The Peterson Foundation Sings the Same Old Song


New Economic Perspectives has the article The Peterson Foundation Sings the Same Old Song.

I post about this article here to try to help disabuse you of the idea that the Peterson Foundation has even a shred of credibility which even some Democrats think it has.

I also post a much larger selection of excerpts than I normally would, because it is really important for you to read this material.  I know many people don’t follow the link to the underlying article in my blog posts.  If I am lucky they do read what I put directly into the post.

Also, keep in mind that the Chief Economist for the minority on the Senate Budget Committee, Stephanie Kelton, used to be the editor of New Economic Perspectives until she became the Chief Economist.  I have high hopes that she and Senator Bernie Sanders, who appointed her, can start to educate the public and other politicians to the reality of how sovereign currency works, and the policy opportunities it unlocks.

Now for the excerpts from the article The Peterson Foundation Sings the Same Old Song.

He thinks the debt is a long-term problem that we have to start to solve now. I think there is, literally, no public finance-related debt problem for a fiat sovereign like the U.S., and that the problem that exists is not a debt problem, but a political problem created by Peterson and his allies across the political spectrum who have propagandized the view that there is a debt crisis since the mid-1970s, with increasing success since the 1990s.
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But apart from CBO’s efforts at science fiction, this sentence clearly implies that higher deficits are a bad thing, that the lower deficits we’ve been having currently are an improvement over what we had before, and that our fiscal situation will be getting worse again soon in the precise sense that we will be running higher deficits. So, this one sentence shows that The Peterson Foundation has no idea what the government deficit really is.
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So, the lower deficit Peterson approves of is close to or past putting the private sector into an aggregate annual loss position. And, in advocating for further deficit reduction, what Peterson is doing is advocating for placing the private sector into a much deeper and unsustainable loss position over a period of years. Doesn’t Peterson know that government deficits add to private sector aggregate net financial assets? Doesn’t he know that budgetary austerity will cause the private sector to lose financial wealth? Doesn’t he know that the deficit doesn’t harm the government’s capability to spend, but that cutting it does harm the private sector’s capability to spend by destroying private sector wealth over time?
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They would take money from us, our children and our grandchildren today, preventing us from investing in that future, because they say that the Government is like a household and has to run small deficits or surpluses to safeguard its future capacity to spend. But the federal government is the monopoly issuer of the currency, and when it uses that power to deficit spend it generally contributes net financial assets to the private sector and makes it stronger, while when it runs surpluses it doesn’t increase its capacity spend, but only decreases the private sector’s ability to generate economic activity and new investments.
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These very views are today largely responsible for the disasters we see in Greece, Spain, Portugal, and increasingly in Italy. It is long past time to end their fiscal reign of terror, by giving them no further credence.

We can do that in the United States, by making everyone understand that there is nothing to the gospel of deficit reductions, surplus budgets, and fiscal austerity except human misery, and making them understand also that the time is long passed to embrace a doctrine of real fiscal responsibility that tells us to evaluate fiscal policy proposals in fiat sovereign nations by their likely real world results without regard to their implications for the public interest-bearing debt.

 

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