To let some (most?) Republicans tell it, Americans stay up at night fretting over the deficit and the national debt.
You know the narratives. Out-of-control spending presages financial ruin. 330 million men, women and children are set to drown in a river of red ink and any survivors will be crushed under a mountainous pile of IOUs made out to Xi Jinping.
That’s all nonsense, of course, but I gave up litigating it a long time ago. People pushing those campfire stories either have a political agenda, are clueless or, in a lot of cases, both. There are limits to expansionary fiscal policy even for hard currency-issuing sovereigns, and the bond market does still play a role in setting those limits — just ask Liz Truss. However, the limits vary by sovereign and by circumstance, and there are no bright red lines.
When you’re the US, you can pretty much do whatever you want on that front, and on every other front too for that matter. The biggest threat to America’s “exorbitant privilege” isn’t the proximity of any fiscal or debt thresholds, it’s political dysfunction. As I put it in “Dysfunction, Division and Dystopia,”
Indeed, you could plausibly argue that [Fitch and Moody’s] believe the bigger problem isn’t America’s fiscal trajectory, but rather mounting evidence to suggest that in the exceptionally unlikely event circumstances conspired to revoke or water down the “exorbitant privileges” which afford the US virtually unlimited monetary and fiscal policy latitude, the US government would prove utterly incapable of taking steps to win back those privileges.
That nuance might be lost on Matt Gaetz who, while speaking to Bloomberg this week after orchestrating Kevin McCarthy’s ouster, said the Fitch downgrade was about out-of-control spending. He’s right, but, again, the existential worry centers around the idea that America doesn’t have a functioning government anymore. And Gaetz embodies those concerns. If you don’t have a functioning government, the rest is irrelevant.
During the same interview, Gaetz perpetuated the very same de-dollarization propaganda you might run across on Kremlin-linked web portals. “We are facing $2 trillion-plus annual deficits, and I am worried about global de-dollarization,” he declared. “The real worry about BRICS is the movement of natural resources outside the dollar as the Global South continues to develop and pack an even larger punch in the economy.”
If you think Gaetz came up with that on his own, I’ve got some “BRICS coin” I’d like to trade for some of your genuine US dollars. Gaetz was reciting (figuratively) the foreign propaganda playbook, whether he realized it or not. This is why I’m so keen to caution readers against those sorts of narratives. Gaetz could’ve been reading aloud from a Zoltan Pozsar note, and Pozsar might as well be writing editorials for Sputnik or RT at this point. That’s not to suggest Gaetz or Pozsar (or anyone else saying similar things) is wittingly trafficking in Kremlin narratives or People’s Daily talking points. But wittingly or not, they’re still peddling those narratives.
To be completely fair, Gaetz sounded far more rational during the Bloomberg interview than I expected, but even if he does believe the de-dollarization story or has seriously considered it on its own merits (as opposed to just leveraging it for points with the counter-narrative crowd that so adores him), hearing him parrot it on business television hours after deliberately crippling America’s legislature was a disconcerting reminder of how foreign propaganda ties Westerners into self-referential knots.
Gaetz is a darling of America’s libertarian far-right, which has shown itself time and again to be dangerously amenable to misinformation emanating in some cases from state actors. Gaetz has doubtlessly been exposed on social media to de-dollarization propaganda, and he’s doubtlessly exposed others to it. That’s the echo chamber. Some variations of the de-dollarization story play up America’s allegedly parlous finances. Gaetz is in a position to “do something about it,” so to speak.
Happily (for him), that something entailed embarrassing his main political rival in McCarthy and it entailed pushing back on additional aid to Ukraine. It also froze the House, heightening the governance concerns cited by Fitch and Moody’s, and it increased the odds that America’s fractious democracy will deteriorate into the kind of chaos that might actually undermine the dollar on the world stage.
