Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
The Folly of Massive Debt
Here’s Mr. Richard Rich advising the President in a silly old ’90s movie:
Well, Mr. President, if the government spends more money than it takes in, it goes into debt.
It’s not a clever insight. It’s not original. Here’s an ancient Confucian text on the subject:
生財有大道。生之者衆、食之者寡、爲之者疾、用之者舒、則財恆足矣。
There is also a clear Way for the production of wealth. When producers are many and consumers are few; when production is rapid and use is slow, then there will always be enough. (Charles Muller translation)
There is a great course also for the production of wealth. Let the producers be many and the consumers few. Let there be activity in the production, and economy in the expenditure. Then the wealth will always be sufficient. (James Legge translation)
Proverbs 13:11 and Proverbs 21:17 are some other good reminders of the importance of not spending ourselves into destitution. For more biblical wisdom, see comment # 29 on this thread.
No, it’s not original or clever, but it is important. The basic and the oldest lessons usually are. They’re the oldest because they’re the best; we found them out long ago, and we still need them, even though we keep forgetting them. See Kipling’s reminder in “The Gods of the Copybook Headings;” for fiscal matters specifically, see the seventh verse.
The image above is a screenshot I took yesterday from the US Debt Clock. Of course, the numbers are worse today. If Confucianism, Kipling, and the Bible aren’t enough to convince us that the debt is a real problem, we could go to the Debt Clock and run some numbers on the interest on the debt compared to the national defense budget. We’ll find that the USA is spending about 60% as much money paying interest on the debt as it’s spending on national defense. Irresponsible.
But the real danger is the ratio of debt to GDP. It’s dangerously high.
This is an unsustainable and reckless path we’re on.
Published in General
https://ricochet.com/1214852/inflation-is-our-friend/
It is said that the Fed is intentionally creating inflation to lower the debt to GDP ratio. That is a short-sighted fix as it will create a risk premium on future debt issuance. Typical of our government to opt for the short-term fix to a long-term problem.
Things I worry about today (in order):
1) corruption in government
2) the war on the nuclear family
3) the war on Americanism
4) eco-socialism
I think if we fix those we fix things like
* global famine
* inflation
* crappy schools
* culture wars
In fairness, they don’t have much of a choice. There are only four ways to solve our chronic deficit problem: raise taxes, increase the number of taxpayers, cut spending in real terms, or cut spending in nominal terms. Chamber of Commerce Republicans won’t let taxes go up. MAGA Republicans won’t allow increases in legal immigration. Democrats are only in favor of immigrants who will be dependent on the dole. (See the radically different treatment of illegal immigration from Mexico and Cuba.) Practically no one on Social Security and Medicare across either party will allow nominal cuts in the government’s biggest job of taking money from the young to give to the old. The only solution is to cut spending in real terms by holding nominal values level and inflate the value away.
Increasing immigration isn’t the only way to increase the number of taxpayers. More people in the workforce would increase the number of taxpayers, too. So policies that promote the creation of small businesses would be good for the nation. And for long-term thinking, encouraging people to have larger families will help, too. Of course, the Greenists have been against babies for as long as I’ve been alive, and environmentalists have effectively brainwashed the last few generations that babies are a net negative. Who needs China’s one-child policy when people in the West do it willingly because they think that Mother Earth will deliver hurricanes and volcanoes if they should increase the population. And the government thinks that putting everyone on unemployment and welfare programs is good for the economy.
And increasing tax revenues without increasing taxes is possible if you grow the economy.
There’s no getting out of this without entitlement reform. But Trumpy deregulation to fuel economic growth would have helped. I miss that.
How are you going to increase the number of people in the workforce while increasing family size at the same time? Once a family has more than two kids, it is almost always financially better off as a one income family than trying to earn enough money to pay other people to parent for them. Frankly, I think a lot of the job vacancies at the moment are from women who realized that the benefits of being an active part in their kids’ lives is worth the financial hit of not working. Particularly when they realize that the only way their kids are going to get an education is if they do it themselves.
I agree that we should put pro-family policies in place. Of course, considering Republicans can’t bring themselves to abolish the marriage tax penalty, much less get rid of the single parent tax break, I don’t see that happening any time soon.
As of 9/30/2000, during Clinton’s last year, the National Debt was 5,674,178,209,886.86.
As of 9/30/2008, during W’s last year, the National Debt was $10,024,724,896,912.49.
As of 9/30/2016, during Obama’s last year, the National Debt was $19,573,444,713,936.79.
As of 9/30/2000, during Trump’s last year, the National Debt was $26,945,391,194,615.15.
