Nebraska Green Party, Co-Chairs
Charles Ostdiek- Iconofcharles@gmail.com; David Long – fraterdavid@cox.net
Approved 12/17/17 by consensus at Nebraska Greens monthly meeting
Authors: Shane Fry – dasfry@gmail.com;
Dr. Joseph Firestone – eisai@comcast.net
PROPOSAL TO AMEND GPUS PLATFORM – Chapter IV – Section M – Economic Justice and Sustainability
Omit Section M. Preface-Paragraphs
Omit “Greens will reduce our national debt”
(Explanation for Omission: This needs to be omitted because posing a necessity on reducing Federal spending when we still have unemployed people and underfunded programs around the country is dangerous. Spending practices of a Monetary Sovereign are inherently different than those of Users of the Currency. The Federal Government is the Issuer of the Currency, and issues and spends into the economy for Public Purpose. There’s no other way for the new $ to get into the economy other than through being originally issued and spent by the Federal Government.)
Omit “Presidents George W. Bush and Barack Obama have irresponsibly expanded our national debt by trillions of dollars to finance tax cuts for America’s wealthiest citizens, war, corporate welfare and bailouts of Wall Street and the automotive industry. This debt and the interest that must be paid on it is not sustainable.”
(Explanation for Omission: Though previous administrations have frivolously spent our own sovereign currency on extending many of these industries, it is inconsequential to our being able to spend now or future solvency. This paragraph gives the impression that the money spent yesterday will prevent future spending, but that premise is inherently untrue for a monetary sovereign. The idea that the National Debt is a cumulative debt that all Americans together have to “pay” is not just untrue, but it is highly misleading, dangerous, and completely denies the nature of our monetary system. The Federal Government is the sole issuer of the currency, all dollars in existence came from them in the form of spending; generally on Public Purpose. Any American who has bought Treasury Securities and Bonds is holding that liability which is an investment for them, a private surplus, though we may call it Public Debt.)
Omit “Working people and the small business community are bearing a disproportionate amount of the federal debt burden. Yet the federal debt is, to a large degree, the end product of tax cuts for the wealthy and big business, and the military-defense industry buildup.”
(Explanation for Omission: Once again, this falls into the category of giving a false impression and denying that we are a monetary sovereign. The Federal Debt is a non-governmental surplus, there is no debt burden placed on the American people by Federal spending other than the implications of that spending, or the taxes which may be placed on them when politicians attempt to balance the federal budget. That would mean that the sole creator of US Dollars is refusing to spend more than they take in; an unnecessary limitation to a monetary sovereign which will cripple every attempt to adequately fund federal programs.)
Omit. “For many years the federal government borrowed trillions of dollars. Money that should have been going into a better “safety net” for the poor, homes for the homeless, environmental and public lands conservation, sustainable jobs, research and development, roads and bridges, schools and the technologies of tomorrow, has been lost to servicing the national debt. We cannot ignore the consequences of our nation’s past deficits and the related costs of debt service.”
(Explanation for change: A monetary sovereign has the expressed ability to create and destroy their own sovereign currency at will through issuance/spending and taxation. Inflation and employment are better indicators of what we need to be doing economically, rather than looking at the National Debt or the Debt to GDP Ratio, which is just a number, neither good nor bad, it just is. Whenever the economy does not have enough Public investiture, they have to get the rest of the funds from the Private Sector, creating private debt which is inherently and undisputedly much worse; unless you are a bank and you want to make money off of those looking to borrow money to fulfill their basic needs.)
Omit and Replace “GREEN SOLUTIONS
1. Reduce our national debt by increasing taxes on large corporations, the super-rich and pollution; and decreasing expenditures in some areas, especially for war, armaments and corporate welfare.
2. Oppose privatization of Social Security.
3. Increase funding for green jobs, Social Security, public housing, higher education, public transportation, environmental protection, renewable energy and energy conservation.”
Proposed Changes to Chapter IV. – Section M. National Debt
Replace Section M. Preface-Paragraphs with the following
“Greens will deficit spend on public purpose until full employment is met and acknowledge the National Debt is not a threat to a stable sovereign fiat currency system because the level of debt has no effect on the solvency of the Government; there is no fiscal sustainability problem for a fiat sovereign government that is not self-imposed.
Even so, the idea that the National Debt matters for solvency is a very serious political propaganda problem, underlying austerity myths and policies, including the debt ceiling law that has caused recent, periodic fiscal crises and problems.
We need to meet these issues with the following solutions:”
Replace. #1 with
“1. Immediately repeal the law placing a limit on what is now called “the debt subject to the
limit” (Debt Ceiling) by Congress. There is no need for such limits and they do great harm by allowing Congress to avoid its responsibility to allow the Treasury to pay its bills, and to pass appropriations bills that fund federal spending for the public purpose in the first place”
Replace #2 with
“3. Nationalize the Federal Reserve under the Treasury Department, providing the Secretary of
the Treasury with the authority to direct the Fed to fill the Treasury Spending Account with all reserves necessary to spend appropriations legislated by the Congress.”
