Thanks to Emcee Joan for highlighting this short but substantive interview with James Kenneth Galbraith.
One of the things I've just started to understand in recent months is how ill-informed our leaders are about government spending and our monetary system. A real eye-opener for me was this article in The Nation also by JKG. If you, like many politically engaged, progressive people, think that our debt is a looming catastrophe, or, if you believe it:
When Obama says, even offhand, that the United States is "out of money," ...
then you're buying into the thinking that is really hurting us in the long term.
The right-wing is looking for nothing more than a chance to impose a massive shock-doctrine on the US by cutting the so-called entitlements. Unfortunately, our President is giving this movement countenance with his fiscal responsibility summit (or whatever it's called).
Read both the Galbraith articles I linked to. More than once. And remember the following points whenever someone tells you about our dangerous spending.
- We're not going bankrupt. "... no government can ever be forced to default on debts in a currency it controls. ... Social Security and Medicare are government programs; they cannot go bankrupt, and they cannot fail to meet their obligations unless Congress decides--say on the recommendation of the Simpson-Bowles Commission--to cut the benefits they provide."
- The debt does not have to be repaid. "So the public debt simply increases from one year to the next. In the entire history of the United States it has done so, with budget deficits and increased public debt on all but about six very short occasions--with each surplus followed by a recession. Far from being a burden, these debts are the foundation of economic growth. Bonds owed by the government yield net income to the private sector, unlike all purely private debts, which merely transfer income from one part of the private sector to another."
- The Chinese do not have us over a barrel with their holdings of US debt. In practice this purchase of US Government debt means that the Chinese are shipping us a lot of goods without demanding anything in return.
- More spending is the only way to recover our prosperity. "You don't have to like budget deficits to realize that we must have them, on whatever scale necessary to restore growth and jobs. And we will need them not just now but for a long while, until we've shaped a strategic program for investment, energy and the environment, financed in part by a reformed, restored and disciplined financial sector."
I realize I have not offered a single original thought in this diary. And if this is all very familiar stuff to you, then good. But these ideas are still seem to me very remote from the daily discussions we have on matters of public policy. And I think it's important to help make them more familiar.
[UPDATE. 12:23 am UK time]
It seems like we've got a lively discussion going here. I don't pretend to be an expert on this stuff and I really appreciate the comments, including the ones that disagree with my points. This stuff is important, IMO, and it gives me lots to think about.
But it's late here and I'm going to bed soon.