This is what happens when we elect people into office who have no understanding of our monetary system. They make decisions based on misconception and enact policy that directly hurts the American public. In this case, we have Republicans now discussing the possibility of raising taxes in order to avoid our Greek moment. Bloomberg reports:
For Senator John Cornyn, it was the situation in Greece.
The Texas Republican said he is willing to back tax increases as part of a major deficit-reduction deal because he fears the European debt crisis could spread to the U.S.
“We’ve never been in this spot before,” said Cornyn, who also leads his party’s effort to elect more Republicans to the Senate. “We’re looking over at Europe and what’s happening in Greece and Italy — we risk having another huge financial crisis in this country, and we’ve got to try to solve the problem.”
So let’s break this down. There has been no sign of a debt crisis in U.S. government bond markets (never mind the operational realities at work there). We now know that the debt ceiling is an entirely self imposed constraint that can be lifted at any moment without bond market seizures. And anyone following the debt crisis in Europe should now understand that the defining characteristic that differentiates the EMU nations from sovereign currency issuers is their ability to create money at will. In other words, being a currency ISSUER makes you entirely different from being a currency USER (EMU nations are all currency users while the UK, Japan, USA, etc are all currency issuers). Did it ever dawn on anyone in Congress that a nation with a printing press can never “run out” of the dollars it has an endless supply of? Granted, we could suffer a different type of insolvency through inflation, but that’s an entirely different phenomenon than what is ravaging the revenue constrained countries in Europe.
But because our leaders can’t understand these very basic operational realities of our monetary system you are going to have to hand over more money from your paychecks so that a nation with an endless supply of dollars can pretend to “finance” itself and avoid a debt crisis that will never happen, by taxing you more during the middle of a recession.