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In Praise of Public Debt

Originally published at http://www.commondreams.org/views/2020/09/15/praise-public-debt

Afterall, no nation ever got into trouble endlessly printing money and driving debt up above the GDP. Weimar Germany? Argentina? Bueller? Bueller?

I have a splendid idea. Let’s cut ol’ Ted Cruz buddy’s pay to zero, zero out his bank accounts, and keep his payments–for whatever he still owns on like his home, say,–mandatory and see if he still wants to stop the government from printing Monopoly money that will keep him from being homeless after the bank forecloses on his home. Eh, Ted? No? See how happy your are after seeing Wall Street get $trillions of free money starting last September 17th, way before the c-virus pandemic was in the news, or when the CARES act gave $5 trillion more in free loans. Fuck you, Ted, specifically, and Congress in general for not caring about the taxpayers that pays all of you members the over the top salaries. Gads, I need to stop reading Common Dreams before dinner time. I’m tired of watching my nightly movies with a bad case of heartburn from reading about the idiots running things in the country.

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The gubmit’s borrowing capacity is so overextended from borrowing to fund corporate welfare (military industrial media infotainment complex (MIMIC) being the biggest recipient) and tax cuts for billionaires that they can’t borrow to fund “domestic” programs.

Japan has a debt to GDP higher then Germany ever did. These are the Countries with the Highest debt to GDP in the world.

1>Japan
2>Greece
3>Portugal
4>Italy
5>Bhutan
6>Cyprus
7>Belgium
8>United States of America
9>Spain
10>Singapore

Note not a single one of the Nordic Countries there. They do have debt but they INVEST that Debt in the well being of the people.

Note the USA has a higher Debt then any Nordic Country. The difference is they invest that debt in their war machine and in making the 1 percent richer. They have little in the way of Social spending programs when compared to Finland or Sweden.

There also a whole pile of Countries with very little Debt when compared to GDP. Russia is one. Haiti is another. Russia has a debt to GDP of around 17 percent. Haiti sits at 33 percent.

Do people live better in Belgium, Haiti or Japan or Russia?

The lesson is that debt does not have to be onerous while at the same time having no debt does not mean everyone living happy.

~https://worldpopulationreview.com/countries/countries-by-national-debt

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And yet, with our national debt well over annual GDP by almost $10 trillion and climbing dramatically, inflation is nil outside of real estate (the banks, stoked by money not even officially borrowed by Uncle Sam, corner that market), healthcare (another fully government subsidized industry), and education (where the customers are subsidized by wealthy parents or again by the government).

If anything, there are large sectors of the economy in which prices keep relatively falling. Clothing, electronics, gasoline, home heating gas, many foodstuffs.

Here’s are some reasons that debt doesn’t matter: A lot of our debt is held by The Federal Reserve, they can cancel what we owe them with a click of a button. And The Federal Reserve, through quantitative easing, injects trillions into market – stock market investors are loving it. Interest rates – thanks again, Federal Reserve – are close to zero, we borrow money for free.

I bring up the Federal Reserve (somehow not mentioned in this article, which erroneously claims that only Congress can print money!) to highlight the artificiality of the entire system. Only collective faith in the $US gives it value – and only a default on our debt or abandonment of the $US as the world’s reserve currency would erode that faith. You brought up Argentina, by the way – they defaulted on their debt, as did Iceland, and it worked out well for both. The switch to a different reserve currency, now that concern has some legs. Yet, even with the world eager to disassociate themselves from Trump, there the $US sits, king of the hill.

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This is the most ridiculous article I’ve read here - in a few days at least. This guy is recommending we drive up inflation by printing more money to try to magically revive a broken economy that is based on capitalist greed, and then counteract that inflation by increasing taxes? If solving the problem eventually involves increasing taxes then why not just do this from the start and save everyone from painful inflation? Of course the answer to this is that the republicans will never allow taxes to increase - especially on the wealthy and corporations - either way.

The other problem with increasing the debt indefinitely in the hope it will revive the economy is it also increases the percentage of the budget that has to be spent on interest on the debt and debt repayment so it leaves less money for anything else. The ultimate solution is to cut the defense budget dramatically since this is the largest area of discretionary spending and raise taxes on the wealthy and large corporations back to where they were before reagan took office. Then you would have plenty of money to fund a recovery based on green energy and other infrastructure projects. Good luck with that in this dysfunctional government!

Don’t let the corporate Democrats off the hook. The wealthy and large corporations would not allow their corporate Democrat dependents to implement your otherwise spot-on-correct ultimate solution.

I noticed the lack of comment on the Federal Reserve as well. Note that coinage bypasses the Fed. I have been trying to figure out how to only spend coinage and let paper money go. Back in the day in Norfolk VA, there was a lot of complaints about the Navy. They responded by paying all the sailors in $2 bills. Once the town was flooded in $2 bills, the people of Norfolk realized what their livelihood depended on. Perhaps if we could pay all our bills with coinage, we could make a point to the Fed and get US notes printed again…although many think that was part of the reason Kennedy took a bullet.

Interest rates are at 0%. Interest payments are dropping as a percentage of our total outlay.

And where’s that inflation everyone’s been warning about for 20 years?

Inflation went where the Fed poured trillions, the stock market, creating what is known as a bubble- fantastic solution for the unemployed millions.

In the street, Covid and unemployment money made up for money that had gone missing.

Interests payments may be dropping, depending on your starting point, as a percentage of our total outlay, but they are too high nevertheless, and don’t bode well for the future when interest rates rise again.