Tuesday, April 7, 2009

House Approves Budget

Senate Republican leader, Mitch McConnell objected to the budget and said, "The administration budget simply taxes too much, spends too much and borrows too much at a moment when we can least afford it." LSJ April 3,2009.

However, this is the moment when we particularly can afford it. When resources are unemployed, there is no opportunity cost to using them. Why are so many rooted in myth and superstition? McConnell is partly correct, but I doubt if he knows why. We do not need to tax or borrow, the Federal Reserve and the Treasury can simply write checks. Remember, if commercial banks can create money by making loans, so can the Federal Reserve.

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