fairy tales

In celebration of Paul Ryan's nomination, and in consideration of his reputation among Washington, DC villagers as a fiscal guru, I thought it might be fun to do a series of posts, of which this is the first, critiquing examples of Ryan's past wisdom. Here's the first example:

”We face a crushing burden of debt. The debt will soon eclipse our entire economy, and grow to catastrophic levels in the years ahead.”

The debt referred to here by the Congressman is the accounting construct of the national debt subject to the limit, or the face value of the debt instruments the Government has yet to redeem. But just why the “burden of debt” is so crushing, or even a burden at all to you and I really needs to be explained carefully by Ryan and the other deficit hawks to the rest of us.

I don't see any public debt burden on myself or any American people at all either at present or in the future. Why? Because a burdensome debt is one that you and I will personally have to pay back, and we just won't ever have to pay the public debt of the US back from taxes that we are asked to pay to the Government. That is, we won't unless Congress and people who believe the things Mr. Ryan believes, decide to pay the debt by levying taxes, cutting Government spending, and running Government surpluses until it is paid. Read below the fold...

Here's Part Two of my textual analysis of the deficit reduction portion of Paul Ryan's Republican response to the SOTU.

Then the President and his party made matters even worse, by creating a new open-ended health care entitlement.

What we already know about the President’s health care law is this: Costs are going up, premiums are rising, and millions of people will lose the coverage they currently have. Job creation is being stifled by all of its taxes, penalties, mandates and fees.

Read below the fold...

Many of my recent posts have focused on fairy tales I thought the President would tell in the SOTU and also those that he did tell. The reason for this is that I think people on the left have a greater need to be informed about Obama's fairy tales, then they do about Republican fairy tales, since they are automatically skeptical about what Republicans say given their 40 year history of systematically lying about reality every chance they get. Read below the fold...

Yesterday, I scored the SOTU on the 7 Fairy Tales I discussed previously, and concluded that the President was subscribing to at most two of them, and that he accepted the deficit reduction framing of the Republicans as a basis for negotiation, and was trying to point the US in the same direction as export-led economies emphasizing fiscal austerity, thus joining the world's race to bottom. Today, I want to analyze the details of the portion of the SOTU dealing with deficit reduction. The President said: Read below the fold...

In "All Together Now: There Is No Deficit/Debt Problem,” I warned against the message calling for deficit reduction that the President would probably deliver in his State of the Union Address. And in a series of later posts, I looked at 7 fairy tales I thought he would tell. Finally, in a summary post, I offered a table summarizing the fairy tales and corresponding truths. In this post, I'll do a post-mortem. How many of the 7 fairy tales did he tell us? Read below the fold...

In "All Together Now: There Is No Deficit/Debt Problem,” I warned against the message calling for deficit reduction that the President will probably deliver in his State of the Union Address next month. I view the coming narrative as very likely to be composed of a number of fairy tales. In previous posts in this series I've analyzed and critiqued seven of the fairy tales I expect the President to tell us in his coming State of the Union speech. Read below the fold...

In "All Together Now: There Is No Deficit/Debt Problem,” I warned against the message calling for deficit reduction that the President will probably deliver in his State of the Union Address next month. I view the coming narrative as very likely to be composed of a number of fairy tales. In previous posts in this series I've analyzed and critiqued six of the fairy tales I expect the President to tell us in his coming State of the Union speech. In this post, I'll discuss a seventh fairy tale: the idea that our grandchildren must have the heavy burden of repaying our national debt.

Let's begin with a little history, only once, in the history of the Republic has the United States fully repaid that national debt, and that was in 1835, when Andrew Jackson's second Administration paid off the debt. That pay-off and the further attempt to establish a fund that would compensate for future deficits was followed by the one of the worst depressions in American history in 1837. That depression brought back the deficit and the national debt, and though the Government has sometimes run surpluses since then, it has never again paid off the national debt. Read below the fold...

In "All Together Now: There Is No Deficit/Debt Problem,” I warned against the message calling for deficit reduction that the President will probably deliver in his State of the Union Address next month. I view the coming narrative as very likely to be composed of a number of fairy tales. In previous posts in this series I've analyzed and critiqued five of the fairy tales I expect the President to tell us in his coming State of the Union speech. Read below the fold...

In "All Together Now: There Is No Deficit/Debt Problem,” I warned against the message calling for deficit reduction that the President will probably deliver in his State of the Union Address next month. I view the coming narrative as very likely to be composed of a number of fairy tales. In previous posts in this series I've analyzed and critiqued four of the fairy tales I expect the President to tell us in his coming State of the Union speech. In this post, I'll discuss a fifth fairy tale: the idea that if the Government borrows more money, the bond markets will raise our interest rates.

This fairy tale assumes that the bond market actually controls the interest rates that Governments like the United States must pay. Sure, they can determine interest rates if the Government sits idly by, and lets them do so. However, the Federal Reserve and the Treasury, can target bond interest rates and set these for the bond markets by manipulating overnight bank reserves. Specifically, one way to do this, is that the Treasury can cease issuing long-term bonds, and sell only three-month bonds. Three-month bond interest rates are generally controlled by overnight rates for bank reserves, and overnight rates can be driven down to near zero by flooding the banks with excess reserves. That's basically how the Japanese keep their bond interest near zero, and that's how we can do the same. Read below the fold...

In "All Together Now: There Is No Deficit/Debt Problem,” I warned against the message calling for deficit reduction that the President will probably deliver in his State of the Union Address next month. I view the coming narrative as very likely to be composed of a number of fairy tales. Read below the fold...