by Tom Olin
Republicans in Washington are playing chicken with our economy and well-being for no good reason. The debt limit is an anachronism from the gold standard, which effectively ended in 1934. Yet, the GOP threatens to blow up things because of it.
Most people believe the federal government is like a household, that it must get dollars before it can spend. That view is understandable but wrong. Households, businesses, and state and local governments are currency users; the federal government is our currency issuer.
The government creates new dollars when it spends by changing numbers up on a computer (YouTube: Bernanke 60 minutes printing money). When it taxes, dollars are destroyed by changing numbers down. It can create as many dollars as it needs (YouTube: Alan Greenspan Paul Ryan). Existing dollars can be exchanged, with a computer, for interest-bearing Treasury securities, just as dollars in your checking account can be exchanged for a CD. On maturity, the dollars are exchanged back with interest. Understanding that shows any debt limit to be unnecessary and pointless. Our national “debt” is paid off with computer keystrokes. Those Treasuries are our national savings.
The infuriating part of this is that many of our federal leaders understand all that. Yet they maintain a lie because admitting the truth would expose their own prior duplicity and/or ignorance. They use the lie to justify lack of action on vital needs like climate, infrastructure, healthcare, education, etc.
For the sake of our futures, demand an end to this lunacy.