September 27th, 2015
in Op Ed
by Rodger Malcolm Mitchell, www.nofica.com
Sen. Rand Paul, Kentucky Republican and 2016 presidential contender, said he could not support any bill that "continues to add to our nation's mountain of debt." (By Tom Howell Jr. - The Washington Times - Thursday, September 24, 2015)
Congress, the media and the economists have been telling you the same Big Lie since - well, forever. What the hell is the problem?
The Big Lie, simply stated is this:
"The federal debt should be reduced. Whether its federal debt or personal debt, being in debt is bad."
But why is federal debt bad?
Will the federal government default? Will the federal debt cause inflation? Will our children have to pay the federal debt?
No, no and no.
So, what exactly is the problem with the federal debt?
Rising federal debt threatens to choke economic growth within a decade, beginning a death spiral that will sap revenue from government programs even as demands grow, forcing the government to borrow even more, Congress' budget watchdog said in a frightening report Tuesday.
Budget cuts or tax increases now would help avert that scary scenario, leaving the economy far stronger than it otherwise would be, the Congressional Budget Office said.
The next few years will show solid improvement in the budget as the effects of the stimulus wear off.
So let's get this straight: Tax increases make the economy stronger by . . . by what? By removing dollars from the economy?
Are we supposed to believe that reducing the money supply increases GDP??
And that federal spending, which adds dollars to the economy, should be decreased?
What branch of economics claims that adding dollars to an economy, particularly at a time of extremely low inflation, depresses the economy?
And finally, do we need the effects of the stimulus, which by definition stimulated the economy - do we need those stimulative effects to wear off?
Earth to CBO, Earth to CBO. Come in please.
And then we come to the infamous "debt ceiling," the law that says,
"Beyond an arbitrary limit, the U.S. government should not pay for what it already has bought.""
Right. Congress and the President first decide how much to spend and tax, and then the debt ceiling determines which debts they will pay, after all the spending and taxing.
If that makes sense to you, feel free to join the CBO, drifting somewhere on a distant planet.
Returning to earth, here are the simple facts:
In 1939, the federal debt was $48 billion.
In 1972, the year the U.S. government became Monetarily Sovereign, the federal debt was $436 billion - a 9-fold increase in 33 years.
Last year, the federal debt was $18 trillion - a 41-fold increase in 43 years.
Yet here we are: Despite the CBO's ludicrous claim about a "death spiral," the federal government still has no difficulty paying its debts (phony "debt ceiling" notwithstanding).
And despite debt-nuts' incessant warnings about hyper-inflation, our inflation rate is as low as it ever has been - so low as to concern the Fed.
And with today's federal tax rates at relatively low levels, nobody's children are paying for past federal debts.
So again, what the hell is the problem? Why do we see headlines like these?
- The Treasury Department estimated (when) the government would hit its $18.1 trillion borrowing limit
- Highway trust fund runs out next summer
- Social Security disability payments will run out of money in 2016
- Medicare: Running out of time and money; The crisis is coming-with no easy fix in sight
- The United States Postal Service is in deep financial trouble
And why does the Big Lie continue to be told and believed, year after year:
FEDERAL DEBT, A TICKING TIME BOMB Sept 26, 1940, New York Times: Deficit Financing is Hit by Hanes: " . . . unless an end is put to deficit financing,to profligate spending and to indifference as to the nature and extent of governmental borrowing, the nation will surely take the road to dictatorship
Our politicians, media and economists long have known that the public is economically ignorant, and will believe the same lies, even when the lies become laughably obvious.
The same warnings, since 1940 and earlier, about federal debt - yet the debt grows, and none of the warnings come true, the "time bomb" keeps ticking, and still the public believes.
Just like in the Peanuts comic strip, where Lucy repeatedly pulls the football away before Charlie Brown can kick it - and Charlie never catches on - the American public never catches on to the fact that the Monetarily Sovereign federal government cannot run short of its own sovereign dollars.
What is the purpose of the Big Lie? Very simple: Federal deficit spending benefits the poor and middle classes far more than the rich.
The rich run the government (via campaign contributions and promises of lucrative employment later), the media (via ownership) and the university economists (via university contributions).
The rich want the Gap between the rich and the rest to be widened, for without the Gap, no one would be rich, and the wider the Gap, the richer they are.
So now, as we enter the silly season of the federal debt ceiling debates, remember this: The federal debt ceiling is a Big Lie, and what the politicians, the media and the university economists telling you will be bullsh*t.
But our Charlie Brown public keeps getting fooled.
THE RECESSION CLOCK
Recessions come after the blue line drops below zero.
Vertical gray bars mark recessions.
As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka "stimulus") is necessary for long-term economic growth.
- ·Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
- Any monetarily NON-sovereign government - be it city, county, state or nation - that runs an ongoing trade deficit, eventually will run out of money.
- The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
- Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
- The single most important problem in economics is the Gap between rich and poor.
- Austerity is the government's method for widening the Gap between rich and poor.
- Until the 99% understand the need for federal deficits, the upper 1% will rule.
- Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..