This Article considers the current government-spending debate in light of monetary sovereignty. The Author argues that claims the United States will “go broke” if the federal government does not reduce the deficit are legal and logical fallacies. The federal government cannot “go broke” because it can issue unlimited amounts of fiat money at will. The Author explains the basis and history of Congress’s sovereign power to create money and describes how Congress delegates that power to the Federal Reserve and private banks. Given Congress’s monetary power, the Author contends that the deficit debate should not be how America can learn to “live within its means,” or whether members of Congress can make the “tough choices about what they hold most dear and what they can learn to live without,” but how the sovereign power to create money should be exercised and who should benefit from the exercise of that power. Rather than endorsing a particular answer to this monumental policy question, the Author explores some of the interests, arguments, and proposals that Congress and voters should consider.
Ashton S. Phillips, BANK-CREATED MONEY, MONETARY SOVEREIGNTY, AND THE FEDERAL DEFICIT: TOWARD A NEW PARADIGM IN THE GOVERNMENT-SPENDING DEBATE, 36 W. New Eng. L. Rev. 221 (2014), https://digitalcommons.law.wne.edu/lawreview/vol36/iss3/3