In other words, no one for the last twenty years has given a damn about deficits. This isn’t a partisan problem.
Date Dollar Amount
From the U.S. Treasury. https://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm
Right on.
And yes–it is often more financially healthy for the mother to stay home–more efficient managing of life through division of labor.
It’s also not bad for the economy, long-term, when mothers take care of kids.
W: plus 5 trillion (in 8 years).
Obama: plus 9 trillion (in 8 years).
Trump: plus 7 trillion (in 4 years).
Biden: 30 trillion or so, plus 3 or 4 trillion (in 1.5 years).
Those are all bad numbers.
Waddaya talkin’ about? Let’s just mint 30 new trillion dollar coins and deposit them with the Fed. Done and done.
Almost 20 years ago none other than Paul Krugman penned an op-ed called A Fiscal Train Wreck. Like a blind squirrel, Krugman occasionally finds a nut. He was quaking in his boots at a debt/GDP ratio of 5ish %. Some excerpts…
Yeah, it’s a dilemma. But the equation more workers = more tax revenue seems an unassailable fact of life. Of course, more small business owners helps, too. But all politicians care about are the giant corporations who fill their personal coffers.
No, Republicans are also screwing over the country, just at a slower pace.
The Laffer Curve is real.
Only if they earn enough to be taxed.
Under Obama, there was a year over year 2T increase in debt until the Rs took Congress.
Under Trump’s presidency, he maintained a year over year 1T increase with a massive blow out for COVID relief.
And for that, he was damned no matter what he did.
True, but an evil government might create a virus that kills off many old people.
But isn’t it money we loan ourselves and as long as we are cool about it, what’s the problem? I think my personal share of that debt is probably around $100,000.
I am hereby waiving what I owe me!
If everybody does that, doesn’t that solve the problem? And then we can start over and spend away and stimulate the economy since all economics is based on government spending and the resulting humongous growth will totally wipe out the debt and probably save the planet. It is so simple a child can see it.
A mother who doesn’t work is one person out of the job market. But if she raises more than one child who DOES work, that’s a net increase in the workforce.
WASHINGTON, April 28, 2010 (Reuters) – The idea of a European-style value-added tax got qualified backing on Wednesday from two prominent figures: former President Bill Clinton and former Federal Reserve Chairman Paul Volcker.
Both Clinton and Volcker, who is an outside adviser to President Barack Obama, told a private forum on fiscal issues that they saw benefits for the United States from a VAT, a tax on goods at each stage of production…
The Liberal Left is chomping at the bit to get MORE DOLLARS, they just have to ‘craft it’ in a way that it is the savior of the American way of life. Bill Clinton wanted it because it was a windfall of funds for the expansion of government and he could push national healthcare and then Obama liked it for the same but soooo much more.
And here we are… how long before ‘Saving the Union’ by VAT is the banner raised and backed by the MSM… remember ‘every American deserves (fill in the blank here) ___________________’ and the answer is VAT.
Visions of ‘Green Economy’ danced in their heads! New World Order for everyone…
Contrast that with what Hungary does.
That was sarcasm, right?
Well, either way, it’s true that some of this debt is money the government owes itself, but I don’t understand how that’s not still a debt situation. I don’t believe I ever got an answer the last time this came up.
And, in any case, a lot of the government debt is not to the government.
True, but it’s also much misunderstood and misrepresented. The Laffer Curve posits there’s an optimal tax rate, and that whenever the tax rate is above the optimal rate, cutting tax rates will increase tax revenue.
However when the tax rate is below the optimal rate, the only way to raise revenues is to raise taxes. Conservatives tend to conveniently ignore that side of the curve.
The only way to raise revenues by adjusting tax rates.
You can also raise them through economic growth. (Some Trumpy deregulation would be a step in the right direction. I don’t say Trump was good on the debt, but I do say he had part of the right answer. Do lots of that Trumpy deregulation, and do some entitlement reform, says I.)
And one way to get more economic growth is with MORE PEOPLE.
In twenty years. It doesn’t fix the problem today. And today is when transfer payments and interest consume almost 100% of government revenue, with everything else, from the military to the National Park Service, financed by more debt.
The last time the gross outstanding debt went down year over year was 1958, during the Eisenhower administration.
Some further biblical data for your good work here:
https://markeckel.com/2021/01/14/debt-borrowing-lending-financial-planning-biblical-proverbial-wisdom/
True, but in the 90s, Republicans at least pretended to care enough to campaign on the issue. It was better than what we’ve got now.