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George Washington vs. Washington DC’s Debt
Our nation’s founders were keenly aware of the habits of mind necessary to self-governance. Public thrift was considered essential to prosperity and stability. They knew from reading history that financial insolvency was a primary destroyer of great civilizations.
George Washington among others warned against “ungenerously throwing upon posterity the burden which we ourselves are to bear.”
They would see everything they feared most unfolding now in 21st-century America, capped by the financial disaster we have created out of a viral pandemic. We have so far added over $4 trillion in Covid spending, all of it paid for by our fantasy credit card.
Our $27.5 trillion total debt exceeds our GDP, a traditional red flag. Yet Americans remain curiously unconcerned about this menace to our future.
When Covid hit, many pronounced it unprecedented, the worst crisis in our history, justifying the expenditure of gigantic sums. But our hysterical reaction is not based in reality.
1919 was the year after World War I killed 20 million and the Spanish flu (political correctness alert) took 50 million victims worldwide. In 1968, RFK and MLK were assassinated, cities burned and the Hong Kong flu killed 1 million. The Civil War, WWII, and the Great Depression were financial as well as humanitarian disasters.
Yet in the face of conditions at least as dire as ours, Americans accepted the sacrifices, did their jobs, and got through it, without aggrandizing themselves as heroes. It probably didn’t occur to them to start writing checks to each other, even those who have not suffered financially, with the intention of passing the bill to future taxpayers.
The original CARES Act was a $3.2 trillion attempt to mitigate the fallout from the disastrous, ineffective lockdown strategy, possibly the worst policy failure of all time. Before the money was even spent, politicians and interest groups were clamoring for more. The House authorized another $3.4 trillion in May and Nancy Pelosi ever since has been pressuring Republicans to go along.
Meanwhile, economic growth is resuming in spite of continuing lockdowns. Employment is rising, financial markets are healthy, and household spending has actually increased in seven of the last eight months.
Yet rather than pursue targeted relief and re-opening the economy, spineless Republicans agreed that more “rescuing” was necessary, just not as much as Queen Nancy had demanded. With the purported crisis as an excuse, another congressional feeding frenzy ensued with $2.3 trillion spent total in the name of coronavirus aid and “keeping the government open“. Broadway, teachers unions, racehorses, brewers, and many others found champions to help them over the line.
The reaction of Democrats and President Trump was: not enough. “This action in the lame-duck session is just beginning” Joe Biden proclaimed. “I’m going to ask for more.” Democrats made no bones about their intention to spend more trillions on Medicare for all, the Green New Deal, student loan forgiveness, and other goodies.
The truth is that Americans love their myth that we can spend more than we have indefinitely without consequences. Our elected leaders speak and behave exactly as they would if we were flush with cash and are politically rewarded for doing so.
If they bother to provide any justification, they conveniently ascribe to the New Monetary Theory, which is that money-printing governments can never run out of money. That’s economic sophistication on the level with believing that you’re always OK if there are checks in the checkbook.
So far, we’ve survived our recklessness because interest rates have been artificially depressed by the Fed and investors are still willing to lend money to the US at extremely low rates. But at some point another crisis will require supplemental funding – war, another pandemic, political collapse, whatever.
Bond investors will then see a nation that is already financing debt payments with more debt, that most likely will be running $2 trillion to $3 trillion deficits and still facing unreformed Social Security and healthcare mandates. Sharply higher interest rates will increase the deficit, which will cause interest rates to rise further, creating a classic Doom Loop, all because our political culture couldn’t resist overspending.
Our 2020 spending was unjustified and immoral intergenerational theft. George would not be amused.
Published in Economics
I’m listening a little more and he’s getting into how inflation and for the most part asset bubbles are just a regressive tax to pay for government.
People need to really stop being naïve about where the Socialism and populism are coming from.
Definitely listen to this. You can skip over the part that you find kind of dry or technical.
***edit***
The next good part was about bitcoin which I don’t have an opinion on, and I don’t have an opinion about his opinion. The important part is when he describes fiat money. He should have been more explicit about how the government forces us to use it. It’s a little bit more complicated than this, but it basically comes down to they force you to pay your taxes in fiat. This creates an artificial floor under its value unlike a regular commodity money. Well, that’s all well and good except then the government turns around and screws over 80% of us with their policies that are empowered by that crap. You are just flat out stupid to not use the government to steal as much as possible from the other citizens.
The system is idiotic and the socialists and the populists are the only ones that get it.
All of the limousine liberals like Zuckerberg need to be persecuted as much as possible or nothing is going to get better. The GOP needs to figure out where it’s supposed populist “problem” is coming from.
I can’t summarize this but it is the best thing I’ve seen about where Trump came from. Steve Bannon explains the phenomenon.
https://www.youtube.com/watch?v=pm5xxlajTW0&t=15s
The other thing I can recommend is this book.
https://www.amazon.com/After-Fall-Saving-Capitalism-Washington-ebook/dp/B004ROT46G
I wrote a review on Amazon summarizing the book.
https://www.amazon.com/gp/customer-reviews/R1UI9RKEE3SBRX/ref=cm_cr_dp_d_rvw_ttl?ie=UTF8&ASIN=B004ROT46G
The video is 2 1/2 hours but worth it.
This is outstanding. Everybody needs to watch this.
The part around 15:00 is excellent. The middle class is supporting the extractive part of the country that everybody’s getting rich off of. It’s disgusting.
These interest rates are excessively low for artificial reasons. You’re a sucker if you save money. 4% on the 10 year breaks every single western government but they can’t raise interest rates enough to put money in a savings account. You cannot run a civilization this way. I have been trying to tell people this for months.
Trade. Not only is china mercantilist, you can’t have an inflationist system when you have all of these Republicans saying that free markets are so great. Cheap labor imported cheap labor overseas. Automation facilitated by fake low interest rates. It’s an outrage. Republicans that don’t get this are a menace.
I’ve seen her speak. She is really smart.
This is a great thread. It’s about four tweets.
I am sure these have nothing at all to do with each other. Move along
These guys have some really good observations on the ruling class, the dispersion of wealth, the actual nature of productivity, and the electorate’s response to it. The problem is it’s really long.
https://www.stitcher.com/show/the-chris-buskirk-show/episode/slowly-and-then-all-at-once-with-malcom-kyeyune-80212977