So given our current institutional structure, the answer is yes, if we balance the budget and leave it that way, the world as we know it is definitely going to end. (And with a bang, not a whimper.)
And given the policy of going cold turkey to balance probably does ‘sound like a pretty reasonable idea to the American public,’ it’s looking more and more like both sides are setting up to let it happen.The Center of the Universe
Rand Paul – “Cold Turkey Balanced Budget is a Good Thing”
Worried about the debt ceiling? Republicans aren’t
Warren Mosler
Ii would also say that if this scenario comes to pass it is likely the end of capitalism as we know it, Then it will be obvious that without government kicking in for accumulated saving of net financial assets, capitalism breaks down. Endogenous credit is not sustainable given profit share relative to labor share typical of managerial capitalism. The alternative is to ban accumulated saving and rentierism and force productive investment, as Keynes realized in calling for the euthanasia of rentierism.
There is a catch to the proposed balance budge proposal, however. Military spending doesn't count. The agenda is to eliminate social spending and government administration, while expanding the military contribution to G. This can always be expanded as needed by fomenting fear and starting wars if necessary. This is the terminal stage of empire historically.
6 comments:
Ike figgered it out: use defense spending for largest public works project to date: interstate
Yes, John Lutz,
But Ike failed us all, by failing to adequately EXPLAIN it all, to his own kids, and later generations.
Give a population a lifeline? You save them for a generation.
Teach a population how to throw themselves continuous lifelines .... ... Nah! Just kidding. :(
Roger isn't that what the academy is supposed to be for?
(In this case the academy of economics...)
rsp,
Ike's interstate project was definitely a socialist enterprise or maybe it was a fascist enterprise.... like the Autobahn? In any event, the interstate was/is more or less constitutional, because the constitution empowered the government to build roads, canals, etc...
The case can also be made that the interstate was constitutional because it tied in with the defense of the nation. Ike had some understanding of this after playing his role as the supreme allied military commander in the European theater during WWII. Not sure if this is true, but I have heard that every 7 miles of the interstate must include a straight section that is flat enough to land a plane on.
Clearly, the interstate was a direct windfall to road construction and indirectly to auto making, oil/gas, glass, rubber, steel and electronics industries. That said, if the interstate highway program had never happened, there might be a lot less auto congestion in the U.S. today and maybe a lot more advanced rail transit. Let's see if Elon Musk can deliver on his mag-lev Hyperloop transportation system.
http://www.cnn.com/2013/07/16/tech/innovation/elon-musk-tube-transport/index.html
"Ii would also say that if this scenario comes to pass it is likely the end of capitalism as we know it, Then it will be obvious that without government kicking in for accumulated saving of net financial assets, capitalism breaks down. Endogenous credit is not sustainable given profit share relative to labor share typical of managerial capitalism. The alternative is to ban accumulated saving and rentierism and force productive investment, as Keynes realized in calling for the euthanasia of rentierism."
This is so wrong.
First, the private market doesn't need "accumulated saving of net financial assets", i.e. INFLATION, in order for capitalism to function.
Endogenous credit is fully capable of supporting the entire savings structure. If there is less credit expansion, then prices, ALL prices, would be lower. There is no problem generated by "profit share relative to labor share."
Second, there is no need to ban "accumulated saving", i.e. CASH HOLDING nor is there a need to force productive investment. If cash holding times increase, then there will be a one time, delimited, downward pressure on prices. As long as prices are free to fall, and aren't propped up artificially by either coercive pro-union legislation, or welfare, or other government intervention, price deflation will tend to clear the market.
Thanks for insturucting us in Austrian "economics" Pete. But this is not fantasyland.
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