Why Nobody Cares About the Climate, er, Debt Crisis

 

I’ll be as upfront as I can: this is not going to be a sophisticated analysis of the budget deficit, the national debt, and its implications on the economy going forward. What it is going to be, is the perception of ordinary people who know full well that all that stuff is way over their heads, and only have what they see and how their lives are going to judge the state of things by.

But first, a divergence into the seemingly unrelated issue of climate change. Why are initiatives such as the Green New Deal failing to catch on outside the most politically connected circles on the coasts? Sure, in the case of the GND specifically, you could argue it’s poorly written with highly impractical and arguably counterproductive goals. But I’m speaking in the general sense. Why is the hysteria of impending climate doom not having a whole lot of impact with any but the most politically aware voters?

The answer to that is straightforward enough. It is because we have heard the same proclamations of doom all our lives. In my case, literally: the first Earth Day in 1970, with the grand declaration that the doom of humanity at the hands of the climate, was on the day I was due to emerge onto this planet, and I must have gotten wind of it somehow because I instead decided to stay in the womb another three weeks before finally being coaxed out.

The point being, when something has been a constant in our lives, and yet never actually seems to impact our lives in the way we’re told it will, it’s entirely natural that we eventually start to just tune it out. Even if it’s not a conscious effort, our brains just process it as noise and move on.

So what does all of that have to do with the debt crisis? Well, more than you might think. Consider everything I wrote in the above three paragraphs, and swap out climate change for the national debt. Sure, there is no holiday to promote awareness of the debt (unless you count April 15), but it remains a fact that we used to be the generation that was going to have to pay off the billions and trillions in debt. But somehow, that bill seems to have gotten lost in the mail.

My father said repeatedly that he never expected to see a dime from Social Security. And yet there the checks were waiting for him after he finally retired, and for my mother after he passed a few years later. Social Security was supposed to have gone bankrupt over and over in my lifetime, and yet somehow there it still is.

But doesn’t that sound familiar? We’re all supposed to have died over and over again from climate change, and yet somehow here we still are. Is it possible that the same noise filters that tune out climate change hysteria, also tune out fears about what disaster is awaiting the economy if we dare to raise the debt ceiling even one more time?

Ah, you say, but unlike with the climate change hysterics, the debt is a real, objectively measurable thing. We even have a big sign that accurately updates it to the second. And it’s certainly a big number, with a lot of digits.

But what … what does it actually mean?

I want to emphasize again that I am not asking this question on my own behalf but on that of the ordinary voter, living their ordinary life. That big, big number keeps getting bigger and bigger and yet … what does it mean? Why is $22 trillion so much worse than $2 trillion, which we were told at the time was already catastrophically huge? How are people’s lives worse because of that big big number, and how would they be better if it were to go away?

I’m sure there’s a perfectly good academic answer to those questions, but that’s missing the point, because those academic explanations are inevitably going to be far over the heads of the ordinary voters I’m speaking of.

It’s not even a case of “they value the goodies they get from the government too much” because even people who are self-sufficient and wouldn’t be directly impacted by the cuts needed to get the budget balanced, aren’t really being given a reason to want it that means anything to them.

The point is, continuing to shriek and point to what has been for many years a dizzyingly high number just doesn’t accomplish anything anymore. The economy is good, the people are prosperous, and these are things that were at least implied wouldn’t be possible until we did something about that big big number.

Can the average voter really be blamed for starting to think that the debt, like climate change, has proven to be much ado about nothing?

At any rate, I hope that’s enough for a starting point for a discussion we really need to have. Are we as guilty as the climate change alarmists in trying to unduly scare people over something that is not as out of control as we portray it? And if not, how do we differentiate it in a way that actually means something to an ordinary voter?

