A Minus And Plus For The Debt Ceiling Crisis
The debt ceiling discussions in Washington may well be help President Biden's secret domestic agenda but it is hampering on of his foreign policy aims.
The New York Times economy columnist Paul Krugman is aghast that the Biden administration had not prepared for the obvious showdown with the Republicans:
As soon as Republicans took control of the House last November, it was obvious that they would try to take the economy hostage by refusing to raise the federal debt limit. After all, that’s what they did in 2011 — and hard as it may be to believe, the Tea Party Republicans were sober and sane compared to the MAGA crew. So it was also obvious that the Biden administration needed a strategy to head off the looming crisis. More and more, however, it looks as if there never was a strategy beyond wishful thinking.
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[R]ight now I have a sick feeling about all of this. What were they thinking? How can they have been caught so off-guard by something that everyone who’s paying attention saw coming?
I am amused over this. Krugman seems to have believed Biden's election campaign talk about being 'progressive' or on the 'left'. Joe Biden was and is far from that. I for one would characterize him as a centrist with strong leanings towards the right.
The fight over the debt ceiling is arbitrary but a chance for Republicans to threaten some damage. The fear is then used to push for domestic policy concessions:
For those somehow new to this, the United States has a weird and dysfunctional system in which Congress enacts legislation that determines federal spending and revenue, but then, if this legislation leads to a budget deficit, must vote a second time to authorize borrowing to cover the deficit. If even one house of Congress refuses to raise the debt limit, the U.S. government will go into default, with possibly catastrophic financial and economic effects.
This weird aspect of budgeting allows a party that is sufficiently ruthless, sufficiently indifferent to the havoc it might wreak, to attempt to impose through extortion policies it would never be able to enact through the normal legislative process.
I do not for one moment believe that Biden is unhappy about that.
In the 1990s and early 2000s Biden supported bankruptcy reform that made it more difficult, especially for the poor, to get rid of debt:
[Biden] had pushed for two earlier bankruptcy reform bills in 2000 and 2001, both of which failed. But in 2005, BAPCPA made it through, successfully erecting all kinds of roadblocks for Americans struggling with debt, and doing so just before the financial crisis of 2008. Since BAPCPA passed, Chapter 13 filings went from representing just 24 percent of all bankruptcy filings per year to 39 percent in 2017.
Before that Biden had called for cuts to Social Security:
In 1984 he proposed freezing Social Security benefits — that is, ending cost-of-living adjustments that boost benefits to keep up with inflation. In January 1995 he gave a speech endorsing a balanced budget amendment (an utterly lunatic policy) and boasted about his previous record of proposing "that we freeze every single solitary program in the government, anything the government had to do with, every single solitary one, that we not spend a penny more, not even accounting for inflation, than we spent the year before." In November 1995 he did so again, boasting that "I tried with Senator Grassley back in the '80s to freeze all government spending, including Social Security, including everything."
There are other non-progressive laws and several wars that had Biden's support. In the current fight over the debt ceiling the Republicans demand cuts to several welfare bills. It is certainly not obvious that Biden is against those. He may well be using the debt ceiling fight to push for politics he favors but which a majority of Democrats would otherwise oppose.
Talks have been held in the White House with Senate and House majority and minority leaders. There were no serious results because the Democratic Senate majority leader Chuck Schumer held Biden back from making concessions to the Republican House speaker Kevin McCarthy:
The California Republican had vented to his colleagues just hours before the meeting that the current format of negotiations — with all four party leaders in a room with the president — wasn’t fruitful. Speaking to his conference on Tuesday morning, McCarthy said the five of them had achieved little in their first sitdown last week, arguing that Schumer had prevented Biden from fully engaging with the speaker and McConnell, according to two people familiar with his remarks. Whenever Biden did seem to agree with Republicans, McCarthy said Schumer would try to cut him off.
The talks will now continue without the Senate leadership:
Leaders agreed to narrow a bicameral negotiation down to Speaker Kevin McCarthy and Biden, hoping fewer players might be more productive in reaching a bipartisan deal to raise the debt ceiling. Even then, it looks like a longshot to some Senate Democrats.
That setting will give Biden the opportunity to make 'concessions' that are favored by his rich donors but opposed by a majority of people who voted for him. He will then sell those by presenting them as the only possible step to take. Maggie Thatcher's "There is no alternative!" will again succeed.
The current due date for a debt ceiling deal is Friday:
Reflecting the growing sense of urgency, the White House announced Tuesday that the president will cut short his trip to Asia and now plans return to Washington on Sunday in order to resume negotiations with Republicans as soon as possible.Biden will depart Wednesday for a trip to Japan but will no longer make stops in Papua New Guinea and Australia before returning stateside.
There is a G-7 meeting in Japan during which Biden will press for some anti-China wording but probably without much results. The canceled Quad meeting in Australia was also to support his anti-China agenda as was the planned stop in Papua New Guinea where the U.S. navy wants extensive port rights.
For Biden's foreign policy agenda the canceling of those dates is bad. It makes the leadership of the PNG look stupid:
PNG News & Info @PngPles - 2:08 UTC · May 17, 2023PNG declares Monday as Public Holiday in Port Moresby as US President Joe Biden makes historical visit
Link
The canceling of the visit may well be the end of the planned port agreement as the opposition in PNG will now have chance to look into the dubious and secretive deal:
The Opposition Leader, however, said the cancellation of the trip would give the opportunity for the Prime Minister to tell this country what this Defense Cooperation Treaty is all about.Mr. Lelang said information on the contents of the Defense Cooperation Treaty with the United States was sketchy, therefore, created a lot of confusion and uneasiness around the country as to what this means for us. The Opposition is calling on the Prime Minister to come out and tell the nation the details of the Defense Cooperation Treaty.
The Opposition Leader reminded the Government that we have a foreign policy of "Friends to All and Enemies to None” and PNG need to stand firm on this foreign policy position.
Mr. Lelang said we should not be blinded by the dollar sign or be coerced into signing deals that may be detrimental to us in the long run.
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Meanwhile, Former Prime Minister and Ialibu Pangia MP Peter O’Neil also expressed concern that the only people who seems to know about this security pact is the former Minister for Foreign Affairs, the PM and Minister for Defense.
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I am told there will be Security Agreement to be signed between US and PNG, however, that particular agreement was never made public, never debated on the floor of Parliament, never been approved by Parliament so we are all going blind and some of the reports we are getting are concerning”
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From the information we gathered, the Agreement is that the pact was largely drafted by the US Government. Only a few of our own PNG Government officials and the then Minister for Foreign Affairs have seen this document and as a result has been put forward to the Prime Minister and officials to sign the agreement on the day of the visit of the US President," Mr O'Neil said.
This reminds one of the AUKUS deal which will see Australia pay huge amounts of money for nuclear submarines it does not need. That deal was also negotiated secretly and agreed upon without any public discussion.
If the Defense Cooperation Treaty with the PNG fails the chance for a conflict with China will lessen and the world will be better off. If some people in the U.S. will lose some government support due to a debt ceiling agreement it will be bad for them.
But in total that would still be a win.
Posted by b on May 17, 2023 at 16:12 UTC | Permalink
next page »Krugman is a stupid idiot. Watch Michael Hudson totally school Krugman on macro economics.
Posted by: JC | May 17 2023 16:32 utc | 2
the "debt ceiling" is just like every other part of the "US" financial "system": smoke and mirrors. the "US" have never paid its debts and never will. at most it will start another world war to jump start the "economy" because boomers are f_cking dumb and think it's always the 1930s or 1940s. the "real" "economy" is circling the drain and between actual consumer debt and the bullsh_t real estate bubble it's only a matter of time before we start seeing some straight up purge conditions.
as for the effect on voters; biden is still able to rest on his "derp orange man bad imma not him lol" strategy and anytone dumb enough to vote for him once will do it again when the dems start screeching about "trans gin o side!!!111!!" or whatever social issue "liberal" yuppies care about because they live in a fantasy world.
the "republicans" will continue to be full of sh_t and push for austerity and privatizing every damn thing while sending $500,000 patriot systems to "ukraine" to be turned into scrap metal.
Posted by: the pair | May 17 2023 16:34 utc | 3
There is no genuine left representation in US politics. Merely two right wing parties (including the pseudo left ‘Squad’ and total fake left AOC) who operate a phoney culture war but work in tandem to protect the interests of the US ruling class against the majority of society who can be classified as working class.
