Deficit Dove Prayer: "Grant Me Agile Thinking, Morality & Half A Brain ... But Not Until AFTER I Steal Everything In Sight."

(Commentary posted by Roger Erickson.)

Saint Augustine must be turning over in his grave.

Deficit Doves are still at it, saying that more austerity is needed ... but not just yet. (Hat tip to Bill Mitchell.)

German minister calls for EU budget rules to be loosened ... briefly

Translation: "Grant me agile thinking, morality & half a brain ... but not until AFTER I steal everything in sight."

Brilliant! :( Tell electorates with growing numbers & capabilities that they'll all have to DO LESS ... but not just yet?

That's exactly like telling growing kids they'll be malnourished .. but not yet?

?? 

Where do we FIND idiots who can't grasp the difference between dynamic and static assets, and between REAL resources and purely nominal metrics?

These idiots don't understand the difference between a deficit in one purely nominal metric (national fiat = Public Initiative =~ fiat currency supply), and a deficit in REAL capabilities or resources.

What MORONS!!! Just continuously right-size & right-distribute currency supply, in real-time? Any engineer or high school math student could write the Automatic Stabilizer functions for you. It's analogous to defining the basic gear that allows a soldier to function as a working part of an army. This is NOT rocket science. The concept of functional tolerance limits applies.

Some people just don't understand creation & creativity.

Fine. So for heavens sake, do NOT send such idiots to your Congress or Parliament!!! BMHOTK!

As mindless believers in "Double-Entry Accounting" for everything, idiots will insist that creativity & social development has to "come" from somewhere, in order to be created. NOT!!!

Invention, creation, innovation & return-on-coordination supersede Double-Entry Accounting! Get over it. We do not GET those things from anyone. We as a people create them, de novo - just like our fiat currency. Please wise up, as in now, before it's too late & your grandchildren have NO options.

Brad DeLong — Delong (And Krugman) Smackdown Watch: Bill Black, Stephanie Kelton, And Randy Wray Are Justifiably Irate Modern Monetary Theory How Do Deficits Matter?: Monday Hoisted From Comments Weblogging

OMG! Brad DeLong does full-on MMT. We are hitting the turning point.

Grasping Reality with Both Hands
Delong (And Krugman) Smackdown Watch: Bill Black, Stephanie Kelton, And Randy Wray Are Justifiably Irate Modern Monetary Theory How Do Deficits Matter?: Monday Hoisted From Comments Weblogging
J. Bradford DeLong | Professor of Economics, University of California at Berkeley
(h/t Clonal Antibody via email)

James K. Galbraith — Is This the End for the Deficit Drones?

Public opinion is turning on those who seek to cut our social safety net.

AlterNet
Galbraith: Is This the End for the Deficit Drones?
James K. Galbraith | Lloyd M. Bentsen Jr. Chair in Government/Business Relations and Professor of Government, University of Texas at Austin

Randy Wray — Let’s Leap the Fiscal Cliff: Who’s Afraid of Deficits, Anyhow?

OK, did you leap last night? Aren’t you glad that the President and Congress bargained last night to increase your payroll taxes in order to take away 2% of your income for all of 2013? I guess that at least our “progressive” deficit doves are now happy that with higher payroll taxes, Social Security is on “firmer” ground. Yes, right. Just you wait–more bargains are coming. Spending will be cut next.

Oh, and what did we get in return for the bargain? Some breathing space? Wrong again. We’ve reached the debt limit so the Congress gets to start all over from square one. Remember–the Cliff was created by Congress in order to move foward on the debt limit. And here we are with deja vu all over again.

Anyway, lets take a deeper look in the next few posts at the issue of the US “running out of money”.

Economonitor |Great Leap Forward
Let’s Leap the Fiscal Cliff: Who’s Afraid of Deficits, Anyhow?
L. Randall Wray | Professor of Economics, UMKC

Paul Krugman doubles down on the MMT POV on deficits

This is the NYT op-ed page, not his blog. The big time. And he calls out Pete Peterson by name. The fight is on.

The New York Times
Fighting Fiscal Phantoms
Paul Krugman | Professor of Economics, Princeton University

Bill Mitchell — The myth of compassionate deficit reduction

Bill Mitchell turns his attention on the US today and deftly rips "progressive" deficit doves a new one as only he can.

Bill Mitchell — billy blog
The myth of compassionate deficit reduction
Bill Mitchell

Marshall Auerback on the virtues of deficits

Americans should quit listening to austerity hawks and embrace time-tested economic logic.

Read it at AlterNet
Why Are US Job Numbers Better Than Europe’s? Thank the Deficit!
by Marshall Auerback

Jared Bernstein on debt — the good and the bad

Prof. Bernstein gets several things right in this article. First, that debt is not necessarily bad and can be used appropriately for growth. Secondly, that in downturns government must step and stimulate the economy with increased deficits. Thirdly, that Minsky's financial instability hypothesis must be taken into account in considering debt.

All good. But this he goes on to repeat the common shibboleths. First, he fails to distinguish between the currency issuer and currency user and falls into the government is the same a households and firms, only bigger. Secondly, while he rejects crowding out in recent circumstances (but not outright), he is a deficit dove and accepts the intertemporal budget constraint, believing that government budgets should be balanced over the cycle. Worse, he gives credence to the belief that surpluses are superior to deficits even in the short run.

Bernstein was one of President Obama's more economically enlightened advisors, and he is considered a leading progressive economist. Yikes!

 It’s always important to remember that one person’s debt is another person’s asset. When it comes to the budget deficit, while we owe about half of it to foreign holders of Treasuries (China and Japan being the most prominent lenders), we owe the other half to ourselves. That doesn’t mean we can afford to ignore unsustainable borrowing. But from a macroeconomic perspective, it doesn’t necessarily hurt the economy to borrow from ourselves to invest in productivity-enhancing initiatives that increase the future wealth of our progeny.....
••••••••
What impact do federal budget deficits have on the economy? Was Dick Cheney right to argue that “Reagan proved deficits don’t matter”?

For economists, the issue comes down to “crowding out.” Under certain conditions, by running large deficits, the government can be in competition with private firms for capital, and the extra demand for loans pushes up interest rates. Higher interest rates mean less investment and slower private-sector growth than would otherwise occur. Crowding out makes sense in theory, and research has found some evidence of it. But the whole story is not so simple. In fact, neither interest rates nor investment have responded during this crisis the way the crude view predicts (interest rates haven’t risen with deficits, and neither investment nor capital stock consistently fell). The reason is that there is no competition for scarce funds right now—to the contrary, firms are sitting on trillions in cash reserves, and capital is flowing freely to the United States as a safe haven in uncertain times.

Economists’ focus on crowding out, given the lack of compelling evidence, is doing more harm than good. None of this is meant to signal indifference to budget deficits. I was as elated by the surpluses of the latter 1990s as I was discouraged by the growing deficits of the 2000s....

Read the whole article at Democracy — A Journal of Ideas
Rethinking Debt
by Jared Bernstein

(h/t Mark Thoma)