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Why worry about debt when you can just print more money?
I have written about the debt ceiling a number of times. In case you are curious, click here or click here or click here. The debt ceiling debate essentially was this: Democrats said, “we need to raise the federal debt ceiling do we don’t default on our bills” whereas Republicans said “no, we’re in enough debt, do it without us.”
Push came to shove and as they so often do, the Republicans caved and the Democrats laughed at them for giving in. Come December 3rd, the battle will begin again when the current deal between Democrats and Republicans runs out. Here is a quote from Axios…
While Congress has pushed off the debt limit issue for now, the fight over a final resolution will be even uglier come December — when lawmakers need to address the problem once again.
The $480 billion increase will allow the government to avoid a default at least until Dec. 3.
By then, the two parties will likely be in the same spot they were just a week ago: Republicans obstructing Democrats’ efforts to lift the ceiling, and Democrats insisting they won’t extend it unilaterally via the budget reconciliation process.
Meanwhile, Congress will also face a series of other deadlines in December — including funding the government, annual defense spending, President Biden’s infrastructure package and Democrats’ roughly $2 trillion social spending package, among other legislative priorities.
What is it that makes Democrats think that money is infinite and debt does not matter? Actually, I know. Its called – Modern Monetary Theory (MMT).
I don’t know all the ins and outs of it but essentially MMT says don’t worry about debt because you can always print more money. The only concern with MMT is inflation which can break out if the public and private sectors spend too much at the same time. As long as there are enough workers and equipment available (and again, if inflation is not triggered) the government can spend, spend, spend without any real consequences. This 1-Minute video does a better job explaining MMT and gives more detail.
MMT is a popular THEORY that many Democrats have embraced with open arms. Alexandria Ocasio-Cortez for example, has a deep appreciation for it. That being said, there are many arguments debunking MMT. Here are just a few of them:
- BlackRock’s Fink: Modern Monetary Theory Is ‘Garbage’
- Problems with Modern Monetary Theory (MMT)
- Debunking Modern Monetary Theory
- Fed Chair Powell Says Concept of MMT Is ‘Just Wrong’
- Larry Summers: Modern Monetary Theory is a recipe for a disaster
Hmm… Can you guess what would happen if you ran your household according to Modern Monetary Theory? Pretty much a disaster would happen; just as it would for me. As I shuddered over the very thought of that, Subscriber Cindy sends me a joke that has been circulating the internet since Obama was in office. It was well-timed. I did not write it but I wish I had because it has a sort of folksy wisdom to it. Here it is…
Lesson # 1:
- U.S. Tax Revenue: $2,170,000,000,000
- Federal Budget: $3,820,000,000,000
- New Debt: $1,650,000,000,000
- National Debt: $14,271,000,000,000
- Recent Budget cuts: 38,500,000,000
Let’s now remove 8 zeros and pretend it’s a household budget:
- Annual family income: $21,700
- Money the family spent: $38,200
- New debt on the credit card: $16,500
- Outstanding balance on the credit card: $142,710
- Total budget cuts so far: $385
Got it?…. OK now…
Lesson # 2
Here’s another way of looking at the Debt Ceiling:
Let’s say you come home from work and find there has been a sewer backup in your neighborhood… and your home has sewage all the way up to your ceiling. What do you think you should do?
Raise the ceiling or remove the sh*t?
Okay everyone, here is some homework for you. Send that joke to every politician you know, by or before December 3rd, when the budget talks begin again.