The Government now estimates that We will spend about $10.58 trillion more than the federal budget is worth over the next decade. I would first like to find an intelligent analysis of some entity I could trust as to the size of expected Investment by the American economy over this same period. We are getting into numbers which must impact each other, and in adverse ways. Increased Debt will absorb Investment Capital, while loss of Investment Capital will limit the Credit rating of Treasuries and raise the Interest rates demanded by loan extension elements. The total size of the Debt eats up available Capital to be borrowed, and increases the Service Costs of acquiring the Funds. Debt Creation and Supply becomes a massive economic sector in its own right, requiring a high degree of specialized labor which must be drawn from other economic sectors at extreme Cost. The trouble with this new economic sector rests in the fact that the full Cost of it presents no real economic input to production outside of raising Resource pricing with an artificial enlargement of Consumption Demand.
The artificiality of the increase in Consumption Demand is actually what creates the Danger. People spend above their means, and Business profits from that expenditure. Resource Costs go up, Labor Costs go up, Debt Repayment assumes a greater segment of Income, and Consumers continue to expend an ever-increasing limitation of Income on Consumption. It is a policy which encourages fiscal irresponsibility throughout the economy, and bankruptcy an ever greater Demon to all Participants. The entire specter of Debt becomes an ever-enlarging Black Hole which captures more and more, crushing economic activity.
One can account the many advantages of this Credit expansion. More Product is sold, higher Business Profits are made, extra Labor is employed at higher Wage; far too Many gaining in the Short Run, None worried about the necessary Inflation which is the only means by which the Debt will be repaid. The eventual outcome will be what one expects, but accompanied by a real loss of Credit rating. This is not a possible Result, but the only Outcome from the current policy. We need an effective Tax schedule which pays for Government programs in this Country; otherwise, We are as doomed as every previous Civilization in history. lgl