Money money money

by Yule Heibel on January 11, 2013

Two money-related things I have a hard time wrapping my head around.

First, Quartz Daily points me to an article by Matt Phillips, The US Fed had a greater profit than Apple and Exxon combined last year, wherein we read that the profit made by the Federal Reserve, which it has to hand over to the US Treasury, was $89 billion.

Phillips adds, “Apple and Exxon combined only made a bit more than $82 billion in profits during their most recent full reporting years.”

It’s weird, but it’s how it’s done: “…the Fed buys US government bonds, the US government pays the Fed tens of billions of dollars in interest payments, and the Fed then turns around and pays that money back to the Treasury.”

Meanwhile, back in pundit-land, we’re treated to what Jonathan Chait brilliantly analyzes as the meme of a “right-thinking sentiment,” which assumes that the two major parties in Washington can’t come together to solve problems, viz. the debt problem (see his Jan.8 article, The Eternal Folly of the Bipartisan Debt Fetish).

Chait agrees that the debt is a problem worth solving, but he balks at how it has hijacked punditry and what we see as politics.

I don’t have anything to contribute here, except to say that the complexity of how Federal Reserve profits are (a) made (read the article) and (b) transferred back to the government makes me think that all the political posturing around The Debt and how “the government” should learn to budget “like householders do” is baloney. Obviously, a government budget is not a family household budget. (If it were, where’s my Federal Reserve handing over its profits to my Treasury?)

Chait in turn nails the pundits for ignoring far more pressing issues. Like unemployment. And the environment (climate change). In this article,, he writes:

I consider the long-term deficit a problem worth solving, though I would argue that mass unemployment and, especially, climate change are more urgent problems. I would like to know the case to the contrary, but if there is an argument for elevating the deficit above those priorities, I am not aware of it. Overt argument is not the preferred style of respectable centrist pundits. It is too rude.

And so, when figures like Erskine Bowles and Alan Simpson are invited on to programs like Meet the Press, they are treated as disinterested wise men rather than political advocates. The host, David Gregory, asks them to hand down rulings on politicians. He does not question their own ideas. (Notably, the Sunday talk shows, a haven of right-thinking, deficit-obsessed centrism, have given over little attention to climate change in the last four years and have not quoted a single climate scientist during the entire span.)

So, we have everyone focused on the debt and on “the fiscal cliff” (which, in the run-up to January 1, 2013, seemed on par with Y2K, another dud), while we ignore climate change and employment/wages. We’re focused on a near-chimerical Federal budget (which we claim has qualities resembling our own household budgets, even though that’s laughable) as we ignore real household budgets and ecological budgets. Great.

But Chait goes deeper and further, pointing out that manufactured despair over the Federal budget is making mincemeat of real political debate. We’re devolving to pablum, and he blames the centrist, right-thinking pundits who dominate the discourse via television and print:

That the two parties must meet in the center and agree on a deficit plan is something that respectable people repeat to each other so often it becomes obviously, uncontroversially true.

Obama seems co-opted by this meme to the point where he seems incapable of advocating a more trenchant position. And yet, the meme continues, with more and more calls for “meeting in the center.”

What a disconnect.

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