In my time away from the typer, I’ve wondered who would share my interest in robots, so far as I’ve already explained them, especially since few likely agree with any of my positions. This being the case, we’ll let the robots be robots for now. …But don’t bug me when your phone demands equal rights.
So. What, then?
Well, I wasn’t long on the interwebs before I read an article that began by citing a fact I, myself, have cited in this very blog: That Britain was in perpetual, gigantic, debt for more than a century — and that it fucking worked. To have ensured otherwise would have meant ruin, not vice versa.
(It was the first thing I read. OK. Ego placated.)
Matthew Yglesias, in a brilliant piece for Slate, went a bit further than I did. Well, he went further in a more productive direction, anyway. He describes how Britain could manage all that debt while trying to kill every Frenchman, plus take over Spain, Austria, and pretty much anything else above sea level.
Here’s how: perpetual bonds. And I’ll just let Yglesias explain, as he does so better than I would summarize:
“In 1752, Prime Minister Henry Pelham converted the entire outstanding stock of British debt into consolidated annuities that would become known as consols. The consols paid interest on an annual basis just like regular bonds, but with no requirement that the government ever redeem them by repaying the face value.”
As long as we’re here: Show of hands — raise ’em up if you really, truly, honestly believe America is going to repay sixteen trillion dollars in your lifetime. If you raised your hand, you may want to get behind gun control before it gets behind you.
Um, thing is: There is just no effing way that would ever ever happen. I mean… sixteen trillion is rather a lot of money. And why would we want to stop selling our debt when, as Yglesias points out, the world can’t get enough of buying the stuff?
The world loves our debt perhaps more than Charlie Sheen loves cocaine (I’m lazy, write your own material). Back to Yglesias:
“As of Friday, the inflation-adjusted yield on 10-year Treasury bonds was negative 0.56 percent. Savers, in other words, want to pay the American government for the privilege of safeguarding their money. For the longest-dated bonds we sell, the 30-year Treasury bond, rates were 0.51 percent. That’s higher than zero, but far below the long-term average economic growth level. A sensible country would be taking advantage of that fact to finance some valuable public undertakings.”
Notice: When you eschew the political score-keeping that is most news and get your info from disinterested parties, as well as qualified ones — which pundits, op-ed columnists,* and politicians are not — reality at first seems counter-intuitive. Why? The bandwagon effect, for one: Humans go with the crowd.
How far? To the extent that, when a crowd gathers to watch a person high above them ponder the merits of suicide, about seventy-five percent find themselves yelling at the person to jump. Yes, we’re both disgusted and sure we’d never ever be so evil. The fact remains that police cordon off as much space as possible near a potential jumper for one reason: to prevent the goddam encouragement onlookers would so readily provide.
MACABRE! So let’s discuss economist, Nobel laureate, Paul Krugman. He’s been writing op-ed columns about the truth of the deficit since politicians and media began spouting lies. Krugman, for as long as I’ve read him, has often gone against popular “wisdom.” And he’s yet to be wrong. And so when this kerfuffle began, I read his columns, did my research, and here we are.Both of us blue in the face from discussing the same thing repeatedly. (Though, however blue, his face will always be the more erudite.)
Just days ago Krugman summed up Capitol Hill’s efforts to ensure Social Security is available thirty years from now:
“So the plan is to avoid cuts in future benefits by committing right now to … cuts in future benefits. Huh?”
Which is just amazingly stupid. However, to a lot of people I’m sure the following would seem just as idiotic (Yglesias): “At a time when demand for goods and services is depressed, demand for American government debt is sky-high. The responsible choice is to let the supply meet the demand and borrow more.”
Yep. In these times of crisis, the “responsible choice” is to accrue more debt!
After all, Krugman’s column points out: “You’re actually supposed to run deficits in a depressed economy to help support overall demand. The deficit will come down as the economy recovers: Revenue will rise while some categories of spending, such as unemployment benefits, will fall.”
So what would perpetual bonds do for us? The answer seems too much to hope for:
“Most of all, perpetual bonds would help us move beyond the destructive politics of the grand bargain. The government could borrow money without adding to the national debt. Instead of obsessing over the debt-to-GDP ratio, we could tackle the present-day problem of unemployment and the medium-term barriers to growth.”
Imagine that… The government addressing the problems America has right now.
Welcome to the other side of the looking glass.
And don’t worry: The ennui caused by being in the minority is soon replaced by utter exasperation with the majority.
Ready? Hate? Fire!
(*I assume we can make exceptions for op-ed columnists who are giving an expert opinion. That is, Krugman, in this case.)
PS: Read it again for the first time: A previous post discussed this issue but, hoping to serve as a wake-up call, was heavier on angry swearing and lighter on citations.