Kelton’s Myth — Chapter 3: The National Debt (That Isn’t)

I’ve been harping on the rhetorical nature of Kelton’s quest – that is, whether or not I agree with her policy positions, or the “facticity” of her claims, if she expects people to adopt and understand the ideas, they must be conveyed in ways that counter the existing rhetorical myths propagated by the opposition.

She starts Chapter 3 with a story about designating herself the “Deficit Owl,” as a way to create new space in the discussion among the Deficit Hawks and Doves she was to work with in Washington.  This is brilliant rhetoric, tapping into long, and widely held folk lore about the owl’s wisdom.  A wise voice matters.

She says she began her work subtly crafting talking points, editorials and memos for Senate Budget Committee Staffers, to help them avoid reinforcing the myths surrounding the deficits. “Sometimes, what you don’t say is as important as what you do.” 

She understands the essence of the task facing us, yet used the Bezos example I offered in Chapter 2’s review. 

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Pedantry Break – I let it slide in chapter one, when she wrote she was “pouring over” documents (instead of “poring”).  I can hold back no longer, when she says “one in the same” instead of “one AND the same.”  Some will argue the meaning gets through, so the words don’t matter.  And that is the opposite of careful attention to crafting persuasive, invisible rhetoric that shifts us toward where we want to be. (A gentle reader suggests that Kelton suffers from being assigned a bad editor. Fine.)

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What is “one and the same?”  The US National Debt, and US treasury bonds.  Senators uniformly wanted to get rid of the Debt (a liability) but wanted to keep Bonds (a financial asset.) One and the same.  So you see, the rhetoric matters. Republicans play to fears of “debt,” bankruptcy, debtors prison, peonage, etc. What are we playing to, in making people aware that our national Debt is an asset?

Secondly, though they may be “one and the same,” Kelton does not (at least yet pp.79) discuss the consequences of a run on the bank.  What if everyone cashed in the bonds they hold?

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Kelton “quotes” Mark Twain, attributing to him a phrase he never uttered: “It’s easier to fool people than to convince them they have been fooled.” I worry when someone attempting to convince me of the truth and utility of an idea foists false quotes on me.  Perhaps by chapter’s end she will reveal this is part of her strategy?

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Senator Enzi insists on writing $27.1 Trillion in longhand:  27,100,000,000,000.  Enzi gets rhetoric.

Kelton writes, “Once politicians succeed in making us anxious about the sheer size of this thing we label debt, they can weaponized that fear in a number of ways.”  Exactly!! So what are we doing to create POSITIVE or ALTERNATIVE views that we can weaponized against their position?  That is the missing nugget, divorced entirely from whether or not the economic theory is “objectively true,” as that same gentle reader mentioned above put it.

She concludes this section on rhetoric saying, “We need to beat back every destructive myth that hobbles our thinking.”  Partially right.  If our stance is beating back a myth, that is defensive and playing on the mythmaker’s turf. 

We need to establish our own, alternative, Wise Owl phraseology, push it relentlessly for 40 years, and make people feel wonderful about it.


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Let’s return to the question, “What if someone calls our bluff and demands to be paid for the US Treasuries they hold?” 

In Kelton’s phrasing, it’s a flick of a bit at the Fed, and China’s US Treasuries (Yellow Dollars… icky rhetorical implications when we talk about China) are converted into Green Dollars. China is actually getting a raw deal, she argues, because we take in their real output and in exchange we simply keep a ledger of how large our trade deficit is. And since the US can print as many dollars as it likes, we’re never short on repaying them. Simple.

But then we shift to talking about how Greece gave up its monetary sovereignty by joining the European Union, and it seems that there is some magical belief in the power of simply claiming to be a monetary sovereign.  We get back to chapter one – claiming someone owes you something in exchange for your chits, requires you back it up with the force to enforce.

How long can we maintain a brute-force bully position of “Sovereign Currency Supplier” if we keep printing and every other nation in the world that agrees to play economic poker with us, catches on to the fact that we’ve got a deck of aces up our sleeve?

Does MMT simply say, “It’s good to be rich, and call the shots?”

Why is this not a pyramid scheme? Kelton suggests that a pyramid scheme runs out of investors, whereas a currency-supplying, economic-sovereign never runs out of more money, which it can print to pay its debts. If the debt ceiling is not raised, THEN we have “voluntary default” in which we unilaterally decide to stop using the power of being a currency supplier.  But why would we?

The last three pages of Chapter 3 are a rousing defense of the central idea. We need to come up with a new name for the “debt”… a new piece of rhetoric that allows us to escape the hold of the myth.

Agreed. So, now what?  Has anyone done it? IS anyone doing it?


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