Former Senator Alan Simpson gave an interview on the Today Show this morning and here are a few comments he made.“There’s people that we owe $16 trillion bucks to.”
“We’re in deficit to the tune of $1 trillion one hundred million. If that isn’t a stimulus then the drinks are on me.”
“Unless you get in there these people are going to say, I got an idea for you…you’re addicted to debt, and we’re gonna loan you more and we want more money for our money and then when we do that interest rates will kick up and inflation will kick in…”
First off the gov’t owes about half of that $16 trillion to itself, so let’s just correct him right off the bat and by the way, why doesn’t he make that clear? The answer is, because it’s part of his campaign to manipulate you. He has no leverage if you’re not scared.
Next he says we’re in a deficit to the tune of $1.1 trillion. And he says, “if that’s not a stimulus then the drinks are on me.”
Ok, I’m confused here. Is he agreeing that the deficit is a stimulus?
Moving on he’s saying that we owe money. Let’s get real…WE owe nothing. WE got paid, in dollars. That’s what we OWN not owe. Dollars. That’s it. The world (including parts of our own government) got to keep $16 trillion dollars because in the past 234 years that’s the amount of dollars the gov’t spent into the economy in excess of what it took away from us in taxes.
Those people/nations/institutions…whatever…are holding those dollars in dollar equivalents called Treasuries, just like you holding your money in a savings account at your bank. How does the bank “pay you back?” It debits your savings account and credits your checking account. That’s it. Done. Just like that. Nobody screaming where’s the bank gonna get the money to pay you back? Nobody saying the bank has to go on austerity in order to be able to move your money from your savings account to your checking account. The bank just makes some accounting changes and your savings account balance goes down and your checking account balance goes up. Same thing with how we “pay back” holders of Treasuries. The Fed just debits their securities account (at the Fed) and credits their reserve account (also at the Fed). In fact this has been done to the tune of $11.6 trillion so far this fiscal year alone. We’re talking two and a half months! In that time the national debt has been almost completely rolled over (paid back).
Let’s keep going. Simpson says people are loaning us the money because we’re addicted to debt. So, who is loaning us money? What money? Dollars? Here’s a simple question for Alan that the interviewer should have asked: If we make the money, which we do, why do we need to borrow it? Where is that person who is lending it to us, getting it from? I guarantee you, he won’t be able to answer that.
Finally, the most idiotic of his claims (fear mongering) were his claims that if we don’t pay down the debt rates are going to go up and inflation is going to go up.
Take a look at the charts below.
US Public Debt and 10yr Treasury yield
Photo: Mike Norman, FRED
And this…US Public Debt and Inflation
Photo: Mike Norman, FRED
Interest rates have been collapsing even as the debt has been skyrocketing. Inflation has been non-existent even as the debt has been skyrocketing. When will you stop being scared by these false and ridiculous stories about the debt? And when will the media call bullshit on these claims?