“We” Don’t Owe $16 Trillion; and You Don’t Owe $50,000

By letsgetitdone (Joe Firestone, who is Managing Director and CEO of the Knowledge Management Consortium International (KMCI). Originally published at Corrente.

Just saw John Sununu, one of Republicans favorite Bushie junk yard attack dogs all up in arms about the debt subject to the limit (the so-called national debt) reaching $16 Trillion dollars, and going on to tell people that every man, woman, and child in the United States now owes $50,000 to pay that debt off. Now, I’m here to tell you that all that is bull sh*t.

The debt subject to the limit is a debt incurred by the Congress and the Treasury Department because when the Government spends more than it taxes, the Treasury Department issues debt instruments in the name of the US Government even though it doesn’t have to do that in order to deficit spend. These instruments make the Government a debtor. But they don’t make any individual man, woman, or child in the United States a debtor. So, the idea that YOU owe $50,000 or even a single dollar is BS. You’ve signed no such note. You’ve not charged a single dollar on your credit card for this purpose. And you’ve not made a single promise that any portion of the national debt will be paid by YOU.

Well, you might ask: “Doesn’t the US have to pay the $16 T debt sooner or later by taxing, and won’t we then be responsible for our portion in the form of a tax obligation?”

The answer is that the US must pay all its debts when they fall due. It’s in the Constitution. If the Federal Government refused to do that it would be violating the Constitution, and would be illegal. But saying that the US must pay all its debts, doesn’t say that it must do so only by using taxation to raise enough revenue to run budget surpluses and pay those debts. It’s that lie that Sununu and the other austerians want you to believe!

How we pay US debts is up to us and is a political question. If we do it the way Sununu suggests we’ll condemn the country to permanent recession in the context of a perpetually depressed economy in which the wealthy get wealthier and everyone else gets poorer. That’s what a plutocratic tool like John Sununu wants. But there are other ways to do it.

The best way, because it ends unnecessary welfare for the rich and foreign nations is to stop issuing debt instruments, continue with enough deficit spending to create full employment and an economy operating at its full potential, and make up the gap between spending and revenue by using the legal power of the Government to issue 1 oz. Proof Platinum coins with arbitrary face values, and using the coin seigniorage profits gained by depositing the coins at the Federal Reserve. Here’s the process, along with the political speech explaining it to everybody.

Read it, and understand that There Is An Alternative (TIAA) to making every, or any, man, woman, or child pay $50,000 to pay off that national debt through taxing more than we spend, and that John Sununu, as usual, either doesn’t know what he’s talking about or is lying through his teeth about there not being one. Take your choice!

* * *

Lambert here: I originally commissioned this piece with the hope that it would be non-technical enough for Nathan, the Food Not Bombs activist from the Republican National Convention in Tampa, to understand and pass along.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

118 comments

  1. Pavan

    This kind of errant nonsense is why I haven’t looked at this site in months, and won’t bother looking again. One way or another, this debt will be paid. For example, savers now get 0% on their savings, because the Fed is artificially holding down interest rates. Meanwhile, inflation continues at somewhere north of 3%. Therefore, savers are already being forced to help pay the debt.

    1. F. Beard

      One way or another, this debt will be paid. Pavan

      According to MMT, the debt of a monetary sovereign is ITSELF a form of money so in a sense there is no National Debt. In other words, paying off the National Debt would simply be an asset swap of non-interest paying fiat for interest paying fiat.

      As for suppressed interest rates, it’s the banking system that is doing that. Ethically speaking, there should be no government backed money cartel. Then interest rates for fiat would be market determined. However, there should also be no legal tender laws for private debts so those who hope to lend fiat for usury might be frustrated by non-usury based money forms such as common stock.

    2. Lambert Strether Post author

      I like this quote from Thomas Edison from an early post by Beowulf on this topic:

      “But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good… If the Government issues bonds, the brokers will sell them. The bonds will be negotiable; they will be considered as gilt edged paper. Why? Because the government is behind them, but who is behind the Government? The people. Therefore it is the people who constitute the basis of Government credit. Why then cannot the people have the benefit of their own gilt-edged credit by receiving non-interest bearing currency… instead of the bankers receiving the benefit of the people’s credit in interest-bearing bonds?”

      1. TK421

        Have you ever read about interest/inflation-free money? I’ve always thought we could have a good discussion of that here at NC.

        1. F. Beard

          Inflation-free money would require, imo, coexisting government and private money supplies. That way, fiat would keep private monies honest and vice versa – via competition for the payment of private debts.

          1. jim beene

            Not if you controlled the supply by eliminating debt based currency and restricting the amount of debt free money issued on the past years GDP; only exceptions being acts of god or war declared against a nation.

          2. F. Beard

            That might work and certainly government should have a strategy wrt to its money creation but the allowance of private currencies is, imo, a needed check-and-balance in case government over or under issues its money.

            Besides, allowing the gold-bugs to play with their shiny metals might shut them up and teach them a lesson too.

    3. Rodger Malcolm Mitchell

      Federal debt is not like personal debt.

      Federal “debt” merely is the total of outstanding T-securities held in accounts at the Federal Reserve Bank.

      To buy T-securities, you instruct the FRB to debit your checking account and credit your T-security account. It’s identical with telling your bank to transfer dollars from your checking account to your savings account.

      When the federal government “pays off its debt,” it merely transfers YOUR dollars from your T-security account to your checking account.

      The federal government could pay all $16 trillion worth of “debt” tomorrow, simply by transferring the dollars in T-security accounts to checking accounts — no problem at all.

    1. BertS

      I’m quite excited to know that I can buy $1800 of platinum, pound the face of a dead president on it, and someone will willingly give me $16 trillion dollars for it.

      I’m planning my trip to Hawaii as we speak!

          1. Valissa

            Perhaps some irreverance vibration calibration needed… Beard is a pretty good punster, and is one of the more likely here to play along with word games. However, in this case I think he was both joking and slightly serious :)

          2. BertS

            Likewise, I laugh my cojones off whenever I hear a “goldgug” advocating going back on the gold standard. If the USG or anyone else ever went back on the gold standard the first thing they do is confiscate all of it.

