$54 trillion PAID BACK and counting...

Just thought I'd check in and see how much of our debt we've "paid back" so far this fiscal year. Let's see...hmmm...well, turns out it's now up to $54 TRILLION. And that was in the past 10 months.

And with absolutely no problem whatsoever. The world didn't end. Interest rates didn't spike up (they're actually at record lows...AGAIN), the dollar went up, the economy is still growing, there's no hyperinflation, gold is down, commodities are down. What else? It's all good.

What say the idiots likes Schiff, Santelli, Rogers, Faber, Paul Ryan, Simpson/Bowles, Peterson, Walker, Fox News, et al?

We don't have money? Can't pay for Social Security for our seniors? Health care? Education? Infrastructure? Basic research? Jobs for the unemployed?

What a joke. We have all the money we need and an abundance of goods and services to make and distribute. It's religion that keeps us from doing it. The proof is right here in these numbers that folks at Treasury and the Fed all understand.

Investigative report exposes the deficit hawks

Groups like the CRFB and the Concord Coalition, founded by former Congress members in the 1980s and ’90s, have long presented themselves as nonpartisan, penny-pinching critics of wasteful government spending, when really they are anti-government, pro-corporate ideologues whose boards are filled with K Street lobbyists and financial executives. The goal of much of the austerity class is to see government funds redirected to the private sector. (Their ideology, which accepts the accumulation of private debt but opposes government debt, explains why the austerity class ignored the massive housing and credit bubble, which more than any single factor contributed to an explosion of debt worldwide.)

(emphasis added)

Read the whole article How the Austerity Class Rules Washington by Ari Berman at The Nation

It's the economic rent, stupid.

Berman has a one-two punch in this issue. See also Occupy Wall Street Hits K Street by Ari Berman at The Nation

If you want to understand how the top 1 percent have accumulated such power in American politics, look no further than Washington’s K Street lobbying corridor. Wall Street has long been the dominant player in the capital. “The banks,” Senator Dick Durbin said in 2009, “are still the most powerful lobby on Capitol Hill. And they frankly own the place.”

The financial sector has spent more money on campaign contributions and lobbying than any other sector of the economy—$4.6 billion on lobbying since 1998, according to Open Secrets. This year, commercial banks andsecurities and investment firms have spent over $82 million on lobbying, employing over 1,000 lobbyists.

Given these facts, it makes sense that the Occupy Wall Street movement has spread to K Street. Since October 1, demonstrators have gathered in MacPherson Square, their numbers and visibility growing in recent days....

A lot of this post is about Harvard professor Larry Lessig, "one of the pre-eminent advocates of true campaign finance reform."

“Forget the 99 percent,” Lessig said yesterday. “We are the 99.95 percent of people who have never maxed out in a Congressional election campaign by giving the maximum amount. It is .05 percent of America who have given $2500 in the last election to a Congressional candidate, .05 percent, and Congress listens to them.”

Warren Mosler — "Deficit Reduction Super Committee Fighting the Battle of New Orleans" [Repost]

[Reposted with permission from The Center of the Universe]

I realize it’s not a perfect analogy,
but, due to poor communications,


the battle of New Orleans was fought


well after the War of 1812 had ended.

Likewise, the Congressional super committee is fighting the battle for deficit reduction


long after the vaporization of the primary reason driving that move towards deficit.

The main difference is the stakes are much higher this time,


with the real cost of the lost output from the excessive, ongoing,


global output gap far exceeding


all the real losses of all the wars in history combined.

The headline reason for deficit reduction was


the rhetoric about the immediate danger of the US


suddenly becoming the next Greece,


with the US govt being cut off from credit,


interest rates spiking,


and visions of the US Treasury Secretary
on his knees, hat in hand,


begging the IMF for funding and mercy.

And the looming flash point was the threat of a US downgrade if


a credible deficit reduction package wasn’t passed before the Aug 2 deadline,


when the Congressionally self-imposed US borrowing authority was to expire.

After a prolonged Congressional process that was

even uglier than the healthcare process,


with already dismal Congressional approval ratings moving even lower,

the debt ceiling was extended with a measure that contained some deficit reduction,


and also set up the current super committee to ensure further deficit reduction.

Soon after, however, Standard and Poor’s decided it all wasn’t enough,


and the dreaded downgrade was announced.

And then the unexpected happened.


Rather than spike up as widely feared,


market forces drove US Treasury interest rates down, substantially.

What was happening? Where had the mainstream gone wrong?


Former Fed Chairman Greenspan and celebrity investor Warren Buffet
both immediately had the answer.


