Deficit Hawk, tell me: How do you define "spend"?
1. To use up or put out; expend: spent an hour exercising.
2. To pay out (money).
3. To wear out; exhaust: The storm finally spent itself.
If the government doesn't spend money, does it save it? No, because there is nothing to save.
It is not a physical thing. Money is a social contract. Money doesn't exist until it is "spent" because the act of spending is the money. If the govt doesn't spend it, there is nothing to save for a rainy day.
The govt is spending too much money, you say. You and I can spend too much money and not save enough for later use. But we are not the govt and we cannot create our own money. Our own money is in part in the form of physical things such as coins and paper currency. So we can really run out of money. We can spend our entire monthly paycheck's worth of money before the month is over, and have no money left for the remaining days of the month. We can see our money supply diminishing as the bills in our wallet or safe become fewer.
That is true for our personal or household budget, but it's not true for the federal government. With the fed govt, money is like computer clicks. Even though I can run out of money, I have a virtually unlimited number of computer clicks I can make. I can click on every link on Daily Kos, I can go through each diary and click a "recommend" on each comment and I will not run out of clicks. If I can't find any more places to click on DK, I can move to another website and continue clicking. I will not run out of clicks.
That's because my clicks are actions, not physical things. It's the same with the fed govt. When someone in Washington wants to "send money" to a budding high-speed rail project in East Dakota, he can with one keystroke grant millions of dollars to the East Dakota High-Speed Rail Project. His making the keystroke was an action, representing an authorization for the EDHSRP to use that amount of money to begin laying ties. Nothing physical has been removed from an imaginary treasury in Washington. Instead a social contract has been enacted, enabling the East Dakotans to start work and pay their employees.
The institution of money, like that of language, or that of state, has often been seen to be based on some kind of contractual agreement. Aristotle describes the nature of money as follows:
(M)oney has become by convention a sort of representative of demand; and this is why it has the name 'money'--because it exists not by nature but by law and it is in our power to change it and make it useless."
|
Source:
http://resources.metapress.com/...
Now the Feds could do such authorizations to their heart's content except that Congress sets limits on the degree to which they can do so. This is the debt ceiling. Besides setting the debt ceiling, Congress sets the amounts that can be used for the various government projects, so if enough Congresscritters dislike certain projects or programs, such as the EPA, they can try to scale back their budgets. They might do this simply out of spite, or they might argue that scaling back is necessary to reduce the "deficit", or the amount that federal expenditures exceed the feds' money on hand.
Now we are, since 1971, no longer on the gold standard. We are using "fiat money", which does not have to be backed up by stores of gold. With the coming of fiat money it should now be clear that money isn't physical stuff, or based upon physical stuff; it is a social contract, actions by the feds that authorize the usage of what we call money.
A big problem is that those Congresscritters back in about 1971 when we finally left the chains of the gold standard behind couldn't stop thinking that money is still a physical thing like gold, so they required that every time the feds "spent" money they had to register a debt. That kept us still partly shackled to the unnecessary piles of gold. That's the debt that keeps climbing and has to be increased and approved each year.
The declaration by deficit hawks that debt is getting too high is causing them to demand budget cuts, and worse than that is forcing the nation to gradually destroy itself by not having enough authorizing power to do things we desperately need to do, such as fighting climate change, alleviating poverty, rebuilding infrastructure... the list is too long to print here.
So, deficit hawk, I hope you're proud of yourself for your role in turning America into a third-world country. You should try reading Aristotle.
This diary is based upon concepts developed by Modern Monetary Theory (MMT) and by me in my recent book.
Please follow our group, Money and Public Purpose (here), as we continue to pursue a strong effort to bring MMT to the attention of everyone who can possibly support it. Money and Public Purpose has published a number of diaries that explain in further detail the concepts I've been promoting.
Thank you for reading and reccing.
psyched