Class Warfare Blog

August 7, 2018

The Deliberate Mischaracterization of the National Debt

Republicans and even a few Democrats are fond of characterizing the National Debt as if it were akin to your household debt and claiming that the size of that debt is a big, big problem.

And I respond with: how do you know when a politician is lying about the National Debt? Answer: when his lips are moving.

Most of the “debt” incurred by the federal government is in the form of Treasury bonds. If one thinks of this as a piece of paper (rather than the electrons they are made of now) printed by the government, it is in effect a promise to pay. If the nominal value of the Treasury bond is $1000, the promise to pay is that $1000 and a smaller amount more. Easy peasy. This is, in effect, the government printing money. What would be the difference between this procedure and the government printing that $1000+ in the form of currency? Answer: there is no difference.

But, but the government has to pay off that debt, doesn’t it? Sure, it issues a new series of bonds and pays off the old bonds with the sale proceeds from the new ones.

But, but … that’s something we cannot do as individuals. Yep, that is why what we have is called a sovereign currency. As a sovereign country we can make as much or little of it as we want.

Consider this, in 1964, the year I graduated high school, the national debt was $312 billion, which constituted 46% of GDP. What do you think people would have said then that in 2018 it would be $21.5 trillion and 108% of GDP? I am sure some would have set their hair on fire and run about, claiming this was disastrous, that the American economy would be in a “failing third world country” state with rapid inflation and that we would be in a severe decline economically. Have you noticed any of this? No? (There are a great many things I do not like about our current economy; that is not my point, my point is that we are not now a banana republic because of our yuge national debt.)

Oh, by way of creating a little perspective, the National Debt in 1946, my birth year, just 18 years earlier, the debt was $216 billion, which was a whopping 119% of GDP.

As another point to ponder, realize that the U.S. Federal Reserve, aka “the Fed,” created $2 trillion out of thin air to fund its purchases of stock and creation of bank “reserves” and whatnot to “save the economy” during the recent Great Recession. Did you notice all of the inflation created by the injection of that much “new money” into the economy? No? Neither did I. Inflation was virtually nonexistent. In fact, many were worried about deflation. So much for the claim that printing money causes inflation. Printing money can cause inflation, but it doesn’t have to.

The country’s budget is not like a household budget, not even close. The country’s debt is not like a household’s debt, not even close. If the National Debt really bothers you, the government could print $21 trillion in currency (now done with electrons, not paper) and pay it off entirely. This is not desirable for many reasons; I won’t go into them now. (Whew, I had you worried, didn’t I? But just a teaser … would you make war on someone who owed you a lot of money?)

In an era of “fake news” the claim of there being a “big, big problem with the national debt” is among the fakiest of bits of news. Of course, there is no such thing as fake news, we have had lies in the news since the beginning of the country; those lies are still news. Think of the news as a court transcript; people lie in court all of the time and the transcripts can be used to convict them of that; they are not automatically true, just a record of who said what, just like “the news.” This is why lawyers tell their clients to shut up and not talk about their cases, something President Trump would be wise to do.

This claim of a “big, big problem with the National Debt” is pure propaganda, playing on the general public’s ignorance of national economics to push political agendas that have no good basis otherwise. For example, if you look back in history, if you had a large problem with debt, the last thing you would do is … cut taxes. Think of a corporation which is struggling with a large amount of debt, the last thing they would want is a reduction in income such as you would get if you cut prices. Cutting taxes creates a large reduction in income for the government. If spending stays near the same, a larger amount of debt is created. Have you known of any administration, Republican or Democrat, which has reduced spending? No? Neither have I. This is why Republicans can cut taxes dramatically and not worry. No matter what happens, it will not affect what they want to do. Reagan, Bush 1 and Bush 2, and Trump spent/spend more money than they took/take in, which was fine by them as long as their wealthy sponsors got wealthier, their prime objective. After all, these are the people that claim that they want to “get the government off of the people’s backs” and then create legislation pushing the government into our private lives ever deeper. Pay no attention to what they say, watch what they do.

September 9, 2017

NRA Quietly Backing Democratic Presidential Candidates

Filed under: Politics — Steve Ruis @ 8:43 am
Tags: , , , , , ,

The NRA has been quietly funding some Democratic candidates for president for the 2020 election, noted an inside source. The election of Donald Trump has been a disaster for the guns and ammunition manufacturers. Without the threat of a progressive administration “taking away our guns,” there has been no impetus to stock up and guns and ammo sales have plummeted.