S&P was wrong.


The US is not Greece.


The US govt prints its own money, while Greece does not.


The US always has the ability to pay any amount of dollars,
that markets can’t take away.

And everyone agreed.

And the driving force behind deficit reduction was suddenly not there,


and the rhetoric of becoming the next Greece vanished from the national TV screens.

And, unfortunately, just like the news that the War of 1812 had ended


didn’t get to New Orleans in time to prevent thousands from


losing their lives in that bloody battle that would otherwise not have been fought,

the news that the US isn’t Greece apparently hasn’t gotten through


to the Congressional members of the super committee
now fighting the current battle over deficit reduction.

What was learned after the downgrade was that


there is no such thing as a solvency problem for the US govt.


Short term or long term.

True, excessive deficit spending may indeed someday cause unwelcome inflation,


but the US government is never in any danger of not being able
to make any payment (in dollars) that it wants to.

And yes, the discussion could be shifted to a discussion
as to whether current long term deficits forecasts
translate into unwelcome inflation in the future
that may demand action today.

However no specific research has been done along those lines.


And, in fact, inflation forecasts,


which all assume our current fiscal trajectory,


don’t show any signs of an inflation problem.


Nor are the long term US Treasury inflation indexed bonds flashing any inflation warnings.


In fact, the Fed and most other forecasters remain more concerned over the risk of deflation.


And Japan, with a debt to GDP ratio about triple that of the US,


has been fighting its battle against deflation for nearly two decades.

So, clearly, shooting from the hip on this issue,

by suddenly declaring long term deficits


must be immediately addressed


with cuts to Social Security,


and with tax hikes,
to prevent a looming inflation problem,


(now that the prior errant reason, that the US could be the next Greece, has been dismissed)


could only be considered
highly irresponsible behavior


on the part of the super committee.

An informed Congress might recognize


the reason for the urgent action to reduce the federal deficit


and the reason for the super committee
is no longer there.


And, therefore, an informed Congress might suspend the super committee,
and regroup and reconsider before taking action.

It is widely agreed the current problem is a massive lack of aggregate demand.


It is widely agreed that a combination of tax cuts and/or spending increases


will restore sales, output and employment.

But instead of a compromise where the Republicans get some of their tax cuts


and the Democrats some of their spending increases,

and the economy booms,


both sides are instead going the other way and pushing proposals to reduce aggregate demand,


even though they no longer have good reason to do so.

The battle of New Orleans was fought after the reason for fighting it had ended,


And, likewise, long after the reason for deficit reduction vaporized,


this battle continues to be fought
with both parties continuing acting counter agenda.

(feel free to distribute)

Congressman Paul Ryan should apologize to the American people!

This was posted on Warren Mosler's site. Warren says that Paul Ryan should apologize to the American people for his misleading comments on the debt.

Dear Congressman Ryan, Your response to the President Obama’s State of the Union address included something we’ve all heard a lot of ever since. You warned along the lines that that the US could become the next Greece, and be faced with some kind of a sudden financial crisis, where the world would no longer lend to us, interest rates would skyrocket, and the US, unable to spend, would be down on its knees before the IMF begging for the needed funding. And no one with any kind of national public forum took issue with you, including the President and the Democrats in Congress, who for all appearances quietly agreed and acted accordingly. Well, today, based on the near universal response to the S&P downgrade, everyone now knows, or should know, there is no such thing as the US becoming the next Greece. The overwhelming response to the S&P downgrade by everyone from Buffet to Greenspan, and most every financial and academic economist in the world was along the lines of: The US is the issuer of the dollar. It can print dollars. So it can always make timely payments without limit. THERE IS NO SOLVENCY ISSUE FOR THE US. There is no such thing as the US running out of dollars to spend. There is no such thing as the US being dependent on taxing or borrowing to get dollars to spend. Greece is very different. Greece, Ireland, Italy, and all the euro member nations, corporations, and households can’t print euro, any more than the US states, corporations, and households can print dollars. And so they are all indeed dependent on revenues from somewhere to be able to spend. So, Congressman Ryan, please apologize NOW for being so wrong and so misleading. There is no solvency risk for the US. The Fed is price setter for the interest rates for the US government and the banking system, not the market, just like the European Central Bank sets the interest rates for its banking system and its own debt. Congressman Ryan, your reasons for deficit reduction have vaporized. You see, the risk of overspending is inflation, not solvency. So if you want to argue for deficit reduction, apologize NOW, regroup, and come back with your next round of fear mongering about how the deficit can be inflationary, or something like that, and see how that flies.