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Peterson Thinks We Need Austerity While He Lives It Up!

Pete Peterson’s long-term fiscal problem is a figment of his lack of imagination

The Peterson Foundation reacted to the President’s budget document with a reportrepeating its usual whining about the debt problem, and the need to cut entitlements. Here are quotations from the report and my explanations of why they are ridiculous deficit/debt terrorist nonsense.

While today’s deficits are much lower than those during the financial crisis and recession, over the next ten years debt will remain at historically high levels under the policies outlined in the President’s budget. Over the long term, our debt is on a rising and unsustainable path that harms our economy and threatens our future standard of living.

First, Government deficits that don’t exceed the sum of private sector savings and trade deficits are not bad for the private economy. They are good because contribute directly to private sector savings and the aggregate demand and subsequent economic growth it can create. It would be nicer for all of is if Mr. Peterson learned that lesson before his propaganda turn the US into a third world banana republic; unless, of course, that’s what he’s about.

Second, if the public debt remains at a high level then the private sector savings (net financial assets) denominated in Government debt instruments will also remain at historically high levels. Does Mr. Peterson think that the private sector should go into further debt and have less savings? If so, who else agrees with him?

Third, why is the public debt unsustainable? Is the Government limited in the amount of debt instruments it can issue if it wants to, so long as Congress cooperates and either raises or gets rid of the debt limit?

And fourth, if the debt is really growing so unsustainably, then why doesn’t Peterson, along with his foundation, advocate using High Value Platinum Coin Seigniorage (HVPCS) to pay off all the debt subject to the limit as it falls due? Or alternatively, why doesn’t it advocate that Congress place the Fed within the Treasury Department so that Treasury can just order the Fed to issue reserves to spend the deficit appropriations of Congress?

That is, why is Peterson insisting that entitlements be cut and /or taxes be raised to create austerity for people, when all the Government (including the Congress) needs to do to end “the debt crisis” is to issue the money it needs, using he authority it has under the Constitution, to deficit spend and pay off the outstanding debt instruments as they fall due? Why is Peter G. Peterson, a multi-billionaire, so intent on making the rest of us suffer to solve the debt crisis, when he won’t suffer a bit if we either just continue to issue debt, or alternatively issue the amount needed to pay it off? more…

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Peterson Thinks We Need Austerity While He Lives It Up!

Pete Peterson’s long-term fiscal problem is a figment of his lack of imagination

The Peterson Foundation reacted to the President’s budget document with a report repeating its usual whining about the debt problem, and the need to cut entitlements. Here are quotations from the report and my explanations of why they are ridiculous deficit/debt terrorist nonsense.

While today’s deficits are much lower than those during the financial crisis and recession, over the next ten years debt will remain at historically high levels under the policies outlined in the President’s budget. Over the long term, our debt is on a rising and unsustainable path that harms our economy and threatens our future standard of living.

First, Government deficits that don’t exceed the sum of private sector savings and trade deficits are not bad for the private economy. They are good because they contribute directly to private sector savings and the aggregate demand and subsequent economic growth it can create. It would be nicer for all of us if Mr. Peterson learned that lesson before his propaganda turns the US into a third world banana republic; unless, of course, that’s what he’s about. (more…)

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