So, apparently, spending cuts
aren't necessary to stave off the latest fiscapocalypse. We can just jigger tax rates and keep spending and accumulating debt forever!
At least that's what politicians in DC seem to think. Admittedly, I have no great skill in managing a large and disparate nation, but then again, judging from results, the current collection of elected
officials don't either. I have, however, seen the results of spending and indefinite debt accumulation on personal finances. The path either ends in bankruptcy, for people who care about the niceties, or what fancy policy-wonk types call 'debt repudiation'. For us low-class folks out in the hinterlands, 'debt repudiation' just means you quit paying the people you owe.
These options aren't the same on a national scale, mainly because sovereigns do not declare bankruptcy. It is now, as always, good to be the king. When you are the king, you engage in debt repudiation. You tell everybody who owes you money to get fucked. Since you, as sovereign, control the courts, police, and army, it makes it a little difficult for your shafted creditors to get much recourse.
I don't think I'd be putting a bunch of money in Treasury securities right now. Even if the Bernanke does manage to hold it all together with currency devaluation (Quantitative Easing Forever!), they aren't a real good bet.
Labels: gummint, idjits, money, politics