Home > Economics > Mitt Romney is a (insert your own expletive here) Moron

Mitt Romney is a (insert your own expletive here) Moron

As if you didn’t already know that. I haven’t written a blog for a while, but after coming across this article, I just couldn’t stop myself. Let’s look at some excerpts.

The presumptive GOP nominee warned Iowa voters they cannot ignore the swelling “crisis of debt and spending that threatens what it means to be an American” during a speech at a hotel in Des Moines. “A prairie fire of debt is sweeping across Iowa and across the nation and every day we fail to act, that fire gets closer to the homes and the children we love,” Romney said.

Oh boy, here we go. Let’s get into the meat.

“Subprime mortgages, they came close to bringing the economy to its knees. This debt is America’s Nightmare Mortgage,” he said, placing blame for the debt upon both parties. “It is adjustable, no-money down, and assigned to our children. Politicians have been trying to hide the truth about this Nightmare Mortgage for years–just like liar-loans.”

He’s working hard to get this much wrong in this little space. The subprime mortgage problem was largely driven by fraud on the originator’s part, not on the part of the homeowner. Read Bill Black’s piece on liar’s loans. It was exacerbated by an asset bubble driven primarily through trading of credit default swaps (CDO’s) on Wall Street where Romney’s friends work. Also read Bill Black’s other post here for more info on liar’s loans and CDO’s. The US debt, as measured by Treasury securities outstanding, is adjustable, but not like a mortgage. The US Treasury sets the rate of it’s securities, not the market, so the rate is whatever it wants to set.

We do not “borrow” dollars from other countries. The US is the sole creator of dollars. We only “borrow” those dollars because countries like China, who have accumulated lots of dollars through international trade would rather buy treasury securities that earn interest in stead of letting their dollars sit in non-interest earning reserve accounts. It’s like moving your money from checking to savings at the bank. Read Warren’s Mosler’s explanation of why this is so.

We do not borrow from our Children’s future as a country. In fact, we are making it worse by trying to implement austerity. The cost of running a budget deficit or having a large public debt is purely accounting. You have a big number. The real cost of running austerity is lower production, higher unemployment, more crime, less opportunities for youth, etc. There was economist named Keynes (you might have heard of him) who introduced us to pro-cyclical and counter-cyclical policy options. The basic idea being that in order to exit the downward spiral of a recession you needed to counter it with aggressive fiscal policy. The idea have austerity during a recession is totally counter to that common economic knowledge. To quote Warren Mosler, “It’s like the the carpenter who keeps cutting a piece of wood and complains that ‘No matter how much I’ve cut off, it’s still not long enough.'”

Politicians have been trying to hide the truth about the national debt for years, and Mitt Romney is still doing it. The national debt, while not a meaningless number, is used to create fear and to remove social programs that Romney and his ilk want to remove for ideological reasons. The fact is that, as a nation that produces its own currency, the US cannot run out of money, EVER. Try to imagine World of Warcraft running out of money and you will see how ridiculous it is. The Fed creates money very similar to WoW, it changes numbers in bank accounts on computers. You can never run out of numbers in bank accounts. See my other post on this for more info.

He continued: “The time has come for a president, a leader, who will lead. I will lead us out of this debt and spending inferno. We will stop borrowing unfathomable sums of money we can’t even imagine, from foreign countries we’ll never even visit. I will bring us together to put out the fire.”

By “countries we’ll never even visit,” he means countries YOU will never visit, you poor lazy unemployed bastards. Mitt Romney wants to metaphorically piss on his imaginary debt fire, but he better be careful it doesn’t blow back in his face.

Categories: Economics
  1. Dustin
    May 24, 2012 at 1:17 pm

    Mitt Romney is a tool. He uses the debt to scare people into doing the things that he wants, but much of the country doesn’t want to.

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