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Tuesday, November 19, 2013

Debt Ignorance

Dishonest ignoramus Sarah Palin has been getting a lot of shit lately for tossing this word-salad about the debt:

Our free stuff today is being paid for today by taking money from our children and borrowing from China. When that money comes due and, this isn’t racist, so try it, try it anyway, this isn’t racist, but it’s going to be like slavery when that note is due. Right? We are going to be beholden to a foreign master.

People were offended, and rightly so, for her invocation of slavery (for future reference, if you have to preface something with "this isn't racist," just don't say it.) but I was mostly struck by her profound ignorance of how debt works. It's fine to be ignorant about debt, but then you don't get to be passionate about it. I'm completely ignorant about chemistry, and I have no strong opinions on the subject tother than I maintain that meth is bad and I don't care who disagrees!

But I hear this line from the "fix the debt" types a lot lately, this "when the note comes due. . ." The note doesn't come due. The not e never comes due. It's like your mortgage or your car note, you have to keep making payments until it is finally paid off. It's not like you buy a house, take out a 30-year mortgage and then you sit around for 30 years until a guy from the bank shows up and says "okay, time to pay that 200 grand you owe."

There is never going to be a time when China or anyone else shows up at our front door saying "I demand that you pay me that trillion dollars today" and then we don't have the trillion dollars so a judge sentences us to be China's butler and hijinks ensue. (I've been watching Seinfeld re-runs)

Also, we do not need to fix the debt. It will need to be adressed eventually, like say, in the Bill Clinton administration, when we were running a surplus and  starting to pay it down and then George W. Bush completely undid all that progress because Republicans are the party of fiscal responsibility, yea!!! But you work on debt reduction during prosperous times, not during a recession. And yes, our debt is very large, but here's a little perspective:




Government debt as % of GDP



Our debt to GDP ratio is in the same neighborhood as Germany which is the strong Eurozone economy, the one that has to bail everyone else out. And look at Japan! Their debt to GDP ratio is over twice as high as ours. Is anyone panicking over Japan's "debt problem?" (actually, I don't know, maybe they are.)

Anyway, I kind of lost track of my thread of thought. I guess my point is that just as those who thump the Bible the most seem the most ignorant of what Jesus actually said, those who are the most passionate about debt seem the most ignorant about it. Also, God do I hate Sarah Palin. What a fraud!