There is much obfuscation by the demarcation ‘middle class’. He has a college degree so he must be middle class. Wrong. She’s an engineer so must be middle class. Wrong. They have a holiday home, so must be middle class. Wrong.
You’re either part of the ruling class or you are working class. And if you’re not sure which one you’re in…ask yourself ‘if there’s a nuclear exchange, do I have access to a secure ‘blast proof’ bunker in a remote locale, with access to ten years of life support in a radioactive world without sunshine?’
Posted by: Lev Davidovich | May 17 2023 16:36 utc | 4
Michael Hudson recently ripped Krugman in ways he certainly deserves. Neoliberal caused disintegration of national economies is happening all over Europe and in North America. The latest Geopolitical Economic Hour program reviewed those happenings. Perhaps the most important fact that gets mentioned is the gross overstatement of GDP by Neoliberal nations, which in the case of The Outlaw US Empire is close to 50% that serves to sharply magnify the deep crisis of the debt situation as it's over 200% of real GDP. The crisis will worsen as dedollarization increases along with the absolutely incorrect policy implemented by the Fed to contain the inflation it caused.
And of course, the degree of financial instability will impact the ability of the Empire to make war and conduct international trade. Even domestic firms need to worry about being paid on time by the Treasury for fulfilling the agreed upon contracts--How willing is Lockheed-Martin to increase production facilities when its customer has a dire credit rating and default is being constantly mentioned? And then there's the social obligations the government has to its citizens which ought to take precedence over everything else.
So, take a break from Ukraine and read about what's happening geopolitically and geoeconomically and learn how it's all interconnected policy-wise.
* $400,000,000 for the patriot system. messing with korean currency and i guess the dropping zeroes became a reflex. i'd apologize for typo spam but hey blame the weak energy drinks.
Posted by: the pair | May 17 2023 16:40 utc | 7
circus!
biden is rooted in 19th century democrat political chicaneries, november 2020, in a number of election districts the machinations with shuttered counting and day after day unwatched delivery of ballots from 'drop boxes' would please boss tweed running tamany hall in 1870's new york city.
biden is also rooted in the deep state, the uni-party monster, overseeing the trillions in cumulative war spending.
the total usa debt is not far from the total of war spending since 1947, when the military industry complex rose up to profit from the first 'cold war'.
the traditional democrat machine was in on that more than the republicans who had more connection with real power than the progressives hiding behind civil rights and later abortion and sexual deviants' rights.....
being immoral, progressives do not prevent making money off the national security state as well as pillaging the social welfare state.....
what trump called the swamp.....
while krugman is entrenched in the modern monetarist movement: ideology which states the usa can spend on negative return government projects from wars to student loan forgiveness bc it can always print more, and 7% inflation is no big deal to them!
generally, liberal economists are challenged by blindness to unintended consequences, or they are just innumerate!
a debt crisis may be cover for rationalizing and correcting the immense over bought positions in the usa equity markets.
Posted by: paddy | May 17 2023 16:42 utc | 8
On debt payments by the US Government: It does pay its obligations, otherwise it would have nothing: No military, no infrastructure, no medicare, no social security, etc. When you buy something, the initial debt is quickly dissolved by payment, unless you contract to pay for the item over time and agree to contract additional debt--interest--with the purchase price.
"This weird aspect of budgeting allows a party that is sufficiently ruthless, sufficiently indifferent to the havoc it might wreak, to attempt to impose through extortion policies it would never be able to enact through the normal legislative process."
You mean like the democrats since 2016 and especially 2020? If the republicans were smart and serious they would let the US default. It would be the best way for them to hamper the weaponization of the federal government against them, but more then half of them are on that side so they wont.
Posted by: Mr. House | May 17 2023 16:54 utc | 10
Most Democratic liberals have been fooled by Biden and refuse to acknowledge he is the servant of Delaware's banks, which want the cuts to social services. The Republican fascists are using the debt ceiling to provide Biden cover to make 'concessions' to the banksters, which the Democratic liberals will easily swallow.
Posted by: Wilikins | May 17 2023 17:01 utc | 11
"That deal was also negotiated secretly and agreed upon without any public discussion."
Like all the jab contracts or the lab results that were not to been seen by the public for 75 years? You guys are a joke. Remember the Trans pacific partnership that Obama was pushing for that would have given corporations higher sovereignty then countries with regards to their own laws? Nah its all a conspiracy theory.
Posted by: Mr. House | May 17 2023 17:01 utc | 12
Biden isn't anywhere on the political spectrum b, he has end stage dementia.
The Empire of Lies is being ghost run by ex Obama lackies, Susan Rice being right up there....effectively Obama's 3rd term.
And as for Krugman, he accidentally won the Nobel prize for Economics and has been wrong ever since.
Posted by: AleaJactaEst | May 17 2023 17:02 utc | 13
"Most Democratic liberals have been fooled by Biden and refuse to acknowledge he is the servant of Delaware's banks, which want the cuts to social services."
No they haven't, they just treat politics like any sport. Their team wrong or right.
Posted by: Mr. House | May 17 2023 17:03 utc | 14
Failing to raise the debt limit does not result in default. That is a separate issue. Once total debt reaches the limit, new debt cannot be incurred. However, existing debt can be serviced and rolled over, as long as the total stays below or at the limit.
What failure to raise the debt doe do is to force a balanced budget: expenditures cannot exceed revenues. That is a major problem, because the US routinely runs budget deficits over $1 trillion, and sometimes over $2 trillion. So failure to raise the debt limit means spending must be cut by at least $1 trillion, or over 15% of the total budget.
A spending cut of that magnitude would shut down many federal programs. Debt servicing would have to continue, because the 14th Amendment mandates it. Social Security and Medicare would continue, without reductions in payments, because it is politically impossible to cut them. The military budget would continue, because without it the GAE collapses into chaos.
Such a spending cut, about 5% of GDP, would also crash the economy.
There will much gnashing of teeth and howling, but the limit will be increased, as it always is.
Posted by: bob sykes | May 17 2023 17:12 utc | 15
"Joe Biden was and is far from that." [progressive, on the left]
Exactly. But he's not a centrist. He's a Dixiecrat conservative & has decades of careerist proof to back it up.
He, like George Wallace, for one instance, opposed "The busing of little school children."
He's his own dog-faced pony soldier and racist.
Posted by: Elmagnostic | May 17 2023 17:14 utc | 16
IIRC The defense minister in PNG (a longtime back) accepted a large Mercedes from The Indonesians next door as a gift. They were theoretically the ones he would need to defend PNG against. He didn't see anything wrong with that.. it was one of the "perks" of his job.
Not much changes peoples' basic habits, even if the society becomes "servilised.... ooops spelling, "civilised". It would be a good question what the US was secretly offering and to whom. If only four ministers were almost in the know, then the US could limit it's depenses to the minimum.
There will much gnashing of teeth and howling, but the limit will be increased, as it always is.
Posted by: bob sykes | May 17 2023 17:12 utc | 15
Almost certainly true, but the point is the threat is being used to try to cut popular programs that the wealthy would rather do away with.
Posted by: JMW | May 17 2023 17:27 utc | 18
De-dollarization has changed the dynamics of the debt ceiling by eroding the exorbitant privilege of the US Dollar. Bag holders will demand higher interest rates to keep playing along.
The short end of the curve continues to rise as the ceiling approaches.
Posted by: too scents | May 17 2023 17:27 utc | 19
30% of Federal Expenses are funded with debt.
20% of Federal Income is devoted to paying interest
Some very harsh numbers
Posted by: Exile | May 17 2023 17:27 utc | 20
No they haven't, they just treat politics like any sport. Their team wrong or right.
Posted by: Mr. House | May 17 2023 17:03 utc | 14
In our two party system that's how both sides largely operate. Culture wars to keep the masses divided while the owner class protects their privileges.
Posted by: JMW | May 17 2023 17:36 utc | 21
Thanks for the link explaining why you think a balanced budget amendment is an "utterly lunatic policy." I read the linked article but did not find it entirely persuasive. I hope that doesn't make me a lunatic.
