It’s just out there, like a boogeyman, just out of your peripheral line of sight. It’s the National Debt. The amount we owe, collectively as a nation, to our creditors. It’s like a massive Visa bill you somehow ran up over the last seventy five years and now you can’t even wrap your mind around how you can ever pay it down.
And like boogeymen, all that fear is unwarranted. Because the national debt is just that; a boogeyman. There’s only one time when you hear about the debt. When Democrats have the White House. It’s a boogey man, brought out to scare the bejesus out of the credulous, drive some cattle into the pens, you know, bidness as usual.
Ok, you’re probably thinking wait a minute, we really did borrow that money and we really do have to pay it back.
Yes. We do. But when, and more importantly, how?
Firstly, we aren’t going to pay it off with taxes. You’ve seen those debt clock things.Think about it, when you look at the amount owed by each and every American family and how it grows, it doesn’t take a genius to see that if you hit individuals or businesses with high enough taxes to pay it down at an accelerated rate, the economy would grind to a halt. You can’t tax your way out of it. And if you try to do it by cutting spending, you quickly realize that the sizeable cuts to the budget required would negatively effect the economy, shifting massive costs onto state governments that are in no way up to the task.
So how do you pay it off? With growth. In times of economic expansion you devote a greater part of the yearly budget toward paying off the debt. You must resist the pressure to cut taxes or otherwise line the pockets of special interests with excess funds, but it isn’t rocket science. It’s accounting. It’s a year to year thing, and what counts is not the point you are at, but the aiming point of where you are headed, and the confidence folks have in your marksmanship.
And so, naturally, it stands to reason that there is a time to borrow, and the time to run up the debt is when there is a; a need and b; favorable market conditions.
The need to run up the debt would be a time of low demand for goods and services. Lagging growth in the private sector slowing the economy. A recession. Hmm….sound familiar? And favorable market conditions occur when there is a strong demand for US Treasuries. That makes for low interest for the borrower.
Low and behold we are living through a Perfect Storm for running up the debt. Oh, but wait, there’s politics involved in the process of allocating collective resources. Get the boogeyman out boys, there’s fear to monger!
So you’re still scared by the debt, even though I promise to you that if you just use Google, you will discover at light speed that in the last thirty plus years, Republican presidents always preside over increases in the national debt, regardless of economic conditions? That alone should tell a person this is all just a load of crap. Just as sure as they’ll try to stop a colored person from voting, a Republican administration regards deficit spending of such small consequence that they treat it like a private honeypot.
OK, if that isn’t enough to convince you of the relatively benign nature of the debt, let’s try something easier. Theoretical Physics.
There is a theory called The Holographic Principle. It has to do with black holes, what a singularity actually is and whether or not gravity could make matter dissapear and Shatner’s in there somewhere and some stuff about light years….you get the picture.
Anyway, after some braniac moments it leads to a very interesting question: If you’re looking at a full moon, and you turn your back to it…is the moon still there when you can no longer see it?
Obviously, there is evidence that it is, like your shadow, but is it really still there? More and more, scientists are beginning to suspect that it isn’t. It has to do with how the littlest of particles that comprise the universe only behave in the predictable manner that produces the universe we know when we observe them.
But when we’re not looking, they do all kinds of crazy shit.
So it only stands to reason that when you’re no longer looking at the moon, it is doing some crazy shit too, and then reassembles itself as soon as you look at it. It’s almost as if the Man in the Moon is laughing at us behind our backs.
Insane, right. But true. So true that the guys who put men on the moon are now looking for the fundamental membrane that this three dimensional holograph we call “real life” is projected on. And if you think that’s just nonsense consider…billions are being invested in this science.
Quick refresher course; What talks? Good. And what walks. Right again, nice work.
You can’t really expain this to someone in real terms unless you both have outrageous math skills. But it’s true. If you will choose to believe the guys that put men on the moon over your neighbor with the rebel flag mailbox.
Only a theoretical physicist can work the the math and experimentation behind all this. All you or I can do is offer up analogies, and then ask people to use a combination of careful fact based consideration and their natural bullshit meter to realize you’re telling them the truth. Kind of like you need them to do with climate change.
And the same is true about the National Debt. You really need an analogy. I’ve read a little about economics. Not any actual economics per se, that’s over my head and pretty dry stuff, but about economics. Theoretical stuff. I sort of grasp the difference between John Maynard Keynes and Milton Friedman. I have a friend who’s an economist. So what the hell, I’ll take a stab at it.
Here’s the situation; You’re in tough shape. Work is slack, pay is low, and you’re carrying beaucoup debt. You’re working, your job is steady, you know it will pick up. The boss likes you, so you know that if you just keep showing up and working hard, your problems aren’t solved, but you can hold it together while you try to work it out. Except you can see a problem that is going to mess you up. Your wheels. You need your car desperately to earn a living, and you know it’s on it’s last legs. You’ve got blue smoke coming out the tailpipe and it sounds like something is starting to knock. So besides your four bald tires and the high price of gas, which your ’85 K Car guzzles, you lack anything like the cash it would take to keep this peice of junk running. And you have no downstroke and no way can you afford car payments, but, what the hell, you do have good credit, why not just fall by the dealer and see what up.
So you hit the lot and the salesman says, ”You don’t have good credit, you have great credit! The best! You can get the car you want no money down.”
Yeah, but you just can’t afford the payments, how can you afford the payments?
And that’s when the credit manager comes out, and shows you that the rates on car loans are so low, that you can borrow at at rate that, over the years, will result in you paying less for the car than today’s sticker price! It’s a deal to good to be true, only for the first time in your life, it is true!
So what do you do?
Duh!?! You buy the freaking car! You’ll save money immediately on gas and repairs that you can apply to your monthly payment, the rest you can figure out, a second job maybe, but the bottom line is, you’ll be working because you have a dependable car!
You are being given an opportunity to work your way out of your current problems via credit.
And it’s the same with the national debt. We can’t afford not to run up the debt right now! Market conditions have never been so favorable, and clearly there is need. Dire need.
All of our greatest landmarks, from the Golden Gate Bridge to the Empire State Building, and many of those jewels of smaller stature that are treasured by us, our great civil engineering projects, were done during the Great Depression. Just like Lincoln, who chose during the Civil War to build a transcontinental railway, times of travail demand large, heroic decisions made by men and women with steel in their gizzards.
The investors of the world are begging, please, to invest in the future of the United States. We are the economic bedrock of the world.
But we will only take action, we will only commit ourselves to rebuilding the infrastructure of the nation, the power grid, high speed rail, solar and wind power generation, the r and d, if we understand that the national debt is like the moon.
It’s real, it’s there, but it’s just not exactly what we think it is. Unless we look at it. Unless we add it up and look at the bottom line. Turn away, who know’s what it is.
Other than something we don’t need to fear.
Credit is something to be put to work. They talk about running government like a business. Now’s the time.