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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
Not really. Failure to deliver is what has led to so much cynicism on the issue.
Literally no one expects a politico to do anything about it, so it’s a non issue when voting at this point.
Sarcasm? I am pretty much paraphrasing a column by Nobel Prize winner Paul Krugman as only slightly re-interpreted by AOC. How can it be incorrect?
And if it turns out that the debt actually matters, if we go ahead and emulate Greek fiscal policy circa 1974 we could cut the value of what we owe by oodles each year (and I’m talking metric oodles here, people). What could possibly go wrong?
In that case, this is my theology:
“I am Mastos, god of sensible spending. No one has listened to me for the last 30 years.”
They left out Otaipote, the god of smug indifference. Once a local cult in LA, it spread rapidly. Among the myths associated with him is that of a non-hero named Holden Caulfield who appeals to Otaipote to save him from all that is phony. Instead, the god turned Caulfield himself into a phony, condemned to endlessly repeat “whatever.”
You laugh but a very similar scenario has been proposed by some genius democrat congressman. Other famous congressional idiocies include Gerry Connolly- a Northern Virginia congressman who tried to get Alan Greenspan to agree that it was impossible for the government to spend too much money. Unfortunately for Gerry, Alan was nowhere near dumb enough to agree. I cannot find the video of the exchange but it was cringeworthy that a congressman is that dumb.
Couples having just one child, or none at all, are far worse for economic growth.
But Newt Gingrich and the GOP did deliver a balanced budget in the late 90’s (which Clinton later tried to take credit for).
It was the combined forces of W’s “Compassionate Conservative” agenda and post-9/11 military spending that quickly reversed all that after Y2K.
Great. A national sales tax. I prefer sales taxes to remain a state and local tax.
There was no balanced budget. They came close one year (about $20 billion, IIRC) but the debt increased every year.
The last time the debt went down from one year to the next was under Eisenhower. You can look it up.
There’s a pretty solid block of voters out there with no experience with this. 25 years is not nothing.
John Yarmuth said the government couldn’t go broke because it can print all the money it needs. Neel Kashkari said the government could print all the money it needed to fight Covid. Heard those two with my own ears, and I’ve been told that Jerome Powell supported the statements.
Negotiation for a head of cabbage, Germany.
Those dates! Look at how rapidly it happened.
It was cheaper to burn the marks than to attempt to use the to buy firewood.
This is my biggest issues. The GOP care about it only when they can’t do anything about it, Democrats don’t even do that.
I gave up any hope of DC addressing this
“How did you go broke?”
“Gradually, then suddenly.”
The only thing either party cares about is keeping the asset bubble intact to get past the next election.
The central bankers should have read the riot act to both parties in the middle 90s. Instead they just compensated by printing money.
They need 5% government measured inflation, which probably means 10%, for five years to balance the books and hold society together.
The whole system is regressive unless you learn how to speculate and you can afford lawyers and lobbyists.
I’m not sure I’ve gotten even one person to read this article, but this is what is going on. It’s almost impossible to highlight.
http://financialrepressionauthority.com/2017/07/26/the-roundtable-insight-george-bragues-on-how-the-financial-markets-are-influenced-by-politics/
This article is a page and a half. This is what people want. This is a comprehensive review of a conservative or libertarian society.This is what is reflected in the comments. The problem is the government interferes and then it starts a cycle that you can’t get out of.
https://mises.org/wire/were-living-age-capital-consumption
Remind yourself to vote lol
This is our genius system. We invent the pill, feminism, the Great Society, inflation, and Medicare at basically the same time. By 1974 they knew that Medicare was an actuarial disaster by a factor of dozens. Nobody did anything about any of it.
They should have been paying bounties for procreating W-2 slaves for three decades.
It always feels funny to me saying this, but supposedly 2/3 of GDP is population growth.
Listen to interviews of Deirdre McCloskey from about eight years ago. That is another thing that I think truly gets at what conservatives want. She probably doesn’t get as much attention as she should because she has gender issues.
Another place where this is all laid out is an interview of Mike Green at Gestalt University. He hits everything. He has more Democrat solutions, except for credit growth has to be taken over more by community bankers than the way we do it now. What we do now it’s just stuff the economy with debt regardless if it’s productive. It’s killing us.
The cited rticle was a marvelously concise lesson.
McCloskey’s Bougeois Dignity should be required reading in all poli sci and economics programs. Utterly brilliant in so many places. I agree that the author’s transgender status (Deirdre used to be Donald) is probably a major distraction from the content of the work which is unfortunate.
The Austrians cited are more cognizant of political impacts on markets–the efficient market hypothesis seems to begin by ignoring them–and McCloskey reconstructs the mindset, cultural ingredients, values that made modern capitalism possible, while demolishing Marxist and other bogus economic histories along the way.