Comments on: Regretting raising the debt-ceiling

By: paintcan

paintcan — Fri, 12 Aug 2011 16:24:22 +0000

When one considers how many ways the wealth of the nation is distributed and redistributed, from subsidies to the top, from the top, to the bottom, from the bottom, and very likely sideways, it should be a matter of real confusion and no doubt endless debate, what “other people’s money” really means.

No one really has anything but other people’s money, especially now. The process is supposed to work best when it is a matter of exchange. Somehow the reservoirs must be filled, or the fountains run dry and the gardens and the gardeners die.

Fountains usually pump water. It is not necessary for them to pump blood. I’ve never understood the theology of blood. Do those who believe in it, or seem to, understand it themselves?

By: howard7

howard7 — Fri, 05 Aug 2011 20:23:47 +0000

why am i supposed to take seriously the ramblings of someone who talks about “moola?”

look, the congress already approved the spending and taxing policies in place: that’s the constitutional way.

deciding arbitrarily that some of those approvals should be ignored is the advice of an authoritarian who hates democratic governance, not a useful contribution to debate.

the debt ceiling is an utterly stupid device and should be done away with, not used as a cudgel to bypass constitutional norms.

as to the particular point, the idea that it would be just grand to simply break existing contracts and/or laws: i can’t imagine a less rational contribution.

nor can i imagine what this clown teaches his poor students, other than things they will have to unlearn in the future.

By: rapier

rapier — Fri, 05 Aug 2011 18:53:57 +0000

The US Treasury has easily been borrowing, and then spending, money amounting to near 12% of GDP recently. Other sectors of the economy, business household or financial have been cutting back their borrowing out of preference, necessity or inability to find lenders willing to lend to them. That isn’t about to change soon so if the government can’t borrow more then 12% of GDP disappears. This is not belt tightening, it is a depression.

The expansion of credit is an existential necessity for the system to remain intact. Not that the system isn’t dysfunctional, that is another argument. Well we have already put off and end to the breakneck borrowing by the government but if by some odd chance we did then we would go into depression. You can’t cut 12% of total cash flow from the economy and not have a depression

By: kathygornik

kathygornik — Fri, 05 Aug 2011 16:04:43 +0000

Having read Larry Summers depressing (to me) account of the debt ceiling decision, I was elated to read Dr. Boudreaux’s opinion, reflecting my own sense of things. No economist, I do own a business and run a household, however, which should qualify me for a reasonable opinion. Indeed, any self-sufficient person qualifies as we all live by the laws of economics or we wouldn’t be self-sufficient. Among these are, spend no more than you make, and cut spending when you make less, otherwise you jeopardize yourself and loved ones. What blindness and fantasy-thinking overcome politicians and their followers is beyond my comprehension. I do believe they know nothing about how wealth is created and the human nature that drives that creation. If they did, they could not possibly hold to their world view.

By: RMoS

RMoS — Fri, 05 Aug 2011 15:54:22 +0000

Does the author genuinely believe that the failure to raise the debt limit wouldn’t have resulted in a violation of contractual payment terms to any creditor?

Whatever one may think of Federal spending priorities, the U.S. gov’t could not have lived up to its contractual obligations without an increase in the debt limit.

Granted, the Mercatus Institute is correct that the gov’t has signifcant assets. Could they be sold in time to prevent late payments? Quite doubtful.

Ergo the US credit rating would very likely fall, and that means interest rates would rise in myriad arenas.

No entity – no individual, no business, and no nation – can violate its contractual obligations merely on the grounds that it desires to cut spending, without consequences.

By: johnvos

johnvos — Thu, 04 Aug 2011 11:59:52 +0000

That is the sober truth of the matter. We are RELIEVED (can you believe it!) that we have given ourselves permission to spend MORE of what we do not have.

By: tibikem

tibikem — Thu, 04 Aug 2011 00:21:13 +0000

This is right on. A rare honest comment and a vewry necessary antidote to all the neo-Keynesean mythology coming from the likes of Paul Krugmann. Thanks Professor Boudreaux.