Submitted
by Charles Hugh Smith from Of Two Minds
America's problem isn't a lack of deficit spending/consumption.
America's problems are profoundly structural.
See Chart:
Read comments at the end of this
article
….
The
nice thing about free money to me - from any source- is the
recipients don't have to change anything. Free money is the
ultimate free-pass from consequence and adaptation: instead of having to make difficult
trade-offs or suffer the consequences of profligacy, the recipients of free
money are saved: they can continue on their merry way, ignoring the
monumental dysfunction of their lifestyle.
This
explains the appeal of Modern Monetary Theory (MMT), which
holds that deficit spending is the "solution" to all our problems
because governments can't go broke--they can always emit whatever currency they
need via printing or borrowing.
The
problem with government deficit spending is it's free money to
the recipients: there are no feedback mechanisms to
enforce any consequences for spending that's wasteful, fraudulent or
inefficient/ineffective.
Deficit
spending simply enables the wasteful, corrupt, rewarding-insiders profiteering
state-cartel kleptocracy to continue gorging on public spending. So
what desperately needed efficiencies and improvements are imposed on the higher
education cartel by handing the cartel another trillion dollars of public
spending? None.
What desperately needed efficiencies
and improvements are imposed on the healthcare cartel by handing the cartel
trillions of dollars in publicly funded "Medicare for all"? NONE.
What desperately needed efficiencies
and improvements are imposed on the national defense cartel by handing the
cartel additional trillions of public spending? NONE.
What
kind of sense does it make to encourage wasteful consumption on a finite planet
with limited resources? The
entire rationale of Modern Monetary Theory (MMT) is that the productive capacity of the economy isn't
being maxed out because we're not consuming enough.
This
is the insane ideology of endless growth on a finite planet. Consumption
funded by free to me deficit spending has no mechanisms to
recognize the wasteful, dysfunctional insanity of planned obsolescence and
growth-for-growth's-sake wasteful consumption.
Everybody
supports spending trillions on infrastructure but has anyone noticed that the
system for building infrastructure is completely broken in the U.S.? It
takes a decade or two to rebuild a bridge (for example, the Bay Bridge
connecting Oakland and San Francisco) and every project that is budgeted to
cost $1 billion ends up costing $4 billion.
China would have cleared the
political/permit process in weeks and rebuilt the Bay Bridge in six months. In the politically dysfunctional,
over-regulated, insider-oligarchy of the U.S., the process takes 17 years, and
costs quadruple. That is the acme of dysfunction on all levels.
Increasing
deficit spending in this system simply rewards insiders and elites. Look, the U.S. has already borrowed and blown
$16 trillion in federal deficit spending and trillions more in state and local
deficit spending, i.e. the sale of bonds to repave streets, reroof schools,
build affordable housing, etc.
Somebody
benefits from all the deficit spending on cartels and all the financing of the
debt: the top .1%. And why are you surprised? This is the only
possible output of a state-cartel kleptocracy/oligarchy.
See Chart:
Deficit
spending isn't just public. Corporations and households have been deficit-spending
as well. Total credit outstanding in the U.S. has
far outpaced the expansion of GDP, the real economy. We're borrowing more and
getting less, overwhelming evidence that printing/borrowing money is generating
less output.
See Chart:
HERE'S
FEDERAL DEBT. The government doesn't "print"
currency in our system, it borrows it into existence. The central state issues
bonds and the central bank buys the bonds with newly created currency. Or pension funds, insurers, etc. buy the bonds, so "we
owe it to ourselves." Regardless, debt accrues interest and eventually this
generates consequences.
See Chart:
But
not everyone owns debt, which is of course an asset. The
benefits of deficit spending are as asymmetrical as all other spending/debt in
our system.
Deficit
spending is simply doing more of what's failed. We have two examples to study:
Venezuela, which has supported its free to me public welfare
spending and its corrupt ruling elites by printing currency with abandon.
It's simply not true that
"governments can't go broke because they can print money": they can print currency but the currency has
no purchasing power. I've read all sorts of excuses for Venezuela's debasement
of its currency, but the reality is: they printed as much as they needed to
keep the status quo afloat and this profligate issuance of currency destroyed
the purchasing power of their currency.
Then
there's Japan, which has been deficit spending on a colossal scale for almost
30 years. They've played the game of "we owe
it to ourselves" and the wink-wink cycle of the central bank buying
government bonds (to fund deficit spending) with newly created currency.
Japan's
problem isn't a lack of government spending. Its problem is a dysfunctional,
sclerotic state-cartel structure of self-serving corrupt insiders. Beneath the glossy surface of the trains
running on time, Japan's social order has been hollowed out by the dysfunction,
a dysfunction that's been propped up by deficit spending on bridges to nowhere
and other redundant or even pointless infrastructure.
In a similar fashion, we
cling to the fantasy that a few trillion more in wasteful consumption will save
our dysfunctional, sclerotic state-cartel system from well-earned collapse.
America's
problem isn't a lack of deficit spending/consumption: America's
problem isn't a lack of free to me money. America's problems are
profoundly structural: a sclerotic, toxic political system of self-serving
oligarchic elites propped up by a class of self-serving professional
technocrats, and an insiders-take-most economy in which virtually all the
income gains (and 85% of the wealth gains) flow to the very top and the 5%
technocrat class that owns enough of the assets that have been inflated to
bubble heights to enjoy the illusion of security and wealth.
There
is no such thing as free to me money: the cost is
simply being hidden in the deep, pervasive structural rot of our economy,
politics and society.
….
….
My new
mystery The Adventures of the Consulting Philosopher: The Disappearance
of Drake is a ridiculously affordable $1.29 (Kindle) or $8.95
(print); read the first chapters for free in PDF format.
….
….
----
----
No hay comentarios:
Publicar un comentario