Nobody Understands Debt by Paul Krugman January 1, 2012
*** Executive Summary ***
Nobody understands debt, that is the reason to spend.
*** Reality ***
He gets the title correct. You can read all about it in right-wing textbooks, I prefer "The Creature of Jekyll Island". Barrack Obama, Nancy Pelosi, and Hillary Clinton have all explained to the public if the national debt gets to large our children will have to pay it back, and Krugman acknowledges they are full of it.
The reality is the government creates debt and the banks buy the debt and if the interest rates get too high for the debt, the fed can pump money in to allow the government to get that money at any interest rate the choose. In the 1970s Paul Volcker did not want to destroy the savings accounts of the workers of the country so he allow rates to rise. In return the government gets cash to do with it what they choose, "taxation without representation". Approximately $1.5 trillion this year. Who pays the $1.5 trillion? Anyone that holds M0, M1, M2, or M3. It will never be paid back. If the budgets could be balanced it would freeze the value of the dollar, not to the inverse Euro aka as the dollar index, but to gold.
The debt is not owed to ourselves, it is owed to the holders of M0, M1, M2, and M3. It is the poor Chinese kid that worked making McDonalds toys for $1 per day and the life savings of grandma that was earned at $1 per hour mopping floors. It is the bankers, savers, and planners. It is the $2 trillion in cash of corporate America waiting to be used to build factories and malls.
So what does he want to do with the money? Sounds based on his interviews on youtube give it to teachers. How about this Mr. Krugman, how about put together a b.s. degree in engineering all done through the computer and video with the best instructors of the country. Even the tests done automatically. Then we could do this for all degrees and shut down all the state colleges and financial aide.