L. Randall Wray will be providing testimony for Congress on November 20 at 10 am. The topic is the government debt and deficits. His full statement will be available at 10:30AM at the Levy Institute. His goal is to explain a) why we needn’t fear sovereign government deficits and debt; b) why in some important sense, deficits and rising debt are “normal”; c) the deficit is in any case largely outside the control of Congress; d) deficits and rising debt ratios will not lead to government insolvency or bankruptcy; e) all government payments can be made on time, unless f) Congress forces a default (due to the debt ceiling it imposes). The statement will provide a lot of new data related to these topics.
The link to the webcast is: https://budget.house.gov/legislation/hearings/reexamining-economic-costs-debt
Professor Wray, congratulations on this major accomplishment/opportunity! Perhaps you are following in the footsteps of Marriner Eccles? And will shake up the thinking of Congress as much as he did? I hope so–and I send you my best wishes for doing so. Will be listening with great anticipation!
I watched the entire session and it was clear that it did not matter to the Budget Committee what the four expert panelists said. The Republican members could not shake their government-as-a-household paradigm and reveled in their support for cutting federal spending and reducing federal taxes. The Democrats were just as adamant that we need more revenue (taxes). Both sides are hung up on GDP as the surrogate for the economy. Partisanship ruled the day! Nearly all the committee members, but especially congressmen Womack, Hern, and Meuser, were determined to exhibit their superior understanding of federal financing and its role in the economy regardless of any contradictory testimony by Dr. Wray. Guest panelist Dr. John Taylor seemed mired in his ideology and added little or nothing to the discussion.
It seems to me that the members of the House Budget Committee were out to show the guest panel just how smart and informed they are on the subject of money. They each spent more time narrating their own positions than considering those of the experts. Yet not one appeared to understand exactly what the so-called “debt” really is, nor gave any credence to the possibility that the so-called “debt” is not “borrowed” money. I found myself wanting to shake the congressmen by their lapels for essentially the wasting their own time and the time of the Drs. Blanchard, Wray, Bernstein, and to a lesser extent, Taylor.
It was shocking all politics and ideology. James hits the nail on the head above.
I am surprised Randy at the end did not mention Japan.
Japan destroys everything everybody said for an hour and a half and Randy could have highlighted why.
Is Taylor really that dumb or getting paid by the banks ?
Thank you Professor Wray for your testimony before Congress on November 20, 2019, at the “Reexaming the Economic Costs of Debt” hearing. Thank you Devin for sharing this post on the New Economic Perspectives blog. Both of your efforts are appreciated.
Thank you for your continued tenacious efforts to articulate and share the operational distinctions, opportunities and challenges faced by currency issuing sovereign governments with fiat currencies and floating exchange rates in their endeavor to achieve their economic objectives.
It occurred to me that Randy’s testimony seemed to influence Representative Womack in his articulation and understanding of the differences between a household budget/debt (currency user) and the federal budget/debt (currency issuer).
However, it also occurred to me that Rep Womack definitely struggled with the idea of “not using” a federal debt quantity as “the” critical economic target (debt to GDP) for prudent governance. He seemed to encounter some cognitive dissonance in considering “focusing on things that are important – employment, rising income, economic growth, rising productivity and meeting the challenges that face us in the future” as “a comprehensive set of critical economic objectives” for prudent governance.
It occurs Rep Womack and the House Committee on the Budget as well as the Congress and Senate would prefer and find life easier, if “focusing on things that are important – employment, rising income, economic growth, rising productivity and meeting the challenges that face us in the future” could be boiled down to some simple definable “target ratio” as a measure for prudent governance.
This post, Randy’s testimony and the hearing materials have me also appreciate the challenge that the “non economically degreed representatives” might experience in communicating the differences between a household budget/debt (currency user) and the federal budget/debt (currency issuer), when speaking with their “non economically degreed constituents”. Especially, when it is likely that their average constituent will encounter some cognitive dissonance in their efforts to expand their awareness and understanding due to their automatic reference to what they know about their own personal or business budget/debt.
Thank you again Randy and Devin for your continue efforts as well as for your leadership and service.