Posted by: Frank Jaeckle | May 17 2023 17:36 utc | 22
Krugman is what they used to call a limousine liberal. You don't get a bully pulpit at the NY Times is you seriously challenge the status quo.
I'm amazed that he actually had the gumption to criticize Biden. When a partisan hack like Krugman criticizes a Democrat, you know that things are not going well for Biden.
My favorite is when Krugman said that China PNTR (trade under WTO rules) would be good for organized labor. It showed how much of a laissez-faire capitalist Krugman is.
Posted by: JohnH | May 17 2023 17:44 utc | 23
An interesting read from Jamie Galbraith: "The Debt Ceiling Drama Is All Stagecraft." https://www.thenation.com/article/economy/debt-ceiling-yellen-spending-cuts/
Galbraith is a heck of a lot more progressive than Krugman, who is probably why he doesn't have a bully pulpit anywhere.
Posted by: JohnH | May 17 2023 17:47 utc | 24
thanks b... indeed it is all related as @ 6 karlof1 notes.. the ukraine topic is rolled directly into this..
so the extortionist in chief will go to bat for his moneyed class... this so called democracy is quite the racket, lol...
Posted by: james | May 17 2023 17:52 utc | 25
Triple kudos for correctly assessing Joe Biden (or at least, his staff) as the back-stabbing lickspittle corporate whore that he really is.
Biden used to be "The Senator from MasterCard." Not much has changed except the scale of his treachery against the working class.
Posted by: TG | May 17 2023 17:56 utc | 26
I would like to correct one thing. Paul Krugman is aghast and most importantly he is adope. Mr. K is an inveterate liar. He won a big prize after they became irrelevant because they gave out big prizes to idiots like Krugman already.
Mr. K was one of the persons that made the 2008 disaster much worse. Anything he says is going to be misinformation but he doesn't even realize it.
Remember, George Carlin code, this guy is an idiot, full of shit and fx#)ing nuts.
Posted by: Tard | May 17 2023 18:08 utc | 27
some sanity appears . . It's the high military budget, stupid!
. . .from Foreign Policy
Why the U.S. Should Close Its Overseas Military Bases
A growing movement is pushing back against long-held orthodoxy, arguing that it’s time to abandon these outposts and bring the troops home.
Today, the United States has more overseas military bases than every other country combined; its estimated 750 bases spread across 80 or more countries and constitute 75 to 85 percent of the world’s total overseas military bases—likely more than any other people, nation, or empire in history. . . . Despite being one of the most well-entrenched orthodoxies of U.S. national security strategy, it may well be time for change. A growing movement argues that rather than keeping the barbarians at the gate, the gates themselves have drawn the United States into reckless and unpopular conflicts, tempting policymakers into knee-jerk military responses rather than diplomatic ones, and provoke enemies rather than deter them. After decades of consensus, activists, scholars, and veterans are now pushing back against what they see as a geopolitical misstep, arguing that it’s time to abandon these long-held outposts and bring the troops home. . .here
Posted by: Don Bacon | May 17 2023 18:17 utc | 28
1 - Krugman hasn't been correct about anything in the 21st century.
2 - Joe Biden doesn't lean left or right out of political ideology. He's just unable to stand upright unassisted. At this point, it's clear he doesn't have a clue (or, he watched Uncle Junior on the Sopranos, and decided that's his gig too.)
Posted by: FrankDrakman | May 17 2023 18:22 utc | 29
Despite being one of the most well-entrenched orthodoxies of U.S. national security strategy, it may well be time for change. A growing movement argues that rather than keeping the barbarians at the gate, the gates themselves have drawn the United States into reckless and unpopular conflicts, tempting policymakers into knee-jerk military responses rather than diplomatic ones, and provoke enemies rather than deter them. After decades of consensus, activists, scholars, and veterans are now pushing back against what they see as a geopolitical misstep, arguing that it’s time to abandon these long-held outposts and bring the troops home. . .herePosted by: Don Bacon | May 17 2023 18:17 utc | 28
National security strategy? I'd call it multinational economic strategy: use military bases to help maintain a grip over countries' resources, for the benefit of mega-corporations (which toss generous portions toward cooperative politicians).
Posted by: David Levin | May 17 2023 18:52 utc | 30
And as for Krugman, he accidentally won the Nobel prize for Economics and has been wrong ever since.
Posted by: AleaJactaEst | May 17 2023 17:02 utc | 13
That's not entirely correct. There is no Nobel prize for Economics.
What Krugman won was the Bank of Sweden Award in Economic Sciences in Honor of Alfred Nobel.
It is NOT a Nobel Prize and it is a propaganda achievement that people refer to it as such.
It was not an accident. It was precisely because Krugman preaches the economics of the Chicago School,
as have most every other winner of that non-Nobel prize.
What is correct in your statement is that Krugman has been wrong ever since. What you left out is that Krugman
was also wrong all the way up until the time he won that deceptively packaged award.
Posted by: waynorinorway | May 17 2023 19:02 utc | 31
Excellent summary B!
Somebody who gets it unlike Kim dot com extra, extra.It's very simple really and not rocket science.
https://m.youtube.com/watchv=WS9nPBKa3M&pp=ygUlc3RlcGhhbmllIGtlbHRvbiBwcmVzaWRlbnRpYWwgbGVjdHVyZQ%3D%3D
Posted by: Derek Henry | May 17 2023 19:05 utc | 32
What everyone needs to know is this – Biden is and always was a Republican.
Biden grew up in Delaware, a state where there are so few Republicans that they simply cannot get elected to anything. He kept his Republican registration until the day that he realized that becoming a member of Congress would put him in a position to grab millions of unearned dollars from shady sources around the world without any investigations by fellow congress-critters or justice department sniffers looking his way.*
So he changed his registration to Democrat, got himself elected to Congress, and now you know – the rest of the story.
* One exception -– Mass. Senator Elizabeth Warren published, while in post-grad studies and before becoming a senator, a huge exposé on Biden’s vile treatment of women, children, and poor people. I have a copy of that document in my computer.
Posted by: AntiSpin | May 17 2023 19:18 utc | 33
Posted by: Frank Jaeckle | May 17 2023 17:36 utc | 22
" Thanks for the link explaining why you think a balanced budget amendment is an "utterly lunatic policy." I read the linked article but did not find it entirely persuasive. I hope that doesn't make me a lunatic. "
Very simple really the government budget deficit is the household/business surplus to the $. It is economic suicide to balance the government budget as if it is like a household budget.
The simple truth is You should only run a budget surplus if the economy is running red hot and at full emp!oyment. Take more money out of the economy than you put in to try and control inflation.
Eric explains it beautifully here:
https://twitter.com/tymoignee/status/1238131537020727296?cxt=HHwWgMChldaE3a4iAAAA
I've studied the government accounts, central bank accounts and commercial banks accounts for over 20 years. It is the best description I have ever read.
Posted by: Derek Henry | May 17 2023 19:18 utc | 34
"The simple truth is You should only run a budget surplus if the economy is running red hot and at full emp!oyment. Take more money out of the economy than you put in to try and control inflation."
Isn't that what we have now with 3.5% unemployment? How does one incur 1.5 trillion deficits while only having 3.5% unemployment? Its almost like we were going to have another financial crisis in 2020 because the problems from 2008 were never fixed but then it became the fodder of domestic terrorists to point that out in 2020. Let me know when you guys are ready to actually discuss what happened in 2020 and put on your big boy or girl pants.
Posted by: Mr. House | May 17 2023 19:29 utc | 35
I would even go as far to say Eric Tymoigne is the master. THE expert on money. He produced the very first 100% accurate textbook on money and banking.
https://college.lclark.edu/live/profiles/51-eric-tymoigne
Which produced fantastic debates like these over a decade ago. A fantastic example of how debates should be carried out in a civilised society. Compared with the complete BS we have today.
https://billmitchell.org/blog/?p=3921
Posted by: Derek Henry | May 17 2023 19:31 utc | 36
Posted by: Elmagnostic | May 17 2023 17:14 utc | 16
Biden isn't even a Dixiecrat since at least they had a strong vein of economic populism (but only for white males). Joseph "Delaware Corp No Busin" Biden is a racist tool of the finance "industry" and the MIC/security/surveillance states. Or as others have alluded to, a now-senile empty suit controlled by said "industries."
