Posted by WARREN MOSLER on June 19th, 2011
Two quality recent comments:
“If you make a list of the countries in the world that have the biggest homework in restoring their public finances to a reasonable situation in terms of debt levels, you find four countries: Greece, Ireland, Japan and the United States,” Vinals said.
Vinals = Jose Vinals, director of the IMF’s monetary and capital markets department.
IMF cuts U.S. growth forecast, warns of crisis
The IMF is a menace.
People believe the Government Budget Constraint must hold. They are wrong.
The intertemporal government budget constraint (ITBC) is “the government must balance its budget at some point in the future, and pay off all the debt it has accumulated.”
There is a reason I went after this exact part of economics. If you do believe in the fantasy of the Government Budget constraint, you’ll think the United States is doomed.
This single idea is absolutely toxic. The entire edifice of conventional government budget math is based on it. The words “Bond Vigilante” can only make sense because people believe this wrong idea.
This is why I went after it.
The Concise Way to Destroy the IGBC, and Why to Destroy it
As long as the ITBC has any followers, we are literally worse off than if we didn’t know anything. As long as the ITBC has followers at the IMF, we are going to be fighting with people who cannot and do not know the most basic facts about our economy.