M2RB:
On 15 December 1977, The Who performed before a select invited audience at the Gaumont State Theatre in Kilburn, North London, to record a concert for the film, The Kids Are Alright. It was the second-to-last performance for Keith Moon.
My lord, when will they ever learn it, ooh
Look there, nations of travelling children
Nowhere to go to escape the chill wind
Teenage Wasteland has a piper to pay one day....unless you stay wasted on unicorn dust like Obama and The Ferret.
The national debt, that is -- no matter how often Paul Krugman
tells you otherwise.
Since the incomparable William F. Buckley, Jr., has already dealt with this subject in 1958, I defer to his inimitable style in introducing the subject of today's column:
"Halfway through the second term of Franklin Roosevelt, the New Deal braintrusters began to worry about mounting popular concern over the national debt.… Indeed, Franklin Roosevelt had talked himself into office, in 1932, in part by promising to hack away at a debt which, even under the frugal Mr. Hoover, the people tended to think of as grown to menacing size.… And then, suddenly, the academic community came to the rescue. Economists across the length and breadth of the land were electrified by a theory of debt introduced in England by John Maynard Keynes. The politicians wrung their hands in gratitude. Depicting the intoxicating political consequences of Lord Keynes's discovery, the wry cartoonist of the Washington Times Herald drew a memorable picture. In the center, sitting on a throne in front of a maypole, was a jubilant FDR, cigarette tilted up almost vertically, a grin on his face that stretched from ear to ear. Dancing about him in a circle, hands clasped together, their faces glowing with ecstasy, the braintrusters, vested in academic robes, sang the magical incantation, the great discovery of Lord Keynes: "We owe it to ourselves."
With five talismanic words, the planners had disposed of the problem of deficit spending…. Tax and tax, spend and spend, elect and elect…"
After being pinned to the wall in such eloquent fashion like a
rare butterfly, you would think the conceit that "We owe the
national debt to ourselves" would have been long retired to some
museum of rhetorical antiquities. But no, we find that even today
the doctrine is still vigorously alive, at least in the mind of
Paul Krugman, the lunatic columnist of the New York Times
who has just published another 300-page volume that can be digested
into three words: "Spend, spend, spend" -- the government, that
is.
I admit I stopped reading Krugman a long time ago. You can only
listen to a one-track mind for so long before it loses any further
informational value. It all reminds me of the scene in Woody
Allen's Take the Money and Run where Virgil Starkwell, the
inept career bank robber, drops a rock on the foot of a prison
guard and is "locked in solitary confinement for a week with an
insurance salesman" whom we last see disappearing into the hole
with Woody propounding, "Now you're gonna need life. I think term
would be best. Then we're going to want to cover you for
accidents.…" That's what Paul Krugman sounds like.
Fortunately, the New York Post's Kyle Smith has stuck
his head into the maelstrom and
reports in his Sunday column last week what Krugman is up to
these days. Wouldn't you know, he finds the Nobel Laureate still
flogging that same 1930s horse:
"People think of debt's role in the economy as if it were the same as what debt means for an individual: There's a lot of money you have to pay to someone else. But that's all wrong; the debt we create is basically money we owe to ourselves, and the burden it imposes does not involve a real transfer of resources."
In actuality, "We owe it to ourselves" is one of those deceiving little pieces of rhetoric whereby liberals put their arm around your and pat you on the back while picking your pocket. Let's try an illustration. Imagine for a moment that you have taken out a 30-year mortgage on a house and owe the bank $300,000. Two years into your payments you lose some of your income and start falling behind. After three months the bank sends you a note saying that if the situation isn't straightened out within another three months, they may have to foreclose.
Do you think it would be possible to go into the vice
president's office, put your arm around his shoulder and say,
"Look, what's the difference whether I pay you or not? I mean, we
owe it to ourselves, don't we?"
We don't owe the national debt to ourselves. Some of us owe it
to others. Those who owe are generally called "wage earners,"
"taxpayers," or "U.S. citizens." Those who are owed are called
"lenders" and "bondholders." Now there may be some taxpayers who
are also bondholders and bondholders who are also U.S. citizens,
but the two groups are not identical. Reneging on any of the debt
will produce an unequal outcome -- what Krugman would call a "real
transfer of resources."