Posted by: Tom_Q_Collins | May 17 2023 19:32 utc | 37
Let me know when you guys are ready to actually discuss what happened in 2020 and put on your big boy or girl pants.
Posted by: Mr. House | May 17 2023 19:29 utc | 35
Lemme guess. A link to Dinesh D'Souza's "2,000 Mules" will be forthcoming in 3....2....1....
Posted by: Tom_Q_Collins | May 17 2023 19:33 utc | 38
Nope, but take a gander at this for those who are interested:
Posted by: Mr. House | May 17 2023 19:34 utc | 39
Posted by: AntiSpin | May 17 2023 19:18 utc | 33
Exactly. And the obverse example being Clarence Thomas who started off in Black Power activism w/ NAACP assistance and then realized the line to the SCOTUS w/ the Democrats was too long for his career ambitions while the line w/ the Republicans for a Black justice was non-existent.
Posted by: Tom_Q_Collins | May 17 2023 19:36 utc | 40
Posted by: Mr. House | May 17 2023 19:34 utc | 39
Ah, OK. That looks like an interesting read. I'll get back to you later this evening once I've had time to digest it.
Posted by: Tom_Q_Collins | May 17 2023 19:38 utc | 41
Great job of proving my earlier point T_Q_Collins that everybody treats politics like sports though!
Posted by: Mr. House | May 17 2023 19:38 utc | 42
Posted by: Mr. House | May 17 2023 19:38 utc | 42
Not at all. I was just expecting another "Big Lie" lecture about how Trump really won the popular vote. Since I don't even vote for President I couldn't care less, but the topic kept popping up here like poisonous mushrooms for about a year after the fact. Totally uninterested in team/tribal politics, the never-ending campaign season and the electoral horse race. I'm not a member of either wing of the Uni-Party.
That said, I will be reading your linked article about the 2020 shadow bailout enabled by the pandemic.
Posted by: Tom_Q_Collins | May 17 2023 19:43 utc | 43
I hope you enjoy it, i would have posted it in 2021 ( i might have) but prob would have been censored ;)
Posted by: Mr. House | May 17 2023 19:46 utc | 44
"The simple truth is You should only run a budget surplus if the economy is running red hot and at full emp!oyment. Take more money out of the economy than you put in to try and control inflation."
Isn't that what we have now with 3.5% unemployment? How does one incur 1.5 trillion deficits while only having 3.5% unemployment? Its almost like we were going to have another financial crisis in 2020 because the problems from 2008 were never fixed but then it became the fodder of domestic terrorists to point that out in 2020. Let me know when you guys are ready to actually discuss what happened in 2020 and put on your big boy or girl pants.
Posted by: Mr. House | May 17 2023 19:29 utc | 35
John Williams' "ShadowStats" web site does a fantastic job of seeking out and posting the actual numbers for the populace, instead of the fake numbers put out by the Labor Department and others. Williams, for example notes that the official unemployment number is five percent because of what they've been leaving out, more and more, for decades, while his all-in-all, real number is 25 percent.
I highly recommend his site:
http://www.shadowstats.com/alternate_data/unemployment-charts --or go to the main page and read all the other numbers that you might be interested in. Note that not all of the numbers he publishes are free.
Posted by: AntiSpin | May 17 2023 19:56 utc | 45
LoL the debt ceiling fearmongering is one of the biggest scams in US history. No the US wont default. No there wont be economic Armageddon.
In the end they will reach an agreement and of course increase the debt ceiling. Even if that happens at the 11th hour for extra theatrics. But it will happen.
Anyone who believes in this debt ceiling danger probably also believes in the Easter Bunny.
Posted by: Comandante | May 17 2023 16:26 utc | 1
----------------------------------------------------
One person's cute and cuddly Easter Bunny can be another person's vicious rabies infected killer rabbet. You are correct to point out that the debt ceiling budget kabuki dance will not result in Armageddon, that does not mean that millions of people will not be hurt, while others will be helped, by this bi-partisan ritual.
Who wins and who loses depends on the political composition of the congress and the character of the president. In the case of Joe Biden (as "b" so correctly pointed out in his essay) has the character of a criminal used car salesperson. And of course, the Kabuki dance can't start unless the composition of Congress is close enough to start the bidding and extorting among the members.
Social Security and Medicare will get hit but it will still exist. Private programs like "Medicare Advantage" will profit at the expense of the elderly and the taxpayers. Joe will pretend that he opposes these changes but will, in the end, "concede" for the good of the nation and the economy.
At the same time, the US Military Budget which is already larger than the next 144 nations below it, will increase to defend America from the Chinese.
Many social programs will get cut or eliminated, probably some that you Mr. Comandante would support cutting. But the MIC, the Banks, the Oil Companies, Big Pharma and the private insurance companies will all do just fine when the last act of the budget ceiling dance finishes and the curtain closes.
Posted by: Ed | May 17 2023 19:57 utc | 46
With regard to the state of health care in the United States of scAmerica, let me tell you. The more money they take away from Medicare/aid and other social programs, the worse it's going to get for everybody, especially as you age. We hit up against our combined $10,000 deductible and OOP maximum this year already on diagnostics alone. My dad has a prescription that is billed to Medicare at $12,000/month (which is a negotiated discount!) or about $400/pill. The health care situation in the USSA is criminal and only getting worse.
Posted by: Tom_Q_Collins | May 17 2023 20:02 utc | 47
Posted by: Mr. House | May 17 2023 19:29 utc | 35
How does one incur 1.5 trillion deficits while only having 3.5% unemployment?
1.Because the $1.5 trillion "deficit" is the private sector "surplus". Workers have massive savings desires.The incentives to save are HUGE.
2.On top of that the US run massive trade deficits. So foreigners save massive amounts of $'s also. Which most swap for US treasuries. Or did before sanction mania.
3.Then you have the interest paid out in US treasuries ( the debt). At the moment every time the FED hikes rates they increase interest payments paid out to households and businesses who own treasuries. This also increases deficit spending.
The fools think hiking rates fights inflation.
Posted by: Derek Henry | May 17 2023 20:09 utc | 48
I hope you enjoy it, i would have posted it in 2021 ( i might have) but prob would have been censored ;)
Posted by: Mr. House | May 17 2023 19:46 utc | 44
fwiw, It was posted here right after it came out in Aug. 2021 but the MoA archives link isn't working so ...
Grieved and others discussed it on a few open threads I believe. It's where I first learned
about Katherine Austin fitts. Good article iirc with many good links.
Posted by: waynorinorway | May 17 2023 20:13 utc | 49
And the best explanation of what occurred that i have read, probably why no one will actually entertain the argument he makes.
Posted by: Mr. House | May 17 2023 20:16 utc | 50
AntiSpin | May 17 2023 19:56 utc | 45
usa's headline unemployment rate is bogus, it merely reflects those collecting their 18 to 26 weeks of unemployment checks.
the better figure is 38% of prime working age usa people are not working!
and the 10 million job opening reflect the image the human resource departments forecast a gdp that is unachieveable due to lacking inputs, many skills not in supply at the wage the company will pay!!!
iow it has taken multi trillions in deficit spending and the federal reserve soaking up about $4 trillion in shaky agency debt to create an image of prosperity.
when federal outlays is a big part of gdp then gdp is awesomely over stated!
and $19 trillion in money supply is somewhat stimmie cash that is keeping the consumer spending until stimmie cash is gone.
and the federal reserve needs to offload $3 or 4trillion in debt from its balance sheet.
debt ceiling kabuchi is diversion from trouble in the :"real" economy.
the adage 'don't bet against the us economy" may be outdated.
Posted by: paddy | May 17 2023 20:19 utc | 51
"Workers have massive savings desires.The incentives to save are HUGE." Those same people who couldn't afford 500 bucks in an emergency that we see all those articles about? People have had huge desire for savings (if they save, i don't think most do) since 2008 but rates were held at zero for a decade, so i don't buy your argument.
"2.On top of that the US run massive trade deficits. So foreigners save massive amounts of $'s also. Which most swap for US treasuries. Or did before sanction mania."
Have you reviewed who is buying treasuries lately? They aren't financing our trade deficits anymore, perhaps that is why the FED is raising rates all of a sudden? To attract money that is no longer being recycled into our financial system automatically since the BRICS have declared their desire for a new reserve currency? So again, no i don't think that is correct.
