal debt or at least reducing the size of deficits. Here is what happens when we reduce the federal debt:
U.S. depressions tend to come on the heels of federal surpluses.
1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.
Here is what happens when we reduce the federal deficit:
Each recession was preceded by reductions in federal deficit growth. Recessions are marked by vertical gray bars.
The only part of the CRFB’s statement that sometimes can approximate fact is: “. . . lower borrowing costs for families and businesses.”
The CRFB is confusing interest paid with interest rates. Although increased federal debt will increase total federal interest paid, it does not equal interest rates.
It is a rise in interest rates that increases borrowing costs.
Interest rates do not just happen. They are set arbitrarily by the Federal Reserve.
The peaks and valleys do not match. In fact, a case might be made for an inverse relationship.
We’ll end with the final lie, this one supposedly from the CBO:
The Congressional Budget Office predicts that the economy will grow faster with debt on a declining path as opposed to a rising one.
Translation: “Debt on a declining path” requires federal surpluses. But we already have seen that federal surpluses beget depressions. The statement attributed to the CBO is diametrically wrong.
IN SUMMARY
The claim that Donald Trump won the most recent Presidential election is a big lie. Still, it pales compared to the really BIG LIE that has affected us since at least 1940, and probably before: The lie that federal deficits and debt should be reduced.
The BIG LIE is not promulgated by ignorance. It has a purpose, which is to widen the income/wealth/power Gap between the rich and the rest. If there were no Gap, no one would be rich. We all would be the same. The wider the Gap, the richer are the rich.
So the rich who run America try to widen the Gap by convincing the public that the federal government can’t afford to give them benefits (the same benefits the rich already receive.)
It’s the ultimate con job. It’s the BIG LIE.
Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
MONETARY SOVEREIGNTY
When any players are on the verge of bankruptcy, the other players can lengthen the game by changing the rules to provide money to the troubled players.
The players arbitrarily can change the price of properties, houses, and hotels. They can increase or decrease taxes. They can change the traditional “$200 for passing ‘Go'” to any number they choose. They can charge for property sales. They can do anything.
The Chinese government has the same powers. It can bail out anyone, reward anyone, and penalize anyone. Like Monopoly players, the Chinese are omnipotent when dealing with domestic financial matters.
#Monetary Sovereignty - Mitchell 