            So if I were smart enough to have bought all the gold I could get my hands on back when it was $300 or $400 an oz, I would be a raving maniac MMTer right now.

          3. F. Beard

            Actually, I used to be a goldbug and did buy at less than $300/oz.

            But if government should confiscate gold, I’d expect it to pay a high price for it.

            Of course a gold standard is fascist but that does not stop the goldbugs from dreaming about a huge windfall on their gold hoards.

          4. F. Beard

            y’know how we have to worry about the NSA nowadays. BertS

            Yep. That’s why I rarely talk about resonant laser uranium isotope separation.

          5. BertS

            “But if government should confiscate gold, I’d expect it to pay a high price for it.”

            Doesn’t seem to be the way they do it, tho.

            Back in the early thirties FDR did “nationalize” gold. He made an offer you couldn’t refuse, $20 an oz or $10,000 fine and 10 years jailtime. A short while later they “fixed” the price of gold at $35. So this inverse ratio represents the relative deval of fiat.

            http://financialservices.about.com/od/EthicsCompliance/a/Hoarding-Gold-Was-Prohibited-By-President-Roosevelt-In-1933.htm

            Sorry to hear you have to keep your thoughts on resonant laser uranium isotope separation bottled up inside you. That must be quite a severe emotional strain.

          6. F. Beard

            He made an offer you couldn’t refuse, $20 an oz or $10,000 fine and 10 years jailtime. BertS

            Well, at least they got the current market price, didn’t they? How much of the present gold price is speculation on the return of the gold standard? Should speculators be rewarded by government? Yet, if they get current market price for their gold they will have been rewarded.

          7. BertS

            Well, it does get confusing don’t it.

            They got “market price” in fiat, the fiat was quickly devalued.

            The reason I don’t buy gold at present prices is I think it has discounted Armageddon, or at least halfway there.

            But I’m quite sure after all the smoke and mirrors the guv won’t be giving anyone a good deal. (except the rich and their buddies that evade any sort of capital control laws and have their gold stash in Geneva or the Caymens, or maybe some place in Africa we don’t know about yet.

          8. F. Beard

            the fiat was quickly devalued. BertS

            Relative to gold. But what is gold? Some magical measuring stick of real value? It isn’t. Instead, gold is an old tool of the banks to enable them to monopolize money creation.

          9. BertS

            Some magical measuring stick of real value?

            FDR certainly thought so when he conficated it. It has something to do with paying international bills to other sovereigns. They can get funny about accepting other kings paper, and want payment in gold instead.

          10. Valissa

            @BertS, I thought the first comments from each of you were hilarious…

            after that… http://stock.tobinphoto.com/photos/0001-0981.jpg

            btw, I’m surprised anybody uses their real name in blog comments, it’s much more fun to choose a ‘handle’ and I’ve had several different ones over the years. I picked this one after playing around with some language translators, then later found out people actually had this name in real life :)

          11. F. Beard

            They can get funny about accepting other kings paper, and want payment in gold instead. BertS

            They’ll take whatever can be used to buy US export goods. Nebraska wheat farmers have to pay US Federal (and state and local) taxes and for that they need US fiat which they’ll gladly accept from foreigners in exchange for their wheat.

      1. TK421

        How is that different from the government buying $100* worth of paper and ink and turning it into a million dollars in cash?

        *or whatever

          1. MrTortoise

            I suggest taking the hypothetical point of view of aliens descending in their flying saucers to earth to do business. They say the have three good ideas: one to make you happy, one to make you sexy, one to make you live another 200 years. They arrange an Expo. in Paris for January 1 2013. Would you go?

            Evil Smokin Joe says he knows the answer to the Riemann Hypothesis and he tells the Aliens (where else?) in Casablanca … At first, Evil Smokin Joe proves his mettle by solving before the Aliens the 8 other Clay Millenisime Problems in Pure Mathematics … The Aliens look at his 30,000 pages of papers in 5 hours flat. It checks out!
            Kudos to Evil Smokin Joe, think the Aliens. But, the Aliens really really want to know the answer to the Riemann Hypothesis … Evil Smokin Joe says: “Ok. What have you to offer me in exchange?”

            [to be continued … ]

  2. Mike

    WANTED: VILLAGE IDIOT

    Please contact Joe for further details and he will happily conjure up your share of the usury-racket servitude known as sovereign debt.

    Meanwhile, France is raising taxes for no reason at all, whatsoever.

      1. Carla

        Yves Smith, one of the very few influential bloggers who actually reads comments in response to posts on her blog. Good on you, Yves!

  3. F. Beard

    The best way, because it ends unnecessary welfare for the rich and foreign nations is to stop issuing debt instruments, continue with enough deficit spending to create full employment and an economy operating at its full potential, and make up the gap between spending and revenue by using the legal power of the Government to issue 1 oz. Proof Platinum coins with arbitrary face values, and using the coin seigniorage profits gained by depositing the coins at the Federal Reserve. Joe Firestone

    Amen!

    Now let’s see a similar article on dealing with US private debt which is also bogus. I suggest:

    1) Ban further credit creation by the banking system. This would be massively as existing credit is paid off with no new credit to replace it.

    2) Fill the deflationary hole caused by 1) with a metered, universal bailout of the entire US population, including non-debtors, with new reserves until all US deposits are 100% backed by reserves.

    The above allows a non-inflationary bailout of about $7 trillion (out of $40 trillion in US private debt). Additionally, the MBS owned by the Fed increase that amount since debt repaid to the Fed is essentially a dead end for reserves. Anyone know how much MBS the Fed owns?

    Coincidentally (?) Steve Keen recommends a universal bailout of about 1/2 GDP which would equal $7.5 trillion for the US.

  4. OMF

    Why bother making the coins Platinium. This is really just another version of Mr Burns’ Trillion Dollar Bill.

    What people don’t realise is that the Trillion Dollar Bill is actually a completely valid way of paying the debt. Well, maybe not all in one bill, but a million million doallar bills would do it. Or a billion $1000 dollar bills. Anyway, they’re all made of paper, and they’re all legal.

    The US government can print currency at will if it wishes to fund itself. It chooses not to do so, presumably in a (failed) effort to prevent monetisation of government debt and the resulting inflation. That system really isn’t working anymore, so it’s prbably time to just crank up the old Mint and clear the books.

