The other day Treasury Secretary Janet Yellen warned that the refusal by Republicans in Congress to raise the debt ceiling would cause a “constitutional crisis” that might cripple the economy and financial system as the government ran out of money and defaulted on some of its bonds.
Nonsense. Because it retains the power of money creation, the federal government can never run out of money. It can create money to infinity. The government prefers not to create money so frankly, since it might be inflationary, but the government has the power.
And of course the government can raise revenue in a way that won’t aggravate concerns about inflation. It can raise money the old-fashioned way: through taxes.
So why the insistence on more borrowing?
It’s because Congress and President Biden, like his predecessors, enjoy distributing infinite goodies without having to make current taxpayers pay for them. The burden is to be transferred to future generations — and to other countries, which the U.S. government pressures to finance this country’s debt, and thus its parasitic lifestyle. The president and Congress believe that Americans have the right to live at the expense of the rest of the world.
Calling again for raising the debt ceiling, Biden says: “America is not a deadbeat nation. We pay our bills.” But we don’t pay our bills, since borrowing to pay debt doesn’t repay debt at all. It just creates more debt.
Taxes repay debt, but apparently a “constitutional crisis” is preferable to more taxes.
Chris Powell has worked for the Journal Inquirer in Connecticut since 1967, first as a reporter, then as an editor, and now as a columnist. He was managing editor from 1974 until retiring from that position in 2018.