Forget Realpolitiks - We Have Reality TV Politics! (Deficit Spending)

American politics - it's basically reality TV for people who love to look down on reality TV. The show is about a same-sex couple called Republicans and Democrats and the the plot in recent episodes has been very interesting.

You may think that even a monkey or someone from an actual reality TV show could write something more coherent, but everything actually makes sense.

Last season, when Obama was in the Big Brother White House, the Republicans used to go bananas about his deficit spending. The word deficit means that there isn't enough of something, right? Therefore, it must be bad. And if the Democrats liked it, then it was worse than bad - they claimed that the ratings were low enough for it to be cancelled!

This season, the Republicans are in the Big Brother White House and they're the one's spending more than they take back in taxes. Heck, they even cut taxes, just to make sure (if you believe the official script, which, ahem, doesn't officially exist because it's reality TV)!

Did the Republicans just pull a fast one? You bet your bottom shiny-sparkle-want-want they did!

Dick Cheney famously said that "deficits don't matter". What he didn't say was "unless the Democrats are in power, because then it's politically convenient to scaremonger about deficit spending".

What The Media Doesn't Tell You

The word surplus sounds splendid, doesn't it? It conjures up images of abundant prosperity. Ahhh, good times!

The word deficit, on the other hand, sounds horrid! It means that there isn't enough of something, and not having enough isn't going to satisfy our feelings of want.

So, politicians and economists and the media tell us that the government should aim to have a surplus. This is how we'll all become richer than the early adopters/hoarders of a popular cryptocurrency.

What they haven't told you is that the only way for the government to have a surplus is to cause everyone else to have a deficit.

How Does That Make Sense?

Let's say that I'm the government, you're the economy and we each have a pile of bricks that we'll use to build our own house. I decide to take some of your bricks, which means that I can build a bigger house (i.e. I have a surplus) and you only have enough bricks left to build a kennel for your dog (i.e. you have a deficit). It doesn't sound like the best situation for you (the economy), does it?

In truth, that analogy describes the old money system that the US had before 1971, which is where the language about surpluses and deficits comes from. However, it doesn't describe today's system, which is why this terminology is counter-intuitive.

Nevertheless, a surplus for the government is a deficit for everyone else.

The opposite is also true - a deficit for the government is a surplus for everyone else.

So, This Will Boost The Economy?

Dick Cheney was wrong - deficits do matter. When the government spends, that's how the economy receives new income.

This is why many actual progressives had a crisis of conscience when Trump was running for President:

1. he pointed out that the government creates money; and
2. he would create jobs by... creating jobs.

Progressives knew that the first point was true and the second was both feasible and desirable. Most actual progressives that I know didn't criticise Trump all that much during the election campaign. They had their fingers crossed that he'd put two and two together, so they weren't terribly against him winning.

Final Scene

The Big Brother White Housemates are giving us some compelling TV. They know that the government can never go broke because they're the issuer of currency, yet Paul Ryan said that it'll be necessary to cut spending in order to grow spending.

Any predictions on what Oprah would do if she hosts season 2 of Celebrity President?