Thursday, January 10, 2013

Congress should keep up with the Joneses


Basic debt ceiling economics

By Dean Kalahar

If Congress does not raise the debt ceiling, the result will be no different than the Jones family deciding that they have maxed out their credit cards; and that if they continue borrowing and spending over their means, there will be significant pain to the family at best and bankruptcy at worst.

The economics of government is no different

Mr. and Mrs. Jones want to be able to provide for themselves in their retirement and hopefully leave a little something after they are gone to provide a better life for their children and grandchildren. They understand living in the moment and not planning for the future is a plan for failure.

The economics of government is no different

The Joneses know if they stop borrowing they will not become destitute, or default on their loan payments and obligations, because they will continue to work and earn income.  (Just as the government will still take in tax revenue) They know that if they reallocate and budget, which includes paying the interest and some of the principle on their credit card debts, and live within their means - nothing disastrous will happen!

The economics of government is no different.

The Joneses know they have a spending problem -not a revenue problem, and their extravagance must end. They will have to define what is essential for the family to provide stability. This will not be fun or easy, but 
they know their free spending choices have costs and they have decided personal responsibility to their accounts now is better than painful accountability later.

The economics of government is no different.

Sure the kids will whine and their friends will begrudge losing the benefits of cozying up to their big spending neighbors; but the basic family obligations of securing the home, providing food for the table, and making sure the children have clothes will ensure the health of the family.

The economics of government is no different.

If the Joneses want some things they can’t afford, they can become more efficient, increase their productivity, sell some of their assets, hold a garage sale, or just plain old save for that special purchase on a rainy day.
The economics of government is no different.

Over time the Joneses will adjust to their new financial way of life, pay off their bills, and get back on solid economic footing. At that time, they will have the option of having more credit extended to them because their credit rating will not only be secured, it will be enhanced.

The economics of government is no different.

Character and integrity are important to the Joneses, because living up to their commitments is not a slogan, it’s a moral obligation. Over time the self-respect they have shown turns those who were once resentful of their bounty and scornful of their austerity into neighbors who view them with admiration and strength.

The economics of government should be no different.

If Congress decides to stop borrowing money and not raise the debt ceiling - nothing disastrous will happen! And any attempt to prove otherwise is futile because it’s just not true.


2 comments:

  1. Never conflate the finances of a currency sovereign (the federal government) with those of everyone else. You, me, private business, state & local govt, the EU) are simply currency users. The federal government is the issuer of the dollar and is the sole architect of all laws pertaining to the dollar. On average, at least 40 % of ANYONE'S income is derived from aggregate government spending. Govt spending is part of a self-sustaining (positive) feedback loop. Your property rights never can supercede anyone else's property rights. You are not "more valuable." You lack perfect knowledge, so basically, you're full of it. On Real Clear Markets (June 2011) you and Walter Williams (just a toady for the elites, are you, too?) illogically stated tithing at 10% (tax) as somehow a gauge for the "correct" level of govt. spending. Ridiculous! Plus, the "church" is one of the biggest welfare tax chiselers out there.

    ReplyDelete
  2. 'At that time, they will have the option of having more credit extended to them because their credit rating will not only be secured, it will be enhanced.

    The economics of government is no different.'


    Yes indeed, you ARE a toady for the rich. Deficit spending (public or private) is the only means to grow an economy. Private debt (like school loans) purposefully creates debt slaves which is exactly the opposite of what you proclaim.


    In 1980 the national "debt" was $800 billion, today it's over $19 trillion. We've added more than $18 trillion in debt.

    What happened? The economy grew from $6 trillion in output (GDP) to nearly $18 trillion. That's 170%, in real dollars, adjusted for inflation.

    So far in fiscal 2016 we've issued (borrowed) over $55 TRILLION. What kind of credit (rating) allows an entity to do that? Just find me a "private" entity that can do that. You won't. Therefore, you are clueless.

    source: https://www.fms.treas.gov/fmsw...

    The United States government is the monopolist issuer of the currency.'

    ReplyDelete