Today's Elites

Thursday, July 28, 2011

Monetarism is Voodoo Economics

Today's Mother Jones headlines this correct assessment:
Memo to Tea Party: The US Government's Budget is Not Like a Family's


Unfortunately, as expected. they get it wrong. Again. Their analogy is that not raising the debt ceiling is like not paying the rent. In other words, they have no problem in letting the financier interests walk all over us.

Both the tea party and their arguments are wrong. The federal government can issue credit, families cannot. On the other hand, the federal government can stop bailing out the gambling casino speculators that issued worthless debt known as derivative securities. This whole debt ceiling issue is bogus. The Federal Reserve issued 16 trillion dollars in so-called emergency loans in 2008 to bail out the issuers of these derivatives according to the GAO's audit. As long as we honor this lunatic speculation, there is no way out of the crisis. What is needed is a return to FDR's war against these corrupt interests. Cut them loose and reinstate Glass Steagall.
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2 comments:

  1. adiantum7:15 AM

    The Federal Reserve could create 14t dollars and use it to buy back all the treasury bonds from their various owners throughout the world. Of course, no one would want to buy US treasuries because they would be afraid they would be stiffed on a commitment to pay interest over a specified period of time. Most likely the world would find another currency to transact business with--perhaps the yuan or the euro.

    Or, the US treasury could issue millions of dollars of bills that could only be used by American businesses to do work like infrastructure improvement. As long as workers paid in these bills could find American businesses to accept them--like farmers for the food they buy--the bills would be honored. Samsung, Hyundai, or Apple would probably not accept them--but maybe that would not be so bad. We could use this "funny money" to construct American factories that manufacture the goods we used to manufacture. Local currencies have been in use since before the Great Depression. How about a new national currency to be spent here only?

    The point is, the American economy does not resemble a household budget at all. Households cannot create lines of credit and the government can. I do not want to overspend at the national level because interest payments will sink us. But borrowing at near zero percent interest--or even at zero percent interest for socially worthy projects--has no downside. We should be doing more of this kind of spending, not less.

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  2. Thingumbobesquire7:17 AM

    This is a correct line of thinking. The power to create credit also implies the power to extinguish worthless debt. Debt is not sacrosanct. Credit must be viewed only as what is necessary to the continued improvement of the long term standard of living of the nation's population. This is the very essence of what Alexander Hamilton identified in his reports to Congress on Public Credit and Manufactures. It is no accident that the same traitor Aaron Burr who was the founder of the Bank of Manhattan,who did indeed believe that monetary debt is sacred, was responsible for the death of Hamilton. Today's City of London and Wall Street financial houses interests likewise believe that humanity must be sacrificed in order to keep their worthless anti-productive gambling casino derivatives (formerly known as Bucket Shops) game going. Obama is a tool of these interests, just as Burr was before him. Remarkably, Kucinich has it right on two counts now. 1.) Impeach Obama, 2.) The sovereign US government should downgrade Standards and Poor's rating agencies inter alia, 3.) re-institute Glas Steagall.

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