Before I get to my main topic, I note that Fed chairperson Janet Yellen says that the “national debt crisis” is, “The type of thing that should keep people awake at night.”
With Congress wrestling over a tax reform plan that critics say would explode the government budget deficit, Federal Reserve Chair Janet Yellen said she also is concerned over the surging level of public debt. The price tag of the plan is in the area of $1.5 trillion at a time when the Congressional Budget Official already is projecting a deficit of more than $1 trillion in the years ahead and with the total debt level at $20.6 trillion and rising. Of that total, $14.9 trillion is owed by the public.
The other $5.29 trillion is what the U.S. government owes itself – i.e. it’s what various government agencies have deposited in Federal Reserve savings accounts.
Now that’s what I call a debt crisis. Not.
Note the wording…
The price tag of the plan is in the area of $1.5 trillion at a time when the Congressional Budget Official already is projecting a deficit of more than $1 trillion in the years ahead…
This means that over the next ten years the U.S. government will put $1 trillion more into the economy than the government will tax out of it. Let’s hope that’s true.
Even if a $1 trillion deficit over ten years was somehow a problem, the U.S. government spends more than $1 trillion every year on the Pentagon, plus the “intelligence” agencies, plus “Overseas Contingency Operation,” (aka the “War on Terror”).
Janet Yellen knows all this, but lying is part of her job description — although occasionally a Fed chairperson has accidentally spoken the truth. The following three videos are 60 seconds or less…
Ben Bernanke: “To lend to a bank, we simply use a computer to mark up the size of the account that they have with the Fed.”
Alan Greenspan: “We can always print money to pay U.S. debt. So there is zero probability of default.” (That is, the Fed can always create money out of thin air to pay interest on money deposited in Fed savings accounts.)
Alan Greenspan (at 0:39) “There’s nothing to prevent the federal government from creating as much money as it wants.”
More nonsense from Janet Yellen:
“I am very worried about the sustainability of the U.S. debt trajectory. Our current debt-to-GDP ratio of about 75 percent is not frightening but it’s also not low.”
Poor Yellen never learned arithmetic. The “national debt” is over $20 trillion. The U.S. GDP is about $15 trillion per year. Therefore the “debt-to-GDP ratio” is actually 125%. And yet miraculously the USA has not collapsed.
By the way, when I was getting the links for those Fed videos above, I saw the video below, in which an “expert” has been struck down by Ellen Brown Syndrome (EBS). This is a tragic ailment which makes people imagine that all money is created by the Fed as loans.
I also saw this…
The following paragraph pretends that all countries are the same.
Saudi Crown Prince Muhammad bin Salman (or MBS) faced having a broke country, an empty treasury, and a lot of very rich citizens with full coffers. Trump faces a similar problem. In the US, the rich have everything while the state is $20 trillion in debt. Jeff Bezos, Bill Gates and Mark Zuckerberg have as much in their coffers as all the ordinary folk combined. The annual deficit is about $400 billion; the Rockefellers would not even notice if this paltry sum went amiss from their holdings, estimated at well over a trillion dollars. The Greeks have it even worse: they are in debt, biting the bullet of austerity, while the moneys the Greek state borrowed have lined the pockets of the rich.Source
People don’t understand the differences because they don’t want to. It’s fun to complain about things that don’t hurt us, so we can avoid grappling with things that do hurt us.
The problem is universal. Everywhere, from the UK to Russia and from Brazil to Greece it’s the same: the state coffers are empty, politicians prescribe austerity for the people, while a few rich guys enjoy the fast growth of their untaxed capital.
What’s universal are lies and delusions about money, like we see in this quote above.
If a nation badly needs foreign currency, and its rich people have a lot of foreign currency in their bank accounts, then it makes sense to tax the rich in foreign currencies. But if a nation does not need foreign currencies, and its rich people have money in the nation’s own currency, then taxing the rich will make no difference. National governments have no need or use for tax revenues in their own currencies.
