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OpEdNews Op Eds    H1'ed 10/9/15

America Urgently Needs an Unbalanced Budget

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The government could simply rip up money it owes itself. Former Representative Ron Paul, and later Representative Alan Grayson, supported a bill a few years ago that would have wiped $2t in national debt that the government owed the Federal Reserve. This was seen as a way of getting back "under" the so-called debt ceiling, but it is actually revenue-neutral because the Fed already returns whatever money it collects on Treasuries minus its own expenses.

And Buchanan's article suffers throughout from the Loanable Funds Fallacy (LFF). LFF states that there is a finite amount of money and that if this is depleted, in the case of the government, no more money can be produced except by raising taxes or borrowing. While this may be true in the case of the states, it is not true for the Federal Government, which is monetarily sovereign under historical precedent, or the Constitution's Coinage Clause (Art. 1, Sec 8, Clause 5), which allows Congress to "coin Money." "Coining Money" need not be potentially inflationary either, if the money is spent on things like infrastructure that create jobs and make commerce more efficient. A very old example of this is the Erie Canal, which lowered freight prices from $114 a ton down to $9 a ton. Many of the infrastructure projects waiting for funding today (is this what Representative Buchanan means by "Economic Development"?) would create similar savings. The oft-repeated mantra that government spending is inherently wasteful is a shibboleth. Wasteful spending is wasteful whether from the private or public sector. Effective investments can come from both places too. And with over 90% of corporate profits going towards stock buybacks and dividends, perhaps Representative Buchanan ought to be looking more closely at his "base" for the true source of waste.

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Scott Baker is a Managing Editor & The Economics Editor at Opednews, and a blogger for Huffington Post, Daily Kos, and Global Economic Intersection.

His anthology of updated Opednews articles "America is Not Broke" was published by Tayen Lane Publishing (March, 2015) and may be found here:
http://www.americaisnotbroke.net/

Scott is a former President of Common Ground-NYC (http://commongroundnyc.org/), a Geoist/Georgist activist group. He has written dozens of articles for (more...)
 

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