Over the course of its history, the United States of America has seen six episodes of budget surplus. Five of them were immediately followed by depressions. Let us never forget that the orthodoxy – already powerful at the time – had pushed President Herbert Hoover to maintain a budget surplus in 1930, the year of the Great Depression!
The last recorded episode of an American budget surplus, sustained for nearly three years, came in the Clinton era that the recession of 2002 was to succeed, and was entirely down to the federal surplus of 1999 which forced the private sector into debt. The US economy therefore saw a collapse in 2000 due to a fall in consumption and a rise in unemployment, until the fireworks set off in 2007. We might again be confronted with an economic-financial crisis of extreme gravity if the US, Japan, France, or the UK decided – tomorrow – to repay their national debts.
Oh yes! Only Germany now perseveres on its path of imperial indifference to the rest of the world by accumulating surpluses, since it really is the mother of all depressions that would strike if the world’s other great nations decided to follow its path. Their taxpayers and citizens generally wouldn’t be a penny richer if their respective governments paid back their national debt. Because it is, in fact, completely the opposite that would happen and that would thus have a devastating impact on economies. A country that settles its debts actually pumps precious liquidities out of its economy, since less money is left for everyone else – individuals and companies – except for the State which gets richer. Let’s get to grips with it: it is surpluses – not deficits – that are at the origins of slowdowns since it goes without saying that an economy dried up by paying back its debts goes kaput.
It is therefore impossible for an economy to function without money, indeed without debt, and whoever and all those who conflate a State’s budget management with that of a household are guilty of intellectual fraud. Contrary to an individual or a family, a sovereign State cannot fall into bankruptcy: its debts are simply monies owed by the private sector. Everything else is debt. Money is debt, your bank account is a form of debt, the dollar and euro are debt and – objectively – repaying all of its debt for States like the USA or France would end up simply eradicating the dollar or the euro!
This widespread disinformation, which hasn’t stopped hammering home the idea that public debts represent pure evil and that markets should be left to be the adjudicators of peace, has only produced anaemic growth, increased unemployment, deeper inequalities and more precariousness.