Crown Prince MBS found a solution. He rounded up hundreds of the wealthiest people in his Kingdom, placed them in the posh five-star hotel Ritz Carlton in his capital Riyadh, and told them to cough up the dough. When they laughed at his face, he called for torturers to begin, Mafia-style, his extortion racket.
What is your proof for this? And what kind of “dough” are you talking about? Foreign or domestic? Do you admire Crown Prince MBS? The Saudis are as evil as the Israelis and Americans. That’s why all three are staunch allies.
The Daily Mail, in an exclusive report, tells us that “the Saudi princes and billionaire businessmen arrested in a power grab earlier this month are being strung up by their feet and beaten by American private security contractors. The arrests have been followed by ‘interrogations’ which a source said were being carried out by ‘American mercenaries’. ‘They are beating them, torturing them, slapping them, and insulting them. They want to break them down,’ the source told DailyMail.com.
Ha, ha, ha! These days, all the proof or evidence we need from the corporate media outlets is an unnamed “source.” This merits a stamp of approval!
According to the Daily Fail the unnamed “source” says that Saudi billionaires are being tortured by U.S. mercenaries from Academi (formerly Xe Services, formerly Blackwater, formerly Constellis Holdings, formerly Triple Canopy etc etc).
Academi flat denies this.
From the Daily Fail:
“The Saudi crown prince, according to the source, has also confiscated more than $194 billion from the bank accounts and seized assets of those arrested.”
Again, in what currency? Without specific details, we are forced to call bullshit.
Admittedly this is clever bullshit, since average Westerners like to fantasize about some dictator torturing and imprisoning all his rich people. The most effective lies are those that appeal to average people’s lurid fantasies.
CHANGE OF TOPIC
I just Googled the words, “Why can’t we just print money to pay off the national debt?” There were 2.8 million results. I skimmed about 50 of them, and they all make the same three errors.
ERROR ONE: All of them falsely assume that the “national debt” must be “paid off.” Do deposits in a bank need to be “paid off”? No.
As for deposits in Federal Reserve savings account, each T-security is paid off as it matures.
ERROR TWO: All of them falsely assume that creating more government money will cause inflation. This is a bullshit rationale that peasants use to console themselves in their poverty.
Inflation in the UK and USA can only happen when there is (a) excess money in circulation, combined with (b) the nation being at full capacity in terms of production and employment. Both conditions must apply. The only time this has ever occurred during the last 100 years was during the World Wars. Everybody had a job, but there was a shortage of consumer goods to spend one’s salary on. The U.S. government’s solution was to remove money from the economy via taxation, and by selling “War Bonds” that were basically T-securities.
Today neither the UK or USA are anywhere near this situation. If the U.S. government created $10 trillion out of thin air for infrastructure repairs and improvements, it would create millions of jobs, directly and indirectly, with no inflation problem. Each year the U.S. government sets new records in spending on its wars, and on the Pentagon. Does this cause an inflation problem? No.
The U.S. government intentionally creates too little money, in order to keep the masses in poverty. In a society where power is a product of money, you must keep your peasants starving in order to keep them under your power. It’s called gratuitous austerity.
ERROR THREE: All of them falsely assume that money and commodities are the same thing. They talk about things like ancient societies using “commodity money.” Wrong. Commodities can be bought, sold, or purchased, but not “spent” like money. Commodities are physical and limited. Money is not. Money is a way to keep score, or keep accounts. A dollar is an abstract unit of account. A dollar bill is a token of account. If I have traded a bar of gold for a car, then I have not “spent” my gold. I have traded it.
Some ancient societies did not use money, but all of them had a central system of accounts. In effect they always had a bank, and it was usually located in a religious temple. Even societies that created coins as tokens of account usually made the coins in a temple.
The English word “money” comes from the Latin “moneta,” which was the surname of the Roman goddess Juno, in whose temple coins were made. Juno was the mother of the gods, and queen of the gods. (Her Greek equivalent was Hera.)
Mere semantics, you say? No. Since the peasants refuse to understand the difference between money and commodities, the peasants believe the lie that money is physical and limited. Hence they voluntarily submit to slavery and starvation.