Look at it another way. A second class of stakeholders in this
game is government employees who have a claim on pension rights
that stretch far, far into the future. When the day comes -- and it
may not be long -- that governments find they are having difficulty
in meeting these obligations, will it be possible for them to brush
off pensioners by saying, "Look, you don't really need a check
right now. I mean, we'd just be paying ourselves, right?"
The problem here is that modern governments are run by people
who can't make these kinds of calculations. This is especially true
of the populists who congregate in the Democratic Party. Even the
brightest of them see government as an entity above ordinary
morality. In an article last week, for instance, USA Today
revealed that the true size of the national debt is not the
$16,000 per household that registers on the "Deficit Clock" but
$42,000 per household -- very near the average household income of
$49,000. This is because, contrary to the rules that govern private
companies and state and local governments, Congress does not
require itself to include future health and retirement commitments
on its books. That's enough to take $3.7 trillion off the annual
shortfall, chopping it from $5 trillion to $1.7 trillion.
What was really scary, however, was the comment of one Jim
Horney, a former Senate budget staff expert now at the liberal
Center on Budget and Policy Priorities. He told USA Today
that "retirement programs should not count as part of the deficit
because, unlike a business, Congress can change what it owes by
cutting benefits or lifting taxes." Did you get that? We can ignore
future commitments to Medicare and Social Security because -- what
the heck -- we can always just cut benefits or raise tax rates to
something like 90 percent. All that will be required is the
"political will." Even liberals who can add and subtract generally
don't have the nerve to confront what they're doing.
The national debt is not owed "to ourselves." It is owed to
bondholders who have loaned money on the understanding that they
are going to be paid back. Even Democrats in the highest positions
often have trouble grasping this reality. During the early days of
the Clinton Administration, when the new President was being told
he couldn't borrow heedlessly to stimulate the economy, James
Carville became famous for complaining, "I used to think that if
there was reincarnation, I wanted to come back as the president or
the pope or as a .400 baseball hitter. But now I would like to come
back as the bond market. You can intimidate everybody." Apparently
it never occurred to Carville that there are real people out there
buying those bonds.
The bond market is not an abstraction. It is a group
of people who have loaned money to the government. As
creditors, they are acutely aware of the unspoken words at the end
of "We owe it to ourselves," which are, "We owe it to ourselves,
therefore we really don't have to worry about paying it
back."
Now of course we're a long way away from not paying anything
back. As long as there is trouble in the world, as long as the
stock market remains remain uncertain, as long as real estate is
risky, as long as the full faith and credit of Tanzania or Portugal
is open to question, there will investors eager to snap up U.S.
Treasury Bonds. In fact with things falling apart among all those
Eurozone countries who only "owe it to themselves," interest rates
on 30-year Treasuries are at their lowest rate in decades. But
let's look 30 years out to a time when some of those commitments
will be coming due.
In 1938 or even 1978, it might still have been possible to argue
"We owe it to ourselves." Most bond holders were U.S. citizens who
could always be stiff-armed because "their loss is our loss." But
that is no longer true. About 30 percent of the $16 trillion U.S.
debt is now owned by foreigners. The Chinese government is the
third largest creditor, behind the Federal Reserve and the Social
Security Trust Fund, owning 8 percent of the total. The Chinese now
hold more than all U.S. households combined. Japan, the UK, Brazil,
Taiwan, and Hong Kong are also big lenders. Foreigners now own more
than half the debt not held by some division of the U.S.
government. If the debt continues to pile up at a rate of more than
$1 trillion a year, paying it off will involve a "real transfer of
resources."
Yet as Greece is demonstrating now, the system won't fall apart
because we can't pay our debts. It will eventually fall apart but
because we won't be able to go on borrowing to maintain
our standard of living. The crisis will come to a
head when investors decide to they don't want to lend anymore. Then
it will be impossible to meet day-to-day expenses. If a left-wing
government takes control of Greece this month and renounces its
obligations, Greece with not have enough money way to pay the
hundreds of thousands of government employees and pensioners who
receive a check each month. That's when
"We're-all-in-this-together" finally bites back.
Now all this probably isn't going to be enough to convince Paul
Krugman that government deficits have real consequences. But I'll
tell you what. Next time you read one of his columns saying how
spending borrowed money is the only way to end a recession, drop
him a note saying the following:
"Hey Paul, I'm having a little trouble paying the rent this
month. Do you think you could loan me a couple of thousand dollars?