    Either that or bankruptcy. Either way, the debt needs to be cleared.

    1. Clonal Antibody

      Why bother making the coins Platinium. This is really just another version of Mr Burns’ Trillion Dollar Bill.

      What people don’t realise is that the Trillion Dollar Bill is actually a completely valid way of paying the debt. Well, maybe not all in one bill, but a million million doallar bills would do it. Or a billion $1000 dollar bills. Anyway, they’re all made of paper, and they’re all legal.

      This is because there is a 1862 Legal Tender Act on the books, that limits the US Treasury from issuing no more than $400,000,000 in US Notes. Federal Reserve Notes are legally considered to be US Government Debt, while US Notes are not considered to be debt. So an issue of Federal Reserve Notes would be subject to the “Debt Ceiling” – which itself is a 1917 law which has long surpassed its usefulness (other than as a political football – and hence remains on the books.)

      The 1996 Platinum coin Law bypasses the “Debt Ceiling” and allows the US Treasury to mint platinum coins with an arbitrary face value (tbd by the Secretary of the Treasury.) Hence the platinum coin.

  5. Gizzard

    Lets ‘splain it this way for the hard to educate.

    Govt debt; what form does it come in? TBills, Bonds etc. If you have one of those what do you have? An asset. If you have a 100,000$ bond you have 100,000$ in savings

    Private debt; what form does it come in? Mortgage, credit card debt, car loan. If you have one of these what do you have? A liability. If you have a 100,000$ mortgage you will need to use at least 100,000$ of future income to pay it back.

    I would love for someone to give me a 100,000$ govt bond, I would not like it if someone gave me their 100,000$ mortgage.

    Look at it like this. If I have a Bond and no mortgage Im 100,000 richer, if I have both I net to zero if I have only a 100,000$ mortgage Im 100,000$ poorer.

    Give me lots of govt debt, in fact Ill take the whole 16 trillion!!

      1. gf

        Not really that difficult is it?

        But still a lot on this site STILL cannot grasp it as evidenced in some of the comments above.

        1. Gizzard

          its not that difficult but the only caveat is that most of us only hold very small portions (usually via a retirement account or insurance vehicle) of the govt debt. Its distributed (like all wealth in this country) very unevenly. What we should push for, sort of like F Beards proposal to have national stock equity, is that for all Treasurys issued for true public works projects, we ALL get a piece of the interest payment. Why not? Stop letting a few guys get all all the interest income from our govts spending.

          1. F. Beard

            Actually, I only push common stock as a private money form since it requires no usury or fractional reserves and is democratic (at least per share).

            As for government money, it should be spent into existence and some of it taxed out of existence as needed to control price inflation. A monetarily sovereign government should NEVER borrow money.

          2. Gizzard

            “Actually, I only push common stock as a private money form since it requires no usury or fractional reserves and is democratic (at least per share).

            As for government money, it should be spent into existence and some of it taxed out of existence as needed to control price inflation. A monetarily sovereign government should NEVER borrow money.”

            I totally get and support your common stock idea for savings within the private money system

            I suggest two things for the govt money system

            1) we stop referring to bond issuance as borrowing. Its just providing some interest on your saving of govt fiat

            2) we use a portion or all of the collectively saved fiat to be paid out as a citizens income. Stop the maldistribution of a public asset

          3. jim beene

            1) we stop referring to bond issuance as borrowing. It’s just providing some interest on your saving of govt fiat

            Whether we call it borrowing or interest, it causes debt when issuing currency or we would not have the present problem of debt of the nation and interest on the debt becoming equal to one another.

          4. Gizzard

            Jim

            “Whether we call it borrowing or interest, it causes debt when issuing currency or we would not have the present problem of debt of the nation and interest on the debt becoming equal to one another.”

            As the issuer and creator of the fiat currency there can never be a problem of making said interest payments on the savings of fiat. Obviuosly the rate of interest matters. If they paid 20% the affects would be different than if they paid 2%. Paying too high an interest could encourage too many to rely just on income from past savings and drop out of productive work, although this would be self limiting because once too many did this not enough goods would be being produced and we would see rapidly rising prices. But being “able” to make interest payments is a given and its nonsensical to suggest otherwise.

            But if an interest rate of 2% were guaranteed on saving of all fiat, think about how much one would have to save before they could generate say $1500/mo of income? It would be close to a million. Thats 1 million in forgone consumption before you get 1500/month. Thats not insignificant

          5. F. Beard

            1) we stop referring to bond issuance as borrowing. Its just providing some interest on your saving of govt fiat Gizzard

            Good point.

            2) we use a portion or all of the collectively saved fiat to be paid out as a citizens income. Stop the maldistribution of a public asset Gizzard

            That sounds good and since it is a dividend the amount could vary as needed to control price in(de)flation in fiat.

            Yep. The rich are already getting better than a citizen’s dividend – they are getting a guaranteed nominal return and in the case of TIPS a guaranteed real return!

  6. smokethebarbecue

    OK, if I got it right, your idea is to issue coins which are made of platinum, with an intrinsic value of a couple of grand, value them at a trillion dollars apiece or so, leave them on deposit at the Fed, which will then credit the treasury with the difference. How is this any different than QE, i.e printing money and lending it to ourselves?
    It has the same problem as QE, namely it fails when the financial markets decide come to the conclusion that future growth will not support the money supply growth. Because of the herd behavior of markets, this will probably happen suddenly in response to an external event.

    All the BS about “seigniorage” and “platinum coins”
    (yeah the law that allows this specifies “noble metals”
    but the coins could just as well be made of cardboard)
    serves only to obfuscate and mystify. Do yourself a favor
    and reread Galbraith’s quote on financial innovation.

    1. F. Beard

      It has the same problem as QE, namely it fails when the financial markets decide come to the conclusion that future growth will not support the money supply growth. smokethebarbecue

      1) QE is mostly about assets swaps with the banks – new reserves for sovereign debt. But banks are not reserved constrained anyway when it comes to lending – they are capital constrained and QE is a stealth way to recapitalized the banks. But that recapitalization takes time.

      2) You have it backwards. The financial markets have decided that the growth in the money supply is not enough to support future growth. More deficit spending is thus called for so the private sector can pay off its debt.

