GBC

The media and much of the blogosphere are framing the coming debt ceiling decision as one in which the Republican-majority House may refuse to extend the Federal debt ceiling, thus forcing both a Government shut-down, and also a possible default of the US in paying its debt obligations to its creditors. Republicans saying they will not vote to extend the ceiling see this as an opportunity to force spending cuts out of the Democrats and the Obama Administration. Read below the fold...

In "All Together Now: There Is No Deficit/Debt Problem,” I warned against the message calling for deficit reduction that the President will probably deliver in his State of the Union Address next month. I view the coming narrative as very likely to be composed of a number of fairy tales. I've already examined the fairy tale that the Government of the United States can involuntarily run out of money, or is in the process of involuntarily running out of money. This post examines the second fairy tale in the narrative, namely the idea that the Government can only raise money to spend by either taxing or borrowing.

How many times have we heard that the Government can only get US Dollars to spend by either taxing or borrowing. We must hear this from Cable News outlets and in the Washington Post and the New York Times at least a number of times every single day. Then we also hear it from hundreds of blogs across the country and from such Peter G. Peterson outlets as The Fiscal Times, and AmericaSpeaks. Based on these outlets one can't help wondering whether some transformation has taken place since the Founding of the Republic providing for US currency created by the private sector, and that it is private-origin currency that the Government must have in order to spend for its programs. Of course, this isn't true. The Constitution authorizes the Government alone to create United States Dollars. The Government has since delegated the task of printing money to the Federal Reserve Bank which prints the Federal Reserve Notes now in circulation, but, nevertheless the authority for such issuance comes from the Government and it still retains the authority to print Treasury Notes and to create money in other ways. Read below the fold...

In "All Together Now: There Is No Deficit/Debt Problem,” I warned against the message calling for deficit reduction that the President will probably deliver in his State of the Union Address next month. I argued that there was no deficit/debt problem and that it is essential to reject the President's framing of the issue and move on cope with the real problems of the economy and American Society. That piece stands alone. Read below the fold...

In a little more than a month, the President will give his State of the Union speech. There's every reason to believe that, in it, he will state that, in all sincerity, he believes that the United States Government has a deficit problem and a national debt problem that must be brought under control.

He will tell us that the Government is running out of money. He will also tell us that we need to raise money by either taxing or borrowing to get more, or that we need to make do with no more money by cutting government spending, and he may also tell us that we cannot borrow too much more without the bond markets raising our interest rates, imposing even more of a deficit/debt burden on us that our grandchildren will have to repay. Read below the fold...