Comments on: We shouldn’t dread the debt limit

By: mick68

mick68 — Sun, 20 May 2012 16:40:24 +0000

It’s not the debt limit people fear, it’s the politicizing of the debt limit. Neither Dems nor GOP will give one inch to the other in this battle, both wanting to achieve their own agenda.

Fear the results of a broken, entrenched political system trying to agree on anything.

By: ad4mk4

ad4mk4 — Sat, 19 May 2012 22:16:20 +0000

When I read an article like that I don’t know whether people described there simply have no idea what they are talking about or whether they actually know how the monetary system works and they don’t care about the consequences of their actions.

So what is the practical difference between Treasury liabilities (bonds) and Fed liabilities (currency, dollars)? (There are a few but these are minor). The gravest mistake made by these people is that they treat currency as a pre-existing commodity which needs to be borrowed or obtained by levying taxes before spending. (Gold standard was abandoned in 1971.) This is true for the households or individual states but it is false for the government sector as a whole. Money in the broad sense is injected to the non-government sector by the act of spending and it is removed by taxation.

See http://moslereconomics.com/wp-content/po werpoints/7DIF.pdf and contact Warren Mosler on his blog.

The root cause of the current slightly larger budget deficits is private sector debt deleveraging. Credit money is destroyed when loans are repaid (bank liabilities and assets disappear) while existing savers do not want to spend their savings. Restarting the growth of the credit financed bubble is currently impossible. An external source of money is essential to allow the natural process to take its course as in the 1930s-1940s. The only source of money may be the government sector running deficits as large as they are desired by the non-government sector because the foreigners don’t want to reverse the American trade deficit, too.

Public debt is not a burden to the future generations as proven by Abba Lerner. How did America finance WW2? What would Rep Boehner have done in December 1941? Would have he told the President that the war with Japan couldn’t be financed because the children would have to pay back the debt and therefore America needed to be surrender? Please compare the economic policy then and now – and the long term results.

If the West does not survive the current experiment with throttling the real economy with austerity and the Chinese fully dominate the world by becoming an economic number one, a little golden statue of Mr Petersen may be erected in Beijing to commemorate the person who contributed the most to conning the Americans into committing an economic suicide.

By: sandblast

sandblast — Fri, 18 May 2012 21:57:14 +0000

While many of our politicians are not worthy of respect, the fiscal quagmire is the creation of our anti-tax agenda and our greed-blinded banking elite. You may recall that not much over 10 years our federal budget was in surplus. President Bush, either through stupidity (yes, he really was stupid) or design (yes, Republicans have actually advocated starving the government by running up the deficit) turned that surplus to deficit at a faster rate than any president in history (just the facts, ma’am). The politicians didn’t invent the massive poker games that the giant banks and hedge funds play with our pensions and 401k’s, but they had to cover the losses (sad, but true). That’s where the deficit came from – GWB’s tax cuts and covering the losses from the Big Men’s finanial poker. Social service spending, and even medical spending with it’s ridiculous inflation rate are not to blame for our current deficit. It’s the rich guys. Period. Remember what GWB said, “the haves and the have mores. I call them my base.” So who has even more now. Kind of like that was the plan, isn’t it. So that’s where we are now. What about the future? Should you be worried about too much spending on Social Security and Medicare? Naaaa! Be worried about the interest on those trillions in debt. Know how to fix that? Restore taxes to the 1980′s level on the guys who crashed the system and walked off with their pockets stuffed with your money (pensions and 401k’s and bailouts, remember). We don’t owe them, they owe us. As Ross Perot said, it’s as simple as that.

By: NewsLady

NewsLady — Fri, 18 May 2012 05:16:36 +0000

Congress should have gotten its fiscal house under control a long, long time ago. Both parties are guilty. All they care about is getting re-elected, which they do by getting federal money spent on their districts. Money that hasn’t been made through any useful service, but is collected from all of us through taxes or created via the magic printing press. Which is really the only tool in the fed’s “toolbox.”

Using it will not only not solve today’s problems–it will lead to massive hyperinflation and an economy that will make the crash of 2008 look like the good old days we’ll never see again.