This was posted on Warren Mosler's site. Warren says that Paul Ryan should apologize to the American people for his misleading comments on the debt.
Dear Congressman Ryan,
Your response to the President Obama’s State of the Union address included something we’ve all heard a lot of ever since.
You warned along the lines that that the US could become the next Greece, and be faced with some kind of a sudden financial crisis, where the world would no longer lend to us, interest rates would skyrocket, and the US, unable to spend, would be down on its knees before the IMF begging for the needed funding.
And no one with any kind of national public forum took issue with you, including the President and the Democrats in Congress, who for all appearances quietly agreed and acted accordingly.
Well, today, based on the near universal response to the S&P downgrade, everyone now knows, or should know, there is no such thing as the US becoming the next Greece.
The overwhelming response to the S&P downgrade by everyone from Buffet to Greenspan, and
most every financial and academic economist in the world was along the lines of:
The US is the issuer of the dollar.
It can print dollars.
So it can always make timely payments without limit.
THERE IS NO SOLVENCY ISSUE FOR THE US.
There is no such thing as the US running out of dollars to spend.
There is no such thing as the US being dependent on taxing or borrowing to get dollars to spend.
Greece is very different. Greece, Ireland, Italy, and all the euro member nations, corporations, and households can’t print euro, any more than the US states, corporations, and households
can print dollars. And so they are all indeed dependent on revenues from somewhere to be able to spend.
So, Congressman Ryan, please apologize NOW for being so wrong and so misleading.
There is no solvency risk for the US. The Fed is price setter for the interest rates for the US government and the banking system, not the market, just like the European Central Bank sets the interest rates for its banking system and its own debt.
Congressman Ryan, your reasons for deficit reduction have vaporized.
You see, the risk of overspending is inflation, not solvency.
So if you want to argue for deficit reduction, apologize NOW, regroup, and come back with your next round of fear mongering about how the deficit can be inflationary, or something like that, and see how that flies.