How Congress Could Fix Its Budget Woes, Permanently

by Ellen Brown

As Congress struggles through one budget crisis after another, it is becoming increasingly evident that austerity doesn’t work. We cannot possibly pay off a $16 trillion debt by tightening our belts, slashing public services, and raising taxes. Historically, when the deficit has been reduced, the money supply has been reduced along with it, throwing the economy into recession. After a thorough analysis of statistics from dozens of countries forced to apply austerity plans by the World Bank and IMF, former World Bank chief economist Joseph Stiglitz called austerity plans a “suicide pact.”

Congress already has in its hands the power to solve the nation’s budget challenges – today and permanently. But it has been artificially constrained from using that power by misguided economic dogma, dogma generated by the interests it serves.  We have bought into the idea that there is not enough money to feed and house our population, rebuild our roads and bridges, or fund our most important programs — that there is no alternative but to slash budgets and deficits if we are to survive. We have a mountain of critical work to do, improving our schools, rebuilding our infrastructure, pursuing our research goals, and so forth. And with millions of unemployed and underemployed, the people are there to do it. What we don’t have, we are told, is just the money to bring workers and resources together.

But we do have it! Or we could.

 

Money today is simply a legal agreement between parties. Nothing backs it but “the full faith and credit of the United States.” The United States could issue its credit directly to fund its own budget, just as our forebears did in the American colonies and as Abraham Lincoln did in the Civil War.

Any serious discussion of this alternative has long been taboo among economists and politicians. But in a landmark speech on February 6, 2013, Adair Turner, chairman of Britain’s Financial Services Authority, broke the taboo with a historic speech recommending that approach. According to a February 7th article in Reuters, Turner is one of the most influential financial policy makers in the world.  His recommendation was supported by a 75-page paper explaining why handing out newly-created money to citizens and governments could solve economic woes globally and would not lead to hyperinflation.

Our Money Exists Only at the Will and Pleasure of Banks…

CONTINUE READING HERE!

One thought on “How Congress Could Fix Its Budget Woes, Permanently

  1. Ellen, I loved this article and the suggestions that you are proposing for Congress to fix our very screwed up economy. You are so right in saying that austerity does not work. It works so very well, however, for the 1%, for our bought and paid for Congress, lobbyists, and the black hole that is our private banking system. It’s harsh and painful for the 99%, (it sucks) and we don’t want more of it – and yet more seems to be lurking in the “Sequester”.
    You are so right in saying that Congress has the power to solve our monetary problems. But I can’t imagine this Congress focusing on anything except enriching themselves at our expense.
    We have to fix and replace Congress, and then we must prod them to fix our monetary system as you suggest in your many brilliant articles. It should be a top priority to be worked on immediately. We need government issued money, as you have suggested here and elsewhere and we also need state, city, municipal and local public banks. Financial taxes and regulations are good, but they are not the deep and systemic changes that we really need to make.
    We also need economists and financial experts such as you in the treasury department and the government. And we need more people in the media to talk about your suggestions. That is how we will be able to become the country we want to live and thrive in.

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