Pete Peterson: The alternative obituary

Billionaire National Debt panic promoter Pete Peterson just died. His vocations included being CEO of Bell & Howell, Nixon’s Commerce Secretary, CEO of Lehman Brothers, and one of the founders of Blackstone, a vulture hedge fund.

His hobby was spreading panic about national debt. To that end he funded several think tanks and campaigns, including “Fix the Debt” speaking tours, budget workshops from his Concord Coalition (bipartisan!) think tank, and the ubiquitous Peterson Institute which supplied economists even to “lefty” radio NPR.

But national “debt” is nothing like he portrays it in his propaganda. It’s the money. The money is the debt.

How is money debt? Any bank account is the depositor’s asset, but the banks liability--that is the bank’s debt. When you write a check, you’re assigning a portion of the bank’s debt to the payee.

Currency works like that too. It’s like checks made out to “cash” in fixed amounts. The Federal Reserve, our country’s central bank, carries currency on its books as a liability too. In fact, all that “debt” is really the dollar financial assets circulating in the economy.

What happens when policy makers heed the Peterson’s prescription? It diminishes the population’s savings! And mortgage holders all say “OK, there’s less money in the economy now, so we’ll skip this month’s house payment!”

...NOT!

Mortgage holders universally say “Pay your mortgage payment or we’ll foreclose on your house!”

And sure enough, in the periods following major reductions in national “debt” the economy suffers waves of foreclosures and asset forfeitures as the population struggles to come up with the cash to pay their payments.

...And that’s just what a vulture fund wants: Lots of foreclosed assets to pick up on the cheap.

So...Pete Peterson is self-serving even in his “Fiscally Responsible™” concern. He even worried about whether the country would go bankrupt...but if the government makes fiat money, and owes its debts in that money it can never be involuntarily insolvent. NEVER! Bad on us for believing otherwise.

So let’s sum up: 

1. Money is debt is money. 
2. Money creators who owe their debt in the money they create are completely unlike households, and that fundamental difference means they can never be involuntarily insolvent. 
3. Government does not need to implement austerity to “conserve” money...it makes as much as it needs whenever it needs it. 
4. Peterson’s advocacy for austerity injected fragility into the economy, subjecting large numbers of people to debt peonage and suffering. 

The austerity continues today. I’m not the only one who thinks so, too. See Pete Peterson’s Fix the Debt CEOs Promote Austerity for the Masses, Expanding Wealth for the 1 Percent.