“When President Obama tells you we are running out of money, that the piggy bank is empty, that is just not true. All economists know that is not true so the question is why do they lie to you?”
Professor L Randall Wray (Sept 2012) (time =3.40)
Of course President Obama is far from alone in giving out the same false message. We hear these kind of comments all the time from politicians, even supposedly liberal and socialist politicians.
Not just in America, but in the UK and other countries too. “Running out of money” is a justification for austerity economics. The UK, Australia, NZ , Japan etc all have sovereign currencies so they can’t run out of money either.
Is it possible that politicians themselves, are not actually lying, but they don’t understand the economic systems they are supposed to be in charge of? Or is it more likely that they do understand them but prefer not to explain them?
Which would be worse?
PS The only justification for not spending more would be if employment was as high as it could possibly be. If all industrial plant and machinery was working at full capacity. In that case spending more could generate inflation. If that’s their worry then the politicians and their economist advisors should say so