QE for you and me

 

Donald Trump is many things–racist, reality TV star, torture advocate, strong leader with fascist tendencies. However, Trump is also a truth-teller, in that he has repeatedly challenged conventional wisdom, as articulated by the American political and media elite. He’s kind of like the little boy in the Hans Christian Anderson story who points out that the emperor has no clothes, while everyone else pretends not to notice.

In this role, who else but the Donald could expose the fallacy that Bush kept us safe on 9-11?

Trump also departs from economic orthodoxy in ways that are remarkably populist and truthful, by critiquing policies that Republicans (and corporate Democrats) sponsor, including corporate globalization, free trade deals, the carried interest loophole, and cheap labor immigration.

Trump has also pointed out the folly of American imperialism, noting the obvious disasters the US made of Iraq, then Libya, and now Syria.

Trump’s latest truth-telling is that the the US can’t default on its debt because it can always print the money.

“People said I want to go and buy debt and default on debt – these people are crazy. This is the United States government. First of all, you never have to default because you print the money, I hate to tell you, okay? So there’s never a default.”

This kind of talk is breathtakingly refreshing after listening to misleading statements from President Obama, on how the US is just like a household and we need to tighten our belt, and, the Congressional Budget Office (CBO) fear mongering about how the evil debt is going to end life as we know it.

This is completely wrong but it sounds right to all the serious people who believe that people like you and I should suffer. Basically, it’s all just a fucking morality play.

The US government is not like a household, there is no threat to funding available for private investment in capital goods, and no threat to the growth rate of future national income.  The President’s and CBO’s analysis is completely inconsistent with how the modern financial system actually works.

The US has a fiat currency, where money is created out of thin air with a stroke of the keyboard. For political reasons, we allow banks to enjoy the advantage of money creation rather than having the US Treasury issue it directly.

Like Donald says–the only way that the US government can default on debt in its own currency is to willfully refuse to pay the debt.

There is a method to the madness, politically speaking, in repeating the falsehoods that the US government is funded solely through tax receipts to fund government programs, and that it’s going broke. These falsehoods gets trotted out periodically by neoliberal politicians and right-wing think-tanks as a way to prevent progressive spending on healthcare, education, or infrastructure.

Bush and Obama shoveled trillions of dollars into Wall Street banks in the aftermath of the crash of 2008. Where did that money come from? Did we borrow it from the Chinese? And, what about QE (quantitative easing)? Where does that money come from?

These are political decisions–to give money to banks but not American citizens. The truth is, our leaders just don’t want to spend money on progressive policies that would help the vast majority of Americans at the expense of their banker friends.

These decisions about our economy and money supply are increasingly seen as suspect by a growing majority of Americans, who are demonstrating their displeasure through the insurgent campaigns of Donald Trump and Bernie Sanders. That these campaigns caught the Washington establishment by surprise confirms, once again, that both establishment parties are so out of touch with the reality of their constituents that they might as well come from an alien world.

There is an alternative to the failed economic policies of neoliberalism and financialization. The US government could use its fiat currency to carry out quantitative easing (QE) for you and me, rather than shoveling this money into the coffers of the too-big-to-fail banks, and embarking on endless wars. There is much that needs to be done. Repairing our infrastructure, educating our students, providing  healthcare to all Americans, are all good and worthy goals.

Since the press has decided to ignore Bernie Sanders and his populist economic policies, we might be dependent on the Donald to keep shooting his mouth off to get the message out.

 

 

 

 

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