Defined By Debt

Barack Obama,Debt,Economy,Political Economy


By Sept. 30, the end of the fiscal year, reports the Washington Times, the debt will have increased by $2 trillion, to reach $15.476 trillion, thereby constituting 102.6 percent of GDP (admittedly an iffy measure of economic Brownian Motion/expenditure). The Panglossian among us will counter that we’ve been there before and recovered (World War II). However, arguably, the economic fundamentals today are worse than they were during the Great Depression, since this country has never before been so deeply in hock as it currently is. Debt-—micro and macro; public and private—is now one of America’s defining characteristic. By Vox Day’s account, “U.S. households, corporations and various levels of government” owe fifty three trillion dollars! (“The Return of the Great Depression.”)

More: “Federal deficit on track for a record this fiscal year
Government debt to exceed U.S. economy”

Oh, Barack Obama said something really stupid yesterday (for a change): If the federal government shuts down — it would have an “adverse effect” on the economic recovery.

Au contraire, Mr. President. It might be worth while paying this guy not to come to work.

7 thoughts on “Defined By Debt

  1. Myron Pauli

    Contrast between 1946 and 2011 – WE ARE DOOMED. Back THEN:

    (1) pent up consumer demand (underproduction and underconsumption from 1929 – 1945)versus excess consumption.

    (2) Manufacturing rivals devastated by war.

    (3) Demographics had FEW people over 65 on Social Security and NO Medicare.

    (4) No idiotic diversity with a complete flood of immigrants, welfare families to take both benefits and newer but lower paying jobs

    (5) The welfare culture was rather new and had not infected society like today.
    People used to sell apples or hire themselves out as domestics during the Depression rather than sit getting unemployment checks for years on end.

    (6) The Regulatory state discourages any economic flexibility by the private sector.

    (7) FINALLY – DC was not the Megalopolis of Lobbysists with Amtrak, NPR, Fannie, Freddie, Defense Contractors, Dep’t of Education, etc. NPR is already using MY MONEY to air notices that we should all contact our Congressmen or it will be the end of all Classical Music etc. etc. The MOOCHERHIDEEN (Oink!!!) is far more embedded than in 1946 and will not yield power as easily as Hosni Mubarak.

  2. Roy Bleckert

    MP- You make a good case for “WE ARE DOOMED”

    But who would have thought Ron Paul’s stature would grow after 08 ?

    Or Rand would be a go to guy outta the box in the Senate ?

    & Us Ditch Bank Okies have been known to pull off some amazing things against all odds !

  3. David Smith

    If nothing else, this is all good theatre. It should at least provide some kind of entertainment watching the pigs oink for an ever diminishing amount of slop in the trough. Reality’s going to be a real booger!

  4. Myron Pauli

    Roy – while it is nice to be optimistic in the face of heroes like Ron Paul, keep in mind that America has a “winner take all” system and not a Parliamentary system like Israel or Italy – hence if limited government advocates have 10% – 30% of popular opinion, they still only get (by sheer luck) 1 Representative – Ron Paul – out of 435. So in that sense, Ron Paul, getting TV exposure is a bit like world Jewry – getting more publicity than raw numbers would merit.

    Now there may be 20 other Republicans ready to vote with him on most issues but there is no majority opposing the welfare-warfare Leviathan. Even if there was, it is non-trivial for a Congress of 435 Ron Pauls to eliminate $20 Trillion of current debt and $100 Trillion of future “promised obligation” debt. Reciting the Constitution or reading Atlas Shrugged does not in and of itself create wealth – the DOOM lies ahead even if we have the guts to recognize it!

  5. Bob Schaefer

    Myron has provided a shrewd list.

    Regarding Social Security… In 1946 Social Security was still in its fledgling stage. The program was responsibly administrated and federal accounting for the program was honest.

    In 1940 the Board of Trustees reported that assets in the Trust Fund totaled $1.7 Billion and offered this naïve but prescient assessment of the program’s future:

    “The trust fund augmented by the anticipated income of the next five fiscal years is ample to assure the payment of benefits and administrative expenses for this period. However, the next five-year period is but the introduction to several generations during which the trend in benefits, while predictable in degree, will be pronouncedly upward.”

    The rest, as they say, is history. Today the Social Security system is but a shabby Ponzi scheme. The Social Security “Trust Fund” has zero assets and is itself a contradiction in terms. In 2021, according to Obama’s budget, Total Gross Federal Debt will be $26.3 Trillion, of which $7.4 Trillion (28%) is intra-governmental debt (read “Trust Funds”).

    An addition to Myron’s list is the status of the US Dollar. In 1946, as a result of the new monetary regime established at Bretton Woods, the US Dollar was (almost) as good as gold, i.e., world currencies were tied to the dollar and the dollar was tied to gold. Reserve requirements imposed a real measure of fiscal restraint on federal profligacy.

    Today, the US Dollar is a fiat currency on the brink of collapse. Gold, having no official tie to the dollar, serves merely as the market’s means of gauging the dollar’s relative decline in value.

    Moreover, monetary inflation engineered by the US Federal Reserve is rapidly jeopardizing the dollar’s status as the world reserve currency.

    Yes, American prosperity as we have known it is doomed.

  6. irongalt

    Although the country may have been at this debt *ratio* before, there are a few major differences:

    1. The country had a far healthier and more productive private sector, and a smaller and less gluttonous oink sector.

    2. The “new deal” relied on pillaging the large amounts of wealth that the private sector had built up. This time around the only potential spoils will be the scraps they left us with the last time. When the bones are picked clean, they’re picked clean.

    3. Back then the country was making huge amounts of income from exports…including military technology, electronics, raw materials, etc. Now the only businesses left are in the service industries (which don’t export a blasted thing and usually service the oinks), and retailers who subsist off a markup on goods manufactured elsewhere…almost exclusively Asia.

    4. Most potential exports will not compete on the global market because of the horrendous tax rates American businesses are burdened with. Any technology that another country would want to import from the US is stifled with export restrictions, which encompass everything from computer chips and transformers to yes…even vacuum tubes.

    5. The US had more clout on the world stage. Now that the country’s eminently wise “leaders” have proven that the military is incapable of beating a few camel-riding rag heads in Iraq, any respect it had is merely an echo in history.

    Yes, America is doomed.

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