The Green New Deal is silly and not worth our attention. It implies we can have anything we want if the Federal Reserve extends credit.
Let me blow your hair back for a second.
The two biggest US stock market rallies (in the 1920s and in 1990) occurred when the budget deficit was disappearing or had disappeared.
Calvin Coolidge led the US through most of the Roaring Twenties. And he is perhaps the second-least well-understood president of the 20th century (behind only Warren Harding). Long story short: Coolidge was perhaps the biggest saver known to mankind. He ran the country like he ran a household budget. Talk about austerity—wow.
In the 1990s, I worked for the government under the Clinton administration. Clinton was not well-liked by government employees. He kept telling people to “do more with less.” No money for trips, no money for projects, no money for boondoggles.
Go look at the budget figures from the 1990s. The government size remained pretty constant, which is something. It was the closest thing we’ve had to austerity in nearly 70 years.
Today the opposite is happening.
9/11 kicked off the drunken spending spree funding new government bureaucracies and multiple wars. Dick Cheney said that deficits didn’t matter, but at least he was constrained by the bond market.
I suppose that if Modern Monetary Theory (MMT) were implemented, foreign exchange markets would have their say about it (provided we still had floating exchange rates).
Do you think it is a coincidence that the two biggest bull markets correspond with government austerity? I do not.
Monetary Mess
No matter how much money the Fed prints, or what they do with their balance sheet, you can’t spend more money than you make. You can make up a shortfall with debt (just like the government), but after a while, your creditors