It'll carry me over and maybe in a while things will get better.
And as far as paying you back -- well, look, we're all in this
together, right? We'll owe it to ourselves."
++++++++++++++++++++++++++++++++++++++++++++++++++++
Sophie:
I've
got to admit that I love when The Ferret talks about cause-and-effect. It
is like falling down the rabbithole. According to The Ferret, Austerity, which actually means tax
hikes like those that he and Obama have been championing NOW and
spending cuts DOWN THE ROAD, is the cause of the sovereign debt
crisis. Got that? Austerity caused the sovereign debt crisis.
In my alternate universe known as Realville, sovereign debt caused the
sovereign debt crisis. But, then again, what do I know? I'm not a Nobel
Laureate like The Ferret, Yasser Arafat, Jimmy Carter, Kofi Annan, Fat Al
Bore, Barack Obama, or Dr Rajenda Pachauri, author of the enviro-smutty, bodice-ripping,
shag-fest of a GaianPussyGalore book known as “Return to Almora” - to be clear, he won the Peace Prize, not the Piece Prize or
a prize for literature.
I am so sick of The Ferret and his fellow Krugnuts. They act as though we can just print away the debt. How’d that work out for the Weimar Republic? It was great for Hitler, but not so well for the Jews, regular Germans, Russians, rest of Europe, and Americans.
Yes, the US is currently a refuge from the turmoil in Europe. Greece got downgraded again to CA2, which is just a couple of notches above the Nigerian that emails you saying, “Send me all of your financial information and banking data and I will send you a Bank of Nigeria bond that is rated AAA++++ for only $10. In 6 months, we promise to pay you back in full plus $2 trillion in interest.”
JUST BECAUSE WE ARE A REFUGE NOW DOESN’T MEAN WE WILL ALWAYS BE.
People — especially those on the left — look back to the 1950s and pine for the days of 91% tax rates (less than 200 people ever paid those rates), low unemployment (but not the 3 recessions they forget), good-paying jobs that meant mum could stay home (that was before the Great Society started paying women to get pregnant and stay single AND the womyn’s rights movement that told women that staying at home was for losers), low crime (shame and punishment meant something then), families (men were men and not pussified versions of what Naomi Wolf thinks they should be in earthtones, women didn’t get tramp stamps, little boys didn’t wear dresses), etc.
What they forget is that WE REALLY WERE THE ONLY GAME IN GLOBALTOWN. Europe was destroyed. Japan was destroyed. The Soviet Union was on something like its 6th of 17 5-year plans. China was a closed, agrarian society. Brasil and India were impoverished backwaters. WE HAD NO COMPETITION. THOSE DAYS ENDED AROUND THE LATE 1970S-EARLY 1980S.
Imagining that the United States will always remain the securest place to park your money…the refuge of last resort, the shining city on the hill…is just insanity. As Ronald Reagan said, “Freedom is never more than one generation away from extinction.” The same can be said about global leadership, economic competitiveness, financial security, dollar stability, individual property rights, etc.
Baba O'Riley (Teenage Wasteland) by The Who
Out here in the fields
I fight for my meals
I get my back into my living
I don't need to fight
To prove I'm right
I don't need to be forgiven
My kids ain't gonna break my heart
My greed ain't gonna spoil their part
This life just has to be a new one
I'm gonna tan underneath a new sun
Don't cry
Don't raise your eye
It's only teenage wasteland
Don't have the latest suit, the long grass is my fruit
I am really ordinary man
The family is free to do just as they please
And we all sleep together in the caravan
Hey you, don't walk on the turnips
My lord, when will they ever learn it, ooh
Look there, nations of travelling children
Nowhere to go to escape the chill wind
Don't cry
Don't raise your eye
It's only teenage wasteland
My kids ain't gonna break my heart
And my greed ain't gonna spoil their part
This life just has to be a new one
I'm gonna tan underneath a new sun
Sally, take my hand
We'll travel south crossland
Put out the fire
And don't look past my shoulder
The exodus is here
The happy ones are near
Let's get together
Before we get much older
Teenage wasteland
Teenage wasteland
Teenage wasteland
It's only teenage wasteland
Teenage wasteland
It's only teenage wasteland
Teenage wasteland
It's only teenage wasteland
They're all wasted!
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