How can Obama possibly spend more than he already has? But I have faith that he will take it to the [un]limit.
As Glenn Reynolds keeps saying:
"Once again: Something that can’t go on forever, won’t. Promises that can’t be kept, won’t be. Debt that can’t be repaid, won’t be. Make your plans accordingly."
When the dollar is worthless, you'll have lots of them.
Addendum:
I forgot the attribution which is HERE. The following is a quote from that site:
"Math doesn’t care about fairness or good intentions. Spending vastly more than you have isn’t good when done by a Republican or a Democrat. Two plus two doesn’t equal 33.2317 after you factor in a secret "Social Justice" multiplier. And if our current president accumulates debt at the rate of his first four-plus years, the national debt will be $22 trillion by the time leaves office."
6 comments:
Given the fact that there is serious demand for US debt, the optimal level of debt is most likely positive, not zero. Continued demand for US debt also implies that the government can indeed run deficits, even in the long run.
The proper variable to look at is the debt-to-GDP ratio or, even better, the interest-payments-to-GDP ratio, or even the interest-payments-to-government-revenues ratio, along with the likely future trajectories of those objects. This measures the "sustainable" increase in the debt each year, in a broad sense.
I disagree. The payback of interest on the debt will be done not by GDP, but by government income (taxes and fees), less other government spending. Right now, the government is borrowing from the Fed (fiat money) to pay the debt interest. If it did not do so, then other government functions would have to be limited in order to allow the debt interest to be paid. That was the entire issue of the "default": Obama would have had to reduce government even more in order to pay the debt interest out of existing revenue streams.
So the Republicans allowed him to borrow more cash to pay the interest on the debt, plus to increase government even more.
Long term, the increased debt will be passed on to future generations as "generation theft". There will be lots of dollars with little value; the government will be huge and produce negative wealth, while the private sector is reduced to nil, or very close to nil. So the revenue stream will depend on non-wealth producing commerce, not on wealth producing manufacturing and creation of useful products (which will be imported from whoknowswhere).
The short term hazard is when there is a run; what will likely happen is that the Fed will buy that, too, paying with inflated dollars, freshly printed.
The Fed is a fiscally illegitimate player, because as a pretend wealthy entity, it has no risk because it can print however much money is required in order to twist the vision of the economy in the eyes of the unwary. Because its money comes out of thin air, it devalues existing money, as the two are averaged together.
Just by printing up the money, the Fed can make itself the wealthiest entity on earth, and keep it that way. That's the reason that there has been serious talk of printing up billion dollar bills.
"That was the entire issue of the "default": Obama would have had to reduce government even more in order to pay the debt interest out of existing revenue streams."
No.
Last week you wanted to pay the debt and "live within our means".
Awful idea. It's been tried.
Andrew Jackson. Hated debt and compared national debt to a households budget which of course, it is nothing like.
Blocked every spending bill and reduced government until the national debt was paid.
The country started to run at a surplus which caused a recession. Jackson then required land sales to be backed with gold or silver in order to reign in this disaster. BAM. Longest depression in American history.
So, then Obama saying that raising the debt ceiling is unpatriotic in 2008 means he was a moron who didn't know what he was talking about, but now that he has doubled the debt the Bush ran up, it is a really good thing, right?
On July 3, 2008 — the day before Independence Day — Obama said “driving up our national debt from $5 trillion dollars to $9 trillion is irresponsible. It’s unpatriotic.” But under Obama’s watch, Republicans note, that very debt has risen another $5 trillion.
On July 3, 2008 - the day before Independence Day — Obama said “driving up our national debt from $5 trillion dollars to $9 trillion is irresponsible. It’s unpatriotic.” But under Obama’s watch, Republicans note, that very debt has risen another $5 trillion.
Charles,
As much as I hate to quote Wikipedia, the article on the Panic of 1837 seems to be well annotated. And it doesn't seem to reflect your opinion of the cause. It appears to have been a number of causes, including overuse of credit leading to bubbles in land, cotton and slaves, which burst after the British started an inflation spiral on credit. Jackson's reversion to gold/silver may have had a "negative effect", but a more significant cause was the congressional decision to redistribute funds from eastern banks into westerm banks for balance. This put the eastern banks in a cash bind, runs ensued, riots followed, and much hardship.
Blaming it on fiscal responsibility is pretty far fetched, when the prior history was fiscal irresponsibility creating speculation bubbles which collapsed. That was at least partly caused by banks "issuing paper money excessively", the same as being done today by the Fed (owned by the big banks).
The current recession will likely turn out to be longer than the 1837 -1843 "panic".
The national debt is a monstrosity born out of government's reckless spending of fiat money and loans; therefore, both government and the banks/fed are entirely to blame. They don't care about the negative effects this will have on future generations, only about themselves.
Consider the scenario of the family unit -- male and female parents, of course, and a few children. They spend lavishly upon themselves, using credit which they have no intention of paying back. If they don't pay their bills on time, are they not responsible once their water/electricity gets shut off and they can afford either food nor gas? Sooner or later they'll get kicked out onto the street and need to live in a homeless shelter. Eventually, their children will inheret their debt after they pass away. Now, wouldn't you consider that to be a form of abuse and neglect?
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