I have posted testimony that I delivered earlier today, May 11th, for the House of Representatives Subcommittee on Domestic Monetary Policy and Technology, chaired by Congressman Ron Paul (R-Texas), on “Monetary Policy, the Federal Reserve, and the National Debt Problem.”
The link is:
http://defenseofcapitalism.blogspot.com/2011/05/monetary-policy-federal-reserve-and.html
I argue that our deficit spending and resulting cumulative debt of over $14.3 trillion has gotten out-of-control. It is imposing, like revenues from taxes, a huge social cost on the American economy in terms of forgone private sector investment, capital formation, consumer spending that has helped slow down our general economy recovery and improvement in our standard of living.
Deficit spending may be a “path of least resistance” because politicians can create the illusion of giving something for nothing — government largess in the present, while seeming to defer its cost under some uncertain future — but finally there is a “reality” that cannot be put off forever. Default risk premiums are not only for countries like Greece. It can happen here in American, too.
Nor is “monetizing the debt” through money creation by the Federal Reserve a workable alternative. Already America’s central bank has been doing this, first in creating the unsustainable “boom” that turned into a bust, and since 2008 creating a further huge expansion in the money supply that is already pushing the value of the dollar down on the foreign exchange markets, and threatening significant price inflation at home.
I argue that Americans need a “wake-up” call that government does not have the financial means to cover all the “entitlement” and other promised expenditures, both now and in the future — without dramatically damaging America’s economic viability in the years and decades to come.
Thus, it is better to “bit the bullet” and not increase the federal government’s debt ceiling. Washington, to preserve its international credit worthiness, can meet its debtor obligations by fulfilling interest and principle payments on debt coming due, and start cutting government spending down to a size and scope more consistent with the vision of the Founding Fathers in the Declaration of Independence and the original U.S. Constitution.
As for the Federal Reserve, its discretionary policy-making powers should be limited, if not stopped, by anchoring the American dollar on a gold basis again, as a transition to a privatized monetary system free of government control, regulation, and influence.
If we do not start following some such course, the United States is facing dangerous, destabilizing, and damaging monetary and fiscal times ahead.
Richard Ebeling
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Can you provide a link to a video (C- span?) of the hearing?
Can you fix the “bit the bullet” typo ( should be “bite” )
“huge social cost on the American economy in terms of forgone private sector investment,”
You forgot something.
http://www.realclearpolitics.com/video/2011/05/12/obama_there_is_nothing_more_important_than_a_government_job.html
We need to get our priorities straight.
I lolled hard:
“What the GOP and Corporate Media Are Hiding: The Public Debt Is Putting More Cash in Your Pocket
The media is hoodwinking us into buying the Right’s deficit hysteria — they’re not telling us the real story.”
“In fact, while the deficit is on a relatively steep downward slope, just this week the Washington Post told its readers in a front-page news story that Democrats and Republicans have been “lambasted as being far too timid in dealing with the nation’s swelling deficit,” and the New York Times reported that Congress is trying “to cut spending to deal with America’s own ballooning deficit [emphasis added].” These weren’t editorials or opinion pieces; they purported to offer factual news.”
http://www.alternet.org/story/151115/what_the_gop_and_corporate_media_are_hiding%3A_the_higher_the_debt%2C_the_more_cash_in_your_pocket
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