Mark, it's silliness, because you are not reading what I said, and making up stuff.

Nowhere did I mention U.S. "borrowing," which by the way, is functionally is unnecessary.

Any country that gives up its Monetary Sovereignty will fail long-term, unless it has an assured supply of money coming in from outside its borders. Giving up Monetary Sovereignty is the most foolish step a nation can take.

Monetary Sovereignty is the single most valuable asset any nation can have -- far more valuable than the "pieces" you mention.

I gave you a reference link for Monetary Sovereignty. I urge you to read it. Twice.

Rodger Malcolm Mitchell

Not at all. Let me repeat, because I don't know how to say it more clearly:

It is functionally impossible for a monetarily non-sovereign government to survive long-term without money coming in from outside its borders. (http://rodgermmitchell.wordpress.com/2010/03/08/why-the-states-are-in-financial-trouble/)

The U.S. is Monetarily Sovereign (http://rodgermmitchell.wordpress.com/2010/08/13/monetarily-sovereign-the-key-to-understanding-economics/) meaning it has the unlimited ability to pay any bill of any size at any time. The states are monetarily non-sovereign.

Those who do not understand Monetary Sovereignty, do not understand economics.

Rodger Malcolm Mitchell

Not sure what you mean by "integrated," but no gifts? The federal government gives (not lends) trillions of dollars to the states. This is known as "the federal deficit."

Despite those multi-trillion dollar gifts to the states, several states are not "doing fine." I know. I live in Illinois. It is functionally impossible for a monetarily non-sovereign government to survive long-term without money coming in from outside its borders. (http://rodgermmitchell.wordpress.com/2010/03/08/why-the-states-are-in-financial-trouble/)

Rodger Malcolm Mitchell

The euro nations already have surrendered the single most valuable asset any nation can have: It's Monetary Sovereignty (http://rodgermmitchell.wordpress.com/2010/08/13/monetarily-sovereign-the-key-to-understanding-economics/).

The so-called "core" countries, being monetarily non-sovereign, will begin to fail when their balance of trade goes negative. It is an absolute rule of economics that no monetarily non-sovereign nation can survive long-term without money coming in from outside its borders.

The euro is a failed concept, and the sooner this is recognized, the sooner it can be fixed.

Rodger Malcolm Mitchell

The problem with the euro nations is not so complex as the above post would make it seem. The euro nations are suffering because they each voluntarily surrendered the single most valuable asset any nation can have: Its Monetary Sovereignty (http://rodgermmitchell.wordpress.com/2010/08/13/monetarily-sovereign-the-key-to-understanding-economics/).

Lacking Monetary Sovereignty, no euro nation can grow its money supply, meaning it cannot grow its economy. In that, the euro nations are like the U.S. states, the difference being the U.S. states receive dollars from the U.S. central government.

No monetarily non-sovereign government can survive long term without money coming in from outside its borders. This is an absolute law in economics. Thus there are two, and only two, long-term solutions for the euro nations:

1. Leave the euro and re-adopt their own sovereign currencies
or
2. The EU give (not lend) euros to member nations, as needed.

There are no other long-term solutions.

Those who do not understand Monetary Sovereignty do not understand economics.

Rodger Malcolm Mitchell

It is 100% definite we are headed for another recession -- if we are lucky. Not lucky = depression. Reducing the federal deficit reduces non-federal savings, and that doesn't even consider the annual loss in the current account.

Welcome to the United States of Lemming, where our leaders guide us over the cliff, and we all blindly follow.

Rodger Malcolm Mitchell

Oh, and Joe, Greece is not monetarily sovereign, so its situation is different. And please stop with the insulting comments, when you have no economics background. It just makes you look foolish.

Rodger Malcolm Mitchell

Joe, sadly you suffer from ANTHROPOMORPHIC ECONOMICS DISEASE , the belief federal financing is like yours and mine. It isn't. The federal government is monetarily sovereign. You and I aren't.

Not only does the federal government not need taxes, it doesn't need to borrow. So your concern that investors will "stop lending us money" is meaningless. Further, investors can demand higher rates, but the U.S. government always pays exactly what it wants to pay. Remember, it is the monopoly supplier of dollars and of T-securities.

The government does not fund spending through bonds. Visualize a brand new nation, with no money. What is the first thing the government must do? It must supply the citizens with money. How does it do this? With deficit spending. It cannot levy taxes or sell bonds, because the people have no money. So it deficit spends without any taxes being levied. It can continue to deficit spend forever, without ever levying taxes or selling bonds.

This all became possible in 1971, the end of the gold standard, at which time the U.S. government became monetarily sovereign.

Rodger Malcolm Mitchell

Thank you for your magnificent article, which will be ignored. The debt hawks successfully have hypnotized the politicians, the media and even the government. But keep trying.

While you are essentially right in all you said, I would like to correct one small detail. Social Security tax payments are not “transferred” from taxpayers to Social Security recipients. There are two separate operations: First, there is the payment of taxes, which immediately are destroyed by the government, and so are irrelevant to federal spending.

Then separately, there are the government payments to recipients, which the government does simply by writing checks. Neither depends on the other. If FICA were $0, this would not affect by even one penny, the government’s ability to pay Social Security benefits.

I suspect you know this, but phrase it as a “transfer payment” to make it easier for Congress to understand. Much good luck to you in your efforts to educate Congress, as futile as such an endeavor may seem. I've spent 15 years trying, and maybe, just maybe, something good eventually will happen.

Rodger Malcolm Mitchell
You can see me at: http://rodgermmitchell.wordpress.com/2009/09/07/i...

Rodger Malcolm Mitchell