The Trump economy does not make sense even in brutal dollar terms, and it certainly does not make sense in human terms.
This is quite true, but it must be pointed out that the Trump economy is not that much different than the Obama economy that was, for all practical purposes just an extension of the Clinton economy. It is all easily identified as America’s experiment in neoliberalism that depends on “markets” to distribute all things necessary to sustain life.
The Flint water crises was not caused by Trump, or even begin in Trump’s term. It wasn’t unknown to Obama or any of his administration, just as the mistreatment of Native tribes and their tribal sovereignty to secure the environmentally dangerous right of way for the Keystone pipeline was all on Obama. Once one accepts the grand lie that only business and markets can provide anything positive for Americans and that their government is always a “cost” to the greater economy, having to go, hat in hand, to the wealthy to secure funding, issues like Flint and Standing Rock are guaranteed to continue and multiply.
No matter how beneficial a government program may be, or how dire the need for it is, the first question that must be answered before our representatives will even consider it is “How will you pay for it?”. Many theories exist about how the monopoly issuer of the currency got locked into this bizarro world backward thinking, but none of them effectively show any path away from it as long as the general consensus of voters is that money is created by business and banking and that government must tax or borrow funds to spend, just as we do as “users” of our nation’s currency.
This errant view of our monetary system is nowhere more evident than in the constant battle in Congress over deficit spending and the national debt. Both major parties agree that both are bad and only differ in their concept of how bad, or who should shoulder the “burden” with higher taxes or spending cuts/austerity. We abandoned the gold standard in ’71, but never adapted our approach to government finance to the new reality of a sovereign fiat currency that is not dependent upon revenue from any source.
In fact, the federal government neither needs nor uses revenue to spend, and borrowing as a source of revenue has never been possible because one cannot borrow what doesn’t yet exist. Only by spending more into the private sector than it taxes can government create the excess reserves needed to purchase bonds from our Treasury. It is far more accurate to state that deficit spending at the federal level “funds” both taxes and Treasury debt than the reverse.
So, if the government must spend before it can borrow, or tax, then why do either? The obvious answer is inflation control and to drive the need for the currency to enable real resources to be made for sale in the private sector. The strength of a currency depends upon the government’s ability to levy and collect taxes, making it the denomination of commerce/contracts and store of the value of resources. However, both purposes are made moot with balanced budgets that claw back 100% of spending.
A prolonged balanced budget at the federal level is a theft of resources from the private sector and the death of a nation’s economy in spite of being the holy grail for politicians pandering to voter’s economic ignorance. GDP growth can mask structural weaknesses by rolling over private debt, but private bank created money cannot net retire the debt that created it. An economy depending on such growth without public money to retire debt in a timely way and store value is made fragile by that lacking and usually crashes at the first hiccup in the business cycle.
Bringing stability back to the economy then requires public money injections in the form of automatic stabilizers funded from new currency creation to protect vital supply chains from domino-like collapse. Without the ability to create such money on demand, Congress would be faced with the very real question of which national resources should be sold off to foreign interests or which other country’s currency to accept in denominating debt to provide resources to sustain the private sector economy.
I think the results of either are clearly understandable. Neither would ever pass Congress in that framing, but many representatives are laying the groundwork for such a choice by considering a “balanced budget amendment” to our Constitution. The abject and economy killing ignorance that must exist in our Congress for such to be considered, although the oligarchs who understand money would never allow it, is an embarrassment to our nation.
That ignorance is directly responsible for millions of American deaths, not from any honorable sacrifice in war, but from the lack of resources, both hard and soft, in the economy. When all spending must pass “pay for” tests it is impossible to fund both economic growth and the extreme wealth accumulation that we use to judge our nation’s affluence. We must recognize that any suffering that can be mitigated by spending is entirely a political choice, not prudent economics, before we can reverse many of the fallout effects of needlessly underfunding the private sector to further enrich the oligarchs and banking. We can, at the federal level, “afford” anything that is for sale in the currency that Congress is Constitutionally mandated to create “for the common welfare”.
