Saturday, November 16, 2013

This One Simple Concept Debunks all the Deficit Crisis Handwringing

One simple tale proves all the debt hawks are full of BS, but first, lets have a meeting of the minds as to what a deficit hawk is. The deficit hawk is the one heard constant badgering about the big debt clock... we are up to 17 trillion plus in debt now... We cannot afford to spend money. We must cut SNAP to kids and seniors... We have to cut government spending.... We are creating this huge debt which will have to be paid by our children... We are burdening future generations with our debts now...

I write about this huge myth- misunderstanding or willful plotting- a lot because it is such an important issue as we come to grips with real problems and real issues in this country. I will add in a variety of links and topics on this subject- but let me put this whole concept of a government deficit as a huge and growing problem to rest in one simple concept.

How else do we reach out and create the full economy even as our technology puts people out of work... why- if in any one year we spend money to fully fully utilize all the products and services that are able to be provided by America's businesses- why would we consider that a debt that we owe?

In fact, if money is not spent we are not fully utilizing all the value our economy was able to create in a given year. Where can this money come from? It can come from consumers and businesses- but with a struggling economy and tens of millions out of work or underemployed how are consumers going to create enough demand and why would business invest more when they know demand is down because the economy is down.

So why should not the government invest - increase the "deficit". What to invest in can be a national dialog... wouldn't that be a pleasant change in the wind coming from Congress.

Imagine government spending creating a demand for products and services much closer to full employment and full utilization of our human talent? It is just filling out the budget to cover lost production.. If we do not do this, there are investments lost forever because the time when they could have been made are lost. This is the true loss for our future generations. The cleaner water and air we could have invested in... a more robust health system... green spaces...

And, the Federal Government does not have to borrow to spend. Here is an interesting link describing how the Federal Budget does work under Fiat money. Stop and move beyond your present thinking about the Federal deficit. This mythologizing about the dangers of national debt are debilitating to growing the economy and putting people to work. We need government investment. We have real problems to solve. Solutions that start with investing money in the path to solutions.

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