Nations with responsible governments - that is, governments that are willing to impose modestly higher taxes when the situation warrants it - have historically been able to live with much higher levels of debt than today's conventional wisdom would lead you to believe. Britain, in particular, has had debt exceeding 100 percent of GDP for 81 of the past 170 years.Yes, Paul, looking at the last 170 years of the British Empire as it fought multiple disastrous wars, became the British welfare state, and is now berating citizens for not spending their savings fast enough is exactly how we want to model America.
If your image is of a nation that's deep in hock to the Chinese, you've been misinformed.Apparently we were so misinformed by ... Barack Obama:
“It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our government’s reckless fiscal policies. Over the past five years, our federal debt has increased by $3.5 trillion to $8.6 trillion. That is ‘‘trillion’’ with a ‘‘T.’’ That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers.”Number THREE:
Taxes must be levied to pay the interest, and you don't have to be a right-wing ideologue to concede that taxes impose some cost on the economy, if nothing else by causing a diversion of resources away from productive activities into tax avoidance. But these costs are a lot less dramatic than the analogy with an over-indebted family might suggest.Nah, the fact that PBS reports that interest on the Federal debt is now
... more than the combined budgets of Commerce, Education, Homeland Security, Interior, Justice, and the federal courts combined ...... is not a concern at all.
This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of GDP, than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn't make postwar America poorer. In particular, the debt didn't prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation's history.As I have pointed out before, the fact that Paul Krugman keeps trotting out this canard is pretty good evidence that he not only isn't a historian, but also that he doesn't know jack about the global economic differences between then and now.
AND ... FINALLY ... the NUMBER ONE most amazing admission by Paul Krugman (this week):
Families have to pay back their debt. Governments don't.Ironically this one's true--as any citizen of Greece can tell you these days.
Which doesn't mean it's a good thing--as Paul Krugman plainly believes it is.
What is amazing about Krugman is not so much that he has prostituted himself to become a liberal Keynesian guru, but that anybody still listens to the man who calls other Nobel Laureate economists racists for not agreeing with him.