Believe it or not, many economists argue that the economy needs a sufficient amount of public debt out there to function well. And how much is sufficient? Maybe more than we currently have. That is, there’s a reasonable argument to be made that part of what ails the world economy right now is that governments aren’t deep enough in debt.
I know that may sound crazy. After all, we’ve spent much of the past five or six years in a state of fiscal panic, with all the Very Serious People declaring that we must slash deficits and reduce debt now now now or we’ll turn into Greece, Greece I tell you.
But the power of the deficit scolds was always a triumph of ideology over evidence, and a growing number of genuinely serious people — most recently Narayana Kocherlakota, the departing president of the Minneapolis Fed — are making the case that we need more, not less, government debt.
Notice how his brain couches things to his subconscious. Those who think austerity and debt reduction are good, are not “serious” people. That is an attempt at direct control of amygdala flagging, happening at a subconscious level. Merely by placing the serious label on what he wants to hear, and placing the unserious label on that he wishes to ignore, the problem of aversive stimulus produced by logical analysis and the resultant cognitive dissonance is solved.
There is no need for debate, or logic, or reason, or even consideration. Construct an argument – any argument – and then label anyone who objects unserious. Your amygdala can ignore them, and suddenly Greece is in trouble because it hasn’t spent enough, and accumulated enough debt. Obviously Rome should have taken out a massive loan to continue the Empire’s expansion, and today we could all be living under a brilliant, debt-spending, socially conscious Roman Emperor, as part of a revitalized Roman Empire, which would only ever be a single loan away from keeping the party going forever.
Underlying it all is a foundational assumption that resources should be free – and that is the natural state of things. Resource shortage has no basis in nature, or the universe. Everything is limitless, and it is unserious people who create these problems with silly ideas that maybe if everything is free, we might run out of it, or people might get lazy and stop producing.
Liberalism is a mental disorder, which sadly afflicts everyone it comes in contact with.
Apocalypse cometh™
“…Believe it or not, many economists argue that the economy needs a sufficient amount of public debt out there to function well. And how much is sufficient?…”
This may be true. The reason is because of the perverse way money is created. All money is created by debt! If we had no debt we would have NO MONEY. It was designed to fail and enrich the banks. From the beginning. Let’s say you want a million dollars. You have to borrow it from the FED but to pay back the interest…you have to borrow more money…from the FED. It’s unstable and a scam. The Federal Gov. could create money without debt. The problem with this is if the government creates too much…Zimbabwe happens. There’s nothing at all wrong with fiat money if it’s more than the economy. It’s actually more conservative to create money without debt. If too much is created then he currency will inflate. This will be seen much sooner than the present system where the debt is deferred. That way the present gov. will get the hit for trashing the currency instead of leaving it to future generations. If the government wished they could have zero inflation. Target money creation through Gov. spending and if inflation goes up just cut it.
The present system is designed to eventually move ALL money into the hands of the people who create the money. The FED and banks. After all only they can create it and they get paid interest on all money so eventually through compound interest the interest becomes ALL of currency. It’s unstable.
They are moving to a new system that’s Special Drawing Rights(SDR) but it’s just as bad because it takes money creation away from countries and places it into even more remote power that has the same problems. Another scam.
We need to go to a non debt based system for the creation of money. We gave the FED all our gold and the monopoly on money creation for the US and what did we get for that? Nothing. Not one damn thing. They’re just ripping us off. I bet they’ve stolen the gold and we know they’ve given away trillions. One example. During the housing crisis they gave banks over 16 trillion dollars. Well at that rate we could have bought every family of four a house for over $250,000. That would have ended the crisis right there. I bet the banks took that money and bought ever single productive asset in the country. We paid for it and own nothing. [People have estimated that the FED has actually given over 29 Trillion to banks]
I’m fully on board with your explanation of r vs. K but there are variables that you’re not taking account of like the people at the top using the gov. to enrich themselves. I’m not talking about people who create things. I’m talking about the banks and other money manipulators. Essentially monopolist that control gov. and want a little piece of our pockets every time we buy anything.
There’s also a variable that’s coming real soon. We hear about how we need jobs but in ten years a personal computer will have about the same processing power of an average human. It will, within twenty years, kill ALL jobs for any but the most exotic specialties. We could have an economy of molten salt nuclear reactors for plentiful power. Robots to farm and work and most everyone could have very small work weeks. Instead the people at the top are stealing, through financial manipulation, everything they can get their hands on.