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  1. OldPhil Coolidge
    OldPhil
    @OldPhil

    Arahant (View Comment):

    Mark Camp (View Comment):

    Amy,

    A legal person has these six attributes: it can

    Mark,

    Nobody (other than you and that guy who worked for SSA) care about the technical details. Yes, we all know that it’s all one pot. Money goes in and money goes out. Yes, we know the “Social Security Trust Fund” is a fiction that does not exist in any form of reality, only in the mind of some uninformed voters (who are not on Ricochet) and government books. Yes, we know that checks are not sent out. Can you let the conversation flow without being so literal about every term that you want to apply in the most technical sense. You are drowning in facts that hide the truth.

    We are in trouble. It is not if we will have to pay the piper, it is only a question of when and how much.

    And yes, I know that technically, there is no piper playing.

    Thank you for this. And I worked for SSA. The other guy worked for Treasury, I think.

    • #91
  2. Mike H Coolidge
    Mike H
    @MikeH

    RufusRJones (View Comment):

    Mike H (View Comment):

    Inflation isn’t always a bad thing. If there’s no inflation, you’re going to have very low saving account deposit interest to compensate. It’s largely a wash if you don’t get hyperinflation. The Fed likes to pretend (and people are convinced) that they control interest rates, but they don’t really, the market does. The Fed follows where the market goes (or at least is defies it at its peril.) That’s the reason the Fed is going to lower rates at the end of this month. The market is telling them they are going to cause a tight money recession if they don’t. Luckily, the Fed has learned from past failures, so they are probably going to succeed at extending the expansion a while longer.

    Next recession will probably start in 2023/2024, which makes me afraid no matter who wins the next election.

    Without discretionary central banks all savings would get a fair return. It would grow in real terms.

    I think free banking was a better system, but I don’t think the Fed controlling interest rates does that much damage, at least these days. I think they follow the market, they don’t lead it. The reason the Fed is going to cut rates at the end of the month is because the market is “forcing” them to, and they know if they don’t listen they will cause a recession. The fed has made a lot of mistakes, but they are learning from them over time and getting less bad.

    • #92
  3. CarolJoy, Above Top Secret Coolidge
    CarolJoy, Above Top Secret
    @CarolJoy

    Mark Camp (View Comment):

    Arahant (View Comment):

    Mark Camp (View Comment):

    Amy,

    A legal person has these six attributes: it can

    Mark,

    Nobody (other than you and that guy who worked for SSA) care about the technical details. Yes, we all know that it’s all one pot. Money goes in and money goes out. Yes, we know the “Social Security Trust Fund” is a fiction that does not exist in any form of reality, only in the mind of some uninformed voters (who are not on Ricochet) and government books. Yes, we know that checks are not sent out. Can you let the conversation flow without being so literal about every term that you want to apply in the most technical sense. You are drowning in facts that hide the truth.

    We are in trouble. It is not if we will have to pay the piper, it is only a question of when and how much.

    And yes, I know that technically, there is no piper playing.

    A:

    I think that the prospect of the Social Security Trust Fund running out of funds by running a deficit (expenses exceeding revenues) and being unable to send out benefit checks is not a “technical detail” that “nobody cares about” except me.

    Amy cares about it. She wouldn’t have brought it up if she didn’t. I believe that the only reason that folks on Ricochet keep bringing up the issue of the financial health of the Social Security Trust Fund is that they think it is of urgent importance.

    You are mistaken if you think I have ever brought it up as a concern. On the contrary, I do not think it is a logical possibility, let alone a concern. I have only responded to others who have raised it as a concern.

    I always like to throw out there that over 15% of all Baby Boomers have already gone on to their Final Reward, leaving more of the Social Security pie available for everyone else.

    • #93
  4. Bob Thompson Member
    Bob Thompson
    @BobThompson

    CarolJoy, Above Top Secret (View Comment):

    Mark Camp (View Comment):

    Arahant (View Comment):

    Mark Camp (View Comment):

    Amy,

    A legal person has these six attributes: it can

    Mark,

    Nobody (other than you and that guy who worked for SSA) care about the technical details. Yes, we all know that it’s all one pot. Money goes in and money goes out. Yes, we know the “Social Security Trust Fund” is a fiction that does not exist in any form of reality, only in the mind of some uninformed voters (who are not on Ricochet) and government books. Yes, we know that checks are not sent out. Can you let the conversation flow without being so literal about every term that you want to apply in the most technical sense. You are drowning in facts that hide the truth.

