The elitist Brookings Institution, fresh from a September forum that envisioned a cashless society, had just conducted an online forum exploring whether the US would default on its national debt or raise the debt limit when the Democrat-controlled House of Representatives gave final approval Oct. 12 to legislation temporarily raising the government’s borrowing limit to $28.9 trillion, deferring the debt-default deadline only until December.
The vote on this $480 billion debt-limit increase was 219-206, strictly along party lines, with zero intraparty dissent. President Biden signed the measure into law Oct. 14, four days before the Treasury Department had estimated it would no longer be able to pay the nation's debts without congressional action.
The congressional vote temporarily averted the crisis, “but come December, members of Congress will need to choose to put country before party and prevent default,” Rep. Richard Neal (D-Mass.), chairman of the House Ways and Means Committee stated, completely mischaracterizing what it means to “put country before party” when it comes to monetary policy.
Louise Sheiner of the Brookings Institution encapsulated the situation, largely from the establishment’s perspective, in her opening remarks at an Oct. 5 Brookings forum. The forum was put together to look at how Congress is to act before the US Treasury “runs out of cash,” she said. The forum’s participants centered on whether Congress would act by Oct. 18 to either 1) increase the debt limit; 2) suspend the debt limit; or 3) default.
The panelists included Brookings’ own David Wessel as well as Brian Sack, a financial analyst who, until recently, was the executive vice president of the Federal Reserve Bank of New York, the most powerful of the 12 branches of the privately owned central bank. There was even talk that the third option would possibly compel the federal government to reduce or delay Social Security checks and Medicare funding, but the untroubled Brookings panelists generally concurred that principal and interest first must be paid by the government to the bond holders no matter what—a decidedly elitist perspective in support of the creditor class.
Soon after the Brookings’ forum, however, the Social Security Administration announced benefits would be (supposedly) increased by 5.9% in 2022, the most in four decades.
All of the foregoing about the debt is a tragic replay of the general ignorance in some quarters, and a deliberate obfuscation in other quarters, about the Constitutionally authorized prerogative for Treasury and Congress to exercise sovereignty and create United States Notes, debt- and interest-free, and phase out Federal Reserve Notes. Then, there would be no debt limit because, absent borrowing, there is no debt. Congress could simply draw up a budget and fund it, so long as strict attention is paid to what is being funded and why. Abraham Lincoln did this by creating “greenbacks” to finish the Civil War while telling the banking consortium to “shove” their double-digit interest rates.
Meanwhile, our Congress remains trapped in the mindset that it can either mega-trim spending in pursuit of the elusive “balanced budget” or run annual deficits where excess spending above and beyond revenue adds to the national debt. It’s helpful to recall that. in 1941, then-Fed Chairman Marriner Eccles told Rep. Wright Patman (D-Texas) during testimony at the House Banking and Currency Committee that if there’s no debt, there’s no money at all.
So, if Americans truly want a way out of this mess, they must demand a return to what neither Democrats nor Republicans want to discuss—the direct creation of currency and coin by the government. Notably, new steps that the US Postal Service has taken to revive postal banking services, harking back to the days between 1911 and 1967 when modest-income Americans used post office-based banking services, would go hand-in-hand with Treasury taking charge of money creation.
That’s the real (populist) way to “put country before party," Mr. Neal.
Mark Anderson is a veteran journalist who divides his time between Texas and Michigan. Email truthhound2@yahoo.com.
From The Progressive Populist, December 1, 2021
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