      3) The US wastes $400 billion/yr in interest payments to the rich. That should stop.

    2. Clonal Antibody

      It is very different from QE – QE bailed out the banks so that they did not go belly up. However it did nothing for the common person who is busy trying to get out of debt. They do not want to go into debt when they have no jobs. Loans, even at low interest have to be paid back.

      Without jobs and with a dropping aggregate demand, businesses lay off people. They do not hire new people. So the demand for the loans reduces greatly. The banks do not need deposits to make loans. They need a demand for loans.

      The only way out is for the US Government to step into the breach and spend like it has never spent before. Cut FICA taxes, increase unemployment benefits. Extend unemployment benefits – spend to develop new technology. Get the picture?

      In order to do this spending, the US Government needs to run large deficits. The deficits can be accomplished either by raising the debt ceiling (since all budget deficits are subject to the ceiling) or by minting the platinum coin. There is no other legal way. A**holes in the Congress are using the deficit as debt terminology to bring misery to the American people.

      Minting the coin is the way to get the deficit as debt terminology. Remember anything minted or printed by the US Treasury is NOT debt, while anything printed by the Federal Reserve IS debt! A matter of terminology and accounting convention!

      1. jim beene

        It is the old problem of the creditor vs. debtor and the creditor sets the rules under a debt based currency, instead of the national government

        1. Clonal Antibody

          In the US, the US Government is the ultimate creditor, and not the banks. The banks owe the US Government, and not vice versa.

  7. skippy

    Whom would have known that the Easter islanders only needed to create a token worth X value to replace the environment it had consumed. And everything would have been swell…

    1. TK421

      Ha! But those islanders had a tree-based economy, not a money-based economy, so a comparison like that falls apart.

      Some people have a big problem with the government arbitrarily assigning a value to something. But they happily accept US dollars from the ATM. There’s no difference between platinum coins and dollar bills. A $20 bill doesn’t have $20 worth of paper in it.

      1. skippy

        Which only makes matters worse imo.

        There is no correlation between physical reality and human platitudes. BTW it was a Moi economy, the next years wealth went to the winner, best of show comp thingy. That was the mental disconnect. Tress and all other resources were consumed purely for distinction, a gamed played to advert negative social out comes ie war et al.

        I have no problem with a government – of the people – assigning value, this is not the case. We have a government beholden to everything – one, but, the people.

        Skippy… Anywho the great unwashed masses have had their cognitive ability’s rerouted – distracted by the – dog and pony show[s – put on. So even if you got a – government of the people – their so conditioned – well…

  8. BenE

    This can’t be serious right?

    This is pure Zimbawean insanity. Even if I interpret in the best possible light as a legal loophole to bypass the debt ceiling, it’s still pretty crazy and obviously inflationary.

    I thought this blog was legit.

    1. F. Beard

      What’s insane is our money system. The last Great Depression caused WWII which killed 50-86 million people.

      Do you think that was sane?

      Will you allow this Depression to continue because of a lack of mere money tokens? Is that sane?

      1. BenE

        Will you accept to sell me your car if I give you a metal ‘token’ and I tell you it has the value of your car?

        More seriously, printing money does not actually create value it only redistributes it from people who are owed to people who owe it.

        Since wages, pensions and benefits are priced in money, it is an implicit reduction in income for workers, retirees and benefit recipients. It is the equivalent of a flat tax that disproportionately affect the poor because it is not progressive at all and they are the most vulnerable to the rising prices (inflation) it will create.

        1. F. Beard

          More seriously, printing money does not actually create value it only redistributes it from people who are owed to people who owe it. BenE

          Not necessarily. If a 100% reserve requirement for new loans was placed on the banks then approximately $8.25 trillion could be metered out to the US population without debasing the money supply. You see, the banks have ALREADY debased the money supply by driving the population into debt with credit.

          1. BenE

            Alright I’ll bite. That’s just putting more crazy on top of crazy. In this scenario, you let the government print money to cancel its debt but, in order to fight inflation, at the same time you pull most of the loan money out of the economy shutting down access to new credit and forcing people to pay their debt very fast which means most of their revenue would need to go to debt repayment/savings and they wouldn’t be able to buy much. But for people to keep their jobs, someone has to buy the things they produce, so either everyone is unemployed or the government steps in and buys everything being produced or hires everyone to keep the economy running while people pay their debt. The economy would basically be just the government buying things with printed money and distributing it out to the population. Even if this is just for a transition period it would be a catastrophically inefficient method of deleveraging vulnerable to huge amount of government corruption (since it would almost be the only buyer in the economy).

          2. F. Beard

            In this scenario, you let the government print money to cancel its debt BenE

            OK, I’ve mixed private and Federal debt. Sorry. But yes, Federal debt should be paid off as it comes due with new fiat. That should not be inflationary since the debt of a monetary sovereign is itself a form of money but one that pays interest. In fact, it might be deflationary because of the interest not paid. But what I had in mind with the $8.5 trillion giveaway was private debt.

            but, in order to fight inflation, at the same time you pull most of the loan money out of the economy BenE

            No. The credit money would disappear as it normally does when credit is repaid. It just would not be replaced with new credit debt.

            shutting down access to new credit BenE

            Yes since credit creation is a form of counterfeiting. However, new reserves would be metered to the population so that the total money supply (reserves + credit) would remain constant so neither price inflation nor price deflation should be expected. Honest (100% reserve) lending would take the place of credit creation.

            and forcing people to pay their debt very fast BenE

            Say what? I said no such thing. Debt repayment would proceed normally. The new reserves given to the population would ensure that.

            which means most of their revenue would need to go to debt repayment/savings and they wouldn’t be able to buy much. BenE

            Debtors would obtain help with paying their debts and non-debtors would receive an equal amount to honestly lend or to spend.

            But you have made me think that paying off the National Debt as it comes due would reduce the amount that could be given away to the US population without causing inflation because the former would increase bank reserves too and as soon as all deposits were 100% backed by reserves then the giveaway would have to cease to prevent increasing the money supply.

          3. F. Beard

            Even if this is just for a transition period it would be a catastrophically inefficient method of deleveraging BenE

            No. I see I have confused you by mixing private and government debt. Sorry.

