Predictably, the monkeys in D.C. who created a Ponzi government are riding it down the drain. The current molehill from which they’ve created a mountain is the debt ceiling. Shall we raise the debt ceiling with a fig leaf of cuts or shall we play chicken with default because fig leaves are too much “sacrifice”. This is a choice?
I won’t play that game. Defaulting is disastrous and stupid. Raising the limit to briefly prop up unsustainable spending is irresponsible and stupid. I won’t choose between two bad options. The fact that it’s paralyzed Washington means I’m not alone.
Federal debt isn’t merely inflicted by politicians. Citizens collude. Voters want paved bike trails, tofu studies, and sports arenas. Things they don’t value enough to buy with their own money. They desire subsidized retirements and medicine that most adults could (and should) self fund. What they want exceeds what they’ve chosen to pay for. Voters want unicorns, cake, and magic. So long as this remains true another encounter with the debt ceiling was inevitable. (Note: Since March 1962, the debt ceiling has been raised 74 times. This is not new.)
End result? The economy seems unstable.
Decades ago I saw this coming. If you understand demographics you did too. It was frustrating watching my nation (and Europe) deliberately choose long term failure. I didn’t want to go along for the ride. I was hoping for an exit. But there was none. Now that economic shit is hitting economic fans I’m slightly relieved. Seeing clouds on the horizon feels worse than being in the storm.
I don’t know how government’s profligate expansion will change but the status quo is just about over (both in the US and in Europe). My guess is that events will take one of three paths; voters will learn, voters will die, or voters will be stopped.
1. They could learn. The most ideal outcome. In theory every voter (or enough to sway elections) could conclude that “an honest man is one who knows he can’t consume more than he has produced” and act accordingly. Yeah, and I could be a Chinese jet pilot.
2. They could die. People may refuse to learn but they cannot refuse to die. The biggest threats to solvency are Ponzi structured entitlements. They’ll change radically as Baby Boomers who saved too little demand too much. Demographics has sealed their fate. Whether it takes years or decades; it’s a done deal. Human mortality tells us that Baby Boomers will all be dead in 50 years. (Note: I didn’t pull that number from a hat. The census defines Baby Boomers as births from 1946 to 1964. By 2064, or 53 years from today, every Baby Boomer will be a centenarian or dead. Aside from Keith Richards, who is unkillable, it’s statistically likely most of them will be gone much sooner. All things end.) I think (this is conjecture) that subsequent generations will lack the ability to vote themselves free toys. Whether with a crash or a fade, Ponzi games won’t outlast the Boomers. We may have programs with the same names in 2050 but they will be entirely different animals.
3. They could be stopped. The wildcard. I try to live within the ancient and archaic concept of “if you can’t afford it you can’t have it”. Suppose I didn’t? At some point my creditors would impose the restraint that I’d failed to provide. Economics does the same with government. The form is hard to predict but if internal restraint fails external restraint is a certainty. My best guess is that inflation (hopefully not hyperinflation!) will drag us kicking and screaming down to the lower standard of living which we can afford. It’ll be a hard transition but “if you can’t afford it you can’t have it” cannot be denied.
So there’s the silver lining; the frustration of waiting is pretty much over. Fussing over the debt ceiling today is evidence that the transition is already here. If we were still whistling past the graveyard it would have passed weeks ago with a pile of expensive riders on a Friday afternoon before a three day weekend. The fact that it’s causing heartburn is heartening.