What a fascinating time. When you start staring at our government and its economy, you can start to feel an urge to put together a Carrie Mathison-style wall chart. Because on some level, it all starts to seem like it fits together, doesn’t it?
• Here is an “explainer” about What The Federal Reserve Does. Spoiler: what the Fed has done for the last several years is literally give money for free to banks every day. Banks use that borrowed money to make money, including, even, sometimes, by loaning that money to customers. Exciting policy, am I right? “The campaign that gets all the publicity is called quantitative easing. The Fed has purchased more than $4 trillion in Treasury securities and mortgage-backed securities since 2008,” thereby pushing prices up, it helpfully explains. Then, quite a bit further down: “The Fed pays for its purchases by creating money from nothing.” There we go. They print money then give it to banks for free. It’s cool! I mean it’s probably actually not capitalism in any sense of the word though?
• Then there’s a group of politicians who say the Treasury is lying when it says that it will run out of money on October 17—that’s a week from tomorrow—to pay debts. (Already the interest rate on that debt is increasing.) Such as Senator Richard Burr. How is Treasury wrong? Easy! We laid off all the government employees, so we have money on hand!
“We always have enough money to pay our debt service,” said Mr. Burr, who pointed to a stream of tax revenue flowing into the Treasury as he shrugged off fears of a cascading financial crisis. “You’ve had the federal government out of work for close to two weeks; that’s about $24 billion a month. Every month, you have enough saved in salaries alone that you’re covering three-fifths, four-fifths of the total debt service, about $35 billion a month. That’s manageable for some time.”
Perfect. Also, tax revenues are still coming in! Just don’t try to call the IRS to ask any questions, because they’re not answering. That is definitely capitalism: putting people out of work and enjoying the savings.
• What’s most annoying is that when you conceive of siding with Republicans, who ostensibly want to decrease spending and create a “smaller” government, and when you think “yes, I too would like to limit the amount of debt that the government can agree to carry!” they start screaming about “Obamacare”—like Representative Paul Broun of Georgia: “The greatest threat right now is Obamacare. It’s already destroyed jobs, it’s already destroyed our economy, and if it stays in place as it is now, it’s going to destroy America.” And you realize they’re just liars and crazies. (Oh right, and also the party that tried to bankrupt the country with a decade (I mean, at least) of war profiteering, but apparently we don’t talk about that.)
• How will business react to this instability? The same way they always have:
From New York to Silicon Valley, more and more large American corporations are reducing their tax bill by buying a foreign company and effectively renouncing their United States citizenship.
Yay, let’s end the U.S. government and move back to the old worlds from which the majority of us came.