            Ignoring government debt repayment, a ban on further credit creation would allow about $8.5 trillion to be metered out equally to the US population. That would allow very efficient leveraging because debtors would have help paying their debts and non-debtors would have new reserves to spend or honestly lend. Also, the economy should recover and that would help tax revenues at all levels of government.

          4. BenE

            Okay but moving money creation from being 10 parts in a central bank multiplied by 10 by the banks or instead 100 parts from the central bank with no multiplier doesn’t make a difference on the economy. It’s just a change of units on paper.

            Doing it using large amount of printing and forced deleveraging at the same time means you are pulling on leavers hard in opposite directions, a very imprecise way to affect money supply. Unless you are really lucky and able to achieve precise balance it will results in significant amount of inflation or deflation and might result in the economy losing control on the ratio between public and private spending.

            The same effects could be achieved with much more predictability, stability, efficiency not to mention legality by a combination of measured federal reserve money printing/QE, progressive taxes, temporary counter-cyclical government stimulus and a cleanup of corruption and moral hazards in investment banking.

          5. F. Beard

            Okay but moving money creation from being 10 parts in a central bank multiplied by 10 by the banks or instead 100 parts from the central bank with no multiplier doesn’t make a difference on the economy. BenE

            I have in mind NO central bank or a fully nationalized one that cannot lend to the private sector or buy or sell assets. Instead, the Federal Government would spend all of its fiat into existence and tax some of it out of existence again. Lending would be 100% reserve in the case of the banks and eventually would be the actual lending of reserves since everyone would (eventually) be entitled to an account at the nationalized Fed or US Treasury.

            The difference is the elimination of counterfeiting for the so-called “credit-worthy.” That is an enormous social change and one that is long overdue.

          6. F. Beard

            Doing it using large amount of printing and forced deleveraging at the same time means you are pulling on leavers hard in opposite directions, a very imprecise way to affect money supply. BenE

            I disagree. Putting banks out the money creation business should allow very precise control of the money supply by the Federal Government. The universal bailout would be metered to exactly replace the amount of existing credit paid off each month so that neither price inflation or price deflation should be expected.

          7. BenE

            You have wandered off subject. You are no longer talking about solving the debt problem with a money press but moving entirely to a new way of creating money which doesn’t solve the debt problem in itself unless this new system grows the money supply enough to create inflation.

            After we have moved to your system we are back to square one. Paying the debt by creating money within this system will still result in inflation which is a destabilizing and inefficient way of doing it compared to more conventional methods.

          8. F. Beard

            According to MMT, the debt of a monetary sovereign is ITSELF a form of money (except it pays interest) so paying it off as it comes due should not be inflationary. In fact it might be deflationary because of the interest not paid.

            But even if paying off the National Debt did prove to be inflationary, the repayment of private credit debt is deflationary so one might be balanced with the other IF further credit creation (a form of counterfeiting) was banned.

            And it depends who owns the sovereign debt. Sovereign debt owed to the Fed could simply be canceled. Sovereign debt owed to the commercial banks (bought with reserves) could be paid off with little price inflation risk as QE has proven.

            Sovereign debt owed to foreigners and the non-bank private sector is more problematic. Paying that off with new reserves might cause price inflation if done too aggressively. But at least with paying off foreign debt our exports might increase.

        2. TK421

          “Will you accept to sell me your car if I give you a metal ‘token’ and I tell you it has the value of your car?”

          Are you a government? Then no, I wouldn’t. If the government assigns a monetary value to a piece of metal or a square of paper, that’s a different story.

          I just know you’re a part of the modern economy and you trade in money–you don’t go down to the gas station and offer to barter a chicken for a gallon of unleaded. So why are you for one kind of token but against another?

        3. jake chase

          BenE, you are right about the consequences of printing money. What you do not seem to realize is that money is now printed every day by the banks. The bank printed money is mostly used for speculation, in real estate, commodities, stocks, etc. What trickles down to the people supports a usury based debt peonage and incidentally finances a few pizza parlors and bicycle shops. Critical thinkers like FBeard understand this and see that the banks have a money printing privilege which properly should belong to the people, whom they identify with Government. Of course, the problem with ‘government’ printing money is corruption of the political process. Inevitably, the same creeps who have figured out how to loot the bank created money will use their money power to control the government money machine and loot the government money too. Those who believe in ‘private enterprise’ and those who believe in ‘government’ are equally deluded. We have so successfully abandoned morality and common sense and discipline in America that all solutions are guaranteed to fail. We probably need a jacobin solution (complete with guillotine) for the looters, followed by a completely new beginning, perhaps along the lines established by the Massachusetts Bay Colony in 1620. Cooperation requires rigorous enforcement.

          1. skippy

            Critical thinking requires a person deal with facts and when shown – found out to be factual in correct, accept the evidence. To incorporate all the evidence, to assemble as much data, from all fields of study and try and piece it together.

            Taking a few thousand year old book and proclaiming it the undeniable truth, in – All – matters, precludes such a state of thinking. Furthermore to assert the same position over and over, be deceptive in discussing it, always ready to employ slight of hand gimmicks (jesus = love [yet history tells a different story]), rub people belly’s and then not follow thorough with their words… well… Con man is what I call it.

            Skippy… Peak world… is not going to be fixed with money, no matter what its construct it. It will require a completely new direction in humanity’s purpose, our relationship with our environment, and getting off the pedestal.

        4. Gizzard

          “Will you accept to sell me your car if I give you a metal ‘token’ and I tell you it has the value of your car?”

          If I can turn around and have someone else accept this token too.

          Seriously Ben, what alternative is there? All money used within a currency area is a simple agreement on value. Do you think if our tokens were replaced with gold that this would somehow encourage more agreement about value? The whole “trick” is simply having a polity decide what it will use as money and sticking to it. Once everyone is producing within that currency area the tokens become more and more valuable as more and more stuff is able to be acquired with those tokens.