"3.Then you have the interest paid out in US treasuries ( the debt). At the moment every time the FED hikes rates they increase interest payments paid out to households and businesses who own treasuries. This also increases deficit spending."
So why didn't they do this from 2008 thru 2020? Again i don't buy your argument, see above for answer.
Posted by: Mr. House | May 17 2023 20:23 utc | 52
The fools think hiking rates fights inflation.
Not only does hiking interest rates on the debt ( US treasuries) increase deficit spending to meet the increase in interest payments on the debt via the interest income channel.
Businesses just increase their prices of their goods and services to cover the extra cost of borrowing caused by the hikes in interest rates. None of this fights inflation it causes it - See Argentina for details.
If you don't believe me just look at any bank lending chart. The fools think hiking rates stops bank lending. However, since they started hiking bank lending has increased not decreased. Businesses just pass the increased cost of lending into consumers via higher prices.
The interest price spiral
https://new-wayland.com/blog/interest-price-spiral/
The propaganda involved to fool the public is no different to that of CNN reporting on Ukraine. It is all geopolitics the IMF Trojan horse.
Posted by: Derek Henry | May 17 2023 20:24 utc | 53
You mean like the democrats since 2016 and especially 2020? If the republicans were smart and serious they would let the US default. It would be the best way for them to hamper the weaponization of the federal government against them, but more then half of them are on that side so they wont.
A little info for our non- US friends....
The debt of the USA is prohibited from default by the 14th amendment to the US Constitution, and by the fact that ALL OF IT is denominated in the USD, which the USG/USFED has the right to create ad infinitum.
The Debt Ceiling fiasco, limits the USD amount of US Federal Debt, currently ~ $34 trillion...
If USG cannot increase the debt ceiling, USG must operate a balanced budget. This requires cutting previously authorized spending.
Last time this happened, USG closed all National Parks. They are notorious for closing services to the public, to protect DOD spending programs.
Given the Durham report, it's likely the Republicans are in a "take no prisoners" mood. So I expect a confrontation which leads to major cuts in Federal spending. $$$ for Ukraine could be among those programs cut. Could be... not certain..
One certainty, the Share markets depend upon USG deficit spending to rise. It is most likely that Yellen will manage to cope until and through the 15 June tax take, which should carry the USG into the summer, putting off the crisis for a few months.
We live in interesting times...
INDY
Posted by: Dr. George W Oprisko | May 17 2023 20:35 utc | 54
"This weird aspect of budgeting allows a party that is sufficiently ruthless, sufficiently indifferent to the havoc it might wreak, to attempt to impose through extortion policies it would never be able to enact through the normal legislative process."
Not sure where this comes from. This is a feature rather than a bug. Also an indication on how far the Republic's protections of the interests of the minority have been eroded by the majorities desire to feed at the trough. Of course the majority will always vote to continue it's theft and it will only be an extraordinary event that prevents it.
I read lots of arguments here about how a balanced budget would be a disaster. I wonder if that is true. There is some evidence that being the Reserve currency requires both trade and fiscal deficits. But those are both paid for by hollowing out the productive economy.
The national debt will never be paid back. The idea that it will be paid back is a lie. It's also a lie to claim that anything can be done without pain. And a further lie that the pain would be forever.
One just has to look at the Russian experience in 1990-2018 to see the reality. A extremely painful experience from which a new, more prosperous reality emerged, largely based on low fixed rate taxation, essentially balanced budget and minimal debt.
Americas problem is that our oligarchs are much more numerous, much better hidden and much more entrenched in power than Russian oligarchs. The proof of that is that so many Russian oligarchs fled to the west to keep them and their stolen money safe.
Posted by: Dan Farrand | May 17 2023 20:35 utc | 55
Posted by: Mr. House | May 17 2023 19:34 utc | 39
Interesting article. I haven't read all of it carefully, but I had a few quick thoughts.
1. Vighi's "chronicle" that begins with the BIS in June 2019 and ends with the WHO's director in March 2020 strikes me as a chain of elements in a premeditated script that began long before 2019. Maybe it strikes Vighi that way also, but I couldn't tell from what he wrote.
2. Vighi writes, "With lockdowns came the suspension of business transactions, which drained the demand for credit and stopped the contagion. In other words, restructuring the financial architecture through extraordinary monetary policy was contingent on the economy’s engine being turned off. Had the enormous mass of liquidity pumped into the financial sector reached transactions on the ground, a monetary tsunami with catastrophic consequences would have been unleashed."
I don't get this. If the people receiving the $100s in COVID handouts had nothing to spend their money on, I'm not sure what effect those handouts would have had. People clearly did have things to spend their money on, but this spending was heavily skewed toward remote commerce (if I might call it that). Maybe Vighi means that there was massive growth in the percentage of consumer spending on goods from overseas, so that the spent dollars left the US before they could cause a "monetary tsunami." It's certainly been observed that the lockdowns helped destroy our ability to produce tangible goods.
Posted by: David Levin | May 17 2023 21:05 utc | 57
"I don't get this. If the people receiving the $100s in COVID handouts had nothing to spend their money on, I'm not sure what effect those handouts would have had."
They paid down debt, you'd be hard pressed not to find articles from the time not stating that, which went back to the people who were having repo problems and essentially been living on government support since 2008. His point was, that money would not cause any hyperinflation locally because you couldn't spend it locally. Most of that money was spent online (amazon, who didn't pay sales tax until they monopolized that market). It destroyed local economies and gave more "welfare" to large corporations (those who actually run government) and the people who produce products for them (china and other countries in asia).
Posted by: Mr. House | May 17 2023 21:14 utc | 58
If you click his name on that article you can see the other articles he's produced since. He seems to be of the same mind as CJ hopkins.
Posted by: Mr. House | May 17 2023 21:16 utc | 59
Meanwhile the "legacy" corporate media is really ramping up the hatchet job on RFK Jr. Unfortunately he's a slave to the LOTE uni-party system and strongly opposes Donald Trump so he won't ditch the Dims; the only reason he's not running as an Independent.
Posted by: Tom_Q_Collins | May 17 2023 21:26 utc | 60
Biden isn't even a Dixiecrat since at least they had a strong vein of economic populism (but only for white males). Joseph "Delaware Corp No Busin" Biden is a racist tool of the finance "industry" and the MIC/security/surveillance states. Or as others have alluded to, a now-senile empty suit controlled by said "industries."
Posted by: Tom_Q_Collins | May 17 2023 19:32 utc | 37
My favorite observation on this genre is that when "privatization" of Social Security was a hot topic (i.e. channeling part of Social Security tax to investment accounts), Republicans figured a clever argument that Social Security is racists because Blacks on the average live shorter, and thus collect benefits for fewer years. Fortunately, it was way to clever, Southern support for the idea collapsed -- among Southern Republicans, and without them, there was no supportive majority in Congress and Senate.
Posted by: Piotr Berman | May 17 2023 21:35 utc | 61
Posted by: Mr. House | May 17 2023 20:23 utc | 52
"i don't buy your argument"
It's not an argument, not even a theory it is an accounting FACT. Assets and liabilities on the government balance sheet.
Here ask Jan Hatzius Goldman Sachs top economist.
https://www.businessinsider.com/goldmans-jan-hatzius-on-sectoral-balances-2012-12?op=1&r=US&IR=T
Or the Office of national statistics in the UK who produce the real data every quarter.
https://new-wayland.com/blog/uk-sectoral-balances/
The government red ink is our black ink is an indisputable fact not an argument. The government Deficit is our savings held as $'s. The national debt is our savings held as US treasuries. Both of which are private sector "assests" held by domestic savers and foreigners.
So how do you fix it ?
Easy peasy. Stop issuing debt as it was a left over of the gold standard and no longer applies. The only bonds "Americans" ever need are granny bonds.
https://new-wayland.com/blog/the-only-bonds-we-need-are-granny-bonds/
"Foreign holders of $ assets hold that money for neo-mercantile purposes due to their belief in ‘export-led growth’. You simply force them to spend it, or invest it properly, or be left, once again, with the default investment of a $ deposit in a bank. Rather disallow them to swap $'s for US treasuries.
There is no reason why American households should be propping up capital values in the Norwegian Global Pension Fund (or any other foreign pension fund or central bank) with public interest payments.
