Galdetuko bagenitu BERRIAz eta edo GARAz?

Bill Mitchell-en Why does anyone read the New York Times?

… Why does anyone read the New York Times? (…)

I don’t know why anyone reads the New York Times

I was sent this article – No Fight Over Red Ink Now, but Virus Spending Will Force Tough Choices (published April 18, 2020) – a few days ago and wondered why anyone is writing this sort of stuff.

It gives air to and is representative of the dangerous ignorance that abounds, which, if it gains traction in the coming year or so, will derail economic recovery (should we solve the health issue) and significantly exacerbate the damage that will be caused by the lockdowns etc. (Ez hego Euskal Herrian non enpresa txiki eta ertainak LOZORROAn daude (sic))

The basic premise is:

1. “The deficit hawks have had their wings clipped” – they don’t dare at present rail against the fiscal expansion. In the US case, that is, in part, not because of the size of the intervention but mostly, probably, because trillions¹ have been directed at the top-end-of-town (corporations, Wall Street) and only a pittance is providing support for the millions entering poverty because of job loss.

2. I am also unsure whether the journalist’s construction that the US government has thrown “open the spigots in an unstinting effort to protect both American lives and the nation’s financial underpinnings.”

My reading of the data at present is that there has been a very poorly resourced response to the medical emergency and a totally inadequate fiscal response to support the poor who are without work or never had work.

3. The journalist though cannot help himself with the “Something will eventually have to give” story line.

This is the amorphous scaremongering that the fiscal conservatives introduce all the time when they cannot really tell you what that something is or when the give comes but still use the uncertainty to invoke fear among the masses.

The mainstream economists who are usually ready to offer their nonsensical opinions at any chance have also been quiet but you know what they will unleash in the coming months.

All the lies:

(a) Bond yields will rise making government spending more expensive and risking insolvency.

(b) Interest rates will rise because the government is competing for scarce funds in the (mythical) ‘loanable funds market’.

(c) That accelerating inflation moving to hyperinflation is just around the corner.

And more.

None of which will happen as a consequence of the fiscal stimulus provided by the government(s).

4. Then the journalists quotes some fiscally conservative Republican Senator who offers another platitude:

My problem is, we should have been fixing the roof when the sun was shining. But we didn’t.

Progressive Europhiles also use this metaphor too and I wrote about it in their context in this blog post – Fiscal policy paralysis and ECB credibility in tatters (June 18, 2019).

What does it mean?

The journalist informs us that the Senator:

… was referring to the period before the outbreak, when the economy was booming and the deficit was already projected to skyrocket to an estimated $1 trillion² for 2020.

Well obviously they think the federal US fiscal deficit was too large before the crisis. And given the low unemployment that had been achieved, they think the federal government should have imposed austerity on the economy to ‘save up’ currency to meet the current crisis.

They don’t stop to think for a minute that the reason that the unemployment rate was relatively low and the economy had been growing was because Donald Trump DIDN’T impose austerity, and, instead, continued to provide fiscal support to the economy.

That sort of basic macroeconomic logic is a step too far for them.

The ridiculously created – US Committee for a Responsible Federal Budget – published a recent report (I won’t link to it to save you wasting time), which is notable for the size of the numbers they report.

As if these numbers have much meaning. They attach no intrinsic meaning to them – they are just large and the reader is meant to be scared – just as you would if you confronted a ‘cliff’ that was high above the beach and you had to get to the beach.

The Report says deficits and debt will be “unsustainable” in the US.

The journalist’s take is that “In other words, the bill will come due, as it always does”.

He must have a different historical recollection than I because, even though I am a foreigner and live in Australia, I am not aware of any major fiscal catastrophe in recent US history (post 1971) that required pernicious austerity being invoked to ‘pay back debt’ or save the government from insolvency.

And the idea that the rising deficits now will “make budgeting in the future extraordinarily difficult” is equally asinine.

Why?

As the coronavirus crisis has demonstrated – even with the deficit which the journalist says is “estimated $1 trillion for 2020” – the journalist writes:

… any flimsy barriers to spending that remained were demolished in an instant …

Reflect on that a moment.

The logic in one paragraph dismissed (unknowingly) by the logic in the next!

And after all that, the “future generations” enter the narrative, as they always do, and so we read that taxes are going to have to go up.

There is no differentiation between tax rates and tax revenue.

The latter will go up when growth resumes. The latter doesn’t have to do anything in relation to raising funds to reduce the deficit.

Oh, and I nearly forgot, the article would not be the complete disaster unless it got to the storyline:

The spending surge … could prompt inflation, and it also leaves the nation far less prepared in the event of another emergency.

Perfect although he didn’t include the bond yield-insolvency point. We will give him 8/10 for that lapse.

The journalist is listed as having been a “chief Washington correspondent and a veteran of more than three decades of reporting in the capital”.

Standards!

Orain hartu BERRIA edo eta GARA eta irakur ekonomiaz idazten dutenen artikuluak.

Hemengo ‘kazetariek’ ez dute inongo mailarik eta haien ezjakintasuna, eta ondorioz, haien idazkiak are more than dangerous.

Okerrena da neoliberalismo hutsean murgiltzen direla, pentsatuz, aldiz, ezkerrekoak (sic) direla. Horixe da gure patua Granada honetan, non dena, den-dena, posible baita.

Politikan, are bitxiagoa da afera. Orain dela urte batzuk autodeterminazioaren alde zeuden kazetarien multzoak, orain, mirakuluz, mandanga³ bereganatu dute, eta neoautonomismoa itsu-itsuan defendatzen dute, inongo salbuespenenik gabe!

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