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Redline modern employment application

the sky is always falling so what I would like this afternoon to be is essentially a form of group therapy because we need it okay because they're scaring us with these stories about how it's unpatriotic how its burdening the next generation how its dooming us to a future of higher taxes catastrophe for the nation right and I want to try to lower the temperature get us to the point where we can at whatever age it's legal to do so open a nice bottle of red wine read the newspaper see the headline national debt isn't an all-time high and have that nice glow about us and feel at peace with the world right there's no reason to panic the government's budget is nothing like a household budget this is the problem they're not like us their budget doesn't work the way our budgets work deficit spending by the federal government isn't the same as you and I spending more than we make year after year borrowing by the federal government isn't the same as you and I going out and putting money on a credit card one of us issues the currency they do the other one of us you and I are merely using the US dollar so we have a distinction to make between currency issuers and currency users the issuer of the currency the federal government in this case can never run out of it can never go broke can never have bills coming due that he can't afford to pay can't become insolvent can't end up like people you may know right who took on too much debt and got into trouble and were forced into bankruptcy my deficit my red ink is your black ink okay here it is with actual historical data for the u.s. going back to 1960 the red line is my account balance okay the red line is my financial balance the black line is the private sector in the US it's all the households it's all the businesses in the US combined and what do you notice I'm almost always in the red my budget is almost always in deficit and yours is almost always in surplus and not only that they tend to move opposite one another meaning when I run bigger deficits you all end up with bigger surpluses okay so my reading is you're blacking so when you see a headline like this one right from The Wall Street Journal just a few days ago trillion-dollar deficits could be the new normal this is meant to shock and frighten trillion dollar deficits could be the new normal but take a breath and read it this way watch the word deficit don't you feel better don't you feel better the national debt is all of the outstanding Treasury bonds that the government spent the money into the economy didn't tax it back and then traded the cash for a different financial instrument called a security a government bond okay so the entire national debt is nothing more than a record a historical record of all of the dollars that were spent into the economy not taxed back and are currently being held in the form of US Treasuries that's all the national debt is what are we really a China so I have a friend who's a bond trader is he's a fixed income guy trades government bonds and his name is Warren Mosler and Warren will often say the only thing we ought China is a bank statement okay it's he's being a little bit funny but essentially at the end of the day that's about it okay what are we gonna Bank statement we already got the stuff we traded it for a Treasury and at the end of the day as long as China wants to orient its economy around exporting in order to grow in order to create jobs then we're the beneficiary in this bargain eliminating the national debt means eliminating all of those safe securities called US Treasuries that people like to hold in their portfolios because that's what the national debt is you pay off the debt you eliminate the debt there are no more Treasury securities anywhere they're done so why does that happen why does something that sounds so good and fiscally responsible runnings and budget surpluses and paying down debt why does it tend to coincide with bad economic consequences why do we end up with depressions in the great recession and very quickly because we could talk for an hour just about I could about this picture but I would just show you this is where this is where we were with Bill Clinton that is the government's budget moving into surplus you can see the red that's the government's deficit government's almost always in deficit but there were those four years right there under Bill Clinton when the government's budget moved into surplus and there was great celebration right this is the first time in generations that the budget has been in surplus this is the fiscally responsible thing to do you know Democrats delivered this well yeah but guess what look what happened to the private sector's financial position right that it was the built on the backs of the private sector the private sectors financial balance went deeply in the red and that's what allowed the public sectors balance to move temporarily into the black but it didn't last and it can't last why because it was driven by primarily households spending more than their income borrowing on the back of a dot-com bubble and then a housing bubble and eventually the whole thing unravels too much debt mostly for households inflation is every central bankers public enemy number one that's what he's worried about okay so can you imagine if instead of saying Social Security is going broke we have to cut benefits the system is unsustainable forget all of that if instead of that we were saying what are the things that we can do today what are the investments we can make today to increase the odds that in 5 10 20 years the US economy is productive enough that we can make good on all of those promises without causing an inflation problem the Republicans would say what tax cuts and deregulation are the best ways to produce an economy that is you know maximum growth and high productivity the Democrats would say what education infrastructure R&D but at least we would be having the right debate right at least we would be having a good constructive productive debate over the real issues that matter instead of this phony you know where the money is running out sort of debate the US government is never going to run out of the US dollar the US government is the scorekeeper for the dollar it can't run out of dollars any more than a carpenter can run out of inches or the scorekeeper here at Stonybrook can run out of points when the football team is putting up 77 points in a game and all the fans are sitting in the audience going oh my god what happens if they score again they're never gonna have enough points to put up yes they will they can't run out the stadium can't run out of points the US government can't run out of dollars it's a unit right the government spends by instructing its bank to change the numbers in someone's account upward that's how we pay for things it's not actually by physically printing money and making payments it's all done electronically this is the debate I wish we were having instead of getting bogged down in the pay for a question focus on the real things that matter what can we afford the answer isn't in financial terms the answer is in real terms if we want to do a trillion dollars of infrastructure and somebody says how are you going to pay for it you should say I'm gonna pay for it by hiring 300,000 construction workers by using X tons of steel by using 2 or 3 percent of our unused spare capacity in our factories by mobilizing this many machines and heavy equipment and so that's how you pay for it real resources and if you don't have them if the economy is already operating at full employment and everybody's being used all the workers are already employed all the resources are currently being used then you can't afford it right but if you have spare capacity if you have idle people if you have idle machines if the recent raw materials are there then the government can step in and say now would be a good time because we can mobilize these resources in a responsible way that means without causing inflation without competing for those resources with other people who are currently using they're not being used we can hire them put them to work and improve the standard of living right in the interest of the public of the public good so thank you very much you