          So the real question becomes how many different tokens do we want circulating? If we wish for there to be many competing ones, issued by different banks or large corps like WalMart, we will have more choices of tokens and varying systems of valuation but that will come with a real price too. How much more time and mental effort would shopping be if the token you got “paid” in was not the same token that someone else was selling their stuff in? Sure we would have relative value charts, that might change daily or weekly but would you find this an improvement. What if your boss changed tokens but you liked the old ones for whatever reason? I hope you can see that there are advantages to having ONE currency for a group of people who share some common interests. Maybe 300 million is too many to really keep a cohesive common interest but whatever way a group decides to account for the value of its economic activity, a choice from an authority is involved.

          A decision to return to a gold standard is not more natural or better, its simply a decision that would be “by fiat”.

      2. MrTortoise

        Suppose you and yours live in California (alone: unoccupied). The gods give you 10 million hamster cages with what you need to get electricity from the hamsters spinning the wheels in their cages and a couple of Philosopher’s Stones to transmute earth into hamster feed and so forth.

        So that’s set-up to produce energy. There could be many other Philosophers Stones to get washing machines out of earth and so forth.

        So, how to manage the hamster population? If you let them breed, more energy. With more Philosopher’s stones, you can build a Pyramid (if you have architects).

        But if you run out of earth (soil, not rock), then the hamsters will go hungry. What then?

      1. jake chase

        Only if you try to buy things a person actually needs, particularly food. A man who knows things told me Saturday night that building materials are now 50% more expensive than they were in 2006.

      1. BenE

        Linking to a multiple article’s worth of text is a cheap trick in a debate because it puts a large time burden on the other party to decipher and figure out which argument in the text you think refutes his or her points.

        The relation between printing money and inflation is a simple enough concept that you should be able to lay out the core of your arguments refuting it directly in the comments with maybe links added for a bit of additional support.

        Regardless, I actually spent an hour skimming through your links and “Zimbabwe for hyperventilators 101” hypothesizes that government crises and supply shocks cause hyperinflation because such things were present when it happened in these two cases. There is little in this post to tell which way the causal relation goes. It is not surprising that government would be more likely to resort to too much money printing when they have these types of crises on their hands and it doesn’t mean that the money printing didn’t cause or at least exacerbate the supply shock problem. The post contains way to0 much detail and conjecture for a number of events (n=2) few enough to be considered just anecdotes and it does nothing to explain away the simple supply and demand theory of monetary value.

        “Printing money does not cause inflation” actually supports my arguments. There is a lot of emphasis on the idea that “levying taxes” is what gives value to a fiat currency. This is kinda true in an indirect way and is exactly the rule being broken by minting the platinum coins instead of levying the taxes to pay back the debt. The fact that the taxes are no longer levied is the reason it will result in inflation.

        The article actually concludes with a pretty reasonable paragraph:

        “The experiences of the Confederacy are not evidence that rising budget deficits (or quantitative easing) will be inflationary. They might be but when there are idle resources that want to work and are willing to pay taxes then public spending should always elicit a real response (increased output) rather than a nominal response (increased prices).”

        And thus the dual mandate at the federal reserve. While it can be argued that the unemployment part of the mandate should be given more weight, it is silly to say that we can just print our debts away and that people won’t have to pay them through future taxes. If they don’t they will pay through inflation in a much more disorderly, inefficient and unethical way affecting the poor and elderly disproportionately because inflation is not progressive like taxes.

        1. Gizzard

          Ben

          The thing about hyperinflations is that those who correlate it to money printing are being……… lazy. There is so much more to it. When Weimar and Zimbabwe had their hyperinflationary episodes they were not in the context of being the most productive economy on the planet and simply arguing about a couple trillion in spending or taxation (about 10% of GDP) over the next few years. Nor were they trying to keep a bank payment system operative by adding needed liquidity.

          Germany had just had their most productive industry hijacked by foreigners (think of Mexico taking over Texas oil fields in the 60s or Canadiens taking over silicon valley). Those workers now had two choices, strike or go work for the French. They struck, cant say I blame them, and the German govt continued to pay them, again, cant say I blame them. Obviously paying people who arent producing anything in an environment of rapidly falling supplies is the recipe for hyperinflation. Zimbabwe was similar in that productive white farmers were run off their farms and they were turned over to natives who had no farming skills. Being a mostly agricultural economy the outcome was obvious.

          I think its more correct to view the money printing as a response to the real supply shocks in both instances. They werent a cause but more of an effect. Yes the spiral continued with more and more money printing but really if you are a German politician at that time are you going to advocate NOT to provide a German citizen with money in the face of that crisis?

          The US today is in no way analogous to those circumstances.

    2. Lambert Strether Post author

      Since WP seems to be eating his comments, letsgetitdone requests that I post this:

      @BenE, there’s a lot of MMT work out there now arguing against the need for debt issuance when the Government deficit spends. The first things we see in any comment on it is usually “Zimbabwe!” “Weimar!” Seriously, don’t you think we’ve considered carefully such replies before and have answers for them?

      Please google Rob Parenteau, Marshall Auerback, Bill Mitchell, letsgetitdone (that’s me), Scott Fullwiler, John T. Harvey, and Eric Tymoigne on inflation and hyperinflation for our answers. And please make your next comment about “inflation” a little more informed about why the US case is remotely like either Zimbabwe or Weimar. When you use historical analogy as an argument, you can’t just bleat the label for the case like some slogan. You have to argue that the analogy holds by focusing on details. When you read the references you’ll see that there’s no chance that the US is in any way like Zimbabwe or Weimar or subject to the same dynamics.

      If we use PPCS here in the US, there will be no demand-pull inflation due to Government deficit spending, as long as we’re careful not to spend so much that we exceed the potential of the economy to respond. And please note that minting a $60 T platinum coin isn’t the same as spending the $60 T all at once or even over 15-25 years. Minting the coin only fills the public purse; Congress must still open the purse strings for any spending other than debt repayment, to happen.

      1. BenE

        “Minting the coin only fills the public purse; Congress must still open the purse strings for any spending other than debt repayment, to happen.”

        There is no point in minting the coin if the government is going to act as if doesn’t exist. Then it’s just “defining the debt away”. I define the debt to be the actual debt minus the value of this $100 trillion coin we hold. We will still act as if we had 10 trillion in debt and not spend more or reduce taxes since it would cause inflation but we actually have 90 trillion in savings because of the coin!. That’s quite a pointless exercise.

