My Letter to Speaker Pelosi (Feel free to write your own)

House Speaker Nancy Pelosi 8/1/2021
1236 Longworth H.O.B.
Washington, DC 20515

Dear Speaker Pelosi,

Thanks to Stephanie Kelton, I recently read your comment on Twitter: “Suppose…your child just decided they, ...[do] not want to go to college but you’re paying taxes to forgive somebody else’s obligations. You may not be happy about that." Ms Kelton remarked that the president ran on student loan forgiveness.

Although many dispute taxes for war, etc, no replies to your Tweet dispute your “PayGo” principle saying we need taxes to provision federal programs, or to pay student debt. “Tax and spend” resonates with most people who have to earn money before they can spend it. But that phrase is for currency users, not currency creators. Dollars retire the inevitable liability of taxes, so dollars are valuable (“taxes drive money”), but taxes do not, and cannot, provision federal programs. The federal government creates the money. And how could people pay taxes if the government didn’t spend the dollars out into the economy first? The real sequence for currency creators is “spend first, then retrieve some dollars in taxes.” Alone in the economy, the creator of currency is fiscally unconstrained. And what do we call the dollars not retrieved in taxes? Answer #1: the dollar financial assets of the population. Answer #2: National ‘debt.’ Both answers describe exactly the same thing.

“B...but if we just print money, we’ll get [gasp!] [hyper-]inflation!” is a common objection. First, we always “print” the money. Inflation comes and goes, irrespective of the money supply (typically reflecting shortages, like oil in the ‘70s). See this graph of money supply growth vs. consumer prices:



According to its own congressionally-mandated audit, the Fed issued $16 - $29 trillion in credit to the financial sector in 2007-8. Where was the inflation surge then?

So I urge you to consult with Ms. Kelton, and stop giving Americans invalid excuses for continuing to collect student debts. Forgiving the debts is not something taxes would pay anyway. Your excuses aren’t valid not just because your priorities are misplaced, but because you do not understand the power of government as a currency creator.


Regards,