His argument is higher spending is needed and justifies debt and some garbage about interest rates.
Posted on 08/21/2015 2:08:03 PM PDT by dynachrome
Edited on 08/22/2015 2:18:47 AM PDT by Admin Moderator. [history]
Rand Paul said something funny the other day. No, really — although of course it wasn’t intentional. On his Twitter account he decried the irresponsibility of American fiscal policy, declaring, “The last time the United States was debt free was 1835.”
Wags quickly noted that the U.S. economy has, on the whole, done pretty well these past 180 years, suggesting that having the government owe the private sector money might not be all that bad a thing. The British government, by the way, has been in debt for more than three centuries, an era spanning the Industrial Revolution, victory over Napoleon, and more.
Going into debt to keep a roof over your head and even make improvements to it can make sense, if you don't get idiotic about it. Ditto for basic transportation to get you to and from work or education to improve a skillset or income earning potential.
So much of what our government does is the equivalent of going into debt to purchase temporary pleasure at the whorehouse or casino and buy smokes, booze and bong hits. And a moron like Krugman can't tell the difference.
Debt can be necessary for certain things. It is never "good".
Government debt is especially nasty because in theory it sucks money out of the credit markets that could otherwise be used to create real jobs.
But of course that was before the FRB went rogue and has created a mess we will never get out of.
If he likes debt, he can have mine.
Markets will tank and wealth will be destroyed. Central banks will print, and then the big investment banks will buy up what’s left at pennies on the dollar.
Thus is crony capitalism transitioning into neo-feudalism. World government to follow.
Well said, I may re-quote your post, if you don’t mind...
Of course he decried excessive debt.
But his antagonists pointed out that government debt becomes excessive by its very nature, and that it was therefore dangerous to even start it up in the first place.
You nailed it.
His argument is higher spending is needed and justifies debt and some garbage about interest rates.
Be my guest. Glad you liked it.
Debt is selling your future.
However, I'm not Trillions and Trillions in debt - what's the difference in the scenarios?
I’m shocked, shocked that Krugman supports slavery.
Debt is a necessary part of life.
We will never be free of certain obligations and the same thing is true for governments as well.
That said, there is a difference between debt and living beyond one’s means.
For our country, I’m more concerned about the latter than the former.
When we are able to pay our debts, its not a problem. We can’t pay our debts our lives are compromised in so many ways.
And we can’t depend on the goodwill of our foreign creditors forever if we can’t pay them back.
“Alexander Hamilton agreed.”
A funded public debt.
Hamilton’s insight is what transformed the bankrupt Continental Congress government into the fiscally sound US Constitution government, and made the American dollar good as gold.
He absorbed all of the debts of the 13 states and agreed to pay interest on that debt in gold. US Treasury debt was immediately bid up to par.
In spite of, rather than because of.
ELI5
“ELI5”
I had to look that up. Okay, I dunno if I can quite equal the 5 yr old requirement but I’ll try-
From 1777 until 1789 the United States operated under the Articles of Confederation. Taxing power for the national government was essentially non-existent. The 13 states owed a lot of money for war debts. To “pay” their debts they had been issuing their own currency, as had the Continental Congress. But no one wanted to get paid in that money, people regarded it as being worthless. The 13 states and the Continental Congress were close to financial collapse.
The United States reorganized under the Constitution in 1789. The national government now had taxing power, which at that time was mostly tariffs collected on imported goods. Treasury Secretary Alexander Hamilton offered to accept either gold or American currency as payment for the taxes owed. This immediately made the formerly “worthless” American money as good as gold, since the government would accept either one as payment.
Hamilton also announced that he would pay, in gold, the interest owed on all debt issued by the US Treasury. This made US Treasury debt highly desirable to investors because they would now have a reliable income stream paid in gold, backed by the taxing power of the United States government. There was a lot of this US Treasury debt because the US Treasury had taken over all of the debts that the 13 States and the Continental Congress during and after the Revolution.
When he took office Secretary Hamilton had inherited a huge debt burden that the country owed but couldn’t pay for. He inherited a worthless currency that no one wanted to accept. The United States in 1789 was a financial basket case that couldn’t pay its bills. And no one was willing to lend the country the money it needed to keep functioning. His innovations described above converted that massive debt and worthless currency into an asset that saved the United States from ruin at its birth. It’s a variation of the funded public debt that the Dutch Republic had used in the 1600s.
Thank you for that explanation, it is clear and precise.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.