© by Mark Dempsey
The debate for the 4th congressional district occurred October 4 in Auburn. If you didn’t attend, you can still see it online. (https://www.youtube.com/watch?v=wXyDO26mQ78). Both candidates agree: “Fiscal Responsibility™” is what to pursue.
Congressman McClintock repeated his endorsement of the trickle-down economics we’ve enjoyed since the Reagan years. In a previous radio address, McClintock claimed there’s really only one proven way to revive an economy: reduce top marginal tax rates the way Reagan did in the ‘80s.
Q: But the heyday of the American middle class--when only one parent needed a wage-paying job, and college graduation didn’t mean a debt millstone around the graduate’s neck--wasn’t that when those top marginal rates were high (70 - 90%+)?
A: Yes!
Nevertheless, McClintock waxed nostalgic for the good old days, even though Reagan’s “Morning in America” was no more than an average business cycle recovery. (source: Paul Krugman’s Peddling Prosperity). McClintock even laments the loss of low or free college tuition! The forehead-smacking truth: Reagan himself ended free college in California. In fact, since 1972, Federal subsidies for higher education have diminished 55%. (Gosh! I wonder why tuition keeps going up!).
Perhaps accurate information is beside the point here, but the problem isn’t just that such lies are despicable, it’s that McClintock seems to sincerely believe them. Unfortunately, delusional thinking seldom produces good public policy.
Is the alternative better? His opponent, Dr. Derlet’s policies are less delusional than McClintock’s by a wide margin, but both candidates agree on Fiscal Responsibility™: budget balance is something to pursue. It’s as though they believe a government which creates currency has a debt “burden” just like households who use currency!
But it’s different...really, really different.
Americans use “debt-based” currency. Bank account holders have an asset (their bank account), which is the bank’s liability (debt). Write a check, and you assign the bank’s debt to the payee. Dollars are checks made out to cash in fixed amounts, payable by the Federal Reserve bank. The Fed carries that currency on its books as a liability. Central bank “debt” is the money!
Imagine your bank encouraging you to worry about the size of its debt to account holders. “Let’s see how we can reduce the size of your checking account…” Where does that happen, at the Bank of Crazy People? Yet we somehow believe reducing central bank debt is always good!
Historically the U.S. reduced its “debt” significantly seven times since 1776. The last such reduction was the Clinton surplus. The preceding time occurred in 1929. Andrew Jackson even paid the entire national “debt” in 1835. What happened every time after those “debt” paydowns? Answer: a Great-Depression-sized hole in the economy, the worst of which was the Panic of 1837.
So reducing national “debt”--in quotes because it’s fundamentally different from household debt--can be bad! And remember: the Fed can make dollars without limit. According to its own audit, it pushed $16 - $29 trillion out the door to cure the frauds of the financial sector in 2007-8. (And where’s the predicted inflation?) Yet, somehow when it comes to grandma’s Social Security, not Ponzi capitalists, “Whoops! We’re out of money!” … or so McClintock claims.
So...Derlet is better, but still does not understand that a “balanced” budget is anathema to currency creators even if it works well for currency users like households. [sigh!]
The debate for the 4th congressional district occurred October 4 in Auburn. If you didn’t attend, you can still see it online. (https://www.youtube.com/watch?v=wXyDO26mQ78). Both candidates agree: “Fiscal Responsibility™” is what to pursue.
Congressman McClintock repeated his endorsement of the trickle-down economics we’ve enjoyed since the Reagan years. In a previous radio address, McClintock claimed there’s really only one proven way to revive an economy: reduce top marginal tax rates the way Reagan did in the ‘80s.
Q: But the heyday of the American middle class--when only one parent needed a wage-paying job, and college graduation didn’t mean a debt millstone around the graduate’s neck--wasn’t that when those top marginal rates were high (70 - 90%+)?
A: Yes!
Nevertheless, McClintock waxed nostalgic for the good old days, even though Reagan’s “Morning in America” was no more than an average business cycle recovery. (source: Paul Krugman’s Peddling Prosperity). McClintock even laments the loss of low or free college tuition! The forehead-smacking truth: Reagan himself ended free college in California. In fact, since 1972, Federal subsidies for higher education have diminished 55%. (Gosh! I wonder why tuition keeps going up!).
Perhaps accurate information is beside the point here, but the problem isn’t just that such lies are despicable, it’s that McClintock seems to sincerely believe them. Unfortunately, delusional thinking seldom produces good public policy.
Is the alternative better? His opponent, Dr. Derlet’s policies are less delusional than McClintock’s by a wide margin, but both candidates agree on Fiscal Responsibility™: budget balance is something to pursue. It’s as though they believe a government which creates currency has a debt “burden” just like households who use currency!
But it’s different...really, really different.
Americans use “debt-based” currency. Bank account holders have an asset (their bank account), which is the bank’s liability (debt). Write a check, and you assign the bank’s debt to the payee. Dollars are checks made out to cash in fixed amounts, payable by the Federal Reserve bank. The Fed carries that currency on its books as a liability. Central bank “debt” is the money!
Imagine your bank encouraging you to worry about the size of its debt to account holders. “Let’s see how we can reduce the size of your checking account…” Where does that happen, at the Bank of Crazy People? Yet we somehow believe reducing central bank debt is always good!
Historically the U.S. reduced its “debt” significantly seven times since 1776. The last such reduction was the Clinton surplus. The preceding time occurred in 1929. Andrew Jackson even paid the entire national “debt” in 1835. What happened every time after those “debt” paydowns? Answer: a Great-Depression-sized hole in the economy, the worst of which was the Panic of 1837.
So reducing national “debt”--in quotes because it’s fundamentally different from household debt--can be bad! And remember: the Fed can make dollars without limit. According to its own audit, it pushed $16 - $29 trillion out the door to cure the frauds of the financial sector in 2007-8. (And where’s the predicted inflation?) Yet, somehow when it comes to grandma’s Social Security, not Ponzi capitalists, “Whoops! We’re out of money!” … or so McClintock claims.
So...Derlet is better, but still does not understand that a “balanced” budget is anathema to currency creators even if it works well for currency users like households. [sigh!]
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