Omit #3
M: National Debt (original text)
Our Position
Greens will reduce our national debt.
Presidents George W. Bush and Barack Obama have irresponsibly expanded our national debt by trillions of dollars to finance tax cuts for America’s wealthiest citizens, war, corporate welfare and bailouts of Wall Street and the automotive industry. This debt and the interest that must be paid on it is not sustainable.
Working people and the small business community are bearing a disproportionate amount of the federal debt burden. Yet the federal debt is, to a large degree, the end product of tax cuts for the wealthy and big business, and the military-defense industry buildup.
For many years the federal government borrowed trillions of dollars. Money that should have been going into a better “safety net” for the poor, homes for the homeless, environmental and public lands conservation, sustainable jobs, research and development, roads and bridges, schools and the technologies of tomorrow, has been lost to servicing the national debt. We cannot ignore the consequences of our nation’s past deficits and the related costs of debt service.
GREEN SOLUTIONS
1. Reduce our national debt by increasing taxes on large corporations, the super-rich and pollution; and decreasing expenditures in some areas, especially for war, armaments and corporate welfare.
2. Oppose privatization of Social Security.
3. Increase funding for green jobs, Social Security, public housing, higher education, public transportation, environmental protection, renewable energy and energy conservation.
CHAPTER IV – SECTION M (WITH PROPOSED CHANGES)
M: National Debt
OUR POSITION
Greens will deficit spend on public purpose until full employment is met and acknowledge the National Debt is not a threat to a stable sovereign fiat currency system because the level of debt has no effect on the solvency of the Government; there is no fiscal sustainability problem for a fiat sovereign government that is not self-imposed.
The idea that the National Debt matters for solvency is a very serious political propaganda problem, underlying austerity myths and policies, including the debt ceiling law that has caused recent, periodic fiscal crises and problems.
We need to meet these issues with the following solutions:
GREEN SOLUTIONS
1. Immediately repeal the law placing a limit on what is now called “the debt subject to the limit” (Debt Ceiling) by Congress. There is no need for such limits and they do great harm by allowing Congress to avoid its responsibility to allow the Treasury to pay its bills, and to pass appropriations bills that fund federal spending for the public purpose.
2. Nationalize the Federal Reserve under the Treasury Department, providing the Secretary of the Treasury with the authority to direct the Fed to fill the Treasury Spending Account with all reserves necessary to spend appropriations legislated by the Congress.
The proposal is trying to slip numerous false premises by. Well, economists do base all their machinations on the false assumptions their taught. FIRST – pay attention to the double-speak. MMT claims the national debt is not a debt and that reducing the debt would reduce public spending and yet they claim that money is not issued as debt, that government doesn’t borrow from commercial banks what it spends in excess of the tax revenue collected, which is what creates the debt which we pay nearly a half-trillion in interest on each year which are profits for private banks who created the money in making the loans. Through Green Party Monetary Policy we would pay the debt off as it comes due because we change the law that requires government to borrow rather than exercise its sovereign right to issue the money. More than that GP policy changes the system itself. It changes the ownership of the monetary system from private to public, removing the private money control over public policy. More to come, for sure.
“they claim that money is not issued as debt, that government doesn’t borrow from commercial banks…”
This is incorrect. The government does not borrow from commercial banks; Treasury issues liabilities (bonds), those bonds are sold to the private sector, and the proceeds are spent back into the economy. The net transaction is an increase in bonds held by the private sector, a movement of dollars from bondholder to govt. payee, and the resulting increase in aggregate demand. Commercial banks play no important part in this transaction; they merely act as intermediaries (as in all govt.-private sector transactions), and they do not profit from the transaction. Check your accounting, please.
Govt. bond issuance is not true debt, because government liabilities are not “paid off” by exchanging mature bonds for dollars; govt. liabilities can ONLY by extinguished by running a federal tax surplus- which the government is under no obligation, or even pressure, to do.
So any attempt to “pay off” the debt by instead issuing “greenbacks” would not lower the amount of total government liabilities (bonds + reserves + cash) in the private sector, it would merely change the makeup of said liabilities. And reducing the number of total liabilities would require running a (large) federal tax surplus, which would be paid not from clawing back money from bondholders, but taxing money from the active economy (our income, basically), which would be a financial disaster.
“The government does not borrow from commercial banks”
It’s an open question who the government borrows from. It borrows from the private sector and from the Fed. It borrows from whoever has custody of the T-bonds at the moment.
