Are We Headed for Insolvency?

A commenter notes:

The debt ceiling problem if you think it is going to go away your stupid because this country is headed for insolvency. All we do is give our $ to other countries and all we do is take it in the ass.

I do not believe that the US is headed for insolvency. A nation with fiat currency that prints its own money can and will always pay its bills. There’s no problem with that. The only problem is whether or not the US has the will to pay its bills. It will always have the means, that is beyond dispute.

However, with the debt ceiling debate, some in Congress decided that the US government would decide via willpower not to pay its bills, even though the US of course always has the means to pay its bills. That is part of the real problem with the debt downgrade – that there are politicians who will deliberately force a default on the US bills for purely ideological reasons.

Interest payments on debt as a % of GDP are only 1.4%, which is very low by historical standards and as compared to other countries.

The problem is that we are being insane about deficit reduction. There is only one way that sane nations do austerity – you raise revenues via taxation or fees and you cut spending. We are trying to do austerity by purely cutting spending without raising any revenue at all. It’s pure economic insanity, and there’s hardly a sane economist alive who thinks this is going to work. So we aren’t doing austerity at all – we are just doing insanity.

The Republican Party, by demanding massive cuts with no revenue increases, is setting the stage for future recessions and depressions, and is not operating with any kind of economic sense that any sane economist anywhere would recognize. So we aren’t doing austerity at all. We are just doing government-killing.

This is just a Libertarian get the government so small we can drown it in a bathtub project. That’s not an austerity project. It’s a Libertarian kill the state project. And it won’t work. When you kill the state, all you end up with is the 3rd World. Look to the 3rd World if you want to see what happens when the rich and the capitalists run everywhere and the state is emasculated, defunded and neutered.

During an economic downturn, the state must increase spending as a stimulus in order to get the economy going again (Keynesianism). Not all economists believe this – neoliberals don’t – but neoliberal theory has never worked anywhere. Keynesianism at least has the advantage among economic theories of being tried and tested.  Austerity and slashing spending during an economic downturn will only make matters worse. The current round of slashing – $2 trillion worth – may well cause 10 years of recession to depression.

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0 thoughts on “Are We Headed for Insolvency?”

  1. So are you a communitarian or what? On the central banker payroll to push the agenda on the unsuspecting public? Let us know.

    You deleted quite a bit of well-documented information on UN Agenda 21 posted here. There was only one reason for that, really. Though I’m sure you’ll check Saul Alinsky’s handbook for another, better reason to share with all of us here.

    Banned my IP? Easier than debating truth, eh?

    1. Did I ban your IP? I wasn’t aware that I did. Yes, I support a central bank. I am a monetarist of course. I’m not a communitarian, but I am sort of a Communist. Maybe just a little bit of one. Saul Alinsky is one of my heroes.

      1. What do you find so attractive about communism? It has never been successful, if you gauge human happiness against it. It’s been nothing but a historical failure. Why choose such an anti-human political philosophy over the freedom of a Constitutional republic? What’s potentially in it for you?

        1. I think the model in China, Vietnam, Belarus and even Cuba work pretty well all things considered. It’s not true that humans didn’t like it. There have been many surveys undertaken in Eastern Europe after the Fall that show that very large numbers of persons are nostalgic for Communism. Actually, I favor a moderated Communism something like what they have in Cuba, Belarus, Vietnam or China. On the other hand, it’s never coming to the US anyway, so why worry about it? I’m really just a socialist, and I support all types of socialism, all the way from social democracy up. What’s so good about a Constitutional Republic? Who needs it? Does it guarantee us a job, food, a place to live, medical care, education, a right to live and even survive? It’s doesn’t even guarantee me the right to survive. If it doesn’t guarantee my right to survive, eat, go to the doctor and have a roof over my head, it’s totally useless, and it’s not freedom at all. It’s freedom to starve, freedom to die.

          You can make an excellent case that capitalism has been a pretty monumental failure too, you know.

          I’ve never gotten much personally out of this capitalist system. I’d probably enjoy Communism or socialism just as much.

          But it’s moot anyway, as it will never happen in my lifetime.

          Why do you guys worry so much about phantoms like Communism?

  2. A Constitutional republic guarantees your ability to own your own land. This is the very backbone of the US Constitution, that it guarantees this, for each individual. In Communism, the government owns the land. You have no rights outside of those the government gives you, in Communism.

    When you own your own land, you can live any way you want to — freedom to choose any lifestyle you wish as long as it does not infringe on the rights and liberties of others. You are not required to belong to a consumer lifestyle because you can opt out, since you can live off your own land any way you want to. A republic is not by default capitalistic, in other words. A Constitutional republic represents the highest form of freedom for the individual.