  9. Hugh

    This thread represents two kinds of thinking. Those who adhere to the gold standard react in horror. The problem with their view is that the gold standard ended in 1971 and despite multi-trillions of dollars spent on wars, tax cuts for the rich, and bank and Wall Street bailouts the inflation they predict hasn’t occurred.

    The other group understands how fiat currency operates, which is good because that is the kind of currency we have. And coin seigniorage would work. The problem though is that we live in a kleptocracy. The rich are already using fiat against us precisely in their multi-trillion dollar wars, tax cuts, and bailouts. They would use coin seignorage as well, never doubt it, but only if they figure out a way to loot it.

    1. Carla

      So, Hugh, we just have to be smarter than the rich, right?
      This should not be difficult.

      Naked Capitalism is GREAT — Long live Yves Smith, Lambert, Beard, Hugh and ALL the other wonderful contributors to this great ENTERPRISE.

    2. LucyLulu

      As usual, excellent summary, Hugh.

      Until we have meaningful regulation and enforce them, prosecuting those who break laws, and restore fairness and trust, the type of policies proposed are a moot point. Rooting out the corruption is the first step, but unfortunately there is no political will towards that end. We must continue to support blogs like this and movements such as Occupy that bring light to the problem.

  10. banger

    Sovereign debt is both ambiguous and negotiable anyway. For U.S. sovereign debt is that printing money allows debts to be settled, yes there are consequences but these consequences can be handled. The main thing to understand about our debt is that, first of all, no one wants to call in the debt since so many are holding dollars and it is still the international currency. But, ultimately, power comes out of the mouth of a gun–in other words, there is no such thing as an economy there is only politics–and politics is ruled by those who have the most guns and can apply the most force–and that is the U.S. This country can guarantee the sea lanes and keep order, more or less, in the world. It can assassinate leaders or destroy any country that stands in our way–we may choose not to but we can and everyone knows this–thus no one is going to be too concerned about collecting debt.

    1. skippy

      Bingo! Sovereignty is about Force – Coercion , its just a pretty word used to clean off the blood for the commoners. And some wonder why the US is always in so many wars… duh.

      If for any reason that dynamic changed, well what does the US have to offer in trade?

        1. skippy

          Some where down the road beardo, the hole concept of competitive based activity’s to feed, shelter, etc, is going to have too stop. Its simply to wasteful, whether you have abundant energy or not. We are going to have too align ourselves with the environment, firstly, then see what options are available to entertain ourselves.

          Skippy… even the big dogs of industry are acutely aware, but, the music plays and they dance, its all just a game their stuck in. Why do you think the west developed virtual finance any way, to beat the commies and retain privilege. Now its time to create a new dimension as the old one is fooked like an old whore. The slow down is coming one way or another. I just disagree with the way their going to do it and the future after that. I’ve supplied plenty of links to papers and publications to those effects, water, land, oceans. Your refusal to acknowledge any of it is based on your religious biased views. This is a impenetrable fog, a fools errand.

          PS. I won a bet with some friends. Argue with you with out losing my mind, for a period of time. I feel diminished as it is. I shall no longer respond to you, your positions are based on a doomsday cult with a built in – after life – escape hatch. WOW if you swallow that kinda thing, anything is possible… too the cliffs!!!!!!!!

          1. F. Beard

            Sorry skippy but you are loading all kind of environmental and resource concerns onto what is mostly an ethical problem. Remember Occam’s Razor?

  11. Hugh

    And for anyone wanting to know 31 USC 5112(k):

    “(k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.”

    It seems innocuous enough except for the one word “denominations”. In other cases, all kinds of conditions are placed on the coins, but in the case of platinum there are quite literally none.

    I think the other point that really needs to be driven home is Joe Firestone’s observation that “we” do not owe this $16 trillion. This is important. We aren’t leaving it to our grandchildren because it isn’t ours in the first place so how can it be theirs? The whole point of the debt narrative is to make us think that we have no options, that while the rich and the elites spend without limit on themselves, there is no money left for us.

    But the Edison quote lambert cites shows just how long this kind of a narrative has been going on. Money is not some primordial element of the universe. Ultimately, our currency comes down to us, we the people. We, our work and skills, are our currency. The point of kleptocracy is to trick us into forgetting this fundamental equivalence so that a few can steal them. And as a form of ultimate chutzpah they go on to tell us that any attempt to take back the products of our work and skills is the basest form of theft.

  12. F. Beard

    A pertinent question, I think, when it comes to paying off the US National debt with new reserves is to whom that debt is owed?

    1) If to the Fed then that’s not a problem since the interest is refunded to the US Treasury.

    2) If to the banks then that’s not a problem either as QE has proven.

    3) If to foreigners this could be inflationary as they rush to spend their dollars in the US instead of parking them at the Fed. OTOH, it would spur US exports!

    1. joebhed

      Just a friendly caution that it is not the interest that is returned from the Fed to Treasury, but the net profits.
      So when we think about the Fed’s operations and its effects upon the budget, there’s a lot more to think about.
      Like losses.
      Just saying.

  13. Fiver

    The author states:

    “The best way, because it ends unnecessary welfare for the rich and foreign nations is to stop issuing debt instruments, continue with enough deficit spending to create full employment…”

    Would he be so good as to name the foreign nations(and nationals)who currently own US debt he believes constitutes “unnecessary welfare” and why good-faith foreign purchasers of US debt would not view this proposal with some mixture of astonishment, indignation, disgust, alarm, panic, anger or even fear given the sheer arbitrariness of this suggested move from an external perspective ? Explain how this would not wreak financial havoc, whatever one’s political orientation or motives. Here’s a handy list of peoples’ nations and the debt money owed them by the US.

    http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

    And might he also explain, as noted by Skippy above, how the planet is supposed to support what would be in the script advocated a gargantuan economic boom indefinitely into the future if it was not at the same time coupled with severe contraints on consumption by everyone with a lifestyle more luxuriant than something resembling a US lower-middle income? Do you imagine for 1 moment the rest of the world can also have material heaven on earth? Want to unleash the real war to end all wars?