Private banks that hold T-bonds are current owners of part of the debt. How much is that happening? It varies by the second.
“Govt. bond issuance is not true debt”
If I owe money on a credit card, and I “pay” it by getting money from another credit card, I wouldn’t say that means I don’t have “true debt”.
You are saying that dollars are government liabilities the same as T-bonds. If that’s so, that still doesn’t make T-bonds something other than debt.
“it would merely change the makeup of said liabilities.”
Other things equal, changing the makeup of liabilities from something that we pay half a trillion a year in interest on to something we pay zero interest on, would probably be a good thing. But other things are not equal. It’s complicated. Not nearly as simple as you describe.
“taxing money from the active economy (our income, basically), which would be a financial disaster.”
Are you arguing that the existing financial system is sustainable?
MMT appears to argue that the existing system is sustainable.
“Immediately repeal the law placing a limit on what is now called “the debt subject to the limit” (Debt Ceiling) by Congress. ” This is laughably in favor of banks taking much more private profit out of the system while claiming we need no limit to borrowing which they call spending. More double-speak. This is part of the financial industries effort to destroy our government, Trump is doing his part but this would eliminate any wiggle-room for the public interest as the banks tighten their grip.
Then they want to “nationalize the Fed” (so we pay the staff instead of the banks) but then to “direct the Fed to fill the Treasury Spending Account with all *reserves* necessary..” Reserves??? Why not “fill the Treasury Spending Account with all the” SOVEREIGN MONEY necessary which has no debt obligation whatsoever? Reserves? Well this is all part of the complexity and ‘confusury’ that MMT peddles and such misdirects have protected this vile fraud for a long time. As J.K. Galbraith said, “The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it.” In fact universities do not teach anyone about how money is created. That ended when universities were bribed into eliminating Political Economy (the study of the relationship between wealth and power) from their curriculums and replacing them with Economics (the study of wealth while ignoring power) and Poli-Sci (the study of power while ignoring wealth). The NE proposals regarding debt, banking and money are further examples of the financial industry seeking to protect its gold egg laying goose. That NE Greens are unaware of this is disappointing but understandable considering the amount of propaganda we are bombarded with. However, despite that there is an International Movement for Monetary Reform beginning to grow. Greens in the US and UK have MR already in their platforms, other nations will follow becasue a protected sovereign money system is the only way they can take care of the needs of their people.
Looking at Howard Switzer’s comments. There is a concern about what SOVEREIGN MONEY is versus the”reserves” created by the Federal Reserve.
They both are names for the same thing. They are even already sometimes issued without creating debt obligations. Evidence is QE where they simply “marked up” bank accounts to purchase the assets in the banking system. This is how SOVEREIGN MONEY is now issued, by “making up accounts”.
This dreaded growing interest payment on debt is therefore optional.
If it is optional, why do we keep doing it?
Answer:
To control the overnight interest rate. The FOMC decides on an interest rate, on their own. This is not a rate forced on them by the market. In fact they try to control the market by doing this countercyclically. This is the insight MMT brings.
Paying this interest is a choice we’ve made. Many of us are not seeing any reason to set the interest rate above zero. And to stop would simply be to have the US Congress officially tell the FOMC to make the rate zero permanently until further notice.
Looking at Howard Switzer’s comments. There is a concern about what SOVEREIGN MONEY is versus the”reserves” created by the Federal Reserve.
They both are names for the same thing. They are even already sometimes issued without creating debt obligations. Evidence is QE where they simply “marked up” bank accounts to purchase the assets in the banking system. This is how SOVEREIGN MONEY is now issued, by “making up accounts”.
This dreaded growing interest payment on debt is therefore optional.
If it is optional, why do we keep doing it?
Answer:
To control the overnight interest rate. The FOMC decides on an interest rate, on their own. This is not a rate forced on them by the market. In fact they try to control the market by doing this countercyclically. This is the insight MMT brings.
Paying this interest is a choice we’ve made. Many of us are not seeing any reason to set the interest rate above zero. And to stop would simply be to have the US Congress officially tell the FOMC to make the rate zero permanently until further notice. EJ
Are Ernest Jones and Mark Collins the same person?
“To control the overnight interest rate.”
Does it make sense to pay interest forever, so we can control the overnight interest rate tonight?
Isn’t that like buying a piece of candy with debt, and paying interest forever for the candy? You keep paying interest long after the candy is only a sweet memory….
“Many of us are not seeing any reason to set the interest rate above zero.”
If the interest rate was zero, why would anybody buy a T-bond? (Apart from the Fed.) Or maybe that doesn’t apply to T-bonds. Then why would anybody lend money to anybody else when they can buy T-bonds instead?
It can be argued that MMT accurately describes how the US financial system has worked. Do you claim this is sustainable?