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The national debt, that is — no matter how often Paul Krugman tells you otherwise.
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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.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?
H/T to National Review Online