The New York Times, apparently now the "Pay Lady of News," is busy whoring out to the "don't worry, be happy!" crowd.
Check this article....
The concern, of course, is that one day rates will inevitably go up, which means interest payments will too. According to this school of thought, as our debt grows, lenders will be willing to take the risk of giving more money only if they can get more in return. And yet with the rise of China, India and Brazil, the world is awash in money looking for safe places. Even with the U.S. economy weak, the dollar remains one of the few truly safe havens, and that means interest rates could stay low for a very long time, which in turn means that our debts — however big — can be managed.
Indeed, though eliminating deficits might seem wise, it could actually be fatal to future prosperity. China is spending hundreds of billions of dollars on infrastructure, while America can hardly repair its bridges. The U.S. has to invest and spend to build a future, to help re-create a workforce, and for now debt is a means to that end — provided Washington shows it can effectively channel that money.
(See the best business deals of 2009.)
Like home mortgages, much of the debt never has to be paid down. Half of the debt of trillions of dollars is owed by the federal government to itself, and a quarter more is owed to the American public. Because of the unique role of the dollar as the global reserve currency, the debt the government owes itself can simply be rolled over endlessly. Only the interest payments are a must. As long as the dollar remains central to the global system — and there is little chance of that changing in the next decade — the U.S. will have the latitude to borrow more than most other countries.
Worrying about debt is like gaining too much weight and worrying about the size of your clothing.
Okay...first, it's NOT "like gaining too much weight and worrying about the size of your clothing." The US debt is like gaining too much weight and saying it's okay to gain more weight.
Second, if you want to make that bizarre analogy work, you would have to say, "Eating 5,000 calories a day would be okay if you are training for a marathon. But if you are sitting around watching curling, eating 5,000 calories a day is disastrous."
I accept, as Angus did before, that debt might be okay if we were investing it. But we are not. We are using debt to fund pet projects that have no purpose other than re-electing Senators, or paying to put more people on the public employment roles so they will reliably vote Democrat.
Third, the dude actually says, "According to this school of thought, as our debt grows, lenders will be willing to take the risk of giving more money only if they can get more in return. And yet with the rise of China, India and Brazil, the world is awash in money looking for safe places." That's not a school of thought, that's accounting physics. Further, if either the Eurozone or Chinese get their act together, our complacency ("sure we suck, but they suck worse! Eat that pie!") will be hammered.
Yes, I realize that the author is in fact some shill, not the NYT ed page itself. Still, this is pretty funny. Almost as funny as Joe Stiglitz.
(Nod to Kesav)
1 comment:
Much of the debt the federal government "owes itself" represents Social Security and Medicare liabilities. In order to meet these obligations, the government will not be able to roll over debt internally. Rather, if the obligations are to be met, either taxes will have to rise or external debt will have to increase.
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