    We are in trouble. It is not if we will have to pay the piper, it is only a question of when and how much.

    And yes, I know that technically, there is no piper playing.

    A:

    I think that the prospect of the Social Security Trust Fund running out of funds by running a deficit (expenses exceeding revenues) and being unable to send out benefit checks is not a “technical detail” that “nobody cares about” except me.

    Amy cares about it. She wouldn’t have brought it up if she didn’t. I believe that the only reason that folks on Ricochet keep bringing up the issue of the financial health of the Social Security Trust Fund is that they think it is of urgent importance.

    You are mistaken if you think I have ever brought it up as a concern. On the contrary, I do not think it is a logical possibility, let alone a concern. I have only responded to others who have raised it as a concern.

    I always like to throw out there that over 15% of all Baby Boomers have already gone on to their Final Reward, leaving more of the Social Security pie available for everyone else.

    That imaginary pie? And its imaginary problems.

    • #94
  5. CarolJoy, Above Top Secret Coolidge
    CarolJoy, Above Top Secret
    @CarolJoy

    Arahant (View Comment):

    Aaron Miller (View Comment):

    Small Metal Owl: But what… what does it actually mean?

    It means governments are not exactly subject to creditors as individuals are. Governments can play tricks like inflation to falsify their debts and issue IOUs until the cows come home.

    And it means the government with the most influential economy and most powerful military in the world is unlikely to be called to account by anyone.

    Our government’s debt is a measurement of ideal responsibilities, not enforceable bills.

    At least for awhile. Eventually, all debts are called. Eventually, all monetary games have their price in the economy.

    Yes eventually all debts are called. Except the debts for those who we allowed to manage our economic  situation. Those people, in top positions at banks and at top financial firms, are deemed to be “Too Big To Fail” and are required to be bailed out. The last round of Bailouts, tax forgivenesses, asset seizures etc circa 2008 to 2012 actually took 23 to 32 trillions of American dollars from Main Street American over to them. These same Big Time Players managed to have Congress enact legislation such that when the Next Big Horrid Collapse occurs, the middle class will bail them out once again.

    • #95
  6. Arahant Member
    Arahant
    @Arahant

    I do hear pipe music.

    • #96
  7. CarolJoy, Above Top Secret Coolidge
    CarolJoy, Above Top Secret
    @CarolJoy

    Mark Camp (View Comment):

    Amy Schley (View Comment):
    Perhaps, but that money is long gone.

    That isn’t true.

    Money is fungible, so “that money” is a meaningless term. If you receive a dollar and pay a dollar, you can’t say that “that dollar” that you paid is or is not “that dollar” that you received.

    I think your statement, Mark is wrong for the following reason: if you pay in a dollar to a fund like Social Security in FY 1969, that dollar did far more then than   it does now.

    On top of that, the dollar paid out today to a Social Security recipient will most likely arrive at the same time the recipient realizes that their utilities are costing 20% more than the year before, while internet and phone fees cost 40%.

    • #97
  8. CarolJoy, Above Top Secret Coolidge
    CarolJoy, Above Top Secret
    @CarolJoy

    Critiques of Modern Monetary Theory

     

    https://www.themoneyillusion.com/mmt-explained/

    MMT “explained”

    From the website mentioned above:

    Bloomberg has published a new article that attempts to explain what MMT is all about. It begins by quoting yours truly:

    “MMT has constructed such a bizarre, illogical, convoluted way of thinking about macro that it’s almost impervious to attack,” Bentley University economist Scott Sumner claimed recently on his blog

    Their explanation begins as follows:

    A good place to start is with a simple description that you can carry in your pocket: MMT proposes that a country with its own currency, such as the U.S., doesn’t have to worry about accumulating too much debt because it can always print more money to pay interest. So the only constraint on spending is inflation, which can break out if the public and private sectors spend too much at the same time. As long as there are enough workers and equipment to meet growing demand without igniting inflation, the government can spend what it needs to maintain employment and achieve goals such as halting climate change.

