8 Myths About Federal Debt

16 May 2019 – I promised you that in our next show I would get into the myths about Federal debt. This is that show. In addition, Will talks about why we should be going into space – for real. Some of the ideas sound crazy but I think there is enormous value in doing the work that takes us down those paths, regardless. There is so much possibility, why would we not get serious? At the top of the show we touch on the new agreement, between the UK and the Republic of Ireland, to establish a common travel area. Granted, this is a weak tea solution but it’s not nothing.

In case you want a quick list of the eight myths about Federal debt which I cover, here goes:

  1. Carrying debt is bad for the Federal government
  2. And the corollary, Federal surplus is good (this article provides perspective)
  3. The Federal government uses our taxes to “pay for” government spending
  4. There is a fiscal cliff
  5. Passing Federal debt on to future generations is bad
  6. The Federal government issues Treasury bonds (debt) to fund spending
  7. Federal debt “crowds out” investors (Stephanie Kelton crushes Paul Krugman on this subject here.)
  8. When all else fails, gibberish explains why debt is bad (a special thank-you to JD Alt for this one!)

We have been busy but we will keep trying to fit shows in as often as we can. Like carrots, there are so many topics and so little time! Cheers! – Arliss

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4 thoughts on “8 Myths About Federal Debt

  1. I don’t care at all about space AT ALL. We have enough real world problems here on our planet that will require the use of our limited resources. This is a technology / science / space exploration fetish. The fact that the federal government can run a deficit doesn’t change the resource limit. Let us get our house in order before we indulge boyish fantasies. Let’s actually deal with each other and the planet we have before trying to escape into space.

    1. I can understand your point of view though I think what Will said at the very beginning of his segment was, perhaps, lost. He started by saying that he wanted to talk about something which was not stressful and which took us outside of all the news that is just pounding us every day. We are inundated with climate change and the Muller report and Trump’s trade war and Brexit and on and on and on. There are actually other things worth considering which are neither stress-inducing nor political. Every once and a while we like to take a beat and touch on one of those things. Focus is important, so I take your point, but perhaps it is mentally healthy to also take a breath now and then?

      As for the federal government running a deficit, two things. First, I was talking about debt, not deficit and I clarified the distinction between the two right at the beginning of my block. And second, I was VERY clear that our limits are real resources…not the supply of money but resources. I’ve been saying that on the show for years now so it’s nothing new. It is one of the core concepts in MMT.

      I do truly thank you for taking your valuable time to comment. Feedback does shape what we do in the future so, again, I thank you. – Arliss

      1. Thanks. I had no problem with your segment. I’m familiar with MMT, but there was a comment in the first segment suggesting that MMT would allow for more space exploration. This is true, but with all our problems we already have resource constraints, and for me space exploration is very low down on my list of priorities. To the limited extent that we can direct resources to public purpose we need to use them wisely.

      2. Ahhhh – I see. I do believe there are opportunities in space which are worth exploring and, in many ways, with space we don’t know what we don’t know…yet. Still, you aren’t wrong. Resources are extremely limited and time is short. Every move we make must be balanced against all the others. There is no such thing as a free carrot. – Arliss

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