IMF — back off fiscal tightening if it is cramping growth, and focus on medium term debt reduction

Major advanced economies need to balance supporting activity and grappling with old risks from structural weaknesses that weigh on growth. A slow but fairly steady private sector led recovery is in the making in the U.S., while recovery remains elusive in the euro area and Japan. 

•  While sentiment has improved, the top priority for the U.S. is to raise the debt ceiling in a timely manner and agree on a credible medium-term fiscal roadmap to bring down debt. 
• In the euro area, monetary policy should remain accommodative and fiscal consolidation be properly paced. The foundations of monetary union should be made more secure. National authorities should fix frayed banking systems and rebuild competitiveness as required. Japan needs to balance upfront stimulus with more ambitious plans to bring down debt and structural reforms to put growth on a permanently higher plane. 
• In its advice and analysis, the Fund will seek the right balance between supporting growth (including through monetary easing) and removing the millstone of high private and public debt.

IMF
Managing Director’s Global Policy Agenda – April 2013

Contradictory messaging. Read anything you want into it.

George Zornick — A Truly Progressive Budget Vision

But this massive spending is offset by a number of crucial revenue measures: The “Back to Work” budget increases taxes on millionaires and billionaires, taxes investments at the same level as wages, closes corporate tax loopholes, enacts both a financial transactions tax and a carbon tax, and introduces both a public option and government negotiating for drug prices to Medicare. In addition, the budget finds savings by cutting Pentagon spending back to 2006 levels.

In short, they sketch out the opposite vision of Paul Ryan: reduced military spending, robust public investment and a strong safety net.

Moreover, the budget actually reduces public debt over the next ten years....

The Nation
A Truly Progressive Budget Vision
George Zornick

Deficit doves and debt hysteria.

Michael Stephens — Reverse Pivot?

It remains to be seen how these SOTU proposals get fleshed out, but a true pivot away from prioritizing the deficit would mean, instead of promising not to add a dime to the deficit, pledging not pass a budget that removes even one-tenth of a percentage point from growth until the unemployment rate dips below some target level.

Multiplier Effect
Reverse Pivot?
Michael Stephens

Paul Krugman — Things Serious People Believe

On invoking the confidence fairy to justify debt reduction. Yes, it's Democratic VSP (very serious people), too.

Nothing new, but nice to hear coming from the bully pulpit.

The New York Times — The Conscience of a Liberal
Things Serious People Believe
Paul Krugman | Professor of Economics, Princeton University

Eric Tymoigne — Public Debt, Debt Ceiling and Monetary Sovereignty: Some Accounting Realities

The accounting.

New Economic Perspectives
Public Debt, Debt Ceiling and Monetary Sovereignty: Some Accounting Realities
Eric Tymoigne | Assistant Professor of Economics at Lewis and Clark College, Portland, Oregon; and Research Associate at the Levy Economics Institute of Bard


For a currency sovereign, the monetary issue is a liquidity management issue only since government has the power to create state money and the only limitation on this power is debasement but never insolvency.

When Treasury credits bank accounts based on expenditure iaw the legalities of appropriation process and the regulation governing the agencies that contract for govt, the govt’s fiscal agent, typically the cb under the current arrangement, simply needs to supply liquidity to clear.

The Treasury can credit accounts iaw the appropriations and expenditure processes, if the fiscal agent clears in the payments system, Or the Treasury can issue equity, coins and notes being booked as equity.

There is no operational need under a non-convertible floating rate regime for the government as currency sovereign to have “money in the bank,” to finance itself with borrowing, or to obtain its own currency through taxation.

Especially in the digital age, the creation of state money is through entires on spreadsheets iaw institutional rules, like keeping score in a game on an electronic scoreboard. 

Politically independent central banks are regularly delegated this power instead of the Treasury where Treasury must obtain currency for settlement from the central bank. This is not an operational requirement of the monetary system but rather a voluntary political restraint designed to separate government from its constitutional power, supposedly "for its own good."

Anything that is imposed over the operational necessity is just the introduction of inefficiency, or likely, an attempt to baffle with BS for a purpose. It is one cog in the wheels of elites maintaining control when they are a minority in a democratic republic. The monetary authority is put behind a veil designed to baffle and then used to further the objectives of the elite, which is maintenance of power on one hand and redistribution upward economically.

It is time for the people to take back the monetary authority, as President Lincoln did in issuing greenbacks.

"If Congress has the right under the Constitution to issue paper money, it was given to be used by themselves, not to be delegated to individuals or corporations." — Andrew Jackson

Matt Yglesias — Pete Peterson's 1993 Forecast of Japanese Domination

Wrong then. Wrong now. Wrong for America.

Slate
Pete Peterson's 1993 Forecast of Japanese Domination
Matthew Yglesias