Daily Archives: February 1, 2020

Economic Update: Military Spending and Debt

Democracy at Work has the episode Economic Update: Military Spending and Debt.

The second half of this week’s episode features an interview with journalist Bob Hennelly on military spending and debts in the US economy.

I first saw a video clip of the beginning of the second half, before I got to see the entire episode.

It is too bad that Richard Wolff and Bob Hennelly seem to be completely ignorant of Modern Money Theory. The budget of a currency user is not like the budget of the currency issuer. As an economist, Prof. Richard Wolff should be capable of understanding this.

The “borrowing” that the Federal Government does to support a war is to use the productive capacity of our economy to make war material instead of using that capacity to improve the lives of the people. If our productive capacity is used for war it isn’t and won”t be available for making lives better. There is no bankruptcy in terms of money when you are creator of the money.

The way that future generations pay for the “borrowing” the federal government does is to forego the benefit of the productive capacity that was diverted to war and not used to develop even more productive capacity for civilian use. Talking about borrowing “money” which the government freely creates only diverts attention from what was really lost.