Re: fiscal deficit

[Bill Mitchell <ecwfm@xxxxxxxxxxxxxxxxxxxxxxx>]

At 22:03 11/13/2001 -0500, you wrote:
> February 8, 2000
> LS-390
> TESTIMONY BEFORE THE SENATE FINANCE COMMITTEE
> TREASURY SECRETARY LAWRENCE H. SUMMERS
>
> Debt reduction also creates fiscal space, widening the range of choices
> available to us, and giving us
> greater capacity to respond to unforeseen problems. Today, the Federal
> Government is spending more
> than $200 billion a year on interest payments that would be eliminated
> under our proposals. The President
> proposes that resources not paid in interest be used to help ease the
> burden of the Social Security and
> Medicare costs that will arise once the baby-boom generation begins to retire.
>
> http://www.treas.gov/press/releases/ps390.htm
It is almost tragic that our graduate schools pump out people who rise to
these heights and
offer these "lows" in analysis.

Fiscal space has a real constraint but no financial constraints.

How can the issuer of the currency that represents the unit of account ever
encounter any financial
constraint other than that which is self imposed?

It is like someone who had control of infinite oil reserves driving their
car with some self imposed
throttle moderation because they wanted to save oil despite stalling
continually on steep hills.

madness.

best wishes
bill



William F. Mitchell
Professor of Economics and Head of Department
Director, Centre of Full Employment and Equity
University of Newcastle
New South Wales, Australia
E-mail: ecwfm@xxxxxxxxxxxxxxxxxxxxxxx
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