    MMT is a national government spending more than it taxes, to stimulate output. It can print or borrow the extra money.

    The current MMT crowd says deficits do not matter, nor the national debt.

    In other words, the MMT crowd has been running Washington DC since the Ronald Reagan days….

    If the Fed implemented a low-rate Treasury peg like they had in the 1940’s, how would deficits have to change to maintain 2% inflation? What about 4% inflation?

    If you really tried to make an honest framework out of MMT, we would have cut deficits considerably to achieve 2% inflation with a 1940’s Treasury peg.

    ###############

    A short video about one of the modern tricks of modern monetary theorists:

    Explanation of Quantitative Easing

    https://www.youtube.com/watch?v=PTUY16CkS-k

     

    • #98
  9. JosePluma Coolidge
    JosePluma
    @JosePluma

    Amy Schley (View Comment):
    D) Cut real benefits. Massive inflation is the only option that doesn’t have entrenched opposition, so you better believe that’s the option they’ll go with. 

    Buy gold!

    • #99
  10. Arahant Member
    Arahant
    @Arahant

    JosePluma (View Comment):

    Amy Schley (View Comment):
    D) Cut real benefits. Massive inflation is the only option that doesn’t have entrenched opposition, so you better believe that’s the option they’ll go with.

    Buy gold!

    The only gold I can afford would be gold fish.

    • #100
  11. Amy Schley Moderator
    Amy Schley
    @AmySchley

    JosePluma (View Comment):

    Amy Schley (View Comment):
    D) Cut real benefits. Massive inflation is the only option that doesn’t have entrenched opposition, so you better believe that’s the option they’ll go with.

    Buy gold!

    Yes, please buy gold, because I now work at a gold mine, and the more gold bugs inflate the price the more money we make. 

    As a hedge against inflation and preparation against economic collapse though, I’m just not convinced gold is really that useful. First, since it’s not a standard currency, you’ll have to either barter with it or turn it back into dollars. Second, gold doesn’t have intrinsic value outside the electronic industry. 

    I’d suggest stockpiling ammo. Much easier to barter with since you can finely divide quantities without equipment, and if nobody wants to trade, you still have something useful.

    • #101
  12. RufusRJones Member
    RufusRJones
    @RufusRJones

    This is a great, short article about how government is bad at creating any net value. Per Byland is excellent. 

    That’s the reason the government did it. Government is in the business of wasting scarce resources at high economic cost, i.e., without sufficient expected value. No matter how one looks at it, this is wasteful. Unless, of course, one ignores the concept of economic cost: the higher-value opportunities that are foregone — lost — because we’re instead pursuing the lower-valued ones.

    • #102
  13. Mark Camp Member
    Mark Camp
    @MarkCamp

    Mike H (View Comment):
    The fed has made a lot of mistakes, but they are learning from them over time and getting less bad.

    The Austrian economists, like Mises and Hayek, claim to have proven your belief to be false, and in fact dangerously false.

    If you have studied this theory and found a flaw in it, I would be interested to know what it is.  I’ve studied it and haven’t found one.

    To summarize, socialist planners, including the Fed, have no rational means of predicting the effects of their coercive (non-market) actions.  One critical problem is that their equations have no constants.  A set of equations where every parameter is a variable can never predict the future.

    Imagine using Newton’s laws to predict a ballistic path.  Suppose that instead of the gravitational constant g being a constant, it were a variable.  It is different for each future case.

    How could you predict the path?

    • #103
  14. RufusRJones Member
    RufusRJones
    @RufusRJones

    If central banks do anything except back up the financial system in a punitive way, bad things will happen. It’s unworkable GOSPLAN-style guesswork. 

    • #104
  15. Mark Camp Member
    Mark Camp
    @MarkCamp

    RufusRJones (View Comment):

    If central banks do anything except back up the financial system in a punitive way, bad things will happen. It’s unworkable GOSPLAN-style guesswork.

