The same neocon stupidity. Cut spending and raise taxes to deal with a non-problem. The false premises the unsophisticated economists at the Brookings rely on for their fiscal projections were made false 45 years ago when Nixon abandoned the convertibility feature of our currency. Brookings and many, many others among the MSM punditry continue to wrongly believe the U.S. is resource constrained. It is not. As a monetarily sovereign nation there are two constraints on Federal government spending, inflation and the unavailability of labor and capital. Neither of those conditions obtain. Our government does not depend on the ability to raise revenue through taxation or Treasury/Fed transactions to fund itself. The Fed. gov taxes to manage inflation and income distribution, etc. but never funding for spending. The act of borrowing manages the term structure of interest rates. A common sense thought process would lead us to ask, since the government can issue its currency by fiat, why then would it need to have a tax revenue source? It wouldnt and for 45 years it hasnt. As former Fed Chairman Alan Greenspan told Congress, ”[A] government cannot become insolvent with respect to obligations in its own currency. A fiat money system, like the ones we have today, can produce such claims without limit.” Moreover, when you have the reserve currency of the world, the demand for your currency is always going to be extremely strong reducing threats of inflation. And, when real unemployment rates are above 12% and real incomes have been stagnant, there is little if any threat of inflation. Deflation is more likely. The only fiscal uncertainty this nation faces is whether Congress will appropriate funds which serve public purpose. There is no uncertainty about having enough money. Ask Brookings economic staff to give you a summary of this essay. mythfighter/ Then peruse the Beardsley Ruml paper presented to the American Bankers Association in 1946, Taxes for Revenue Are Obsolete. Wikipedia tells us the following: In the United States, a Monetarily Sovereign government, there exist many monetarily non-sovereign entities: villages, cities, counties, states, businesses and individuals. None use their own sovereign currency, so having no sovereign they: A. Do not have the unlimited ability to create their sovereign currency B. Can run short of currency (unlike Monetarily Sovereign governments, which cannot run short of their sovereign currency) C. Require income in order to pay their bills (unlike Monetarily Sovereign governments, which require no income). Thus, D. taxing, borrowing and austerity (deficit reduction) are not necessary though for political reasons, a Monetarily Sovereign nation may borrow and levy taxes and enforce austerity.
Posted on: Wed, 17 Dec 2014 17:32:45 +0000
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