The fiscal anthill

Everywhere we turn these days - including these pages - we're confronted with dire commentary on America's "fiscal cliff" and the controversy over raising our debt ceiling. The "cliff" in turn segues into the near-$16 trillion in U.S. sovereign debt and the road to economic perdition. Whether from the right, the center, or the moderate left, the commentators work from a common denominator: They assess the situation as you would a business or a household in which consistently spending more than you're taking in must eventually bury you. The argument is framed this way so the people will relate to the "problem" and buy into it. However, since the U.S. is neither a business nor a household, analysis from this perspective is specious - and the people are being hoodwinked.

The U.S. is a central player in global capitalism, the umbrella under which all nation-states function. Its debt is held by other nations, huge banks and investment institutions worldwide, and other public and private hands holding voluminous amounts of government bonds. Should the U.S. fail to meet its obligations to its creditors - as the scaremongers insist is possible - it would pull the bottom out from under the world economy. Since this cannot be allowed to happen, it will not: The U.S. is too big to fail.

Why, then, this fiscal reign of terror? The answer is found in the commonly proffered solution to the "crisis:" curtail people's benefits. Convincing everyone that the government cannot afford Medicare, Medicaid, Social Security and other public necessities, opens the door to windfall profits by privatizing these programs - and to the further erosion of democratic government with its profit-thwarting regulations. Through this corporate agenda, government profligacy is defined as giving a society the security and well-being it deserves - as if those things were meant for the rich and not the great mass of people.

What could actually happen if the U.S. continues to borrow and its debt burden becomes unsupportable? There are many possibilities, including revaluing world currencies to lessen the debt - or maybe even establishing a single world currency, which is probably somewhere on the horizon anyway given the consolidation of the world economy. Large amounts of the debt could be forgiven - a tactic that would certainly hurt some individuals and financial institutions and lead to an even greater concentration of capital in the largest surviving banks, as in the 2008 crash. Or all banks could be nationalized and the debt spread out in what would amount to a world bailout. This solution, accompanied by currency readjustments, would certainly signal a systemic change - but it would be far from Armageddon for the U.S. - and possibly even a change for the better. Because financial arrangements are man-made, they can be unmade.

The U.S. isn't a candy store to be assessed under the usual laws of accounting. Unlike Greece or other countries threatened by deficits, U.S. production and consumption - not to mention its military might - play a pivotal role in the world economy. The world economy must therefore support it even at the cost of systemic changes. Anyone succumbing to the fiscal scare is being duped. Let's hope our re-elected president sees through the scam and doesn't again sacrifice us to corporate profit.

Andrew Torre lives in Landgrove.


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