A reduction in bonds means an increase in cash and reserves, and therefore less need for repos and other collateralised transactions. Instead, go back to using real things as the basis for collateral and discount them into money, which is what banks are supposed to do for a living.
If banks have got so soft that they can’t price properly off zero, then it’s time to let the market sort them out and produce banks that can price off zero properly. If that means a few banks have to go to the wall, so be it. You wanted capitalism - that’s how it works.
Once we no longer need banks as the channel for economic stabilisation, we can allow the banks to be subject to full market competition, which will drive the improvements that are desperately needed in that area.
Posted by: Derek Henry | May 17 2023 21:40 utc | 62
Krugman was right about the Iraq War, but people like him stopped pretending they cared much about that, it was just a politically convenient stance to attack the republicans. Also, the debt circus is a pretty regular circus, it doesn't mean anything. the elephants dance around in a ring with their gaily colored hats while the donkeys compete with their fresh from Tijuana entertainment, the circus crowd is mesmerized.
Posted by: pretzelattack | May 17 2023 21:45 utc | 63
If I had my way, I would go for balanced budget, but I would not cut current "redistribution programs" and other expenditures that are sensible in the outline, if not always in details.
First, I would close tax loopholes related to tax heavens that have no rational justification whatsoever (except for few rich beneficiaries, multinational corporations etc.). Apple, a multinational, incorporates in Ireland because of low corporate tax rate AND leniency of the local government in respect of accounting the profits in tax heavens. A good formula is to account the global profits proportionally to net revenue in countries where a company is doing business.
Second, ending the special treatment of capital gains. Income is income. Perhaps if an asset is kept for an entire calendar year, you could adjust the cost basis for inflation, otherwise you tax people who lost money (I got taxed that way... Mexican bonds ...).
Third, new tax bracket for people who do not have Social Security tax assessed on entire income.
With three relatively easy steps, we increase revenue. Now, savings. Military and extra's for war should be cut first. Single payer for medical care has the potential of reducing cost by 3 to 6 percent of GDP, with half of it accounted to federal budget, retirees and federal employees.
I would also make a reform automatically adjusting debt limit for inflation.
With all that, there should be quite a bit of money left on the table.
Posted by: Piotr Berman | May 17 2023 21:50 utc | 64
Posted by: Tom_Q_Collins | May 17 2023 21:26 utc | 60
same way they did Bernie, who was also a Russiagate lickspittle. I like the chaos they cause, same as Trump for that matter, but neither one is going to make any difference. both are frauds. long history of Kennedys playing both sides for political advantage, much like the Bush's and Obamas and Clintons. Bidens are another scam family, on a lesser scale until the dems decided to use him to beat back the "radical" Sanders. can't wait for Hunter's reformation. or Chelsea Clinton's or one of Obama's daughters. It's a big club and you ain't in it.
Posted by: pretzelattack | May 17 2023 21:55 utc | 65
STOP issuing US treasuries ( the debt ) as it was a left over of the gold standard and no longer applies.
( with very easy to understand graphics in the link )
http://www.bondeconomics.com/2017/03/modelling-gold-standard.html
Posted by: Derek Henry | May 17 2023 22:01 utc | 66
Social security and Medicare aren’t technically part of the budget because they’re funded by separate payroll taxes. Except congress has borrowed from the trust fund for years.
It’s not American saving that funds the deficit but foreign savings and the toll of the dollar as reserve, trade and investment currency. Some Americans do buy treasuries. Lots of American banks buy them. That’s part of why banks have failed recently. The treasuries were purchased at lower interest rates; people started withdrawing money; treasuries needed to be sold to pay depositors; treasuries weren’t worth as much because they were long term at low rates when new treasuries could be purchased at higher rates.
The debt ceiling will be raised. It has to be. But it’s not a good look during a time when everyone is actually working towards dedollarization. Leaving all your money in a dysfunctional state is risky.
Posted by: Lex | May 17 2023 22:14 utc | 67
Posted by: Piotr Berman | May 17 2023 21:50 utc | 64
" If I had my way, I would go for a balanced budget "
You can't it is impossible because the government has to meet the private sector " savings desires "
While you are trying for a balanced budget. What about trade and the external sector. What are going to do with that because all sectors of the economy and that is
The government balance sheet
The private sector ( business and households) balance sheet
The external sector ( Rest of the world )
Has to by definition = 0 when added together. Balance sheets have to balance.
I don't think you have thought it through properly and treat it like a household budget. As The fiscal position of the government is mostly a REACTIVE variable because of the automatic stabilizers. That is, the government has very limited control over its finances. What drives the fiscal position of Any government is The desire of other sectors of the economy to be in surplus ( net save ).
The domestic private sector ( households and businesses) and the rest of the world want to be in surplus ( net save ) so the government must be in deficit when you run a trade deficit. The government is almost ALWAYS in deficit to meet those savings desires and if it is not in deficit then another sector must be in deficit. Not everyone can record a surplus.
Hence why Clinton's budget surpluses put the private sector in deficit ( spending more than their income) and caused a recession.
This is why we have ran government budget deficits continuously over our very existence.
Posted by: Derek Henry | May 17 2023 22:16 utc | 68
The fact that the government voluntary decides to constrain itself by issuing debt $-for-$ is the real problem. It is an absurd notion. Just deficit spend without issuing the debt.
They are completely bonkers and if they are not using fiat money as if they were still on the gold standard. Then they acting as if they still use fixed exchange rates when They are not.
They are nuts everything they say and do applies to either the gold standard or fixed FX. Neither of which no longer applies.
https://billmitchell.org/blog/?p=2562
Running balanced budgets are absurd we are sovereign and not a country within the Eurozone who gave up their sovereignty. So why act as if we did ?
Posted by: Derek Henry | May 17 2023 22:33 utc | 69
Posted by: Lex | May 17 2023 22:14 utc | 67
That sums it up succinctly.
Posted by: Digital Spartacus | May 17 2023 22:33 utc | 70
[ A Repost from the wrong thread yeasterday ]
Here in Australia, I see the headline: "Whole world will suffer if USA defaults". I recognise the typical egoistic narrative of America's own self importance at play.
I ponder: Is this just a scare psyop to force Congress to raise the debt ceiling (which is what always happens -- 78 times since 1960); and/or just a lot of media hot air; and/or a psyop to raise global sympathy and readiness for a new global crash which will, somehow, in the end, only benefit the American money elites.
I open the article to see in what ways "I" -- as one of the people included in The Whole World -- might personally suffer from America's mismanagement of its own economy since this last happenned (2021).
The writer, a top national economist, outlines how "credit will become much harder to get" and how local interest rates are "absolutely sure to rise" -- despite the fact that "Australia is NOT IN DEBT and has a current account SURPLUS". Hmmm, how can a bankrupt USA hurt a solvent Australia, I think?
As someone with no mortgage, no credit cards, no personal debt, who lives happily on their income, I have a little chuckle, roll over, and go back to sleep. Pft, prices might go up a bit, but only because retailers will opportunistically price gouge, as they do.
Bring it on, I say. The credit junkies can all go down with Big Daddy Dollar. Their stupid fault -- just like the US -- for living beyond their means.
It's all just a little game the Uniparty and the Fed play every now and then while Rome burns.
Posted by: The Dolphin | May 17 2023 23:19 utc | 71
Posted by: paddy | May 17 2023 20:19 utc | 51
Best summary on the thread.
To borrow from Malthus. An economy growing arithmetically with debt growing exponentially guarantees the economy will stop growing, at all.
Posted by: kupkee | May 17 2023 23:20 utc | 72
"PNG declares Monday as Public Holiday in Port Moresby as US President Joe Biden makes historical visit(.)"
Hahahahahaha haaaaaaaah
"He may well be using the debt ceiling fight to push for politics he favors but which a majority of Democrats would otherwise oppose."
Bidet is too senile to know where he is at any given moment, forget about using any political shenanigans for anything.
Posted by: Biswapriya Purkayast | May 17 2023 23:36 utc | 73
Those who tremble in fear before the looming US national default tend to forget that America has already defaulted on its debt twice. Also, while I've got my fingers crossed that House Republicans don't cuck to Biden and the Democrats, I'm not holding my breath that they won't cave eventually.
