A central benefit of the government’s debt ceiling calamity was the outstanding comedy it provided. We’ll certainly miss the B-rated entertainment. While it’s unfortunate a default was avoided, the whole hullabaloo served up some tasty performances.
President Obama, for one, was hilarious. Has there ever been a more comical buffoon in high office?
We can hardly look at the man without doubling over in sidesplitting laughter. And when he opens his mouth we fall out of our chair…
“Make no mistake – for those who reflexively opposed tax increase on anyone, a lower credit rating would be a tax increase on everyone,” warned Obama on Sunday, with the clever backwards logic of a forward thinking liberal.
Then there was House Speaker John Boehner… He seems like an honest fellow, by Washington standards. But his southwestern Ohio upbringing made it near impossible for him to negotiate with those who don’t walk or talk entirely upright. Maybe we shouldn’t fault the man for this. Nonetheless, we got quite a chuckle as proposal after proposal was rejected.
The rest of the cast – Mitch McConnell, Harry Reid, Chuck Schumer – you name it…all clowns.
Yet, but for the laughs, the ultimate agreement to raise the debt limit – assuming the Senate passes the measure later today – was another loss for those who resist the establishment, central planning, and infringements on their freedom. Here’s what we mean…
Government Consumption
Most reports you’ve likely came across have touted the ‘historic agreement to avert default’ as a great salvation. As the news broke Sunday night Asian market’s soared – the Nikkei 225 jumped 133 points. The good news first spread from east to west like a prodigious redemption. European markets, like Britain’s FTSE 100, quickly ran up nearly 100 points before gravity set in.
By the time the sun rose on Lower Manhattan, widespread euphoria had given way to honest reality like a new year’s resolution on January 2nd. After an initial jump, traders all came to the same realization in unison…raising the debt limit won’t do a lick of good for the economy.
At the opening bell, the DOW was up 138 points. But that was before the Institute for Supply Management announced that its index of national factory activity dropped from 55.3 in June to 50.9 in July – its lowest level in 2-years and well below the 54.9 measurement economists had predicted. On cue, the DOW abruptly fell to just below 12,000, before climbing its way back for a 10 point loss on the day.
Here at the Economic Prism we don’t comprehend what even the temporary excitement was for. Despite what your newspaper tells you, the debt limit deal is not the boon to civilization that Washington would like you to believe.
Remember, the government doesn’t produce a darned thing. In fact, they do the exact opposite…they consume. Moreover, not only does the government consume capital, they appropriate money from those who have earned it and spend it in ways to remake the world in their image.
Even worse, when the government runs out of money to consume they don’t stop consuming. They keep consuming by borrowing money and spending it. What this means is that they steal money from people in the future and spread it around to their friends and backers today. A default could have put an abrupt end to this devious and immoral undertaking.
Deliver Us From Idiots
What the idiots in Congress don’t care to recognize is that raising the debt limit doesn’t fix the problem. Amassing more and more debt will eventually reach its natural limit. This will happen when the size of the U.S. Government has grown larger than all the world’s paper issuances can or are willing to support. That is when the real default will happen. And there won’t be a thing Washington will be able to do to stop it.
No doubt about it, a default will be extraordinarily disruptive. The government has misdirected and distorted the economy in unimaginable ways over the last 100 years as it has grown ever more corpulent and rotund. Things could really get ugly…unemployment could double – or more – from its already lofty levels.
But aside from the pain and suffering it would cause to people’s comforts and conveniences, a default would deliver us from the idiots in government. For the first time in six generations the government would not expand…it would contract. Even better, as the size of government contracts, individual freedoms would expand, communities would bloom, and, after some growing pains, healthy economic activity would return.
Deliverance from the idiots in government, we believe, is a trade worth taking. Those willing to roll up their sleeves, put their nose to the grind stone, save and invest, think big thoughts, dream big dreams, and take action to bring them to fruition, will be rewarded in countless ways. The others will flail and fade away.
Sincerely,
MN Gordon
for Economic Prism
