Yahoo Finance pumping out more WRONG crap about Bernie Sanders and the debt

Yahoo Finance is on a mission to be stupider than CNBC.


On a recent post, which looks like it was picked up from Associate Press, there's a claim that Sanders, if elected, would add $18 trillion in "debt" as a result of his programs and that would "blow a hole in the deficit."

Leave aside for a moment that the writer mixes up the "debt" and the deficit.

FYI:

The "debt" is the total amount of dollars issued--over the entire history of our republic--that have not yet been redeemed for payment of taxes. That means it is the total net of dollar financial assets held by the non-government here and throughout the rest of the world.

The deficit is the difference between total withdrawals/spending and total deposits/revenues, usually expressed on an annual basis.


Anyway,the guy gets that wrong.

Next he says that Bernie's programs would add $18 trillion in "debt." He doesn't know this. Nobody knows this for sure, but let's say it's true. So what? In reality that is nothing more than ADDING $18T of dollar financial assets, as I've explained above. The highest quality and the most liquid assets in the world. Added.

And somehow that's supposed to be bad for the economy?

Okay, let's say he doesn't understand that, which clearly he doesn't.

So let's go and look at the last time we added $18T in "debt." That was the period from 1980 until now. In 1980 the national "debt" was $800 billion and today it's over $19 trillion, So we've added more than $18 trillion in debt.

And what happened?

The economy grew from $6 trillion in output (GDP) to $16 trillion. That's 170%, in real dollars. That means, adjusted for inflation.

They can look this all up. It's public information. But I guess it's just easier to make ridiculous statements that have no bearing in truth whatsoever. They figure you're just dumb and won't question it.

They still haven't learned a thing

With MMT really breaking out into the mainstream now and dispelling many of the popular myths about economics you'd think some of the more educated and otherwise informed economic pundits and market mavens would stop with their misguided pronouncements and pleadings.(I stopped 11 years ago, when I met Warren Mosler.)

Barry Ritholtz is probably one of the most widely followed market mavens around and he's certainly very smart and seemingly rational as well. That's why it's hard to fathom why he continues droning on with his false understanding of the Fed and monetary policy. (It's not that hard, Barry!)

In this video he talks about why rising rates are "inevitable." He even agrees with the dim-witted Yahoo! Finance host that the Fed "can't continue to buy Treasury securities forever." You can even discern a noticeable amount of frustration in their pleadings as in, "How has this been going on for this long??"

Well, Barry, if you understood MMT you'd know that the central bank can buy government securities in unlimited quantities for as long as it wants. Moreover, the central bank is the rate setter and often uses asset purchases to set the rate or whatever it wants and keep it there for as long as it wants.

This is all due to the fact that a sovereign currency issuing country, with its central bank as agent, is a monopolist in its own money. And anyone who studied monopolies in Econ 101 (chapter 1) probably knows that a monopolist can charge any price it wants.

The very fact that the US/Treasury/Fed pays any interest at all is superfluous. It needn't pay anything for use of its own fiat.

Really, it's not that hard, bro.