It’s way past time to get serious – and prophetic -- about the $14 trillion-plus national debt. The two major political parties, for different reasons, have been neither.
Republicans in general rail against deficits and debts until it comes time to spend trillions on wars and occupations, Pentagon weapons, bank bailouts, and tax breaks to corporations and the super rich. Debts and deficits are often simply pretexts to slashing social and economic programs benefiting people and communities without having to debate their merits. They point correctly, however, to the current explosion in the debt as economically unsustainable.
Democrats, in general, look at deficits and debts as necessary evils to hire people and prime the nation’s economic pump – especially in times of recessions and depressions. Their claims that the debt isn’t serious, though, by comparing it to the GDP are misleading. The two have little to do with each other. More accurate would be to compare the debt with the US annual income of $2.4 trillion. On a personal level, this would be akin to a person with $50,000 in annual income burdened with nearly $300,000 (and growing) in debt. That’s serious.
The forced vote this week in the US House of Representatives to raise the debt limit without additional spending cuts was pure grandstanding. Calls by Republicans for spending cuts at least equal to the amount Congress would raise the country’s debt ceiling is opposed by many, if not most, Democrats. This isn’t serious.
There is a serious and prophetic path for both parties to confidently strive down together that will eliminate the debt and establish fiscal and political accountability. That path is to affirm the Constitutional authority (Article 1, Section 8) of the government to issue and circulate its own money.
Congress should pass legislation authorizing the government to fund any outstanding expenditure with US money (i.e. electronic and paper notes) – rather than borrowing from banks.
Banks create money currently out of literally nothing as debt when they provide loans to people or the government – the later when they acquire US Treasury bonds. We the People are on the hook not only for the principle but also the hundreds of billions of dollars annually in interest to bankers. This is a loss of fiscal and political independence.
Here’s how it would work. When US Treasury bonds come due, they aren’t renewed or rolled over but rather paid off with US issued debt-free money. This gradually “monetizes” the debt – removing one Treasury bond at a time from the debt anvil off our backs. If additional funds are needed that Congress doesn’t want to pay for via taxes, additional US money is simply spent into circulation.
Thomas Edison clearly understood this solution.
“If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good... If the Government issues bonds, the brokers will sell them. The bonds will be negotiable…Why? Because the government is behind them, but who is behind the Government? The people. Therefore it is the people who constitute the basis of Government credit. Why then cannot the people have the benefit of their own gilt-edged credit by receiving non-interest bearing currency… instead of the bankers receiving the benefit of the people’s credit in interest-bearing bonds?”
What would prevent Congress from flooding the economy with US money? We the People through direct vigilance as well as a checks and balance system established to ensure that US money creation causes neither inflation nor deflation. President Lincoln created debt-free US money during the Civil War – called Greenbacks. The time has come to once again issue US money.
US Representative Dennis Kucinich proposed last year an excellent bill calling for:
1. Moving the private Federal Reserve System under the US Department of the Treasury,
2. Eliminating the ability of banks to create money out of nothing, and
3. Authorizing the US government to issue US debt free money to fund $3 trillion in infrastructure.
Republicans and Democrats need to stop pointing fingers at each other and jointly focus their aim at the root problem of our economic system – private/corporate issuance of money by banks.
Claiming democratic control of our money system is a profound and prophetic means to eliminating our national debt and creating real political independence.