It's Only Money: So Use It!

Greg Ip, an editor for the Economist who covers the U.S. economy writes about all of the outrageous sums of taxpayer money being spent on "an ever-growing swath of the private sector: first homeowners, then banks, now car companies. Soon, President-elect Barack Obama will put the government credit card to work with a massive fiscal boost for the economy." This concerns Ip, who finds it necessary to voice his opinion in the Washington Post. Ip is struck by the notion that the U.S. might not be able to repay its increasing debt. Ip shouldn't be so worried, and neither should anyone else for that matter. Even though the U.S. is dishing out lots of greenbacks; it's also true that the U.S. has a lot more in reserve. So when Ip raises his blood pressure over a total public debt at roughly $5.8 trillion as of September 2008 and deficits pegged at $1.9 trillion he forgets to mention that one of the purposes of money is that it is sometimes spent in very large amounts; and we're experiencing one of those periods now; when lots of money needs to be spent. Ip, seemingly not satisfied with worrying about America's debt and deficit, turns to hypothetical concerns about what could happen in the case of the feds having "taken on massive "contingent liabilities" -- loans and guarantees that don't become actual costs until the borrower defaults and the federal guarantee has to be honored." Yes there's a possibility this could cause a problem but on the other hand, because of the way these instruments and agreements are structured, Ip relents that conditions may negate the government from having to "pay out any money and might even turn a profit." This doesn't satisfy Ip in the least so he ominously adds the often used worse case scenario: "But the worse the economy gets, the more likely it is that some of those contingent liabilities will become actual liabilities." Ouch! But never fear; the U.S. has NEVER failed to pay back a debt in its entire history. A huge reason why we don't have to worry about default is because the government owns printing presses that produce money; and if and when we need it, we can print it. A lot of other countries can't do what we can do, so tough luck for them! Of course, Ip argues we would be replacing the problem of default with the problem of inflation. Most of us have lived through periods of inflation; we didn't like it but we managed and got through those times. So to condense Ip's concerns; lets not worry about what happened in the past in Russia, Zimbabwe, Latin America, or Japan because we're the United States and they're not. The key is economic growth because it solves a lot of problems and that's why Obama should shoot the moon and create a massive jobs producing plan to get the economy humming again by using the job producing power of federal expenditures. Obama must not listen to all of the 'sky is going to fall' pessimists that seem to dominate the media and populate what remains of the GOP. You remember them. They're the politicians who pretty much ran things for more than 30 years and now step back for a second; look around and assess the shape of our financial system to understand how crackerjack successful they were in running the economy into the ground. We needn't worry about debt at this time. Worrying about debt will only "undermine the prospects for a recovery." Only the government can spend us out of the Bush doldrums of recession we currently find ourselves in. Only after the recession has ended should we concentrate on reducing the debt--and only then. And finally as far as the problem of default is concerned; that too will be solved once the recession ends and we reduce the debt.