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Tripping Silently Into Debt

December 2, 2014

As I’ve noted, I’ve been pretty busy lately, so maybe I just missed it.  But last year I saw all sorts of news programs highlighting every time we’d cross a debt milestone.  Now I have to notice it on a blog?

Congratulations, America! You, or rather your elected officials, smashed through the $18 trillion ceiling last week, raising the United States government’s total outstanding public debt to new heights and leaving shards of devalued greenbacks scattered around the place.

Congratulations, J.D. Tuccille, for caring.

I remember getting into an argument with my dad about 12 years ago when George W. Bush was in office.  My take was that he was not being a decent conservative in that he had no concerns about the national debt.  If you look around, you’ll find a video of him jousting with a reporter during his campaign about it, so he had always been on that track.  My dad didn’t appear concerned, saying it was mostly a problem for a future generation.

Well, that was about one third of the problem ago.  We’re now at $18T in debt with no budgetary end in sight.  In the least, the Republican congress is likely to actually, you know, do their freaking job and submit a budget next year, rather than just letting what’s already killing us slide on.  But I don’t expect significant cuts in the budget, and I also don’t expect any significant change in tax revenues.  So, we’ll borrow.

It’s really odd.  The “good economic progress” that we have is really all smoke and mirrors.  Unemployment is down more because large portions of people stopped looking for work, and they’re only slowly coming back into the picture.  Interest rates are low because we’ve been engaging in QE for most of this period. Even if that’s ended, we tried to print our way out of the mess.

I’m not hoarding up my canned goods and ammo because we’re so far in debt. (I might be getting better prepared, but not because of the debt.)  But I’m still very non-pony-finding-like in my concerns for the future when we’re ignoring key indicators that make us very unhealthy.

3 Comments leave one →
  1. December 2, 2014 9:48 am

    Hey Jim, have you picked up Thomas Piketty’s “Capital in the 21st Century”? It’s neither conservative or liberal, which leaves both sides with plenty to agree and disagree with. But it’s simply and completely fact based. That pleases my little data-driven (and centrist) heart. He provides a perspective that is well worth your time. I’d be interested in your reactions. Here’s the challenge, though: After pouring through the book, I’ve found that 99% of the commenters about it haven’t actually read past the book jacket. It’s a lot of effort, but I promise you it’s worth it.

    • December 2, 2014 5:38 pm

      I borrowed it from the library and tried to get through it. He bases a lot of the conclusions on his data in the book, which has been proven to have quite a few errors in it. That doesn’t discredit it, but it does make one wonder if he built the data to fit his conclusions, or actually took a thoughtful approach at the premise based on data. Of course, you and I know that people would NEVER make the data fit their goals, right? 🙂

      • December 2, 2014 9:15 pm

        It’s true – there was a big article in the Financial Times last April that led with a very strong headline that called the whole thesis of inequality into question. It started what I thought was a very healthy discussion among economists – less so among journalists, who tended to recast the book according to their own agendas.
        In the end, the Financial Times article was mostly discredited by economists, but a number of other legitimate questions remain. And there’s no doubt that Piketty took some very prescriptive stands that might upset people. I certainly didn’t agree with everything he said, particularly about the U.S. I followed it quite closely since I was reading the book at the time.
        But I digress.
        The issue I was referring to in my earlier comment was not about his thesis or his positions, but about the kinds of questions he asks, particularly around the structure of regional economies and rules of thumb for stability or instability.
        I raised it because the term “$18 Trillion” without context would – and should – scare the pants off of anyone. I share your opinion that we have not been competently managing debt for quite some time.
        But I’m sure you know that debt, as a structural issue, must be seen in relation to wealth, income and time in order to be understood. $18T is a very big number, but so are the others. Piketty spends a lot of time early in the book setting that context (to my knowledge, no one has argued with that data, since it’s all publicly available from current gov’t sources). His conclusions are not optimistic, but his analysis is a bit like your conclusion – it’s not time to panic.That’s what I was trying to share.
        In terms of making data fit goals, I assume that’s always the case, which only varies by degree. Data should never be equated with reality. No data is certain. Error bars are subject to judgment in either direction.
        When you read the book, Piketty actually goes to great length to illuminate the gaps and uncertainties in his data, and tries to be clear about where he is making judgments. He’s a lot smarter than I am, but I recognized the same factors in my own much more modest work.
        When I was doing strategy, I had to make judgments, and was accused more than once of biasing the data. That was true and not true. Any judgment is, by its nature, a bias. But to say that I changed the actual data would not have been true. My judgments were sometimes right, and often wrong. But they were never malign. I give the same courtesy to Piketty. Time will tell.
        And I still think it’s worth your time, even if you disagree with some (or all) of his positions 🙂

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