I just hit send on the following email in response to Paul Krugmen’s op-ed piece about taxing the rich called “The Social Contract”.
The Times asks for responses to be 150 words or less, this response is more than double that. So in case I do get published, and they insist on shortening it, here is the full version:
By saying “…the burden of making our finances sustainable…” Paul Krugmen contributes to government gridlock.
The US Federal Government does not need to pay off its debt. We don’t need taxes to finance anything. His economics are gold standard learnings, and that ended in 1971. Yet every economics professor, and all mainstream economists, continue to espouse gold standard theory economics. The text books STILL haven’t been changed despite a massive change to our monetary system in 1971.
“Modern Monetary Theory” (MMT) describes our current system, a non-gold standard system, and it explains that Federal debt is not real debt. It is simply the money that the US Gov spends into the system. Money they can create out of thin air. It doesn’t need to pay itself back. So the “debt clock” ought to be called the “money clock” because it is the totality of the money that has been spent into the system. That clock is FAR more representative of our country’s wealth, rather than our debts or “burden” as Krugmen so erroneously calls it.
We can and should print and spend money in proportion to the productivity we are able to create. (The Fed does not print money – acts of Congress to either cut taxes or increase spending is the real act of money printing). Since we are currently under-producing thanks to 18% underemployment we should run the printing presses via tax cuts and increased spending so that we can take advantage of the untapped productivity we have sitting on couches (or sleeping in tents) all over the country.
Paul Krugmen has been presented with MMT arguments, but he mischaracterizes the theory then debunks the mischaracterized ideas. MMT says deficits can be a problem, and wasteful spending can be a problem. It is the so-called “debt” that is never a problem. If Krugmen only knew that there wasn’t a Federal debt burden that had to be paid down he could have some seriously positive influence on the direction of our economy. But by repeating the myth – which he does in the first and third sentences of this article – he is contributing to the gridlock in our government. In a slow economy we can and should run large deficits – large enough to get us back to full employment. And you do that by either spending more, or cutting lots of taxes, or doing some of both. In other words, there is red meat here for both Democrats and Republicans – but right now they are all focused the imaginary debt problem and Krugmen isn’t helping with this wrong headed argument.”