Relevant to us, Krugman takes the opportunity to dispel the myth that we are at the mercy of foreign countries to finance national debt.
It’s All Benghazi, by Paul Krugman, Commentary, NY Times:
So Representative Kevin McCarthy, who was supposed to succeed John Boehner as speaker of the House, won’t be pursuing the job after all. He ... finished off his chances by admitting — boasting, actually — that the endless House hearings on Benghazi had nothing to do with national security, that they were all about inflicting political damage on Hillary Clinton.
But we all knew that, didn’t we?
I often wonder about commentators who write about things like those hearings as if there were some real issue involved... Surely they have to know better... Somehow, though, politicians who ... are obviously just milking those issues for political gain keep getting a free pass. And it’s not just a Clinton story.
Consider the example of an issue ... that dominated much of our political discourse just a few years ago: federal debt.
Many prominent politicians made warnings about the dangers posed by U.S. debt, especially debt owned by China... Paul Ryan ... portrayed himself as a heroic crusader against deficits. Mitt Romney made denunciations of borrowing from China a centerpiece of his campaign... And by and large, commentators treated this posturing as if it were serious. ...
Well, don’t tell anyone, but the much feared event has happened: China is no longer buying our debt, and is in fact selling ... U.S. debt... And what has happened is what serious economic analysis always told us would happen: nothing. It was always a false alarm. ...
People who really worry about government debt don’t propose huge tax cuts for the rich, only partly offset by savage cuts in aid to the poor and middle class, and base all claims of debt reduction on unspecified savings to be announced on some future occasion. ...
Sometimes I have the impression that many people in the media consider it uncouth to acknowledge, even to themselves, the fraudulence of much political posturing. The done thing, it seems, is to pretend that we’re having real debates...
But turning our eyes away from political fakery, pretending that we’re having a serious discussion when we aren’t, is itself a kind of fraudulence. Mr. McCarthy inadvertently did the nation a big favor with his ill-advised honesty, but telling the public what’s really going on shouldn’t depend on politicians with loose lips.
Sometimes — all too often — there’s no substance under the shouting. And then we need to tell the truth, and say that it’s all Benghazi.
Krugman argues that it is fine because domestically the central bank is filling in whatever gaps there are but also:
''The bottom line in all this is that we don’t need the Chinese to keep interest rates down. If they decide to pull back, what they’re basically doing is selling dollars and buying other currencies — and that’s actually an expansionary policy for the United States, just as selling shekels and buying other currencies was an expansionary policy for Israel (it doesn’t matter who does it!)''