Poor Dude

Poisoning the Green Shoots

We live in a world where corporations hire lobbyists to convince Congressmen/Congresswomen to pass laws that benefit them over (and at the expense of) their competitors. And where our leaders do so, in exchange for campaign contributions.

Where our tax laws are so convoluted that not even the people who wrote them nor the people who enforce them have even a clue what the law requires (but where our government will come down on you hard in a heartbeat, should you piss off the wrong federal official or serve as a good example of what "not to do" for the rest of our public).

Where nearly every single elected representative feels it is their solemn duty as an elected official to "bring home the bacon" to their district. (Forget what may be in the "nation"'s best interest.)

Where the vast majority of our population feels they are entitled to a good-paying job, or at least a nice roof over their heads, one (or two?" cars), three radios, two cell phones, a surround-sound home theatre system in HD, free food, and the best of medical care at no cost --- even if they choose not to work. And they get it, in the name of "compassion" or "humanity" or "equality" or "progress". Or whatever.

Where corporate executives and high-flying New York bankers get multi-million-dollar salaries each year, year after year after year, regardless of whether the value of their company's stock has gone up by 10 percent or down by 95 percent. And if they do REALLY badly, they'll get fired and drive off in the company car with a mega-millions settlement and a healthy pension for the rest of their life, while the little old ladies and widows and orphans and average working people who lost their life's savings after investing in them don't get even an apology.

Yep, that's the America we live in today.

And just trust me when I tell you that it's not sustainable, because it isn't. At some point, the producers are going to stop producing. And the hurt and the angry and the homeless and the penniless are going to want blood. And they'll get it.

Poisoning the Green Shoots

>>> Debt is an important tool in building our future. If we wait for people to be able to "pay cash" for their houses, cars, college educations, or for gov'ts too pay "up front" for roads and schools, it will be a looooong time before we see any economic expansion. <<<

OK, I do not disagree with this. If you can borrow at 5 percent and produce a return of 10 percent, then it is smart to borrow. (To yours and Mr. Lounsberry's credit.)

But I think it's important to keep investments and returns in perspective. While the underlying principle may be sound in a growing economy (or for a young nation), it is critical to know when you've passed the point of productive borrowing and entered the realm of borrowing for the sake of survival or maintaining the status quo. Once you cross that threshold, there is only a limited opportunity to reverse course and place oneself on a sustainable footing for the future.

And looking at the literally exponential growth of our nation's total debt over the past 20 or 30 years or so, and then factoring in our nation's demographics and life stage (baby boomers just now entering retirement, the development of a truly global economy where our workers must effectively compete with children from third-world countries, etc.), I can't help but reach the conclusion that we have now passed the point of no return. The point where we are no longer growing or earning our way to prosperity, but are instead simply borrowing today's prosperity (or maintenance of our current status quo) from our future. With a net NEGATIVE return to our children, instead of a positive one. And I'm sorry, but that's not productive borrowing.

Now being unable to sustain ourselves in a world where everyone else has the same advantages we once owned (because we chose to export our expertise in exchange for lower costs of labor and a short-term competitive advantage in the free markets), we are now doomed to failure. We have now borrowed more than we can ever POSSIBLY pay back while realizing a positive return on that investment. We are now borrowing simply to maintain our current lifestyle --- not to improve our future. And we are doing so at the expense of our children.

That's what I fear. That we have now entered the long slide to oblivion, and our leaders have neither the understanding nor the will to stop our demise and save us. At this point, it would require hard choices and sacrifices by many. But none are willing to pay the price. And because of that, we will all die together. All holding each other's hands and singing "kumbaya" as we're flushed down the toilet of human history, along with all those who preceeded us with great ideas but lacking the fortitude to make the sacrifices necessary to realize their fruition over the many centuries it requires ....

:(

Poisoning the Green Shoots

>>> Steven,

Your moralizing about debt is neither grounded in economic history or any credible theory of economic growth. Follow the consequences of your own logic. Less government debt means less government spending and less aggregate spending. So it implies a far more severe recession. Now a more severe recession means less tax revenues...

It is naive for you to think that the federal deficit would be smaller under a do nothing scenario.

Keynes wrote that practical men, who think themselves immune from theory, are usually the slaves of some defunct philosopher. Could that apply to you? <<<


That's an argument that the only way to ensure prosperity is to create it by hocking everyone's future productivity in order to enjoy the benefits of that future productivity today. If that's what Keynes espoused, then he is a fool.

Prosperity is created by productive output and economic expansion. Nothing more, and nothing less.

While borrowing may lend the appearance of prosperity at the current moment, it carries with it an iron-clad and unquestionable consequence. It requires you to drain from your future prosperity the means to repay the amount of your debt, plus the interest on those borrowings (since time is money, and no one is willing to lend to you today without an acceptable return on their investment).

To enjoy the benefits of a borrowed dollar today, you must pay back more than a dollar in the future. I don't know if "economic history" or any "credible theory of economic growth" recognizes that fact, but it's still a fact. Hell, it's just plain old common sense. Finance 101, or even simpler.

Any system built upon the premise that it must borrow from the future in order to survive today is a system built upon sand. One built upon the "bubble theory" of economics. And its future is unquestionable. The bubble will eventually burst, and that system will fail.

This much, I agree with:

"practical men, who think themselves immune from theory (or I would say economic reality), are usually the slaves of some defunct philosopher. Could that apply to you? "