Think about all of that for a minute, then ask yourself if it’s just a coincidence. Again, the point isn’t to accuse Gaetz of being anything other than abrasive. Rather, the point is that the presence of these narratives alongside the fracturing of American society and the dissolution of American government isn’t a coincidence. If it all seems deviously self-fulfilling to you, that’s because it’s by design. Not Gaetz’s design, and not even Trump’s design, necessarily. Sorry, but they aren’t smart enough for that. Rather, it’s the design of state actors waging information warfare on a vulnerable American polity ill-equipped psychologically to defend itself.
Coming full circle, Americans actually don’t even care about the debt or deficits. As Goldman noted this week, there’s “little public concern regarding the fiscal outlook.” Last month, for example, a mere 2% of Americans cited the deficit or debt as the most important problem facing the country. 2%.
That, even as both interest costs and debt levels are poised to peak together for the first time ever.
“Recent political dysfunction, as demonstrated by close calls over the debt limit and shutdown, highlights the challenge facing routine fiscal decisions, let alone proactive policy changes,” Goldman went on to say. “And with little public concern regarding the fiscal outlook, lawmakers have few incentives to press for deficit reduction.”
The natural question, then, is why Gaetz and his ilk would risk a US debt default and, just four months later, an unpopular government shutdown, to address an issue that voters don’t care about?
McCarthy’s answer was simply that Gaetz has a personal grudge, that he’s an attention seeker and that the Republicans who voted with him to oust the Speaker aren’t actually interested in governing. My answer is the same, but I’d add that Gaetz and his compatriots are keen to sow chaos for the sake of it, because grievance politics without grievances is a tough sell. Believe it or not, those are the most innocuous explanations.
I’d also like to add its what we get for profit based media. Why does Bloomberg even entertain Gaetz? Why did CNN relentlessly cover Trump?
Because of eyeballs and clicks we amplify the worst ‘leaders’
Liberty is what we all want I think, left and right, but it makes sense to have guardrails that protect the public. Deciding the details of those guardrails is where the tension is and populist politicians exploit that tension. If the US gradually becomes perceived as somewhat politically dysfunctional that could align with increasingly negative fiscal outlooks and start a long negative process for our country. We need someone or something to bridge the divisions we have built up before the damage changes our trajectory and becomes irreversible.
H-Man, it does appear that Gaetz is more focused on producing chaos rather than order. He should be careful about his wish list while he is being mentored by Bannon who revels in chaos.
Gaetz clearly won’t be careful about anything except drawing attention to himself, and tossing verbal garbage to succeed in his goal.
Why would Gaetz address an issue voters don’t care about? Perhaps its because by the time the masses start to care, its too late to do anything about it.
The idea that a guy like Matt cares genuinely about fiscal discipline is, in my opinion, wholly laughable. I was extremely diplomatic in this article. Anyone who’s been around these parts for, say, five years knows there was a time when I would’ve castigated these recent Beltway shenanigans by the GOP in very caustic terms. I’m not someone who has much patience for far-right politics, and I have even less patience for charlatans. Over the years, I’ve learned there’s little utility in employing a harsh tone to make the point, though. Bottom line: If you’re the type of person who’d buy a steak from “Trump Steaks” or pay for a “degree” from “Trump U” or loan anybody with the last name “Trump” some money, you’re also the type of person who thinks Matt Gaetz cares about the deficit. Good luck out there. You’re going to need it.
I know you’ve written plenty about it as have many others, but I still can’t wrap my head around the idea that people can’t see through the Trump or Gaetz charade. I’d hazard a guess that all of us have encountered grifters like them in our work or personal lives and it’s not hard to pick them out, but clearly I’m wrong since people keep getting grifted by guys like them. I suppose someday I’ll get got (or maybe I already have been), but I’d hope whoever or whatever gets me is a lot more formidable than someone like Trump or Gaetz.
