It only took 85 years, but it looks like Chairman Alan Greenspan finally understands that the USA cannot default. Of course, what’s frustrating about these comments is that Dr. Greenspan spent the majority of his career working under a flawed model that didn’t see the world through this prism. We know this because it wasn’t more than a year ago that Dr. Greenspan made statements that contradict recent commentary. A little over a year ago Dr. Greenspan said:
“Don’t be fooled by today’s low interest rates. The government could very quickly discover the limits of its borrowing capacity.
An urgency to rein in budget deficits seems to be gaining some traction among American lawmakers. If so, it is none too soon. Perceptions of a large U.S. borrowing capacity are misleading.”
“The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default”
Pretty interesting stuff. It’s no surprise that the US economy is a total mess. The man who essentially ran the US economy for 18 years and was more influential in building the current economic model more so than any other economist in the world appears to have done an about-face on his perspective of the US monetary system and the way it functions. These are incredible comments and could show that MMTers are making real headway in our fight to show people how the monetary system actually works.
Does this mean he is ready to also admit that there is no such thing as the USA “running out of money” or correct the other fearmongering myths that have been repeated by Congress in recent weeks? Does this mean that Dr. Greenspan can put down his political gripes and understand that there is more the US government could do in the current environment to helps its citizens? I am not counting on it….