    The communitarian/progressive democrat case that a failure of capitalism means our Constitutional republic is also a failure is therefore a misdirected argument. What makes our republic great is not capitalism, but the freedom to own your own land to live life the way you want to, and not under repression from any government, including your own.

    The capitalists who have truly abused the existing system are central bankers, and they are pro-Communism for a reason. They pump a lot of money into mis-educating people that our Constitutional republic should be replaced with something resembling communism. Central banker David Rockefeller loves the Chinese communist model for its efficiency; he has written articles about this love affair of the central bankers. Central bankers loves communism because it protects their power to control governments, by lending governments money, at interest.

    UN Agenda 21 and sustainable development represents the central bankers’ latest efforts to turn our Constitutional republic into a communitarian communist/socialist government that no longer represents the people.

    Yes, this is a very appropriate and immediate topic to be discussing now, as in — today.

    1. I don’t own any land, and I will probably never own any land, so that’s useless to me. I think it’s cool that in Communist China, the government owns all the land. People can’t buy or sell land. In particular, farmers cannot buy or sell land. This is excellent. I very much oppose giving the Chinese farmers ownership rights to their land. A lot of them will sell it, and that will be a very bad idea.

      Most progressive Democrats do not think that capitalism is failed. They don’t talk about it that much, and most of them have nothing to replace capitalism with.

      The primary reason why India cannot feed itself has do with private ownership of land, especially farmland. It would be better to do it the Chinese way.

      The Central Bankers are Commies thing is rightwing populism, and it’s utterly discredited nonsense. It’s never made any sense that these filthy rich capitalists are secret Commies. It’s simply ludicrous.

      1. Central bankers are not pro-communist? Your lack of education is showing. I’m going to let you spend 30 minutes educating yourself on that point. Come back to me and try again.

      2. You seem to think the Chinese government is an excellent model. What rights do you think you would have under such a system to challenge the government, should your communist government turn out to be corrupt and repressive?

        1. There are 1000 demonstrations every single day in China. The vast majority of demonstrators are never arrested or anything like that. Also, you can take any complaint you want to the local government office. There are long lines outside the local government office about people petitioning the state with this or that complaint.

    2. By the way, let it be known that historically speaking, a socialist regime is never intended to help the people. All socialist regimes end up as failures because the producers at some point end up getting tired of being weighed down by the non-producers of society. At some point, the individual spirit yearns to determine how far he/she can go without carrying the weight of strangers on their back.

      When this happens, socialism turns to communism, as communism is simply enforced socialism — at the barrel of a gun. Socialism is intentionally created because the end result is always the same: communism.

      Those in charge (aka, central bankers) love this model because the individual no longer has any rights to challenge government or those who own government via government debt.

      1. This is not true. Most working societies everywhere on Earth work on some kind of a socialist model, typically social democracy. Most socialist systems typically do not morph into Communism at some point. Most of them just remain social democracies. In fact, the US has many socialist elements.

        Look man, I’m going to ban you. We don’t allow rightwingers to post on here, ok? This is a socialist blog. You need to take it somewhere else.

  3. The leading communitarian, perhaps the guy who invented it?….Etzioni, a Zionist. Nawww, you don’t want to be a communitarian.

    Yockey called Hamilton the greatest Founder. National banks are a good thing, but the bankers have to have a higher calling and be controlled by those with an even higher calling. The Nation.

  4. To Rob:

    I do not believe that the US is headed for insolvency. A nation with fiat currency that prints its own money can and will always pay its bills. There’s no problem with that. The only problem is whether or not the US has the will to pay its bills. It will always have the means, that is beyond dispute.

    My guess is that the US (also many European countries..) will technically default on it’s debt. If I borrow money from you for 10 years and only pay half of it back and say that’s all I have, that’s defaulting on my debt. Since the US can double, treble, quadruple, the money in circulation.. or as you say print money… then I am sure that’s how the US will pay back it’s creditors. Slowly but surely the US dollar will decrease against hard assets. The big issue here is how much the US depends upon other countries for vital (and sometimes not vital..) products, the single most important of which is oil. Although it is true the Japanese have had very low interest rates for years and have run up a huge debt… basically 1) All of that money is owed to themselves. 2) They have higher levels of personal wealth (double the US…) 3) And they export more than they import. (Certainly not the case for the US…. we haven’t run a trade surplus for a very long time…) I wouldn’t be surprised if housing in places like Riverside County, Fresno, or Madera stays cheap for a long time but I suspect the price of gasoline could break $10 within the decade. Food is also likely to outpace inflation. Basically anything that has to be imported. (or can be exported such as food..) Inflation in the things we need, deflation in the things we have.

  5. Folks like Denninger at Market Ticker claim the banks themselves are insolvent and merely engaged in mark to market kicking the can down the road subterfuge. Anyone care to opinionate? (insolvent because of possessing huge CDSwaps type garbage still, etc)

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