LATimes.com
I have to give Michael Kinsley credit. This is the second time in as many years that he has reallys started to question the assumptions that make up what I call the boomer blindspot, aka basically a belief that the U.S. still sits astride the world as it did when they were kids right after WWII. The dollar could never be broken and lastly that the kids and grandkids can pay off all the entitlements no matter the debt level or cost.
He doesn't really come up with answers, but he does sort of think questions into the air. That puts him well ahead of about 98% of his generation. He actually drills down and questions the conventional wisdom of his generation and runs the reasoning out to the impossible conclusions. Good for him and by that I mean bad for us because the outcomes are all terrible for us as a nation.
The deeper question Mr. Kinsley, though again you are applauded for questioning the baseline assumption here, is what happens when not only the government does this, but an entire generation does it by borrowing all the equity out of their homes, taking the "excess" they supposedly paid into Social Security and replaces it with bonds while spending it, taps their 401k's out if they ever paid into them in the first place and tell their kids to take out loans to the tune of trillion dollars for college and then expect the kids and the lawn man to somehow pay it all back?
Well you see the crux of the issue here Mr. Kinsley. Your generation doesn't have to worry about wiping out the savers. As a generation it doesn't have any. They call the savers the Japanese and the Chinese. Much like how they have deluded themselves and their children, the boomers think they will delude nations such as these and all will be fine as they wander into the sunset. One last teaser rate refinance and the balloon payment will happen when they are in the ground.
We don't know who the "derisive guffaw" happens to be but I would be willing to bet a beer and a meal it is Paul Krugman. Mr. Kinsley, you are to be commended for doing better than most of your generation and noting that question. You'll join the rest of us in reality when you realize that it is but the first in a series that reveal massive debt loads not just with a yearly federal deficit but the systematic looting of a country by a generation. The issue isn't just federal entitlements. The boomers own less of their homes, have less in their retirement accounts, are less healthy coming into retirement. They've demanded their kids finance more of their education, spent away the fake Social Security Surplus, added 15 trillion on top of that and then we could actually look into state, county and city pensions, and bonds.
It will be frightening and sad when the bill comes due.
I have to give Michael Kinsley credit. This is the second time in as many years that he has reallys started to question the assumptions that make up what I call the boomer blindspot, aka basically a belief that the U.S. still sits astride the world as it did when they were kids right after WWII. The dollar could never be broken and lastly that the kids and grandkids can pay off all the entitlements no matter the debt level or cost.
He doesn't really come up with answers, but he does sort of think questions into the air. That puts him well ahead of about 98% of his generation. He actually drills down and questions the conventional wisdom of his generation and runs the reasoning out to the impossible conclusions. Good for him and by that I mean bad for us because the outcomes are all terrible for us as a nation.
Quote:
Third and most important, the blitheness with which intelligent people say "Oh, we can always print more money" is horrifying. For one thing, it's not true. Sure, maybe once. But if we develop a reputation for paying our debts with a printing press, no one will want to hold our debt and no one will buy it.
Ask yourself: If the United States can always cover its debts by just printing money, at no cost, what are we waiting for? Why even bother running up these tiresome debts and paying interest on them? Why shouldn't Uncle Sam just make his shopping list, print out as much cash as he will need and head for Costco?
Ask yourself: If the United States can always cover its debts by just printing money, at no cost, what are we waiting for? Why even bother running up these tiresome debts and paying interest on them? Why shouldn't Uncle Sam just make his shopping list, print out as much cash as he will need and head for Costco?
The deeper question Mr. Kinsley, though again you are applauded for questioning the baseline assumption here, is what happens when not only the government does this, but an entire generation does it by borrowing all the equity out of their homes, taking the "excess" they supposedly paid into Social Security and replaces it with bonds while spending it, taps their 401k's out if they ever paid into them in the first place and tell their kids to take out loans to the tune of trillion dollars for college and then expect the kids and the lawn man to somehow pay it all back?
Quote:
Here's the missing explanation: Inflation reduces the value of debt. If poorer people are on balance borrowers and wealthier people are on balance lenders, inflation can help to reduce one of our most serious economic problems, which is the increase in income and wealth inequality. More important, inflation is the only conceivable easy way we can pay down the national debt to a manageable size, or at least slow its growth.
