Since there ‘is no free lunch’ who will wind up picking up the tab for the latest profligate spending sprees?
Pelosi is adding another trillion or two to the national credit card, the money isn’t so much helping the individuals and businesses directly harmed by government lockdowns. A lot of will be going to fill holes in the budgets of blue states with the same runaway spending habits. Rep. Byron Donalds Puts Pretentious Washington Fakery On BLAST (VIDEO)
Since the holes in these state budgets were already a problem before COVID came to town, these must be the ‘pre-existing’ conditions Democrats REALLY meant in their rhetoric.
But throwing a few trillion at a time on the national credit card isn’t without consequences. The question that remains to be seen is who is going to get hit with the blunt end of that pool cue when the bill comes due?
By the laws of economics, what cannot continue forever must end. Seems simple, right? Sure. So what happens when the music stops?
I’m no money guy, so rather than venture too far beyond my expertise, I will just touch on a few general trends, each one relating to the next, using Rep Thomas Massie’s comments as a jumping-off point.
“I feel like we’re kind of almost headed where Puerto Rico got to. You know, Puerto Rico – the only thing that stopped them from spending more money was when their creditors quit lending it to them. And that’s, you know, typically, if you’re in debt or about to go bankrupt, you don’t come to that realization until people quit loaning you money,” Massie said.
“The first thing they do is they raise your interest rates because your risk – the risk of getting paid back goes up. And so the interest rates are going to go up, and I think we’ll still keep spending money. There’ll be nothing to regulate it here, people just borrow money to pay for the interest. But at some point, you become such a risk that you’re, you know, the people who are financing you refuse to loan you any more money.” –JustTheNews
We aren’t even trying to stay within our budget, nationally.
It’s a matter of time before creditors decide we’re not worth the risk, and stop lending to us under the terms we’re accustomed getting money loaned to us.
This will force two choices: tighten our belts and make some tough (Federal) spending decisions, or… go to the international equivalent of the payday loan shops with dizzying interest rates.
We keep talking about Medicare running out of money. What do you suppose happens to them when the money tree tries up?
What about all those plum Public Service sector jobs? Or the pensions and benefits? Ask the fine people of Detriot what happens to all that when a government runs out of money and can’t make good on lavish promises made decades earlier.
Unless you were old enough to cast a vote for Ronald Reagan, you probably aren’t old enough to remember crushing double-digit interest rates. If interest rates go up, there are implications on businesses, homeowners and anyone to whom those people pass on their expenses.
The only people who don’t get jackhammered in that situation are those who own their homes outright. Don’t expect renters to dodge that bullet, either.
It doesn’t take a lot of creativity to figure out other impacts of tightened purse strings from higher interest rates on the economy. Lower discretionary spending. Revenue losses, job losses, generally hitting the working class hardest.
It isn’t a modern idea that economies have a way of self-correcting to balance the value of their currency. Venezuela, Zimbabwe, the Weimar Republic, even ancient Rome ran into problems with public confidence in the value of their currency.
When ‘money printer goes brrrrr’, so that we can shovel money at projects, we might *think* we are helping the economy, but it’s a shell game. What we are really doing is undercutting the value of our currency.
We are used to a little inflation every year with cost-of-living corrections.
But what happens if the new spending habits we’ve picked up in COVID start eating away at the value of the dollar?
– Cost of living goes up. (and don’t expect those cheap foreign imports to seem quite so cheap anymore as exchange rates worsen) This hits people living on the margins the hardest.
– Retirement Savings and Pension value tanks. What happens if that tidy nest egg you scrimped and saved for doesn’t carry you as far as it might have? Or that annuity you were expecting to live on suddenly loses a chunk of its value?
Government Debt Repayment
There is another aspect of debt that profligate spenders don’t like to talk about.
How it could crush granny’s retirement nest egg is only part of the problem. The other part of the problem is what it does to generations not yet born.
It’s pretty rich to hear octogenarian politicians kicking around the term ‘reparations’ with respect to slavery from a century and a half ago without giving a moment’s thought to the system of slavery they themselves are establishing.
What is slavery, in its simplest definition?
Isn’t a reasonable definition something like this? “Forcibly taking the benefit of another person’s labor for oneself while offering nothing in return?”
By that definition, isn’t our government doing exactly that? They are spending massive money on their own priorities (for personal benefits, or in exchange for political power) and passing the bill off onto people who will see no benefit from that spending.
With so much interest on ‘sustainable this and ‘sustainable’ that…
Can you imagine how different DC might be if we were to take as much interest in a sustainable GOVERNMENT?
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