From Riches to Rags
God is getting an earful these days from the distressed around the world who desperately need a miracle. Their jobs are disappearing. Their debts can't be met. The leaders of the once mightiest nation on the face of the globe resemble Keystone Cops in their scramble to find levers that will re-start the stalled economy. The only thing they can think of is to borrow massive amounts of money to bail out the suffering and re-kindle a consumer spending spree.
What wimps we are! For decades we have deluded ourselves into thinking we could borrow ourselves rich. People of modest means signed mortgage agreements on terms they could never meet, and when the payments adjusted upward they howled they had been "misled" by the lenders. There is no provision in the Constitution, of course, requiring Congress to bail out reckless citizens who went in over their heads on financial deals, but it will try. Imagine! The biggest debtor nation in the world will borrow billions of dollars in an attempt to repair the damage too much debt caused in the first place.
Blame John Maynard Keynes for that line of thinking. The old "we only owe it to ourselves" nonsense. WE are not going to pay back the trillions of dollars of debt our weak-kneed leaders in Washington are piling up. Our grandchildren and great-grandchildren will be stuck with the bill, and the heft of it is so great they are guaranteed a much lower standard of living than we have enjoyed. Unless, of course, they wake up to what's been done to them and refuse to pay.
Could they do that? Not pay off all that debt we've run up for them? Of course! They will be running the show and they might be sorely tempted to just repudiate the debt their forebears (us) ran up. And why shouldn't they? Individually, we cannot make our posterity pay our debt. The best our creditors can do when we kick the bucket is take what is owed from our estate. If our debts exceed our estate the creditor is stuck with a loss. He can't badger our descendants for the money.
Collectively we're doing what we can't do on an individual basis. We're borrowing massive amounts of money with the willful intention of sending the responsibility for paying it to our posterity. What a spineless act! Forcing future generations to pay debt with which they had nothing to do!
"But, Sir!" exclaims a pompous ass among the Washington spendthrifts, "repudiation of our national debt by future generations would be dishonorable! We have issued our official promises to pay and these promises must be met by future taxpayers. We could not find any buyers for our bonds and other IOUs if they thought the debt they represent might be repudiated. It wouldn't be fair to the bondholders!"
Repudiation is dishonorable? I think the lack of honor lies with the present generation trying to foist its obligations onto future generations. As for "fairness to bondholders," they are willing to buy these certificates of debt knowing they are claims on the means of future producers who never agreed to the obligation. Why is that honorable?
Our posterity will not be blind. Once the children are grown and in control of the mechanism of governance it may become apparent to them they have been saddled with debt amounting to several trillions of dollars which were spent in an astonishingly reckless era. They will carry a financial burden they never voted for. As former Colorado Governor Lamm put it in 1985, "Christmas is a time when kids tell Santa what they want and adults pay for it. Deficits are when adults tell the government what they want—and their kids pay for it."
If posterity repudiates the national debt and bondholders are left out in the cold, with whom would your sympathies lie? Mine are with my great-grandson who deserves more from my generation than a monstrous debt.
January 30th, 2009
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Fiddler's Broken Wrist
Chances of Gold Confiscation
Look Out Below!
Voting for Maggie
Poobahs of Positivism
A Wistful Vista
An Unknown Road
Blood In the Streets
How To Buy Gold
Just Plain Stealing?
A thing to fear
Unstuffing a Lifetime
FDR & History
The Chicken Little Convention Mr. Bolton's Predators
And Lead us not into temptation
The Legislature and Embryos
Ac-cent-tchu-ate the Positive
What Fools, We Mortals
My Immigrant Relative
The Eloquent Pogo
Unionize School Children
Hucksterism Gone Wild
Unmanageable Religious Violence