Posted by: Monos | May 17 2023 23:50 utc | 74
"... Meanwhile, Former Prime Minister and Ialibu Pangia MP Peter O’Neil also expressed concern that the only people who seems to know about this security pact is the former Minister for Foreign Affairs, the PM and Minister for Defense ..."
The former Minister for Foreign Affairs in Papua New Guinea is one Justin Tkatchenko, born in Australia of Ukrainian immigrants who originally trained in horticulture in Melbourne and later became curator of the Botanical Gardens of the National Capital District of Papua New Guinea.
Tkatchenko recently resigned over controversy created when he and his daughter Savannah attended King Charles III's coronation in London as part of a taxpayer-funded delegation from PNG, and Savannah later took to social media to boast about her first-class plane trip, the extravagant meals she had, and the shopping splurge she engaged in while in Singapore. Tkatchenko defended his daughter against the backlash from the PNG general public but had to resign after calling people who criticised his daughter's actions as "primitive animals".
Was Biden's decision to cancel the visit a response to Tkatchenko's resignation as PNG foreign minister, among other things? What role would Tkatchenko have had in the signing of the Defense Cooperation Treaty, had he not resigned his position?
Incidentally Tkatchenko's PNG citizenship now seems to be in doubt and PNG opposition politicians are now looking into how he was able to obtain citizenship in 2006 when the PNG Citizenship Advisory Committee was non-operational between 1999 and 2009.
Posted by: Refinnejenna | May 18 2023 0:11 utc | 75
Biden is going to do what the ruling class tells him to do. They control both parties and there really isn’t any difference between them. He is a war monger and corporate hustler. Same as all the rest of them. Keep the working class guessing, confused and divided and they are very good at it!
Posted by: Vallette | May 18 2023 1:15 utc | 76
Isn't that what we have now with 3.5% unemployment? How does one incur 1.5 trillion deficits while only having 3.5% unemployment? Its almost like we were going to have another financial crisis in 2020 because the problems from 2008 were never fixed but then it became the fodder of domestic terrorists to point that out in 2020. Let me know when you guys are ready to actually discuss what happened in 2020 and put on your big boy or girl pants.
Posted by: Mr. House | May 17 2023 19:29 utc | 35
----------------------------------------------------------
Where do you get $1.5 trillion from? The total US Debt today is $31.4 trillion. https://www.bing.com/search?q=what+is+the+total+us+debt+today&qs=SC&pq=whatis+the+total+us+debt&sk=SC1&sc=10-24&cvid=7750376BC16D4781BED2D5115B3ABFFA&FORM=QBRE&sp=2&ghc=1&lq=0
And that is just debt that is officially on the books. I don't have a source to cite right now, but if you add the off the book debt the number is something like $105 trillion. If I am not mistaken, I think "b" discussed this a few weeks back while discussing the issue about the collapse of the US dollar.
Posted by: Ed | May 18 2023 2:13 utc | 77
If banks have got so soft that they can’t price properly off zero, then it’s time to let the market sort them out and produce banks that can price off zero properly. If that means a few banks have to go to the wall, so be it. You wanted capitalism - that’s how it works.
Once we no longer need banks as the channel for economic stabilization, we can allow the banks to be subject to full market competition, which will drive the improvements that are desperately needed in that area.
Posted by: Derek Henry | May 17 2023 21:40 utc | 62
--------------------------------------------------------
Mr. Derek, I read every word of your comment@#62. I might have understood 5% of it. For example: "Stop issuing debt as it was a leftover of the gold standard and no longer applies. The only bonds "Americans" ever need are granny bonds." What is a granny bond and how do we know if it will be worth a fuck when granny needs it? What will back it up and give it value?
By the way, I never wanted capitalism. I was born and it was there.
Posted by: Ed | May 18 2023 2:29 utc | 78
@Derekhenry
Take your MMT garbage over to naked capitalism, they'll worship you in those parts. A debt is a debt, just because you can print money in your own currency doesn't make it right. No such thing as a free lunch.
Posted by: Mr. House | May 18 2023 2:41 utc | 79
@ed
You've never lived under capitalism, well you have, because little people don't get bailed out unless they serve a virtue signal value. What you live under is corporate cronyism.
Posted by: Mr. House | May 18 2023 2:43 utc | 80
The fact that the government voluntary decides to constrain itself by issuing debt $-for-$ is the real problem. It is an absurd notion. Just deficit spend without issuing the debt.
.....
Running balanced budgets are absurd
Posted by: Derek Henry | May 17 2023 22:33 utc | 69
If Derek is correct, we could safe effort on paying and collecting taxes, and simply have entire budget "funded" by deficit. Historically, this is associated with hyperinflation that seriously damages the economy.
Posted by: Piotr Berman | May 18 2023 2:52 utc | 81
@ed
You've never lived under capitalism, well you have, because little people don't get bailed out unless they serve a virtue signal value. What you live under is corporate cronyism.
Posted by: Mr. House | May 18 2023 2:43 utc | 80
-----------------------------------------------------------
So, let me see if I got this right. A chattel slave didn't live under "slavery" he/she lived under slave cronyism.
And a feudal serf did not live under feudalism. he/she lived under feudal cronyism.
I think I got it now! No, actually I don't think I do, because calling it cronyism doesn't change the fact that it is still just various forms of economic exploitation by a minority class who own and controls the state apparatus. Now if we could change that then we are talking turkey Mr. House.
Posted by: Ed | May 18 2023 3:05 utc | 82
"....I've got my fingers crossed that House Republicans don't cuck to Biden and the Democrats, I'm not holding my breath that they won't cave eventually."
Posted by: Monos | May 17 2023 23:50 utc | 74
--------------------------------------------------
All well and good Monos, I am not a partisan guy myself, but what class do you want to take the haircut?
Posted by: Ed | May 18 2023 3:12 utc | 83
Muhammad Ali: "I have nothing to lose by standing up for my beliefs. So I’ll go to jail, so what? We’ve been in jail for 400 years."
Jackie Robinson, 1972 biography: “I cannot stand and sing the anthem. I cannot salute the flag; I know that I am a black man in a white world…I know that I never had it made.”
Supreme Court Justice Louis Brandeis, 1933: “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”
Biden is just another right wing butthead, just like Obama (Wall Street's favourite lawn jockey), who blows kisses leftward until he's elected.
H. L. Mencken (1880 - 1956): “As democracy is perfected, the office of president represents… the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron.”
Alexis de Tocqueville : “I know of no country in which there is so little independence of mind and real freedom of discussion as in America.”
Posted by: Ricardo2000 | May 18 2023 3:35 utc | 84
Terrible summary. It is just a power play. If you don't give me "X" ... we won't pass the budget. The other side saying...No, you don't get anything. Pass the budget or we'll start closing things down, delaying payments, etc. And blaming it all on you.
Posted by: Goldhoarder | May 18 2023 3:44 utc | 85
Posted by: Ricardo2000 | May 18 2023 3:35 utc
And don't forget the one about Americans viewing themselves as millionaires whose ship hasn't quite entered the harbor and docked.
Or Mike Tyson's "everybody has a plan until they get punched in the face." Or the one about the bravery of keyboard warriors.
Posted by: Tom_Q_Collins | May 18 2023 4:06 utc | 86
@b
Ignoring the fact that there cannot be a left (representing the proletariat, petite bourgeoisie and arguably the sans culottes) in an oligarchy such as the USA, it is fairly easy to show that Biden is far to the right of every US president since Eisenhower. Simply compare Biden's record with that of a president recognized as being on the right, for example, Nixon, where Nixon:
- signed the SALT and ABM treaties
- Affordable healthcare
- normalized relations with PRC
- Founded the Environmental Protection Agency
- Appointed minimalist Supreme Court judges
- Moonshot
- Desegregated of southern schools
- Avoided Second Cuban Missile Crisis
- Food price decreased
- lowered the voting age
I summarize some of Biden's "accomplishments" in Biden’s Batshit Bullshit
Instead of the thriving economy Eisenhower inherited, Biden is present, but not completely present, for its implosion.
Posted by: Hermit | May 18 2023 5:39 utc | 87
Biden is non compos mentis. Whatever he said in the past is irrelevant. He struggles to mouth the words fed into his teleprompter. He gets lost on public stages. He sniffs the hair of little girls in public. God knows what he would do in private? Shower with them as he did with his daughter? His VP has had more balls brush her chin than any baseball batter and has raised incoherence to a fine art in her public ramblings.
