Thursday, November 12, 2009

The Mother of all Debts!

Menzie Chinn expends some energy in defending the value numbers of the Stimulus package, which I do not doubt are as accurate as can be. The problem I have with those numbers lies in the construct of the models utilized. My Point states that these economic models make two assumptions which I find appalling: the first being the Concept that the American economy works in a vacuum where the US Dollar does not lose Value and new technology is considered mute; the Second ignores the factual reality that the Government itself must be Downsized in the face of insufficient taxation and rising debt. No economic model I know of considers a Government labor force which is 30% smaller, a position which I envision as highly likely. New technology must be introduced, as another Generation of School Graduates will find Us with insufficient land to supply Housing of the current quality, to say nothing of furnishing such Households with Power and Consumer Goods. Someone somewhere has failed to notice this Outfitting of the newest Generation will be much harder with the decline in the value of the Dollar. The final note I would outline is the fact that the economy would have produced a high increase in Employment even without the Stimulus in all later years, to the point that Stimulus has become nothing but Inflation.

Daniel Gross would not agree with my analysis. He still has to present some statistical data which should raise Warning Signs. He has to mention that the Treasury is looking for more debt raised in 2009Q4 than all of 2006, a difference of three years–Recession on Not. The Apologists for the Debt never mention the over 400% increase in debt in three years, when the Government has never repaid any Debt at a faster rate than about 1% per year since the 19th Century. I am not great at Math, but know that 1% of the current Debt is much higher in total amount than when We last achieved such payment. There remains the question of what We are going to do for Stimulus in the next Recession, and even possibly what We are going to do for Government revenue at that time; Suggestion: turn the White House into a Bed and Breakfast.

The MAOA Gene is alive and well, and mostly resides in our Politicians, read the article and understand the incomprehensible. I wonder when they will find the Gene which makes it easier to spend other peoples’ money, rather than your own–it might only be held by Criminals and Politicians; if those two terms are not the same. I do not like the rise of Consumer Debt, but know that it can never reach the level of economic threat to the stability of the system. Government debt, on the other hand, is an animal which destroys the health of everything it touches. It is like health care–which should be Public and universal–or totally left to the Consumer. Anything else leads to lack of care and inflationary pricing in the sector. I watched a comparison of different health care systems in the World on PBS, and realize that these halfway measures covering only part of the problem is what led to the highest percentage of GDP expended on health care. It is time for Change, but there are so many elements which must be worked on, One cannot say any of it will make a difference. lgl

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