Monday, May 11, 2020

Another Comment in the Washington Post

Ho hum. Another clueless, old school article in the Washington Post, "The national debt is out of control", by Robert Samuelson. [snark]Samuelson has the same last name as a famous economist.[/snark] Where did they get this guy?

Note, I have an electronic subscription to the Washington Post, the article may be behind a paywall.

A "run against the dollar"? Not likely. The rest of the world can't get enough of the US Dollar. As the holder of the world's default reserve currency, it makes total sense for us to take on all this debt. It's an ugly job, but somebody's gotta do it. Meanwhile, as is mentioned, interest rates are incredibly low, and may go negative - which means the debt pays itself off over time. If you're really, really worried about the deficit, how about some big tax increases on the 1%? Wealth taxes? Sumptuary or luxury taxes?

Or, following the creative proposal of Mike Broihier, who is running for the Democratic nomination to oppose Mitch McConnell for Kentucky Senator, have the Treasury mint 25 $1 trillion platinum coins - of course bearing Trump's profile. [Come on Donnie, $1T coins with your face on them!!! Obama doesn't have those, no sir!] The Fed is required to buy these. National debt is gone, yay!

Seems silly, doesn't it? And it is silly. And the reason it is silly is that money is imaginary. All US Dollars are created by keystrokes at the Fed. Period. The fiat currency of a sovereign country is entirely a software construct. The Fed can always print more Dollars. Show me the national debt.

The only thing that is real, that is not silly, that we do need to worry about, is resources. If the Fed printed enough Dollars and distributed them to every US citizen such that each citizen could afford to build a mansion like Jeff Bezos has, I doubt there are enough resources to handle it. So it would definitely be inflationary and a bad idea. Printing enough Dollars to cover the COVID-19 shortfall of every US citizen, business, city, and state is just replacing what was there already and is a good idea.

Please read a primer on Modern Money Theory (MMT). We need to start living in the 21st century, not the 18th.

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