Coming Together: Intergenerational Dialogues On The Deficit, Social Security & Beyond
By Andrew L. Yarrow
"Coming Together: Intergenerational Dialogues On The Deficit, Social Security & Beyond" by Andrew Yarrow, is a report on conversations in Massachusetts and Pennsylvania between college students and senior citizens on the budget deficit and national debt and the rising cost of Social Security, health care and other issues relating to America's fiscal future. After four hours of engaged, often heated discussion and questioning, the 20-something students and over-65 participants at both Worcester State and Penn State agreed that seeking common ground and avoiding intergenerational conflict were essential to building public support for entitlement, other spending, tax and government reforms. The intergenerational dialogues are part of Public Agenda's Students Face Up to the Nation's Finances initiative and curriculum for college students and other concerned citizens, available at FacingUp.org and funded by the Peter G. Peterson Foundation. Click here to read the full article.
In your book "Forgive us our debts," Mr. Yarrow, you state (pg. 54) that 80% of the total value of all public debt is accounted for by Treasury notes and bills. These securities can be retired in short order. I recently found out that even long bonds have been called by Treasury before maturity. So I have a couple of questions. First, would any current law have to be amended to allow the government to print money without increasing an annual deficit and national debt (such as the Fed. Res. Act or 1913 or the law on how the Treasury operates?) What law, if any, says or implies that money can only be created by taking Treasury debt?
Second, you seem to hold the same assumption of Mr. Peterson and a lot of Washingtonians, that deficit spending and attendant money creation must be inflationary (even though more economists now are worried about debt deflation.) Isn't there a lot of both waste and slack in our economy so that if it were rationally reoriented, money creation for spending on stimulus and entitlements don't have to be inflationary in the sense of too much money chasing too few goods? For example, if we gave up lunatic quagmire wars, bombing weddings and native resisters, we could cut "defense" spending maybe in half. Granted there'd be a couple more million unemployed (until we finally shortened the work day/week.) . But we already have not only millions unemployed, but hundreds of thousands of workplaces with no jobs producing goods and services being done in them. the capacity Utilization index recently stood at only 71% - meaning 29% of our capacity to produce was not being used to produce goods and services. So does stimulus that puts people to work making goods and providing services going to be inflationary? Don't the states and municipalities (having lost, e.g., $850 billion in pension investment value) need the cash now more than percentage interest in the longer run?
So what do you think would happen if the U.S. suddenly called all or most of its Treasuries, paid them off by electronic direct deposit of crediting FDIC insured accounts of the holders, using the Treasury's standard formula for redemption? For example, suppose I had recently paid $25 for a $50 face value bond. I would then have $25 plus a little interest, in my bank account, but no future interest. I could take it out and spend it, or leave it saved to resurrect interest, or invest it. And our foreign creditors, mainly China and Japan, would be stuck with between $1.4 - $2 trillion U.S. cash. They too, could spend it shopping here, or deposit it with us or invest it. After WWII we rebuilt and capitalized much of the rest of the world. Shouldn't it now help rebuild and re-capitalize us?
Post new comment