Notes from the Fiscal Sustainability Teach-In
I just got back from the Fiscal Sustainability Teach-In organized by letsgetitdone, selise and others who regularly post and comment here at The Seminal.
The event is a bottom-up grassroots response to Pete Peterson and the President’s "catfood commission" – which is already talking about putting things like Medicaid and Social Security on the chopping block in the name of reducing the deficit. If you were able to attend the teach-in, or if you follow the noted economists and presenters who appeared there, you might know that things like full employment are much more important than national deficits, and that the U.S.’s fiscal policy on things like Social Security isn’t nearly as much of a cause for alarm as the right-wing "deficit hawks" might have you believe.
The session I sat in on was led by Marshall Auerback, International Consulting Economist and a blogger at New Deal 2.0 and New Economic Perspectives. His presentation focused on the comparisons that are often made between the U.S. and Wiemar Germany or Zimbabwe, with the aim of frightening the populace into believing America is on the verge of similar hyperinflation.
In short, the comparisons are crap. As Auerback noted, both Wiemar Germany and modern-day Zimbabwe had huge portions of their GDP devoted to foreign spending and simultaneously had huge parts of their suppliers decimated. In the case of Germany, their debt was as big as 50% of their GDP and their government spent a third of its money buying gold to pay foreign countries war reparations. In the case of Zimbabwe, their agricultural and industrial sectors were destroyed by a long civil war and then subsequently re-destroyed by Mugabe’s "land reform," forcing the government to spend most of its money buying and importing foreign food to keep its citizens from starving.
Needless to say, with U.S. debt peaking at around 10% of GDP and America maintaining a productive workforce, our current situation is just not similar, and thus the specter of hyperinflation is just more myth than eventuality.
Though I unfortunately couldn’t stay for much of the day, the event was a testament to the people who volunteered to help organize. The speakers were knowledgeable and interesting and the event was well attended. My congratulations on a great effort – now lets hope someone in Congress or the administration listens.