Veronique de Rugy has a PhD in economics. So why doesn’t she understand Monetary Sovereignty?

Veronique de Rugy is the George Gibbs Chair in Political Economy and Senior Research Fellow at the Mercatus Center at George Mason University and a nationally syndicated columnist. Her primary research interests include the US economy, the federal budget, taxation, tax competition, and cronyism. She received her MA in economics from the Paris Dauphine University and her PhD in economics from the Panthéon-Sorbonne University.

The following article came from the April 4, 2025, The Week Magazine

Veronique de Rugy National Review

“Washington’s so-called debate over deficit spending is a complete joke,” said Veronique de Rugy.

As the U.S. faces the consequences of runaway pandemic spending and deficits that could add $25 trillion to our existing $36 trillion national debt over the next decade, “neither party is serious” about tackling the problem.

Presumably, Ms. de Rugy believes “the problem” is federal debt and deficits, which as you learned in previous posts is no problem at all.

Debt and deficits may be problems for monetarily non-sovereign individuals, state and local governments, and businesses, but they do not burden the Monetarily Sovereign federal government.

It seems that Ms. de Rugy is ignorant of Monetary Sovereignty or wants you to be ignorant.

We all are monetarily non-sovereign. We cannot create dollars at will. However, the U.S. government is monetarily sovereign and can create dollars with the touch of a computer key.

It would be amazing if Ms. de Rugy didn’t know this, yet here we are.

Democrats refuse to acknowledge” the crisis even exists, instead pretending “the fix for every economic problem is more government spending paid for by rich people.”

No, the fix really is “more government spending,” not “paid for by rich people.” Federal spending- ALL federal spending- is paid for by money creation, that touch of a computer key.

As we said, you can’t do it, I can’t do it, and even Elon Musk can’t. But the federal government can, and in fact, it does it every day with every payment of every financial obligation.

Meanwhile, they label any suggestion on taming Social Security and Medicare as “devastating and, hence, unacceptable,” even though those programs will account for half of all non-interest federal spending by 2035.

If by “taming” she means cutting benefits, then she is spouting misinformation that the rich love. Cutting Social Security and Medicare benefits pleases the rich by widening the income/wealth/power Gap between the rich and the rest.

No agency of the federal government can become insolvent unless Congress and the President want it to. So the only debt crisis is the crisis of misinformation (or disinformation, the intentional form of misinformation).

The claims that the Social Security and Medicare trust fund will run short of money are- let me be clear here- dirty, stinking, rotten lies. This can happen only if Congress and the President want it to happen.

If Congress weren’t beholden to the rich, it would vote to add a trillion dollars (or $100 trillion, for that matter) to the trust funds or simply pay for Social Security and Medicare directly without the useless trust funds.

But that is the last thing Congress’s wealthy donors want, so they bleat sadly about the “debt crisis” and their inability to “find the money” to keep these programs solvent.

Republicans, for their part, “try to convince voters they care about the deficit” but feed the delusion that they can balance the budget through discretionary spending cuts that leave Social Security and Medicare untouched.

The delusion is that balancing the federal budget, i.e., eliminating the deficit, would benefit anyone. It wouldn’t. It would be a financial disaster.

Gross Domestic Product (GDP) is a measure of the economy. The formula for GDP is:

GDP = Federal Spending + Nonfederal Spending + Net Exports

Even the most basic understanding of algebra tells you that reduced federal spending reduces GDP, i.e. cuts the economy, while increases in Federal Spending grow the economy. And with even the tiniest inflation, a balanced budget instantly would reduce GDP.

A party that really did “care about fiscal responsibility” also wouldn’t claim that President Trump’s 2017 tax cuts can be extended with no budget cost, or have pushed through the recent continuing resolution that authorized 1.7 trillion in spending – 47 percent more than President Barack Obana’s last budget.

A writer who really ” cared about fiscal responsibility” would take the trouble to learn about Monetary Sovereignty and what it means for federal finances rather than assuming the federal government has the same financial limits we do.

With Washinton in a state of bipartisn denial, “the debt crisis will only get worse.”

Yes, the “debt crisis” is worsening, but it’s not a crisis about federal agency insolvency. It’s a crisis of ignorance, intentional or otherwise, about federal government finances.

THE FEDERAL GOVERNMENT CANNOT RUN SHORT OF U.S. DOLLARS. PERIOD. Someone, please, please inform economics PhD Veronique de Rugy.

And oh yes, if she says, “What about inflation?” Tell her to read, “At long last, let’s put this inflation question to bed.”

Rodger Malcolm Mitchell Monetary Sovereignty

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