    I completely agree.  I think that you expressed their most beneficial possible role very well.

    • #105
  16. RufusRJones Member
    RufusRJones
    @RufusRJones

    Mark Camp (View Comment):

    RufusRJones (View Comment):

    If central banks do anything except back up the financial system in a punitive way, bad things will happen. It’s unworkable GOSPLAN-style guesswork.

    I completely agree. I think that you expressed their most beneficial possible role very well.

    I got that from David Stockman. It’s called a “real bills” policy. Having a central bank buy loans, debts, and accounts receivable that are backed by actual securitized assets or whatever is no big deal. It doesn’t screw up the economy. Then you just charge them a really high interest rate so they don’t get reliant on it.

    • #106
  17. Gumby Mark (R-Meth Lab of Demo… Coolidge
    Gumby Mark (R-Meth Lab of Demo…
    @GumbyMark

    Mark Camp (View Comment):

    RufusRJones (View Comment):

    If central banks do anything except back up the financial system in a punitive way, bad things will happen. It’s unworkable GOSPLAN-style guesswork.

    I completely agree. I think that you expressed their most beneficial possible role very well.

    Since I have completely lost the thread of what the two of you are talking about do either of you have an opinion as to the original questions posed in this post?

    Does an unending stream of trillion dollar + deficits and rapidly increasing national debt pose a real threat to the stability and economic future of America?

    If so, how would one try to convince the American voting public of this?

     

    • #107
  18. RufusRJones Member
    RufusRJones
    @RufusRJones

    Gumby Mark (R-Meth Lab of Demo… (View Comment):

    If so, how would one try to convince the American voting public of this?

     

    I’m convinced the only way to do it is with free market interest rates. When all of the Western central banks plus China are blowing bubbles and then cleaning up the mess with low interest rates and bailing out the stupid financial system you aren’t going to control spending. Spending can’t be controlled with political will, when you have a discretionary central-bank. 

    Government bonds don’t reflect the stupidity of how fiscally irresponsible all of the Western governments are. There are a bunch of reasons for this, but eventually we will pay, somehow. 

    I mean it is just laughable that the GOP ever was fiscally responsible, but it’s really structural. You can’t explain it to anybody. @iwalton has had some really good ideas, but good luck getting the GOP to be that creative and intelligent.

    Medicare Part D was the big one for a lot of experts. A $9 trillion Instant unfunded liability so Bush could finish off Iraq.

    Watch this and then tell me who is to blame. 

     

     

    • #108
  19. Mark Camp Member
    Mark Camp
    @MarkCamp

    Gumby Mark (R-Meth Lab of Demo… (View Comment):

    Mark Camp (View Comment):

    RufusRJones (View Comment):

    If central banks do anything except back up the financial system in a punitive way, bad things will happen. It’s unworkable GOSPLAN-style guesswork.

    I completely agree. I think that you expressed their most beneficial possible role very well.

    Since I have completely lost the thread of what the two of you are talking about do either of you have an opinion as to the original questions posed in this post?

    The article is about the possibility of a debt crisis, caused by the US government’s large and expanding debt.  The question is whether the Fed, which is charged with preventing financial crises, will be able to do that, and if so, how?  How should it intervene?

    Does an unending stream of trillion dollar + deficits and rapidly increasing national debt pose a real threat to the stability and economic future of America?

    I think that it is dangerous to the stability of the financial system.  I agree with what I took to be the OP’s point, that many who have been predicting an imminent disaster were off base.  I have observed that they have based their predictions on a naive understanding of government borrowing and how our monetary system is run.  But yes, it’s a problem.

    If so, how would one try to convince the American voting public of this?

    It has to start with restoring sound economics education in secondary and especially higher education.  But the more we do at the grass roots level, on sites like Ricochet, the better.  There has to be a public awareness of the problem of economic ignorance before someone recognizes the need to change our educational curriculum, and makes the needed changes.

    • #109
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