National Debt -

“It’s not what you don’t know that gets you into trouble, it’s what [some economists] know for sure that just ain’t so.” – Mark Twain

[Background: in 1981, the ratio of national debt/GDP was a robust 31% and falling. In 2023, after the Reagan/Bush/Trump tax cuts on the wealthy and many years of huge deficits, it was 122% and on an unsustainable trajectory (according to the World Bank.) 2023 finances. More information about government finances]

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Remember how the Red Queen in Alice in Wonderland had to run as fast as she could just to stay in one place?

Our government has it worse. It has to collect even more revenue each year just to stay in one place: It has to pay interest on the previous year’s deficit as well as all the previous year’s expenses.

Every year, that extra interest payment will grow faster and faster, until eventually our creditors won’t or can’t lend us enough more to keep us afloat

The government will have three possibilities for dealing with the problem:

Drastically raise taxes
Print a whole lot more money (causing extreme inflation) [Wages have only just been keeping up with inflation as it is.]
Cut way back on the size of the government.

We’ll almost certainly need all three.

Default isn’t really a possibility. We’d ruin our credit, probably cause a depression, and cause a global financial crisis.

Actually, the crisis is fairly close. According to the Wharton Business School, “Under current policy, the United States has about 20 years for corrective action after which no amount of future tax increases or spending cuts could avoid the government defaulting on its debt.” Why we have to start paying our debt.

Eventually the government is going to pay its own way.

Far, far better sooner rather than later.

The answer, of course is to stop using debt as a revenue source.

Income taxes or tariffs are the obvious alternatives.

[ Many economists, though, subscribe to a theory that unlimited debt is all right. Of course, that’s ignoring the possibility that a huge disaster or a rogue creditor will demand a large enough withdrawal to break the bank or cause intolerable inflation. Besides, it’s just a theory. If gets tested and found to be wanting: Disaster, chaos.]

Here’s what ChatGPT has to say about it:

“4. Economic Growth: As long as the economy grows at a rate that outpaces debt growth, the debt/GDP ratio can remain stable. Sustainable growth is key to managing high levels of debt.”

Right. We need infinite growth on a finite planet?!

With our steadily increasing debt/GDP ratio, It’s obviously not working.

Sounds like the infinite-debt economists are in cahoots with the billionaire class. Shameful.

After the Reagan/Bush/Trump tax cuts and many years. of high deficits.The nation is on a road to fiscal disaster.There’s still time to turn around, but Trump wants to stomp on the gas.

Now we’re in for it.

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National Debt

“It’s not what you don’t know that gets you into trouble, it’s what [some economists] know for sure that just ain’t so.” – Mark Twain

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