This is how it works: The debt ceiling we're about to crash through is $14.3 trillion. But even as we borrow more (about $1.6 trillion this year), inflation erodes the value of what we already owe. At an inflation rate of 2.7%, $14.3trillion will be worth about $13.9trillion in today's dollars a year from now. That's nearly $400billion wiped away from the national debt without fuss, without debate and seemingly without cost or pain. A quarter of the deficit. And that's with inflation at record lows. If inflation were 5%, it would wipe out $715 billion; at 10%, nearly the entire projected annual increase in the national debt, even at its current record high of $1.6 trillion.
Of course, it would also wipe out people's savings at the same rapid clip. Anyone who lived through the inflation of 1979-81 knows that there are noxious social effects as well. To say that inflation, at 2.7%, has "climbed closer to healthy levels" is insane.
This is how it works: The debt ceiling we're about to crash through is $14.3 trillion. But even as we borrow more (about $1.6 trillion this year), inflation erodes the value of what we already owe. At an inflation rate of 2.7%, $14.3trillion will be worth about $13.9trillion in today's dollars a year from now. That's nearly $400billion wiped away from the national debt without fuss, without debate and seemingly without cost or pain. A quarter of the deficit. And that's with inflation at record lows. If inflation were 5%, it would wipe out $715 billion; at 10%, nearly the entire projected annual increase in the national debt, even at its current record high of $1.6 trillion.
Of course, it would also wipe out people's savings at the same rapid clip. Anyone who lived through the inflation of 1979-81 knows that there are noxious social effects as well. To say that inflation, at 2.7%, has "climbed closer to healthy levels" is insane.
Well you see the crux of the issue here Mr. Kinsley. Your generation doesn't have to worry about wiping out the savers. As a generation it doesn't have any. They call the savers the Japanese and the Chinese. Much like how they have deluded themselves and their children, the boomers think they will delude nations such as these and all will be fine as they wander into the sunset. One last teaser rate refinance and the balloon payment will happen when they are in the ground.
Quote:
"At least one economist" (the same one, he of the "derisive guffaw") and I had an exchange of views on the Web awhile back. He is of the view that the debt doesn't matter, that the fuss over it is a right-wing plot to generate unnecessary panic about government spending and use it as an excuse to cut Medicare and Social Security. (Many Republicans think it's a left-wing plot to raise taxes.)
I asked him a version of the question above. If the national debt doesn't matter, why do we have taxes at all? Why not just borrow the entire federal budget? (The same question can be posed to a Republican tax-cutter.)
Derisive Guffaw answered that we need the deficit for Keynesian reasons: so that we can easily raise or lower it to stimulate or sedate the economy, as needed. Of course, in the real world, we don't seem to be able to raise and lower (or at least to lower) the deficit for any reason, good or bad.
The question remains: If the deficit doesn't matter, why have any taxes at all? And if there is some point at which the deficit does start to matter, and become dangerous, when is that point if $1.6 trillion isn't it?
I asked him a version of the question above. If the national debt doesn't matter, why do we have taxes at all? Why not just borrow the entire federal budget? (The same question can be posed to a Republican tax-cutter.)
Derisive Guffaw answered that we need the deficit for Keynesian reasons: so that we can easily raise or lower it to stimulate or sedate the economy, as needed. Of course, in the real world, we don't seem to be able to raise and lower (or at least to lower) the deficit for any reason, good or bad.
The question remains: If the deficit doesn't matter, why have any taxes at all? And if there is some point at which the deficit does start to matter, and become dangerous, when is that point if $1.6 trillion isn't it?
We don't know who the "derisive guffaw" happens to be but I would be willing to bet a beer and a meal it is Paul Krugman. Mr. Kinsley, you are to be commended for doing better than most of your generation and noting that question. You'll join the rest of us in reality when you realize that it is but the first in a series that reveal massive debt loads not just with a yearly federal deficit but the systematic looting of a country by a generation. The issue isn't just federal entitlements. The boomers own less of their homes, have less in their retirement accounts, are less healthy coming into retirement. They've demanded their kids finance more of their education, spent away the fake Social Security Surplus, added 15 trillion on top of that and then we could actually look into state, county and city pensions, and bonds.
It will be frightening and sad when the bill comes due.
"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell
"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell
No one who turns a profit through a voluntary exchange needs to "give something back." This concept is merely a socialist delusion.
