Actually, if debt is sustainable, this is not necessarily the case. By sustainable, of course, we mean able to be serviced out of the returns to the borrower, which in the case of a government means more or less the product of the economy. This depends on interest rates, taxation rates, the effect of taxation rates on economic activity, the structure of the tax system as to the degree it hinders or distorts investment decisions.... there are lots of ways to screw it up. But it is not necessarily the case that even ongoing continual increase in total indebtedness must resullt in price spirals.
Which doesn't mean that what we've been doing since the Bush (shrub) tax cuts was not insane. I'm with Hamilton-- the debt, if not immoderate, is a blessing. But moderation has vanished from every corner of our political house.
And our "blessing" has been artificially sustained in bliss by the historical accident that the US dollar is the worlds' de facto reserve currency, and US obligations have never yet defaulted.
What I'm terrified of right now is that happens when (and I'm increasingly confident it's when, as in when near term, a couple of years at most and probably less) the US goes to a treasury auction and nobody buys. Even if we don't actually "default" -- once the market (namely the world) agrees that US debt is now just another sovereign debt, and what is worse a sovereign debt hostage to an insane mob of lunatics who not only can but actually promise to render it worthless whenever the whim takes them, our blessing will become a true curse. Not only for us, but for the entire world, And in the agony which ensues, what cruel tyrannies will follow, like hungry wolves hunting down wounded prey.
I avoided Covid for all the epidemic until last Thursday. I'm recovering, it seems, but in the years to come it could well turn out that I, among the living, will envy the dead.
Actually, if debt is sustainable, this is not necessarily the case. By sustainable, of course, we mean able to be serviced out of the returns to the borrower, which in the case of a government means more or less the product of the economy. This depends on interest rates, taxation rates, the effect of taxation rates on economic activity, the structure of the tax system as to the degree it hinders or distorts investment decisions.... there are lots of ways to screw it up. But it is not necessarily the case that even ongoing continual increase in total indebtedness must resullt in price spirals.
Which doesn't mean that what we've been doing since the Bush (shrub) tax cuts was not insane. I'm with Hamilton-- the debt, if not immoderate, is a blessing. But moderation has vanished from every corner of our political house.
And our "blessing" has been artificially sustained in bliss by the historical accident that the US dollar is the worlds' de facto reserve currency, and US obligations have never yet defaulted.
What I'm terrified of right now is that happens when (and I'm increasingly confident it's when, as in when near term, a couple of years at most and probably less) the US goes to a treasury auction and nobody buys. Even if we don't actually "default" -- once the market (namely the world) agrees that US debt is now just another sovereign debt, and what is worse a sovereign debt hostage to an insane mob of lunatics who not only can but actually promise to render it worthless whenever the whim takes them, our blessing will become a true curse. Not only for us, but for the entire world, And in the agony which ensues, what cruel tyrannies will follow, like hungry wolves hunting down wounded prey.
I avoided Covid for all the epidemic until last Thursday. I'm recovering, it seems, but in the years to come it could well turn out that I, among the living, will envy the dead.
Bill Clinton handed off a budget surplus without cutting to the bone. It is possible.