It is not surprising that the Third Way believes, with all its gold standard based ideology which ignores history and reality, that a monetarily sovereign government needs revenue per se to spend? It is common knowledge among the best of economists that the U.S. abandoned international gold standard principles in 1971-1973 after having abandoned domestic gold/dollar convertibility in 1933. Both of these events ushered in fiat currency, and the former brought us non-convertibility and floating exchange rates. Moreover, the U.S. owes all of its debt in its own currency and never, involuntarily, faces the issue of insolvency. With these operative axioms it follows that the Federal Government never depends on revenue per se from any source to complete the act of spending. All the Federal government needs to fund its expenditures is a Congressional appropriation, not tax or bond sales revenue. Why would it when it creates its dollars ex nihilo? So recommending that Democrats can boost public investment as long as they swallow cuts in entitlements is not only contradictory and socially reprehensible but cynically subversive since you folks at the Third Way are familiar with the tenants of Monetary Sovereignty. Likewise offering Republicans the recommendation to lower corporate tax rates while reducing tax expenditures for the rich compounds the economic growth problem since weve seen that effective marginal tax rates for corporations of around 12%-17% do not stimulate investment/jobs/incomes growth in the U.S. The solution is so simple it defies credulity. The problem: stagnant to no growth in aggregate demand. No demand, no sales, no income, no sales, no capitalism because capitalism depends on sales. Solution: increase incomes by eliminating the FICA. Federal taxes are obsolete since the dont pay for anything but could manage income distribution. Raise minimum wage rates to $18.00 p/h, subsidized by Federal gov topping-off-subsidies based on current MW as the base. Fed. gov. bails out student debt just like they did for the bank bailout (Bernanke used the Feds computers to pump $29 trillion into the financial and other sectors ... neweconomicperspectives.org/2011/12/bernankes-29-trillion-dollar-fog-of.html). Increase SS pensions to the amount that would have been paid had the CPI not been manipulated from 1972 the present with Rube Goldberg formulations for what is and is not included in the CPI. Ostensibly, to reduce the appearance of a growing deficit. What The Third Way wont own up to is that since 1972, Federal deficit spending has added net financial assets to the private sector. This is indisputable. TTW and those other neo-liberals who belong to the deficit terrorist club will never admit that without government spending, during a recession and when the economy is at less than full productive capacity, there is no real growth in consumption.
Posted on: Sun, 21 Sep 2014 02:55:26 +0000
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