    1. F. Beard

      Would he be so good as to name the foreign nations(and nationals)who currently own US debt he believes constitutes “unnecessary welfare” and why good-faith foreign purchasers of US debt would not view this proposal with some mixture of astonishment, indignation, disgust, alarm, panic, anger or even fear given the sheer arbitrariness of this suggested move from an external perspective ? Fiver

      What’s arbitrary about ceasing to go into debt? The existing foreign debt would be paid off and quite plausibly with the same or even greater value fiat. Moreover, there are inflation-adjusted Treasuries (TIPS) that the foreigners could have bought in which case they won’t lose even if the value of the fiat declines.

      And should foreigners need an income stream from interest, they can take their new reserves from the Fed or US Treasury and deposit them into US private banks where they could back 100% lending.

      Borrowing by a monetary sovereign is “corporate welfare” according to Bill Mitchell. But welfare should be reserved for those who need it.

      1. Fiver

        I’m sure China will be happy to receive a $1 trillion clinking nothing made of platinum. Be serious, Mr. Beard. I’m talking about EXISTING debt obligations of the order of $5 trillion that would be rendered vaporous.

        All this incessant yammer for new money systems (MMT for instance)completely fails at the “regular guy” level. It is hard enough to understand (as opposed to “accept” on authority) the counterintuitive physics of Einstein et al, but people just do not resonate with the idea that money owed is a meaningless abstraction whose value is subject to dictat – by the very entity who owes them a great big whack of it.

        The folks at NC ought to spend a little less time thinking of new “money” solutions, and a good deal more time on honest, just and rigorous laws and regulations concerning all facets of its acquistion, accumulation, use etc. THAT is something people CAN relate to with no confusion whatever.

        1. F. Beard

          I’m not saying we should payoff the National Debt all at once but only as it comes due. It’s not China’s business HOW we payoff that debt. We are not obligated to either borrow from someone else to payoff the Chinese or to tax ourselves deeper into this Depression to do so.

          Essentially, we would be telling China: “We’re not going to bribe you anymore not to spend your dollars.”

  14. skippy

    Its funny that some use ethics and morals towards money, when its the human actors that create the problems in the first place and would do so under any system.

    1. F. Beard

      and would do so under any system. skippy

      That’s not the problem. The problem is when a bad system compels good men to do bad things.

      Were there not some very good men you fought? So why were good men trying to kill each other?

      1. A Real Black Person

        b.s. There’s no such thing as bad system since systems are social constructs. Bad people make bad systems. Just about everyone has a little bit of badness in them, so no system that puts its faith in human actors will ever become ‘good’, since we cannot expel the badness from ourselves.

        Selfishness and conflict must have an evolutionary advantage or otherwise they would have disappeared millions of years ago among humans.

  15. Mafer

    The problem with all this is that the US state is the state of the rentier class. In order for such a policy to be implemented, the state would have to first be destroyed and replaced with a state that represents different class interests.

    Or does anyone here actually believe the state is an independent, democratic arbiter that acts in some vaguely defined national interest?

    1. Gizzard

      Totally agree Mafer.

      The world that MMT refers to is one where the govts money has some public purpose attached. Unfortunately our govt has allowed its money to be hijacked by private banks, supported by the govt bank (Central Bank) and this is done in the guise of “increased freedom” and “decreased central planning” when in fact most of the people are noticeably less free now than they were 30-40 years ago.

      We wont get to where most of us want to be with our private banking system getting more entrenched. Private banks arent about public purpose although if you asked them directly they would claim they ARE making it better for all. They just cant prove it cuz the numbers dont back them up at all. More people are in financial dire straits now than have ever been so if this is the banks idea of making it better for all, I’ll take some worsening then. I dont care about words. If you want to call what we’ve done the last thirty years “improvement”, Ill accept your terminology but ask for some deterioration then.

  16. TC

    Death to monetarism and its misconceived notions that arbitrary formulations (which would include 1-oz proof platinum coins) are self-evident determiners of “value.” Therefore, much as state war debt following the Revolution was capitalized to form a national bank financing the productive deployment of American labor in an effort to raise the productive capacity of the U.S. economy, so too will the LEGITIMATE portion of current Treasury liabilities assuredly be made whole. (This aspect of Treasury’s “legitimate” indebtedness has yet to be addressed. No one bothers wondering how much of Treasury’s total indebtedness exists for its own sake, issued in a falling rate environment over the decades since the early 1980s and demanded by the private sector for the sake of the creation of dynamic hedges to the garbage created in the shadow banking system. This portion might be thought by a sovereign people rightly defended as the final arbiter in matters involving what is and what is not “lawful” as Treasury’s illegitimate debt whose treatment necessarily will require a constitutional ruling as to which holds supremecy: outstanding debt or the power to coin money, with the latter being a power the shadow banking system employed assuming “value” in securities whose basis has been amply proven fraud-rife.)

  17. Manofsteel

    The underlying assumption is that the world continues to believe in green bills, and the even deeper implied assumption is that the US will continue to be the relatively safest most transparent rule driven predictable market in the world, with an abundance of natural resources per capita.
    IF the international PERCEPTION that any of the above is true evaporates THEN so does dollar value around the world.
    IF the government continues to print money to pull its own hair in order to get out of the swamp THEN people will realize that the rules of the game are no longer there. Whether this happens following uncontrolled hyperinflation, drought and spiking food prices, China changing its policy due to its own number games or the EU pushing for a new global currency, it is more likely to happen than not. The old almighty dollar regime was good during an old era of one capitalist superpower with unique tech advantages and unlimited international power. That age is gone.

  18. A Real Black Person

    Both liberals and conservatives fall prey to myth of American exceptional-ism. Liberals behave as if bondholders worldwide aren’t going to to realize that they will be paid back with devalued dollars. Conservatives don’t realize that coercion eventually faces dimminishing returns, ESPECIALLY IF THE ECONOMIC DEVELOPMENT promised by capitalism doesn’t happen because of OVERPOPULATION AND OVERCONSUMPTION OF NATURAL RESOURCES. WHAT PERSON WHO UNDERSTANDS BASIC SCIENCE WILL AGREE THAT IT’S POSSIBLE TO RAISE TWO BILLION PEOPLE ‘OUT OF POVERTY’IN A WORLD OF FINITE RESOURCES WITHOUT SENDS TWO BILLION OTHER PEOPLE INTO POVERTY?

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