Friday, March 26, 2010

Why We Do Not Need to Fear the Growing US Debt

(Just before I get into this I'd like to say that I have updated my previous blog about Meredith's anti-Protestantism article.)

For anyone needlessly scared by the increasing indebtedness of the US government you need to read this article by James Galbraith, In Defense of Deficits, recently published in The Nation magazine, and viewable at
The misinformation [and fear that the US state will become bankrupt] is rooted in what many consider to be plain common sense. It may seem like homely wisdom, especially, to say that "just like the family, the government can't live beyond its means." But it's not. In these matters the public and private sectors differ on a very basic point. Your family needs income in order to pay its debts. Your government does not.

Private borrowers can and do default. They go bankrupt (a protection civilized societies afford them instead of debtors' prisons). ...

With government, the risk of nonpayment does not exist. Government spends money (and pays interest) simply by typing numbers into a computer. Unlike private debtors, government does not need to have cash on hand. ... If you choose to pay taxes in cash, the government will give you a receipt--and shred the bills. Since it [the US government] is the source of money, government can't run out.

It's true that government can spend imprudently. Too much spending, net of taxes, may lead to inflation, often via currency depreciation--though with the world in recession, that's not an immediate risk. Wasteful spending--on unnecessary military adventures, say--burns real resources. But no government can ever be forced to default on debts in a currency it controls. Public defaults happen only when governments don't control the currency in which they owe debts--as Argentina owed dollars or as Greece now (it hasn't defaulted yet) owes euros. But for true sovereigns, bankruptcy is an irrelevant concept. When Obama says, even offhand, that the United States is "out of money," he's talking nonsense--dangerous nonsense. One wonders if he believes it.

Nor is public debt a burden on future generations. It does not have to be repaid, and in practice it will never be repaid. Personal debts are generally settled during the lifetime of the debtor or at death, because one person cannot easily encumber another. But public debt does not ever have to be repaid. Governments do not die--except in war or revolution, and when that happens, their debts are generally moot anyway.


  1. Have you noticed that, apart from this, there has not been one comment from anybody to a whole screen of postings over several days? Your effort is apparently deemed almost irrelevant.
    (I know. Yes, I am unfortunately giving it some slight relevance by even pointing this out.)
    Now I expect silent "fans", like xHWA to jump in and offer some scant encouragement to you.
    Ignore them and get a proper job to gainfully occupy your time.
    Meanwhile LCG will continue to be blessed with physical and spiritual growth in spite of pathetic efforts like yours.

  2. Paris,

    People reading and not replying does not make this blog irrelevant. It is the Armstrong empire which if falling into the hole of irrelevance. The purpose of this blog is to bury Armstrong-ism, not to praise the wretched man and his movement. Armstrong-ism has played a key role in the labefaction of our society. There are some who care enough to correct this injustice!
    Make yourself useful Paris and go place flowers onto Terry Ratzmann's grave today.

    Excellent Redfox. Don't let the tithe slaves get to you. Keep it up.

    An avid reader,

  3. Thank you James very much for your encouragement.

    My plan is to just keep writing until I can't think of anything else to say.

    Because I have been fooled by Armstrongism I feel it is my duty to try and warn people about it in my own way.

  4. Keep on just doing that and yes, don't let contemptable people like that drag you down. On my own blog,I have had my share and some way are more downright nasty (I was almost called the N-word, but in the Age of Obama, this person knew that he couldn't say the exact word). Their sick comments NEVER see the light of day on my blog because their comments have NOTHING---and I mean NOTHING to contribute to humankind in any positive way. Their comments never encourage nor edify. They only know how to tear someone down, so they can feel good in the process. I almost (and I mean almost) pity them.