Monday, March 23, 2009

THe Tyranny of Perpetual Debt

So there’s this little group called the Congressional Budget Office that’s a non-partisan, unbiased office dedicated to measuring the economic consequences of government proposals. And guess what they’ve figured out? The Obama budget will create a deficit of $1.8 TRILLION this year alone! That’s new debt this year over 4% of our GDP. By the end of the president’s first term, our debt—not including our unfunded Social Security obligations to the tune of $100T—will account for EIGHTY-FIVE PERCENT of the value produced in the country. How on earth do you expect to survive with debt equal to almost nine-tenths of your income? It doesn’t make any sense!


And now we’re getting some of the money we’re spending by borrowing from ourselves. How does that make any sense? If a private citizen or business accounted that way, people would go to prison! Say there’s a company—like, say, Tyco—who spends money from one department to fund another department, then counts it as an asset. How’d that end up? Oh yeah, with the company going out of business and the executives spending life in prison. So remind me why it’s okay for the government to do it?


It’s a colossal house of cards. We’re paying off our debt by borrowing more money—from ourselves. It’s a circle so absurd it would be funny if it didn’t determine the future of our country—the Treasury borrows from the Fed to pay off its debt to the Fed, which uses the payment to buy debt from the Treasury. They’re juggling, hoping to keep this massive debt in the air so that we never have to do the painful thing, change our lifestyles and deal with it. But as they take on more and more debt, it’s going to be the same as a juggler taking more and more chainsaws or flaming torches—eventually there are going to be too many to keep up with, and then they all come crashing down. And what happens when a couple trillion chainsaws drop on the poor juggler?

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