To get out of this recession, the government needs to do more to create jobs, help struggling state and local governments such as those in Michigan and help homeowners avoid foreclosures, said Robert Kuttner in a talk in the Worldview Lecture Series on Monday night. All of these take more money.
What about the accompanying increase in public debt? Kuttner’s reply is “Debt is not so bad.” That might be, but it worries a lot of Americans just the same.
I wish he had gone further and asked why we use interest-bearing public debt to finance the needed public spending. Why not have the Federal Reserve Bank loan dollars to the government as they did to rescue the big banks?
The Fed just created dollars when it added to the banks’ accounts at the Fed. If the Fed can do this for the big banks, it can do it for the U.S. Treasury.
The government must not fail to spend enough to stop this recession. But the answer is not to stop worrying about the debt. Just don’t create it in the first place.
A. Allan Schmid
professor emeritus
Support student media! Please consider donating to The State News and help fund the future of journalism.
