Fiscal Crisis: Don't Worry, Be Happy!

Over at Ricochet Claire Berlinski introduces us to the 'Don't Worry, Be Happy' approach to the looming fiscal crisis:
Why Anarchist Anthropologists Shouldn't Make Economic Policy

Anarchist anthropologist David Graeber explains why we needn't worry about deficit spending in the New York Daily News. It's all wrong to imagine that governments, like households, must be concerned by debt, he argues. Why? Five reasons:

1. Households can't levy taxes.
2. When households owe money, they owe it to other people. The U.S. debt is owed mainly to ourselves.
3. When households owe money to other people, they can't just print it. The government can.
4. When someone in your household writes a check, the recipient tends to cash it. Not so when the U.S. sells Treasury bonds to banks in Brazil or China.
5. If a household doesn't pay its debts, creditors can take them to court or call the cops. Internationally, we are the cops.

Feel reassured now?
I know I do!

So....Graeber's main argument is that we have nothing to worry about because Government budgets are nothing like family budgets? If you think that is looney, don't read his OpEd any further, or you will run into amazing logic such as this:
"A major reason the U.S. has a deficit to begin with is that we spend more on our military than all other nations in the world combined."
and this:
"Most probably know that if we ever really did balance the budget, it would likely throw our economy into a tailspin."
OK...military spending bad...deficits good!

I hate to break it to you Daaaave, but even if President Obama zeroed-out the Defense budget in his 2012 budget proposal, he would only cut his deficit in half. You see the real-reason we have a deficit and climbing debt are not the discretionary spending, but the mandatory spending (SS, Medicare, Medicaid, Interest on the debt) which keep expanding and are of course "mandatory".

And I for one did not know that a balanced budget would throw our economy into a tailspin. I can't wait to read your sources and evidence.....oh wait, you didn't cite any. Shocking....

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