I know. You can look at Gaetz and tell. It’s written all over his face. If I were trying to get my car tags renewed and he were manning one the windows at the DMV, I’d let someone go ahead of me and wait for another window to open up. There are, in my opinion, four kinds of people vis-a-vis the American far-right: 1) people who hear the dog whistling and actually support the underlying messages (i.e., your NASCAR-types) 2) people attracted to the veneer of libertarianism but who don’t actually know anything about libertarianism and don’t understand the social contract, 3) people who can’t accept that they were gullible enough to go for it in 2016, and have chosen to persist in a fantasy world rather than come to terms with the awful reality of it, 4) people who’d sooner see the Capitol burn than they would accept the fact that American society is becoming more secular, less religious, less white and less conservative than it was. Ironically (and sadly), I’m compelled to be more forgiving towards types 1) and 4), because at least there’s an underlying honesty there as opposed to an unwillingness to learn with type 2, and witting denial with type 3).
And you know, this speaks to one thing that actually does concern me in America (most things don’t, because I’m generally insulated from them, even though I now live downtown in a decent-sized city as opposed to on a literal island): What is a “moderate Republican”? I hear about them all the time, but I’ve never met one. I know what a “moderate Democrat” looks like. But a Republican just looks like a Republican. Just because you don’t want to burn down the Capitol with an actual, real torch, or just because you suspect Donald Trump might be dangerous, doesn’t make you a “moderate.” These are the same people who let religion encroach in areas where it has no business being and who generally support an interventionist (and in some case outright offensive) approach to foreign policy / military projection. I don’t know where these “moderates” are. To me it just looks like two types of extremists: Those who like Trump and those who are a little suspicious of him.
Man, you have been on fire ? over the past few days. Bravo!
Empires primarily fall due to internal contradictions….The public commons is polluted with very bad people- worse than corrupt, they are nihilists….The important thing in politics is to remember who hates who….The hatred for the dollar is by Putin, Xi Jinping, Saudi, Iran, etc. Fuck’em says I..
The Saudis don’t hate the dollar. The riyal is pegged to it, the petrodollar is their creation and they love their US security guarantees. Riyadh just wants a hedge.
True, but they are egonmaniacs….
As H has pointed out, the inability of our elected “leaders” to coherently discuss the basics of public finance and deficits (likening them to our home checking and credit accounts) seems rather disqualifying if we move the discussion to de-dollarization and arbitrary economic blocs.
I would just add that it seems like Mitch’s obstruction game plan in the Senate was handed over to Gaetz in the House after the GOP lost the Senate. That, to me, seems like the underlying principle when the GOP is not in the White House — obstruct, complain, get hysterical. There is no rhyme or reason or even operating principle beyond convincing as many people as possible that the Democrats are out to ruin the country and that they are the only ones who can put a stop to it (despite having few actual policies of their own except to obstruct).
As for Gaetz, I can’t help but think back to the suspicion inre Donald Trump Kevin McCarthy shared with Paul Ryan and another GOP House colleague back in 2015 (?): “I think he’s on Putin’s payroll.”
Need to revisit Steve Bannon who apparently was “coaching” Gaetz et al. during this episode.
One piece of “good” news on a bleak weekend was Trump’s declaration that immigrants are “poisoning the blood of the nation.”
If the Demz stop playing nice and blanket every Spanish language media outlet in NM, NV, and AZ with that quote, that may seal his fate in those swing states. Texas and Florida may be another matter?
Over 90 million Americans identity as “immigrants”. And where would we be without immigrants? Our economy would be a disaster- and look much more like Japan’s economy- with decades long deflation in housing/asset prices. Japan has virtually no immigration, a shrinking population/workforce/economy and a government that purchases bonds/equities to prop of prices. Definitely America doesn’t want that!
I am pro-immigration and have come to realize that even though Congress will likely never tighten up immigration laws/enforcement; that is ok. We need all 1.5M legal and illegal annual additional immigrants, and all of the existing (estimated) 11 M illegal immigrants.
Unlike many native born Americans of long ago European descent, these immigrants come here to work and lead productive lives. They do the difficult/dirty work (farm/landscaping/food processing/construction/etc.) that many Americans don’t want to do; with the hope of working hard to achieve a better life than they could in their native country.
I hope their dreams come true.
Where you stand depends upon where you sit….