Tag: debt bomb

–I’m angry with the Chicago Tribune

An alternative to popular faith

I live in Chicago, and I’m angry with the Chicago Tribune. It continues to be clueless about economics. In a June 15th editorial, the Tribune said, “With 79 percent of Americans rating (the federal debt) ‘extremely serious’ or ‘very serious,” it tied with terrorism for the top (‘scariest threat’). So what does the Obama administration plan to do about it? It proposes to pile on more debt. . . . Americans have good reason to be so worried about the . . . that someone will have to repay.”

Does the term “exploding national debt” sound familiar. If you go back and read TICKING TIME BOMB , MORE BOMB NONSENSE and DEBT BOMB REDUX you will see that the Tribune and its media friends have been referring to the federal debt in explosive terms for the past seventy years! Think about it. For seventy years the media has told you a debt bomb is been ready to explode, and today we are no closer to any of those dire forecasts than we were in 1940.

Does daily failure of prediction stop the Tribune? Nope. Tribune readers keep following their prophet up the mountain to await the end of the world. When the world fails to end, do they ever begin to question their leader? No, they march back down, and sit mesmerized as their prophet repeats the same old predictions – for more than seventy, long years.

Here is what outrages the Chicago Tribune today: “$50 billion in emergency spending to help state and local governments . . . avert massive layoffs of teachers, police and firefighters . . . Block a 21 percent scheduled cut in reimbursements to doctors who treat Medicare patients.”

Yes, helping avert layoffs of teachers, police, firefighters and doctors truly is awful, especially when compared with the unsupported, unproven, patently wrong “risk” of a federal debt that in the Tribune’s misguided words, “someone will have to repay.”

If you read some of the posts on this blog, starting with SUMMARY you will see there is no “someone” who has to pay. Taxpayers neither owe nor service the federal debt. There is no relationship between federal income and federal spending. The so-called “debt” merely is a balance sheet calculation of net money created by the federal government, a calculation that neither inhibits, nor is inhibited by, federal spending.

A curse be upon the person who first labeled this balance sheet column “debt” rather than the correct, “net money created.” Incorrectly calling it “debt” has misled millions of otherwise intelligent people, and worse, has prevented important programs (See: CHILDREN & GRANDCHILDREN) of benefit to us all.

I’m angry with the Tribune, not because they are clueless. Each of us is clueless about many things. I’m angry with them because they have such power to make a positive difference in our economy, but instead they are too intellectually lazy to learn, preferring to parrot the popular myths of the day. What a waste.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity

–Debt Bomb Redux

An alternative to popular faith

Readers of this blog know the debt hawks have been telling us about the imminent explosion of the “debt bomb” since 1940, seventy (!) years ago. See: Federal debt a ticking time bomb/ and More debt bomb nonsense/.

Year after year, for seventy long years, Henny Penny has predicted the sky was about to fall, then each year has had to say, “Well maybe next year.” How often and how long can one repeat the same wrong prediction and still maintain any credibility?

Here’s the latest:

(CBS)The “Where America Stands” series: WASHINGTON, April 8, 2010; American Debt Threatens Status as World Power; Can America Still be the World’s Greatest Power, as the World’s Greatest Borrower? By Lara Logan
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“James Baker, Former U.S. treasury secretary, and U.S. secretary of state. ‘We’re in a real pickle,’ said Baker. ‘We will not be as important on the world scene if we continue to be a tremendously large debtor nation.’ […] I don’t think [America’s decline is] going to happen provided – one big proviso – that we deal with this debt bomb.’”

Although “debt bomb” is a catchy phrase, no one really knows what it means, nor does anyone supply evidence the federal debt is a “bomb.” Use of that phrase is a sure sign the speaker has no idea how today’s economy operates.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

–More “debt bomb” nonsense

An alternative to popular faith

Well, they just keep on doing it. The February 8, 2010 Forbes Magazine’s cover story is titled, “The Global Debt Bomb,” by Daniel Fisher.

It contains the usual scary words, for instance: “The world has issued so much debt in the past two years fighting the Great Recession that paying it all back is going to be hell –for Americans, along with everybody else. Taxes will have to rise around the globe, hobbling job growth and economic recovery.” Etc., etc., etc. You get the idea.

Never mind that this is exactly the same “sky is falling” commentary — even using the words “debt bomb” — we have been hearing from pundits since 1940 (See https://rodgermmitchell.wordpress.com/2009/11/24/federal-debt-a-ticking-time-bomb/). Never mind that “government debt” is an exact synonym for “government money,” which needs to grow if an economy is to grow.

Never mind that “paying it back” is not, and since 1971 (the end of the gold standard) never will be, a problem for a sovereign nation with the unlimited ability to create money. Never mind that using this unlimited ability has not caused inflation, which in any event could be cured by raising interest rates. And never mind that taxpayers do not pay for federal debt and tax rates are not related to federal debt.

In short, never mind history, and just keep making the same old, wrong predictions, using the same old words, because let’s face it, fear-mongering sells magazines, and why make up new words when cribbing the old words is so much easier.

Pick up that issue of Forbes, read Fisher’s article, and wherever you see the word “debt” replace it with the word “money.” That will show you the reality. Also, if you know how to contact Fisher, you might ask him to supply historical proof that, as he says, “. . . the taxpayer will have the devil to pay.”

Rodger Malcolm Mitchell
www.rodgermitchell.com