Monday, December 9, 2013
By SUSAN FEINER
"It's gone. It's gone, It's gone!" Wild cheering as Spendy trots round the bases and touches home.
Spendy at the Bat
(With apologies to Ernest Thayer)
It looked extremely rocky for the Deficit Nine that day.
The score stood 2 to 2 with just an inning left to play.
Then stimulus died at second, and full employment did the same.
Hunger quashed the spirits of the workers of that game.
Fans longed for Mighty Spendy, they knew his record well.
They knew that Mighty Spendy would end recession hell.
Now it's up to Spendy, he strides up to the plate.
Folks who live on wages know his bat will seal their fate.
The count is full, it's 3 and 2, fans faces oh so dark.
When the heat came flaming in, he hit it out the park
The fans go nuts.
Teammates pour out of the dugout.
High fives and back slapping all around.
Then suddenly the stadium lights flash.
A siren screams.
The announcer, shaking his head, intones mournfully, "Umps declare austerity. Baseball is all out of runs."
The score flips back to 2 to 2.
Wait a second.
Baseball can't run out of home runs.
It's just scoring, a way to keep track, bookkeeping.
Well, that's all money is -- a way to record who owes what to whom.
Money, in all its gore and all its glory, is no more significant and no more substantial than a home run, a field goal or a service winner.
I know this is hard to take.
It caught me up short, too.
Like you, I know that money keeps food on the table, gas in the car, inventory on the shelves, the lights on in City Hall.
But really what is money?
Can it do all this and be nothing too?
Therein lies the problem.
Therein lies the solution.
Folktales and common sense tell us that money has substance. That there is a there there. But there's not.
How much commerce in the United States actually happens with green pieces of paper?
Think about it.
We've got a $16 trillion GDP. (That's $16,000,000,000,000). But only seven percent of the transactions comprising GDP are conducted in old-fashioned money.
The other 93 percent take place when clerks -- in banks, corporations or government offices -- type on keyboards like the one I'm typing on right now.
This is modern money.
Workers don't line up at the payroll office each week to collect their Franklins, Jacksons and dimes.
Health insurers don't dispatch Brinks' trucks to settle up with hospitals and docs.
Electronic clicks pay GM's utility bills, Microsoft's programmers, and Boeing's engineers.
Computers subtract clicks from your account.
Computers add clicks to your account.
That's all money is: plus clicks and minus clicks.
The simple truth, despite all the serious people who want you to believe otherwise, is that the U.S. government can no more run out of dollars (clicks) than baseball can exhaust the supply of home runs.
That's because U.S. Treasury clicks call spendable funds into existence.
Click, click, click.
There's $900 billion for defense.
Click again and there's $50 billion for nutrition support.
A few more clicks and presto, K-12 and higher ed. are fully funded.
Since 2007 (the start of the Great Recession), the states that are prohibited from borrowing to cover current spending) have collectively cut over $540 billion from their budgets.
This year they'll cut another $55 billion. There's no reason why the Treasury can't or shouldn't step in with enough firepower to bring state spending back to 2008 levels.
The sky won't fall. The world won't end.
Worried about the resulting deficits?
Chill. They're just clicks too. Don't twig out.
U.S. interest rates are not about to go through the roof.
In fact, just last week the yield on treasuries, after accounting for inflation, went negative.
That's right, the rest of the world is willing to pay for the privilege of lending to us.
What else could they do?
Can you think of a single entity with huge piles of assets (positive clicks) that would be willing to park those assets in euros, yen or pesos?
At least for the time being, U.S. deficits have to exist ... if only to provide a safe haven for all the world's clicks.
The United States is the only entity that can legally create dollars.
(Continued on page 2)