Opportunities lost
America has been tightening its belt steadily since Saint RayGun brought us the revelation of supply side economics (it’ll work this time, I promise) down from the mount. Every honest graph of the economy that doesn’t include Wall St gains shows we are riding a sinking ship and its leakage is clearly tied to our imposed austerity measures. I think that over three decades is sufficient time to judge an economic policy and that we can assume trickle down has failed, again. If we are smart, which there is no indication of in recent decades, we will accept this failure and move back to what had previously given us a half century of economic success and growth during the New Deal. It’s past time to consider a departure from failure before we repeat the lessons of our previous attempts at supply side economics and find ourselves once again deep into global depression.
Over those three decades we have not only seen personal income (again discounting Wall St) flatline, but we’ve not made any investments in the critical infrastructure of our nation, including healthcare and education. It’s good to be mindful of expenses and not be extravagant, but if you don’t occasionally paint your house or mow your lawn you will suffer a loss of value in the primary investment in your net worth. Our house is falling down around us. This approach to our economy becomes even less justifiable, even within gold standard logic, when one considers we can borrow at negative interest compared to inflation, meaning that we are “saving” money by forcing our children to spend more, and likely at higher interest when they inherit the house. A debt free third world country is no great gift.
The primary reason we have locked ourselves into such insanity is that we keep sending people to Washington to manage the “economy” and they insist on managing the budget instead. This is true even of some of our most highly accredited economists, and the dialogue quickly degrades to pissing matches over who should be taxed and what our responsibilities are to our fellow citizens, with everyone picking sides to advocate for the worst possible combination. The liberal side of the argument wants to tax business and wealth to distribute the GDP more “fairly” while the conservative side wants to cut taxes for the wealthy and also cut spending, regardless of how it impacts the people. And both sides point to the national debt as the bane of all things good, but with opposing justifications. We aren’t going to win in a situation where both sides are wrong, disastrously, but none of us is as stupid as all of us.
With a sovereign currency, which our is, taxing to redistribute wealth is totally unnecessary. The government can “distribute” wealth to whomever it wishes and no prior taxation or debt encumbrance is required. These concepts seem foreign to us only because they have been largely misunderstood by most, including some “leading” economists trained from concepts left over from the gold standard, and they seem so counter to how money works for our personal success or failure. This contrast to what we think we know about economics is what feeds the anti-government forces within our political system with cries of “bankruptcy”, “enslaving our children”, and “fiscal irresponsibility”. The government can create currency to pay its debt just as easily as it can for any other purpose and “CAN NOT” become bankrupt or insolvent unless it chooses to do so by not authorizing payment of its obligations. The fact that we have currently many in authority that would do (and have done) this brings into question their qualification and their intentions. That we have a considerable percentage of voters who see this as a positive in their leaders shows just how ill informed we are as a nation.
In fact, the only reason currency creation is (usually) accomplished with debt instruments is to set target bond prices and provide a backstop investment vehicle guaranteeing a interest floor for investors. Currency can be created without impacting any created prior or incurring interest debt, but we’ve been doing the debt thing so long that it has its own momentum in the tight circle of economists. If you ask an average conservative if s/he would like to eliminate the debt you get a big grin and “of course” as a reply. However, if you ask the same conservative if s/he would eliminate Treasury instruments to accomplish eliminating the debt you will see a lot of consternation and mental gear turning, usually accompanied by a blank stare. They have been conditioned to Pavlovion responses to debt and savings that generally lead to a meltdown when they are confronted with the fact that the two can be represented by the same action or object, only differentiated by which side of the ledger sheet they fall on, public or private. This represents that public debt can be (is) private assets and the question of morality has no place in such fundamental math. Neither can be both bad and good, and to assign either of them a moral value means to also assign the same value to the other.
Both taxes and savings (wealth) are net drains on the economy and must be compensated for by the currency issuer if we wish to maintain stability. Currency not in circulation (velocity of capital) can not create inflation by its simple existence, so the federal government can inject currency into the economy without much concern as long as the supply of goods and services the currency represents is sufficient to absorb the injection. While trade deficits, also a drain, come marginally into play, the public deficit/debt will normally reflect whatever currency has been sequestered by capital reserves on the private side in a well managed economy, and therefor is not a meaningful thing to be concerned with. Paying the debt obligation is no different than creating currency for any other purpose, so it matters little if currency is borrowed (central bank) or paid (government contracts and benefits) into the economy. What does matter is whether or not the economy has the fuel needed to provide a level of goods and services sufficient to sustain reasonable growth and general prosperity.
Our economy is not a simple mathematical formula of taxes, deficits and debts. It is a living thing that can experience joy and feel suffering because it is the people. It is their homes, their food, their education and health care. It is the infrastructure that they depend upon to be productive and build the future they dream of for their children and all subsequent generations of Americans. Many in our government currently would like to remove from the federal government the ability to be a positive force to ensure these things for all Americans who desire them. Some even express a desire to return to the limitations and illogical constraints of the gold standard, or to give economic power strictly to the states that “ARE NOT” sovereign issuers of currency, subjecting citizens to those same restraints.
These are the same people who are the purveyors of suffering, and even death, willing to create those among their constituents to serve the purpose of reducing an entirely meaningless debt via imposed austerity on all but the elite. They currently manage the sovereign currency and interest on the debt to maintain a pool of unemployed to be available to business on demand and suppress the wages of all by doing so. This is indicative of a fascist government that is serving much different masters than those who elect it. Making the transition to a positive and vibrant economy for all doesn’t require radical change, as it is easily accomplished by simply acknowledging the truth of the economy, currency, and debt and governing in the best interests of “all” the people. We are being purposefully starved of the necessary currency to sustain such an economy and only the will of our “REPRESENTATIVES” (not leaders) is perpetuating it. Please make sure that any politician receiving your vote is well versed in Modern Monetary Theory and states their intention to use it to the benefit of America.
