In the real world and the reality based community, there is talk about austerity from people who understand the nuances of it and macroeconomic accounting identities. They point out the undeniable fact that there is austerity in the UK, the Eurozone, and yes, the United States. This interactive chart will show this, though I can't embed it here. So instead, I will add a small snapshot of some of the data.

Net spending in the United States has steadily declined since it rose from 2008 to 2009 when the inadequate stimulus(only $500 billion of direct spending at about 1.5 percent of GDP) was passed. Stimulus packages don't exist in a vacuum, and you have to count all government spending, which basically shows how exactly the numbers, including the stimulus as this does, didn't close the output gap. And since the numbers didn't, that is actually austerity. After all, spending went up in the UK and Eurozone from 2008 to 2009 as well, and since then, their spending has declined. Even though it is on a higher level, it is being cut at an even more alarming rate with its fate set to go below our miserable level by 2017.

I have pointed this out before. Sometimes I get frustrated, and point this out harshly, because some pride themselves on denying this established data to support whatever a politician in their party says or does. I don't know why. Denying reality is not going to give resources to people who need them. There is a reason my last diary has been cited by the reality based Post Keynesian MMT community, in which I am truly grateful for and humbled by; it is the truth.

The real economy of jobs and wages continues to go nowhere thanks to the lack of deficit spending and an illogical debate in DC about how much austerity we need to appease the invisible bond vigilantes and confidence fairies. It is neoliberal deficit terrorist economic insanity based on lies. And on that note, it is my pleasure to republish a piece by someone in the reality based economic community whom I can now proudly say is a friend of mine, Post Keynesian MMT economist John T. Harvey. He, once again, brings clarity to these matters in a way that only he can.

Yes they do. I have heard a statement that bugs me a lot lately and that statement is that this was the go to analysis for the Republicans as if Democrats have never referred to it in any way. I'm here to say that is complete BS and we know this now. The Sequester created by the WH and passed in a bipartisan way, was based on Reinhart and Rogoff's BS analysis about scary scary long term debt to GDP ratios like their offer to cut Social Security.

So let's stop pretending this is only coming from Republicans, especially with the Obama administration using deficit lies and errors to come after Social Security. Reinhart and Rogoff's complete methodology was BS and neither of them understand the nuanced difference between countries with a sovereign currency; fixed exchange rates and floating exchange rates; gold standard countries and those with a fiat currency and how that relates to reserve banking at the Fed and our private current account and trade balance within. So therefore it skews the mean and amounts to garbage methodology even if done correctly.

I love How Mike Norman puts it. It kind of reminds me of how I would say it; those of you that are familiar with my work.

There's a solid account tying the Obama administration directly to the work of Reinhart and Rogoff. You will learn more about this below the fold.

A man, being born, is a debt; by his own self he is born to Death, and only when he sacrifices does he redeem himself from Death.
-Satapatha Brahmana 3.6.2.16

Debt

Cross posted in Orange and at the Stars Hollow Gazette

There seems to be a lot of celebrating without actually understanding much of what has happened as of late. One reason is that it looks like House Republicans will agree to raise the debt ceiling but only for 3 months until the budget gimmick of all Congressmen supposedly either passing a budget or denying their own pay as if that will ever happen. There will be infighting on whether there should be heavy or light deficit terrorism terrorizing the unemployed as usual, but now we can expect these dysfunctional austerity celebrating battles to go on and on. And as I pointed out when I predicted all of this 3 years ago, when this is the debate in Washington DC we have already lost.

We’ve Already Lost So Cancel Any Perceivable Celebration

This budget gimmick fight is already on top of what the last debt ceiling fight created with the negotiations coming up over the self induced sequester on the basis that 4 trillion bipartisan austerity is awesome. That is the problem for all debates and all fake "progressive" political rhetoric in DC we heard at the Inauguration even though it was a great speech.

The plans to kick this austerity shit can down the road continually every few months is not a victory; it's also not even a clean debt ceiling raise because it's not even going to be for a fiscal year. It also means the White House was really posturing as I said they were when they claimed they wouldn't negotiate on the debt ceiling; this shows that all this so called new-found post reelection "strength for progress" is a myth. That also means that all the hyp being bandied about, about the low-balled 60 billion to merely 9 billion Sandy relief bill passing weeks late and 51 billion dollars short breaking the Hastert rule did not have the significance of the spin behind it at all. It's simple: John Boehner was looking out for his own ass as speaker(shocking!). That's it.

We know by now that fake tough talk from the President on letting the Bush tax cuts above those making $250,000 expire being an absolute was just that, fake. So there's absolutely no reason to believe that Republicans do not have all the leverage in this upcoming debt ceiling fight coming up. They do.

US Double-Dip Death Watch Continues

Jay Carney’s press conference today leaves no doubt that the situation is substantially as I described it in my previous post. The White House commitment not to negotiate on the debt ceiling is mainly fluff. Their public position is that the Congress must lift the debt ceiling with a “clean” vote first, before a deal can be struck on the massive spending cuts that will take place automatically in March. Carney implores listeners to believe that the debt ceiling and sequester are “separate” issues, and insists that “this not a negotiation the White House is going to have.” But of course the entire press conference is itself a public gambit in an ongoing negotiation that obviously includes back-channel talks.

There's also no reason to believe the President won't put up huge cuts to our safety net just to raise the debt ceiling thanks to what we know from the austerity memo from Jack Lew's office when he was head of Obama's OMB in 2011.

This was all thanks to the gross incompetence of not adding a raise in the debt ceiling in the original 2010 deal that extended the Bush tax cuts as I have repeatedly pointed out. However more than half of you already know this, so let's get to the here and now; there are only two options.

There is the 14th amendment challenge to the SCOTUS option and there is the minting of a 1 trillion platinum coin to start off with. We know the 14th amendment challenge is the least likely scenario to be pursued now. So given the lack of appetite there, there is only one other option and the President better consider it because no one believes the fake posturing about a debt ceiling raise "not being for debate." Too late. It is.

It didn't have to be, but the President made it that way by trusting John Boehner with the full faith and credit of the US so now political default(the only way it could happen as a currency sovereign) is a possibility thanks to this mess. So a Trillion Dollar Coin (TDC) is the first step and a small chance at redemption that suddenly is bigger than the blogger and the blogs talking about it thought it would be. It suddenly got real and thank goodness it did because we need to go further. To defeat austerity for the future we also should go from a Trillion Dollar Coin (TDC) towards Platinum Coin Seigniorage(PCS) and think about minting coins of a higher value up to 60 trillion. Therefore, as a first step, I urge all of you to instruct the President to...

Direct the United States Mint to make a single platinum trillion dollar coin!