Joe Doakes from Como Park emails:

Everybody knows the US can never retire its debts – we owe like 20 trillion dollars.  More, if you count the value of unfunded promises like Social Security and Obamacare.  But everybody also knows you can’t cut spending – can’t even propose a smaller increase in spending – because the media would bury you.

And with Bernie riding the “free stuff” horse into the White House, it’ll only get worse.

So – three possibilities:

  1. America is unique in history: we never pay the debt and nobody ever cares, it’s all imaginary money anyway, in which case, why not spend even more, give away even more, and everyone can be rich forever?
  1. Somebody calls the debt and the US Government can’t pay it.  It’s happened before, after the Revolutionary War.  The resulting economic chaos was mitigated because 90% of the citizens lived on farms where they were used to primitive life and had a chance at being self-sustaining.  This time around, 90% of the citizens live in cities that will run out of food and water in days.
  1. We figure out a way to write off the debt and start fresh, but without a calamitous economic crash.

We’re living as if Option 1 was guaranteed and Option 2 cannot happen.  I’m not convinced that’s true.   Option 3 is never discussed.  Is that because it’s not technically possible?  Because it’s not politically feasible?  Or because Americans are reluctant to give up the dream of a free lobster in every pot and a free Cadillac in every garage?


Joe Doakes

I’m starting to think Trulbert was optimistic.

6 thoughts on “Unique!

  1. One point that’s missed is that most external US debt is in US dollars now, not foreign currency as it was after the Revolution. That was NOT the case in the 70s when a debt crisis pushed Nixon to remove the last vestiges of the Gold Standard and OPEC settled on a dollar standard for their payments.

    As far as the Revolution, the US internal debt (wages for soldiers, etc) was in Continentals that were converted into land grants as a way to pay off the debt. Some poor suckers in the army were given land plots on mountains in Vermont and moved there only to discover that there was no way to make a living off the land they’d been given. Sure, they were “paid”, but the currency in which they were paid was often worthless.

    The US can “pay off” its debt anytime it wants to by printing more money. Nice stuff that fiat paper. Sure, it would wipe out many savers, cause a massive burst of inflation, and huge financial panic the world over. But it can be done. The US government would no doubt be forced to collateralize their new debt, but the old stuff can, in theory, be paid off anytime we want to now that we’re in a post-Bretton Woods world.

  2. Nerdbert, I’d argue that what you describe is case #2. It’s not strictly speaking a default, but the economic impact would be largely the same.

    To me, one of the saddest things is that we can’t even apparently agree that it’s immoral to force the poor to pay for the rich, things like the subsidy for electric cars. My daughter gets to help buy a Tesla for a doctor exactly why? And if we got that straight, we’d have hundreds of billions off the budget right there.

  3. I suspect Bernie loses steam in the coming weeks, with big losses outside the North on Mar. 1. I think he’ll fade to 30-40% in most states, although he’ll win enough to keep Hilary scared. Eventually he will look like what he is, an old man with 20th century ideas for a 21st century USA.

  4. The trick is how does that differentiate Bernie from Hilliary, apart from being male? By the way, the Communist Manifesto was written in 1848. So it’s not 20th century ideas, but rather 19th century ideas that were proven to be utterly barbaric in the 20th.

    Something like the political version of “light rail”, I guess.

  5. Clinton is a better candidate for President than Trump, but so are many of the Republicans. Clinton might find that her base is not as solid as it would be vs. a normal Republican. After months of dismissing Trump as an amusement whom voters would reject come polling day, I am starting to acknowledge the power of his nativist populism. There are clearly a lot of Americans who are prepared to go through with Trump to the bitter end.

  6. I think EI, like many government minions, has lost contact with actual blue collar voters. The anger over the loss of positions that paid for a middle class lifestyle to overseas competition, the loss of jobs and the depression of wages to illegals, has been a potent issue for years waiting for a trigger. The GOP ignored it because of corporatism and some vague resemblance to “free trade” because it wasn’t affecting the elite. Demonrats supported it because the uneducated masses supported their socialist agenda.

    I suspect that had Trump run as his version of a Populist as a Democrat he would have been even more successful, especially in attracting union members. But the dynamic before the start of this race was that Hillary was an unstoppable juggernaut in the Democratic primary, while the GOP field was open. Couple that with the fact that Trump was the only one going against the conventional wisdom in the chattering classes that voters didn’t care about immigration and jobs policy, and Trump saw a way to win.

    I feel strongly enough about the immigration and H1B stuff that if it came down to Trump vs. Rubio, I’d back Trump since I know Rubio embrace of the new reality on immigration policy is tepid at best. I’m willing to give Cruz a pass since he’s not so motivated on immigration, but not Rubio who was clearly a ringleader in amnesty. But I’ll take even Rubio over a lying, scheming, money hungry, influence peddling Democrat any day — Hillary must be stopped.

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