Abuse Advertising Articles Backgrounds Barack Barack Obama Blog Budget change cheating checks choice Citizenship Class coalition Comments Competition Constitution Creativity Criminal debt Default Deficit Discussions economy economy. finance employment. Evolution Great Growth Housing ideologies. Illegal individual Jobs kids Knowledge. Krugman Lobbies Media New News News, information, issues, discussions, solutions. News, information, issues, discussions, solutions. Obama Paul Peace Policies politics President Process Recession recession. depression records Recovery Reforms Reinhart relationships rights Ron science Screening searches spending Survival Taxes taxes technology trust United States

Krugman, Reinhart, Debt, Spending, Taxes, Growth



Mr. Krugman is advocating, since people are interested in buying our bonds, we should keep selling those, to finance our rapidly rising debt. This is just like saying, if people are stupid, we must take advantage of them. His argument is backed by zero logic and reason. After all, before the Greek crisis reached its peak in 2008, most creditors, mostly the German banks, were still buying the Greek debt. That did not mean that Greece would never face the crisis. Credit ratings and demand for securities, does not mean that overwhelming debt will not show its effects. History has repeatedly shown, if it keeps rising, debt, ultimately reaches a level, where it becomes unsustainable. Only difference is that the Rich people reach that level at a later stage, compared to poor people. If uncontrolled, then, time comes, regardless of anything.

Greece is a very small country. It constituted only 2.5% of EU economy. Its long term deficits were in hundreds of billion dollars, only. Rescue packages ranged from hundred billion dollars to hundred and thirty billion dollars. That is why it was relatively easy for International Monetary Fund, European Union and European Central Bank to bailout its collapsing economy. Although, it is still not clear, if Greek economy is definitively saved, yet. We are a sixteen trillion dollar economy, and about twenty three percent of total world’s wealth. If we fail our liabilities will be in trillion of dollars. No one in the world, or even the whole world together, are not big enough to bail us out. Our debt crisis will be a free fall from the grace.

Printing money, buying debt, injecting money into the economy, causing inflation and money devaluation, does help recovery. But, at the same time the rising debt, interest payments, increasing liabilities and entitlement, and resulting tax hikes, exert a counter effect, which at a certain level, surpasses the positive effects of inflation, and situation becomes unsustainable. What is important for the government, right now, is to cut its liabilities and entitlements, and encourage creativity, innovation and business growth by cutting taxes and ensuring the access to capital for businesses. It is only through the growth of business and production that an economy generates its own wealth, which stays in it and benefits its participants and members. On the other hand the money generated out of thin air or the money financed by debt, imposes a long term burden on economy and tax payers, which causes the perpetuation of problems.

We do not want to get stuck in this unending cycle, for a very long time, only to face an ultimate crisis. We do not want to solve this problem in a faulty European way. We want to solve it in American way. That means, by relying on the unmatched ingenuity of our entrepreneurs, businesses and people. We do not want to leave the unsustainable burden of debt for our future generations. We want to leave them a growing, rewarding, promising and prosperous economy. We do not want to break the American tradition of making the next generation better off than the previous one.

There is no doubt that transition to the path of sustainability, from reckless pending, always causes short term pains and difficulties, but, for the sake of a health of economy, we have to swallow this bitter medicine. These short term pains are far better than long term insolvency and far bigger and irreversible crisis. Trust me, the advocates of current reckless path are feeding on our fears of short term hardships. But, the smart and farsighted people are ready to prefer short term problems over long term disaster.

Our current path of reckless spending is like selling our country, our sovereignty and our pride to the buyers of our debt. It is the biggest threat to our national security. In this way we are arming our enemies against ourselves. We are intentionally providing them a very powerful weapon, which in case of crisis can be easily used against us. Just imagine, we are having a serious conflict with China, which is not unlikely, especially in the light of North Korean issues. All China has to do in that case is to float our securities on open markets for sale. That will immediately bring down the value of our securities, sharply increase the interest rates and drastically increase our liabilities overnight. Because of the availability of cheaper U.S. securities, in open markets, it will become extremely difficult for us to sell anymore. We will not be able to finance the ongoing deficit. That will cause a sudden financial crisis, serious austerity measures, credit downgrading and default, and rise in interest rates, making it even harder and more expensive to get any money. In the wake of this crisis we will not be able to fight a war even if we have to. So, it is not just debt, we are actually selling our freedom and independence to our enemies.

Strong defense is always built on strong economy and finances. If you do not have a strong economy to back it up and money to build and sustain it, your defense, and safety and security suffer. We have been the world’s number one power for last so many decades, because, we were affluent and had lots of money to finance our superior status. Most countries and governments in the world played our game, because, we could make them do that by our aid and loans. An unending supply of money gave us the edge of fighting any war, with any country, anytime, anywhere, for any period of time. This is what scarred and deterred our enemies. With ever increasing burden of debt and liabilities, as opposed to wealth and power, all of this faces a serious threat.
Many countries have already started to look towards China for money, assistance and help. That used to be us. Most important person in your life is the one who puts food in your mouth. If that is China, then China will be the most important country in world, not us.

Conquer the web with ExcitingAds!

Browse our Blog

Read our articles Chained CPI, Entitlements, Budget Deficits, Reforms And Obamacare, Healthcare, Government, Private, Insurance, Cost

Reinhart Shop


Born in 1964, business owner, from Woodbridge, VA, owns ExcitingAds! Inc. (http://www.excitingads.com) and blog (https://search.excitingads.com). He was born in Mirpurkhas, Sind, Pakistan. His elementary school was ST. Michael's Convent High School, Mirpurkhas, Sind, Pakistan. Graduated high school from ST. Bonaventure's Convent High School, Hyderabad, Sind, Pakistan. His pre-med college was S. A. L. Govt. College, Mirpurkas, Sind, Pakistan. Graduated from Liaquat University of Medical and Health Sciences, Jamshoro, Sind, Pakistan in 1990. Earned equivalency certification from Educational Commission for Foreign Medical Graduates, Philadelphia, PA in 1994.

Item added to cart.
0 items - $0.00
Verified by MonsterInsights