So, who is actually running the US? Most MAGA supporters believe it is a cabal of Obama acolytes that call the shots. But they don't have all the say. Anthony Blinken and Victoria Nuland have been pushing the NATO war against Russia despite the obvious conclusion: Russia wins when it wants and NATO collapses when it does.
The debt ceiling doesn't matter if the US dollar ceases to be the currency of international trade. That is happening and the US sanctions against Russia just accelerated the process of countries joining BRICS and ditching the greenback. Our $21 trillion dollar national debt is not sustainable if foreign countries stop buying US dollars.
As a newly minted US citizen, I wish to thank those that helped install Joe Biden as "president"; the billionaires who funded it, the five counties that created Biden's electoral "victory", the corrupt courts that ignored blatant fraud, the corrupt DOJ that wouldn't investigate, the media that gaslit the public about the fraud, the lawyers who loosened election integrity, and the Democrat party which organized it. Hats off to them for turning the US into a fascistic totalitarian state.
Posted by: Pat Dooley | May 18 2023 5:54 utc | 88
@ AleaJactaEst
"And as for Krugman, he accidentally won the Nobel prize for Economics and has been wrong ever since."
There is no Nobel prize for Economics: instead, there is a badge of honour awarded by a committee of bankers for making sh*t up.
Posted by: begob | May 18 2023 6:08 utc | 89
@ begob | May 18 2023 6:08 utc | 89
See; waynorinorway | May 17 2023 19:02 utc | 31
Posted by: waynorinorway | May 18 2023 6:25 utc | 90
Maria Vladimirovna Zakharova was asked what she made of the potential US Government debt default.
She replied it was a routine dance the 2 parties played with a suitable last minute/second Hollywood ending. Her opinion is no one outside the US played any attention nor cared, and she was quite sure the US public was easily fooled by this melodrama.
Posted by: Suresh | May 18 2023 6:56 utc | 91
Posted by: Piotr Berman | May 18 2023 2:52 utc | 81
" If Derek is correct, we could safe effort on paying and collecting taxes, and simply have entire budget "funded" by deficit. Historically, this is associated with hyperinflation that seriously damages the economy. "
Simply not true I'm afraid because the " constraints " on Deficit spending are very simply both the skills and real resources and productive capacity of your nation.
Nothing to do with fiscal rules or debt rules and that your deficit can't go above 3% of GDP and your debt above 60% of GDP. That's all complete BS so the war mongers in Washington can control you. The IMF Trojan horse.
You deficit spend over and above what skills and real resources you have and the productive capacity of your economy then of course you will have problems.
All explained beautifully in this TED talk below.
https://m.youtube.com/watchv=FATQ0Yf0Fhc&pp=ygUQU3RlcGhhbmllIGtlbHRvbg%3D%3D
Only 2 places you get money from government spending or bank lending. What's interesting is You never say bank lending is inflationary and that excessive bank lending can lead to the same problems as excessive deficit spending.
"ALL" spending can be inflationary. " Tax cuts " can be inflationary. Anything that increases demand can be inflationary if you don't have enough skills and real resources to absorb that demand in a productive way.
For some very strange reason ideologues only concentrate on government spending. As they fully believe in the tax payer money myth and believe that their taxes will rise if their is an increase in government spending. That right there shows the true power of propaganda and it's ability to brainwash a nation.
Posted by: Derek Henry | May 18 2023 7:00 utc | 92
This "debt ceiling" game of bluff and counterbluff has been with America for a long time, like anti-abortion campaigning and school shootings. The Republicans don't want to crash the U.S. financial system any more than the Democrats do, so it's obviously all Kabuki with the real actors doing their stuff behind a discreet screen.
That being the case, really the only reason for covering it is to point out that the U.S. political system is a big conspiracy against the public. A lot like a lot of other political systems, now I think of it. But the fact that the media, and tenured morons like Krugman, take it seriously, shows that the conspiracy runs a lot wider than just politicians.
No wonder lots of Americans hole up in mountain fortresses with bootleg Armalites.
Posted by: MFB | May 18 2023 8:12 utc | 93
This "debt ceiling" game of bluff and counterbluff ...
Posted by: MFB | May 18 2023 8:12 utc | 93
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Sure their are lots of layers to the onion, of matryoshka doll if you prefer.
But imagine for a moment how fast Congress would blow up the Treasury without any constraint. It boggles. They have absolutely no discipline with the public's purse. The Congress has no skin in the game except for their personal investments.
The Federal Budget has metastasized into a matrix of perverse incentives.
Posted by: too scents | May 18 2023 8:31 utc | 94
"Once total debt reaches the limit, new debt cannot be incurred. "
Not strictly true. No more Treasuries can be issued by the Treasury.
However that doesn't stop spending happening - because Congress has authorised the spending.
Therefore the Treasury gives and order to pay to the Fed, and the Fed is required to pay it because the Fed "shall act as fiscal agents of the United States". The Fed has no authority in law to refuse an order to pay sanctioned by Congress.
The Fed would then account for that as negative equity until Congress resolves their dispute.
However it would also blow open the entire "we've run out of money" scam of neoliberalism.
The US can't run out of money and is constitutionally barred from defaulting on its debts. The bond holders could go to court and require the Treasury to issue the order to pay under the fourteenth amendment.
Posted by: The Accountant | May 18 2023 10:10 utc | 95
A debt is a debt, just because you can print money in your own currency doesn't make it right. No such thing as a free lunch.
Posted by: Mr. House | May 18 2023 2:41 utc | 79
You're going to be really upset when you realise that money is just another debt. A US dollar is nothing more than a 0% bearer bond in the majority of the world.
All money is debt because it is the institutionalisation of "here's a pig, owe me one". Then "Fred owes me a pig, I'll get him to owe you instead if you give me some corn".
That's how business trades, and always has done. It's always on a promise.
Posted by: The Accountant | May 18 2023 10:19 utc | 96
the entire "we've run out of money" scam of neoliberalism.
Posted by: The Accountant | May 18 2023 10:10 utc | 95
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Money represents a claim on accrued savings and you should as hell can run out of savings.
Running out of savings is what credit risk prices and why interest rates are sure to keep going up.
Posted by: too scents | May 18 2023 10:39 utc | 97
too scents | May 18 2023 10:39 utc | 97
*sure* as hell can run out of savings.
Posted by: too scents | May 18 2023 10:50 utc | 98
Take your MMT garbage over to naked capitalism, they'll worship you in those parts. A debt is a debt, just because you can print money in your own currency doesn't make it right. No such thing as a free lunch.
MMT describes how the economy works. The above diatribe equates Sovereign debt to household debt.
As others have tried to explain, the sovereign occupies a separate division in the economy from the civilian sector. The sovereign gives value to it's currency by demanding payment of fees and taxes in same. However, no member of the civilian sector, be it individuals or companies, can obtain the currency before the sovereign issues it.
The sovereign, in addition to taxes, issues bonds and notes, to pay it's bills. These are accepted by the civilian sector because they have value since they can be traded with the sovereign for currency.
Hence, sovereign debt is civilian asset.
Were the USG to go onto a balanced budget, two consequences are possible.
a. taxes rise sufficiently to meet obligations, taking additional $$ from the civilian sector, which reduces economic activity.
b. The budget is reduced to levels comensurate with income, which reduces economic activity.
At the moment, the USG is forced onto a balanced budget, and this condition will remain until the debt ceiling, or taxes are increased.
We will see over the next months how this plays out.
INDY
Posted by: Dr. George W Oprisko | May 18 2023 10:59 utc | 99
At the moment, the USG is forced onto a balanced budget ...
Posted by: Dr. George W Oprisko | May 18 2023 10:59 utc | 99
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Its neat how that happens when the debt limit is reached.
Posted by: too scents | May 18 2023 11:11 utc | 100
The comments to this entry are closed.
LoL the debt ceiling fearmongering is one of the biggest scams in US history. No the US wont default. No there wont be economic Armageddon.
In the end they will reach an agreement and of course increase the debt ceiling. Even if that hapoens at the 11th hour for extra theatrics. But it will happen.
Anyone who believes in this debt ceiling danger probably also believes in the Easter Bunny.
Posted by: Comandante | May 17 2023 16:26 utc | 1