The fundamental part of economics that everyone is missing is this:
The federal government is unique. The rules that apply to you, me, US states, cities, counties, and business (currency users), do not apply to the federal government (currency issuer). It cannot run short of money - it is the creator and issue of USD. It cannot go “broke” as Rep. Boehner claimed and President Obama repeated. It can pay any debt no matter how large. Our economic growth requires ongoing increases in the money supply, that is, increases in federal deficit spending. The only limit to federal spending is inflation, which not only is nowhere near (in our current recession), but can be controlled by the Fed's interest rate policy. Reducing the deficit will cause recessions, depressions and a decrease in quality of life for us, our children and our grandchildren.
Economic austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
Must be logged in to send messages.