While Mr. Obama was president, gun sales soared as repeated NRA campaigns focused on plans of the Obama administration to confiscate Americans’ guns. During Mr. Obama’s time, of course, no such plans were made, neither were there actions taken, with only a few mild suggestions to Congress for reforms. Mandatory background checks at gun shows or universal background checks were recommended, even a one gun per month limit on sales was suggested but none of these were acted upon. Still the threat of confiscation was a constant topic in the circle of gun owners.

Since the election of Mr. Trump, the sales of guns and ammunition have fallen dramatically. While the NRA will not admit it publicly, privately officials are saying that a Democratic president will be much better for business, hence the attempts to support candidates now. Early money is like yeast, our source told us.

April 28, 2017

American Mythology (Con’t.)

Filed under: History — Steve Ruis @ 9:48 am
Tags: ,

As a school child I was told the tale of “Johnny Appleseed” who wandered around early America planting apple seeds, bringing apples to much land that didn’t have any before. He was characterized as a kind of goofy guy, an eighteenth century hippie environmentalist, who ended up giving away apple orchards. (Modern conservatives would now brand him as a socialist.)

What my teachers didn’t tell me was that apples planted from seed are small and sour, basically inedible. (One nickname for such apples was “spitters” because as soon as you bit into one, you spat it out.)

Right

So, what were such apples actually good for? They were good for making hard cider, alcoholic cider (roughly 20 proof, half the proof of whiskey, twice the proof of beer). Such ciders are a tad sweet to the taste from the enzymes of the yeast breaking down the starch into sugars which are then fermented, but only up to a point. When the alcohol content rises up to a point that it deactivates the yeast, there is still sugar left over. In colonial days, sugar was very expensive and honey was rare, so cider was one of a few tastes that would provide any sweetness in one’s diet at all. And after a couple of tankards of “cider” you kinda didn’t care.

One of the other things that our school teachers didn’t share was that early Americans had an almost constant buzz on. Workers were granted “cider breaks” and were provided with a substantial amount to drink. Work just buzzed along!

Since barley was a crop hard to grow in the colonies, almost all of the beer was made from imported barley (the ingredients for beer are: water, barley, and yeast). Other grains were tried, not at all successfully and so whiskey became the most common alcoholic beverage. But it was unseemly for women and children to drink whiskey, so there was still a wide market for hard cider.

Also, some enterprising “upeaster” found that if you left apple cider exposed to very cold air in the winter, ice formed in it. That ice was almost entirely water, with almost no alcohol in it, so if you plucked out the ice and tossed it, you were left with a far more alcoholic beverage, called applejack. (Whee!) Much easier than setting up a still.

It is not unusual to “simplify” stories for children in school, but it is disingenuous to not tell then “the rest of the story” later in school. Alas, too much of the America we now “know” consists of these doctored, sanitized stories; just ask any American Congressman (it is all they know). Does fake history lead to a taste for fake news; it seems to.

December 26, 2016

The Conservative Playbook: Blame Others for What You Are Doing

Conservatives have repurposed the term “fake news” to continue their effort to undermine any opposition to their own chosen narratives. A column by Jeremy W. Peters in today’s N.Y. Times (Wielding Claims of ‘Fake News,’ Conservatives Take Aim at Mainstream Media) addresses this now typical play from the conservative’s playbook.

One quote tells you everything you need to know:
Rush Limbaugh has diagnosed a more fundamental problem. ‘The fake news is the everyday news’ in the mainstream media, he said on his radio show recently. ‘They just make it up.’

Instead of fake news being politically directed disinformation, as has been the case up to this point, that is fake news is political propaganda, the conservatives are morphing this term into another cudgel to undermine the news media, so that there can be no credible opposition to conservative lies fictions narratives.fauxnews_450

Not all conservatives have bought in on this effort as indicated by this quote from the article:
‘Over the years, we’ve effectively brainwashed the core of our audience to distrust anything that they disagree with. And now it’s gone too far,’ said John Ziegler, a conservative radio host, who has been critical of what he sees as excessive partisanship by pundits. ‘Because the gatekeepers have lost all credibility in the minds of consumers, I don’t see how you reverse it.’

But, in the past, conservatives have gotten into line quickly with any promising disinformation campaign and since so much has already been invested in this effort, including an entire news network (Faux Fox News), I expect there to be unity shortly … and another pillar of democracy continues to crumble under the onslaught of the conservatives at the behest of their paymasters.

December 23, 2016

The Back Story on the Bogus “Russia Hacked the Election” Claim

Finally a competent journalist has put together the information necessary to tell whether or not we should believe this and similar claims.

Check it out: http://www.vox.com/world/2016/12/22/13982102/russia-putin-trump-hacking

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