A president warns the nation of a looming threat to national security. A congressional bipartisan wave builds to meet the threat, spurred on by the editorial boards of leading newspapers and backed by reams of policy papers. The nation hurtles forward to face the enemy. Dissenting voices are drowned out. Does this sound like the hysteria leading up to the Iraq war? Indeed. But this time it’s the growing drumbeat around the debt “crisis.”

There is no debt crisis. We have been summoned to the barricades to combat a mirage artfully built with phony evidence proffered by political leaders and gobbled up by the very serious people in power. Some of these people also told us housing prices would never go down, the Dow would reach 30,000 and Bernie Madoff was an investing genius.

The solution to this “crisis,” say the very serious people, is austerity: Cut “out-of-control” spending on pensions, Medicare and roads. If you say “Social Security is in crisis,” you are treated as a serious person—even though the actual numbers show that Social Security will be entirely solvent for many years to come and hasn’t contributed a single dime to the debt “crisis.”

We do have a major crisis. The people who run our markets and our companies have failed, breaking basic rules we lived by. While they enriched themselves, they turned our country into a place where economic fairness is evaporating. Our political leaders have abandoned us because of the legal but corrupt system of raising money for campaigns, which means they serve the powerful interests that write big checks.

Big corporate interests have hurt the economy, making inefficient use of our nation’s wealth at great cost to our financial stability. Chief executive salaries of tens of millions of dollars—which empty corporate treasuries and leave nothing for average workers—exist because our leaders have enabled a corporate governance system that allows such looting.

The truth: Right now we need large deficits. We have a huge hole in spending because people don’t have jobs and thus can’t spend money. Deficits finance jobs when our economy goes down the drain. Deficits finance roads—that our children will use to get to their schools and, in the future, to their jobs. Deficits finance schools—so our children can be educated. Deficits finance a whole bunch of inspectors who poke at and sniff around our cattle and chickens—so we don’t get sick with salmonella.

Start with this question: Is debt bad? People do spend more than they earn, often for worthwhile reasons. Taking out a loan to send a child to college would be considered a worthy reason to assume debt; it would pay off later in, perhaps, your child landing a better job. On the other hand, running up a huge debt by borrowing money so you can gamble in Las Vegas would not be prudent, unless you are a lucky person.

Companies also finance their future with debt—some of it good, some of it bad. Buying new equipment today with borrowed money is a good choice because it should create new jobs and new revenue that will, in turn, pay off the debt 10 years from now. But taking on huge debt to bankroll a leveraged buyout for dubious reasons (such as raising a company’s stock price so a few top executives can make millions) can lead to layoffs and bankruptcy, as was too often the case in the past three decades.

The government makes similar choices. When it runs a deficit, we need to ask these questions: What are we spending the money on? Is it going toward long-term public investment (such as roads, education and energy efficiency)? Or are we, the taxpayers, bearing the cost of things—tax cuts for the wealthy, unpaid-for wars and Wall Street bailouts—that do not add to the overall public good? So, do we face a crisis in government spending? The economic good times after World War II—which we read in grade-school textbooks began the American dream—were financed by large amounts of debt. In 1946, the ratio of sovereign debt to gross domestic product—how much debt we take on compared with how much stuff is made in the economy—was 108.6 percent. In other words, the debt we owed was larger than the entire output of the U.S. economy.

Today, we aren’t even close to that.

How did we get to a point where the whole political establishment has become obsessed with a phony crisis? The short answer is it’s the result of a well-funded campaign financed by billionaires like Peter Peterson (who made his fortune by the debt-financed buying, slicing and selling of companies), longtime opposition to programs such as Medicare and Social Security, elected politicians who aren’t curious enough to ask the tough questions and traditional media outlets whose reporters don’t understand basic economics.

Perhaps the biggest factor is the fear running through the nation. People who can barely pay their bills and have no health insurance or retirement plans point to government workers and ask why they have pensions—pensions that sustain a modest middle-class retirement. The anger aimed at public workers evokes the 19th century robber baron Jay Gould, who mused he could get one half of the working class to kill the other half.

We could spend our money better. But if we want to wring our hands about the government deficit, the collapse of the financial system is the principal reason for the growing debt. The collapse gave us a weaker economy, so money wasn’t coming into the Treasury as quickly (because the millions of unemployed weren’t paying taxes). This weaker economy called on us to assist our fellow citizens with more aid, including unemployment insurance and food stamps, and, as we all know, to bail out Fannie Mae, Freddie Mac, AIG and other companies.

Add on the $4 trillion spent on the Iraq and Afghanistan quagmires and the Bush administration’s tax cuts that gave away $700 billion to the wealthiest one percent, and you can see that virtually our entire debt was built by writing checks that had nothing to do with social spending.

That doesn’t mean we face a fiscal crisis. There are ways to wipe away the debt over time. But it should not be with a policy that asks the 99 percent who had little to do with creating the debt to shoulder the costs of paying it off.

Today, the biggest crisis is the lack of work for millions of people, a crisis that, even when it ebbs, will leave scars for generations to come. Get the monetary printing presses going, for the sake of America.