I am amazed that this appeared in the Wall Street Journal. I am starting to see some push back against the Pete Peterson Deficit Terrorism campaign.
| "Once upon a time Mr. Peterson preached his gospel of thrift through books and essays; since the early 1990s, however, he has built up two foundations to help fight his war on entitlements, the Concord Coalition and the Peter G. Peterson Foundation, both of them dedicated to his obsessive vision of fiscal austerity." |
Read article here.
8 comments:
Mike,
Greg Valliere (Chas Schwab Washington Bureau) piles on with this blog at cnbc here.
Excerpt: "By refusing to grant any extra aid to the states – or to even speed up Medicaid payments to the states – the inaction by Congress unquestionably will prompt layoffs in dozens of states that have new fiscal years that start on July 1. By refusing to grant any additional unemployment benefits this summer, 2 million unemployed Americans will sink even deeper into poverty.
This brutal austerity, now all the rage in Congress, could not come at a worse time. "
Hope is alive...have a great 4th!
Resp,
Maybe this is aimed at the BRIC countries by the original G7 ?
China floated their curreny just like Geitner asked and it did not change anything.
Is oil unhitched from euro/dollar inverted relation yet ?
we are still in transition
Keep fighting the good fight guys.
Mike's comments on recent TV appearances have been excellent and forceful, which is exactly what we need.
I also like the fact that Krugman is taking the gloves off too.
If only the Fed and politicians had listened to you guys earlier...
taxes support all expenses - yeah right.
I notice that even on the very local level - like with the children's PTO presidents at the rich schools who do not get title subsidization from the state complain that they do not get any aid from the State and that the schools with children whose parents are mostly low income get all the State monies.
I venture to guess that this is one spot where deficit terrorism originates - that the rich parents think that their tax money goes to support the poor kids' schools and not their own.
However, the parents at the rich schools work for companies which are subsidized such as oil / energy companies, and so on. These companies are very dependent on government spending and they spend a lot of time, energy and money trying to cover up the actual support by government "deficit" spending which keeps them going.
Austerity, deficit terrorists, creative destruction, budget balancers, Austrian School Economics, tax hawks, inflation mongers, etc
As we saw with Bush's "tax rebates" that they were NOT tax monies at all but government spending retracted from the real economy by the balancing of the budget by Clinton sending the the monies back into the Tsy/Fed and thereby causing the 2001 recession.
Bush's falicious antics that the tax money was returned was a cover up for the fact that the rebates were really reprocessed SPAM version of government spending!
This misnomer of the rebates help to perpetuate the belief that Americans were overtaxed and to cover up that those in the upper income brackets are really recipients of the biggest portion of government spending.
Both side argue this point to all ends. I tend to believe that Deficits matter because no country operates in a vacuum, not even sovereign USA.
Mike says we ran huge deficits during after WWII and we were wealthy, equating deficits to wealth......there was NO other economic power left after WWII but the USA. Every country had to buy from us. Today, there are many economic power houses.....no power's infrastructure has been bombed off the face of the earth.
I think 50 or 70 years of data is not proof that one concept works.
I highjacked KARL DENNINGER comment below because he covers what many think better than I could.
"There are a handful of very dangerous j/a/c/k/a/s/s/e/s [strike through] (people) running around out there who believe "deficits don't matter", or even worse, "government can print up and spend anything it wants as it doesn't play by the same rules; it not only can't go bankrupt but by spending more and more it lifts the economy."
In a word:
Reality is that such nonsense is simply more Ponzi Economics. It is the belief that one can find a free lunch - that there's some magical rainbow at the butt end of a unicorn that emits pretty-colored candies.
The truth is that it is unbelievably corrosive to think that we can inflate out of this, whether with printed money or with borrowed.
If one actually "prints" then the immediate response in the marketplace is to shut down all lending of capital. Why? Because the person with capital has no means of assessing the damage to their purchasing power. Remember, interest is what's charged for the time value of money, the risk of default and the risk of dilution of your purchasing power by either naked shorting of the currency or outright unbacked emission.
The "deal" that all debt-backed currency systems make is that unbacked emission won't happen. Naked shorting (which is what issuing unsecured credit is against a currency) is bad enough; unbacked emission is ruinous to those who have lent capital on fixed terms.
There is no free lunch; destroying those who have term obligations such as pension funds simply means that the government now has more people coming to it with hand outstretched for a bailout. But the ability to fund that bailout is not unlimited, Dick Cheney "deficits don't matter" crooning aside.
The danger is that nobody knows in advance exactly where the edge of that cliff lies. Greece and Iceland found it the hard way and suffered ruinous damage to their economies. Neither thought the cliff was near; both engaged in hinky accounting to try to hide exactly how bad the damage was, just like the pension funds, states and federal government are doing right here, right now, in The United States.
continued
"Austerity" connotes starving in the streets among the public but in point of fact thrift - saving back 10 or 20% of one's income and a government that spends less than what it takes in via taxes, paying down accumulated deficits, is not a dirty word at all.
Capital seeks return, and when you engage in austerity you free capital. The combined earnings power of the nation is incredible; government can, at best, extract perhaps a fifth of it and redirect it, but in the process loses so much to internal costs, fraud and waste that it makes a poor allocator.
Growth comes from the productive use of credit - that is, credit taken for the purpose of expanding factories, machine shops and innovative businesses that invent things like transistors and microprocessors.
Credit used for consumption - which includes virtually all credit taken by state and federal governments - is corrosive to to the financial health of the nation over time. The negative impacts don't appear right away, as it is the compound nature of interest that causes the problem. In the short term such expenditures look great, as the pulled-forward demand causes more production to take place.
But the debt left behind still needs to be serviced, and even under the argument that government essentially creates that demand by issuing, the fact remains that the exponential nature of both growth and debt means that one cannot escape from the crush that comes from the use of credit for either consumptive or speculative purpose."
http://market-ticker.org/archives/2476-No,-Really-Hard-Knocks-From-Easy-Money.html
brantley is full of hot air.
the stock market crash of 1929
was caused by brokers lending 2/3's clients' portfolios back to same clients who in turn put that into the market in order to borrow more.
NOW that is "printing" of money - at it's worse in the real economy.
fed can soak the money back in and also earn interest.
so start in the real economy with your austerity by enforcing basic laws of governance which everyone is protesting with "socialism" etc
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