RyanoBachmannalia - Where Does it Leave Us?

Warren Mosler has some succinct observations about the politics of fiscal policy, which are worth re-posting as is. However, even after his comments, the same 2, perennial questions remain.  First, if it's long past time to start doing things differently, how do we take the 1st step on that 1000-mile journey?  We've been asking that question periodically, since Ben Franklin, Abe Lincoln & Marriner Eccles.  Isn't it past time to permanently capture known answers?  Second, how do we bite the bullet and take steps to permanently capture this as an obvious, incidental part of cultural knowledge base?  Yes, it's embarrassing, and a travesty.  What do we DO about it?

Ryan the next Bachman - (by Warren Mosler)

There's a reason the hardcore budget balancer/deficit hawks don't last long under the microscope. Their numbers can't add up, which leaves them with contradictory statements.

Why can't they add up?
[Because dollars are part of] a 'closed system,' what's called a case of 'inside money,' due to the fact that they all come from [government] and/or its designated agents (apart from counterfeits).

This means the [growing number of] dollars in our pension funds, ira's, corporate reserves, cash in circulation, foreign central bank reserves, etc. etc. all come from someone else spending more than his income.

Yes, the rest of the private sector can and does often spend a bit more than it's income to supply those 'saver's dollars,' but most of it comes from the $15 trillion or so the US govt. has spent [yearly] in excess of its tax collections.
That's called federal deficit spending.

[RGE:  Don't ask me why the REAL economy acquiesces in calling fiat currency creation a "deficit." Accounting semantics should converge to reality. The inverse doesn't seem realistic, or even temporarily useful.]

In fact, the US govt. "debt" is equal to the net dollar denominated 'savings' of all the other sectors combined.
To the penny.
It can't come from anywhere else [except currency creation].

That means any plan to balance the federal budget is also a plan that doesn't allow global dollar savings to grow. [That includes all] the 'automatic savings' like dollars going into and compounding in pension funds, ira's, corporate reserves, cash in circulation, and foreign central bank reserves, etc. etc. [All that savings] either can't happen or [they] are 'supplied' by equal private sector debt increases.

So a plan to reduce the "deficit" [by] $10 trillion from current forecasts is also a plan that either causes private sector debt to increase by that much and/or causes pensions, ira's, corporate reserves, cash in circulation, and foreign central bank reserves to decrease by that much.

None of which is consistent with a growing economy, to say the least.

This means, any plan for long term deficit reduction that includes relatively high rates of growth is what can be called a financial optical illusion, [one] that doesn't hold up on close examination.

And that's why all the budget balancers ultimately fail.
Yes, their headline rhetoric can be casually convincing and even win local elections. But under serious scrutiny, it all falls apart.

But maybe this time it's different.
:( 

[RGE: Don't hold your breath, Warren. The problem is not with currency operations. The key problem is mixing semantics across fields which insist on using different semantics without accurately defining their terms when interacting. That's a situational awareness task, not a monetary operations task. We're arguing over tactics & strategy using sloppy, disorganized terms, while not even defining what success means.  The result is tactics masquerading as national goals.]