Ellen Brown Calls for Massive Government Spending Increases. She Says the Government Can Mint $1 Trillion Coins to Do This.
Aug. 8, 2011
Eklen Brown in late November, 2010, became Bernanke's cheerleader. She loved QE2. She wants more of the same. Way more.
She wants more government spending. Way more spending. Gigantically more spending. She wants it NOW.
Austerity -- reduced government spending -- is bad, she says.
The Market Has Spoken: Austerity Is Bad for Business
Anyone who doubted my accusation that this woman is a hard core leftist needs to read more of her solution.
On Thursday, August 4, the Dow Jones Industrial Average fell 512 points, the biggest stock market drop since the collapse of September 2008. Why? Weren't the markets supposed to rebound after the debt ceiling agreement was reached on Monday, avoiding U.S. default and a downgrade of U.S. debt? So we were told, but the market apparently understands what politicians don't: the debt deal is a death deal for the economy. Reducing government spending by $2.2 trillion over a decade, as Congress just agreed to do, will kill any hopes of economic recovery. We're looking at a double-dip recession.
Does she sound like Paul Krugman? Yes.
She adopts the Keynesian concept -- fallacious -- of the multiplier. She cites some unknown writer who produces stage plays and music CDs. He wrote this for Truthhout. To find out about Truthout, click here.
The figure is actually more than $2.2 trillion. As Jack Rasmus pointed out on Truthout on August 4th:
What we need is more fiat money! It seems that QE2 was not enough. We need QE3. As she writes: The Problem Is Not Debt But a Shrinking Money Supply.
Only about $2 trillion of this shrinkage has been replaced with the Fed's quantitative easing programs, leaving a $3 trillion hole to be filled; and only the government is in a position to fill it. We have been sold the idea that there is a "debt crisis" when there is really a liquidity crisis. Paying down the federal debt when money is already scarce just makes matters worse. Historically, when the deficit has been reduced, the money supply has been reduced along with it, throwing the economy into recession.
So, how can we get more money? Just don't pay off the debt!
The federal debt has not been paid off since the days of Andrew Jackson, and it does not need to be paid off. It is just rolled over from year to year. The only real danger posed by a growing federal debt is the interest burden, but that has not been a problem yet.
There is a solution: QE3.
The interest burden will increase if the federal debt continues to grow, but that problem can be solved by mandating the Federal Reserve to buy the government's debt. The Fed rebates its profits to the government after deducting its costs, making the money nearly interest-free. The Fed is already doing this with its quantitative easing programs and now holds nearly $1.7 trillion in federal securities.
But that's too conventional. There is a better way: the U.S. Mint can crank out a few $1 trillion coins!
Another alternative was suggested in my book Web of Debt in 2007: the government could simply mint some trillion dollar coins. Congress has the Constitutional power to "coin money," and no limit is put on the value of the coins it creates, as was pointed out by a chairman of the House Coinage Subcommittee in the 1980s.
She says this idea is taking hold.
Today the idea has gone mainstream. It is covered by NY Magazine, CNBC, and The Economist. Even Nobel economist Paul Krugman of the NY Times has weighed in. Annie Lowrey of Slate discusses it as one of several gimmicks the government could use to resolve the debt-ceiling debacle. Krugman added:"These things [like coin seigniorage] sound ridiculous -- but so is the behavior of Congressional Republicans. So why not fight back using legal tricks?"
This will not increase prices, she says.
On the inflation question, just because the Treasury has money in its account doesn't mean it can spend the funds. It needs the usual Congressional approval. To keep a lid on spending, Congress just needs to be instructed in basic economics. They can spend on goods and services up to full employment without creating price inflation (since supply and demand will rise together). After that, they need to tax --- not to fund the budget, but to pull excess money back in and avoid driving up prices.
Wait. This is Keynesianism. More taxes! More spending!
In an economic downturn, the government needs to spend more, not less, as history shows. This can be done while still balancing the budget, simply by taking back the government's Constitutional power to issue money.
Keynes was a monetary crank. He cited monetary cranks favorably. I gave a speech on this issue to the Mises University on July 27.
Ellen Brown's Greenbacker forefathers got there before Keynes did. Gertrude Coogan was promoting Brown's position in 1935: a year before Keynes' General Theory. You can read my critique of Coogan here. So, I guess we should give Brown credit -- interest-free, of course.
For my detailed analysis of her scholarship, go here: