Welcome to Trumponomics

It took them a while, but you knew they’d eventually make their mark on our economy. This administration seems intent on dismantling every legacy of the Obama Era. Chief among Obama’s achievements was a long period of consistent economic expansion, job growth, and an epic bull market in equities. This economy continued to chug along for almost a year with only minor slippage. So much for that. We are beginning to witness the economic consequences of placing crooks and morons in charge.

First, a look at the stats. Across the first year of the Trump administration we saw a continuation of recent years’ momentum, but at a slower pace. New jobs grew at the lowest rate in the last six years. Unemployment rates are low, but declines have stalled out. GDP growth was good, but much slower than Obama’s big years of 2014 and 2011.

Stocks soared in 2017, but still at a slower pace than Obama and Clinton’s first years. More importantly for context, US stocks lagged growth elsewhere in the world by a significant margin. And GDP unexpectedly softened in Q4 of last year. Where Obama’s first year was a turnaround from a collapse, Trump’s first year represents an economy nearing the peak of the business cycle, beginning to overheat from an extended period of full employment and the early signals of inflation.

How do you maintain healthy growth under these conditions? A high school economics course teaches the basics.

Relieve some of the inflationary pressure by allowing interest rates to carefully tick upward. Raise taxes, especially on income from speculative activities, to tamp down the dumb-money fever that can signal the end of a bull market. Ramp up international trade to provide new outlets for growth and spending. Attract immigrants to feed continued entrepreneurship and fuel the labor market.

With tax revenues relatively high, this is an ideal moment to address any lingering debt concerns. With a tight labor market, new infrastructure investments should probably wait for an economic downturn. Reducing public debt can help cool an overheated capital market by limiting competition for borrowing. This strategy should also feed gradual increases in the value of your currency, which helps cool the kind of exotic capital speculation that can precipitate a crash, while reducing consumer prices for ordinary goods. This approach to currency and trade during a boom makes life easier for ordinary people while dampening the disruptive get-rich-quick schemes of wealthy investors.

Naturally, Trump’s Idiocrats aren’t doing these things. They’ve launched a trade war unconnected to any identifiable strategic purpose. Badly needed immigrants are in the crosshairs of a comprehensive campaign of harassment. Potential new trade deals have been scrapped and lucrative existing trade deals are being undermined. Oversight of financial markets is being removed. And for some reason they’re doing everything possible to weaken our currency.

They’ve decided to pour almost $2tr of borrowed stimulus onto an already overheated economy. By handing almost 90% of that money to the wealthy and corporations, they have basically constructed an economic crash machine. The overwhelming bulk of that borrowed cash will pour into unproductive speculative engines, which will soar and then crash, or be parked in treasury bonds. Our government is borrowing a ton of money so we can pour it down a hole.

Damage began to appear almost a month ago, thanks to a surprise spike in Treasury bond yields. New borrowing necessary to fund the Trump tax cuts began driving up lending costs and undermining the attractiveness of equities. Across January even before the crash, Treasury yields were growing faster than the stock market. Stocks in the housing sector were among the first to slip, amid worries that our era of cheap credit was coming to an end. The HGX index of housing industry stocks is down more than 12% from its peak three weeks ago.

Rising interest rates aren’t necessarily a problem if that increase is connected to a broader plan, with compensatory mechanisms and an integrated fiscal strategy. On the other hand, if bond yields are rising because of chaotic, unpredictable mismanagement, they can spark panic. In this case, that panic was accompanied by unplanned crazytalk from the Treasury secretary about monetary policy and surprisingly scary news about the epic scale of new government borrowing. Filling out the picture was news of an escalating trade dispute with Canada which is headed to the WTO, and a strange, pointless new tariff on solar panels.

Obama is long gone and his legacy is more fragile than we realized. Critical economic decisions are being made by a monkey pulling random levers.

We have lived through a thirty-year period of global economic expansion beyond anything human beings have ever seen. That expansion has been driven by a wave of accelerating technological innovation, the expansion of liberal democracy and capitalism, and a period of relative peace. During that time, we experienced a few steep economic downturns, but they were all brief.

Fundamentals underlying this long expansion remain mostly intact. Further, our current market correction may not extend too deeply into the core economy, at least not yet. So far, we’ve seen none of the secondary shocks (like the collapse of Lehman Brothers) that convert a “correction” into a “crash.” However, as this band of nitwits continues to exercise power, the more pointless damage we’ll incur. Every system has its limits. We are exploring ours.


  1. Apologies for going OT here but want to post this before I lose the article. Israeli police have completed their investigation and assert that Bibi Netanyahu should be indicted for bribery, fraud, and breach of trust (his 3rd and most serious charges that have been recommended against him). Israel’s AG is the person who makes this decision. Bibi insists he is innocent. Sound familiar?

    There has been discussion in prior posts regarding what would happen if Trump were indicted. Would Congress vote to impeach or, would Trump do as Netanyahu is, saying “he is innocent and he will stay in office.” Both are authoritarian politicians who think they are impervious from the law. I know we are not “there yet” but given the fragile situation in which our DOJ and special counsel find themselves, the Netanyahu announcement today is eerily relevant.


    1. The crucial difference is that Israel has a parliamentary system. Per Wickipedia, The Knesset has the ability to call an election with a majority. In fact Netanyahu is only Prime Minister because of a coalition. Thus if a majority of The Knesset were to lose confidence in Netanyahu, he could be forced to stand for re-election.

      In the US a majority of the House can bring articles of impeachment, but then the Senate would have to sit in trial, with the Chief Justice presiding. A 2/3 vote is required for conviction and removal from office.

      Thus, Israel has a much lower political bar to implement the removal of a Prime Minister, than the US has for removal of the the President. In either case, if the PM or President refused to obey the Constitution, it is an entirely different situation and would be tantamount to the leader becoming an emperor, similar to Caesar in Rome.

  2. Going OT here but want to post this before I lose the article. Israeli police have completed their investigation and assert that Bibi Netanyahu should be indicted for bribery, fraud, and breach of trust (the 3rd and most serious time he has been recommended for such charges). Israel’s AG is the person who makes this decision. Bibi insists he is innocent.

    There has been discussion in prior posts regarding what would happen if Trump were indicted. Would Congress vote to impeach or, would Trump do as Netanyahu is, saying “he is innocent and he will stay in office.” Two authoritarian politicians who think they are impervious from the law. I know we are not “there yet” but given the fragile situation in which our DOJ and special counsel find themselves, the Netanyahu situation is eerily relevant.


  3. Honesty. Courage. Drawing the line in the sand “for” truth and honor. Kudos to both men. Go forth and multiply. Too few on the Republican side are standing up (whether NeverTrumpers, conservative media, corporate leadership or MoC who make protestations then block-vote per whip demands). When they do, they need to be acknowledged and supported.



    1. Politico weighs in on security clearance as does Coates. Why is this getting so much media time? Because it goes to the heart of this administration’s sloppy disregard for the nation’s security and absolute belief that they do not have a responsiblity (legal or ethical) to adhere to it.


  4. Read this story about what happens when the middle class of a society implodes. I see a direct link between the post and this story. Authoritarianism historically requires the dissolution of the middle class leaving only the “haves and the have-nots”. Interesting, but sobering read. It is early in the T/GOP re-distribution cycle for most to see this connection, but it’s there.


    1. Excellent read. It really gets to the heart of the political dysfunction in America. And ties into the transfer of wealth to the upper 1% and 0.1% that has been occurring the last 40 years. Globalization is a factor but not the dominant factor, in the US. The dominant factor is the policy of the Republican party.

  5. Truth or consequences. What the T 2019 Budget tells us…Hint: Cuts won’t pay for themselves and people don’t care. Total denial.

    “…where last year’s document projected a $16 billion budget surplus in a decade, the 2019 version sees the government running a $450 billion deficit in 2027. That’s a pretty stunning reversal.”


  6. Another part of 3rd world america that will most definitely vote against their interests, again.I have said it before, and will say it again. The people that have not left this hellhole are ones with a below average IQ, which partially explains their voting patterns. I don’t think I have much sympathy for them.


    1. EJ

      As I believe they say in America: “Dude, not cool.”

      If you believe in IQ (that is, that it’s a meaningful measurement of intellectual prowess which is consistent across one’s lifetime) then saying you’re not sympathetic to people with low IQs is like saying you’re not sympathetic to people with wheelchairs. They didn’t choose it, and it is the act of a hard hearted man to castigate someone for an aspect of themselves that they didn’t choose.

      I don’t believe in IQ. I do, however, believe in systemic poverty. I agree with you that the people of Eastern Kentucky sound like they’re suffering from that. This is dreadful, it’s also not their fault, and it’s sad that they have been left to fester in it.

  7. So when are the Tea Party protests going to start. These people (???) accused Obama of trying to spend our nation’s future surely they are going to be up in arms over the amount of deficit spending Trump is asking for.

    Wait a second there are no protests. I wonder what has changed?????

    1. I’m at an honest loss as to why T. Partiers didn’t just come out and say they wanted the government to spend more on them, which is all they really wanted – this whole farce about being against debt and deficits, while being a convenient foil for them to rail against, really just came back to bite them in the ass, *hard*.

    2. EJ

      One of the fascinating things about our age is how the political euphemisms are dropping away, one by one. People have started openly talking about things that they only hinted at before, and have stopped holding up their fig leaves. They no longer have to pretend to respect the norms of civilised behaviour. It’s very interesting in a ghoulish, academic sort of way.

      I wonder how we get from here, back to some sort of civilised democratic society with norms of behaviour?

      1. That we’re doing away with all these euphemisms isn’t necessarily a bad thing, IMHO – frankly, I adore the thought of people being more upfront about what they want and what they’re thinking. We can’t have honest conversations with each other if we’re talking in constant circles and being vague about it just because we’re afraid of being offensive.

        That said, we should be able to forge a new consensus on “civilized behavior,” one that respects people’s openness and their desires, but maintaining a minimum level of dignity about it. We need to reach a point where, frankly, we can tear each other’s throats out politically, but still slap each other on the back and have a drink at the bar afterwards.

      2. EJ

        I think you’re right that it’s nice that people are honest; it’s also nice that both of us are privileged enough that this honesty does not take the form of daily calls for our deaths or claims that we do not exist. (Or if such calls happen they are from fringe people, rather than from influential people with large audiences who may actually get the chance to implement them.)

        The danger, however, is that ideas are infectious. If a person publicly declares that “Jews are weakening western civilisation”, for example, or calls for women to be stripped of voting rights, no matter how weak their arguments, they will spread those ideas. Humans are not as rational as we would like to think we are, and we can be convinced simply by the banal repetition of prejudice just as we can by the most sophisticated academic reasoning.

        Bigots being honest means we get more bigots. If bigots speak circumspectly, it makes it harder to spot them but it also makes their ideas spread less freely.

      3. “We can’t have honest conversations with each other if we’re talking in constant circles and being vague about it just because we’re afraid of being offensive.”

        I wouldn’t conflate explicitness with honesty, nor claim that people are less afraid of being offensive. The right wing doesn’t like getting their hand slapped in either case; all they did was switch from staying beyond arms length to hitting first, their hope is to hit hard enough to knock out the ‘nanny’ before she hits back.

        Honesty and reconciliation requires respect for facts and respect for others. Republicans have neither. We’re not going to have honest dialogs about how to fix the country, the type that involves heated arguments followed by beers and mutual appreciation, until Republicans are removed from the discussion entirely.

        It’s naive to consider the conversations happening in this country as any way honest when the country explicitly elected a serial liar and a conman to represent them. Just because 45 makes their behavior more transparent and explicit, does not create opportunities to be more honest. Bald-faced lying isn’t more honest lying.

      4. IOW, don’t bring a knife to a gunfight….I just participated in a very practical 3-hour workshop that offered instruction on how to communicate opposing political views effectively. You start with choosing your audience. The instructor stated (as you did so bluntly and accurately), that there are those who will be a waste of your time. Ignore them. There are others who are reachable with good technique, they are worth your time and trouble. Key is learning how to approach them.

        As you note, hard-right Repubs are not our audience….even when they are family. I have frankly become much more focused in my outreach to those who I feel are approachable. If I fail or they fail to learn from one another, so be it. At least I’ve tried. I refuse to waste my time, energy and patience on those who have no desire to learn.

      5. It’s refreshing when the honesty you speak of comes from within the GOP, rather than always coming from those who disagree. Not many of these brave souls out there. Too many of the Never Trumpers have simply gone underground. Quiescent, silent, reluctant to speak the truth. Too many games being played here with too few putting themselves on the line – whether it is in votes in Congress that make a hard statement (Flake, Collins, McCain, so many others); or within the GOP heirarchy or corporate world. Their hands are in the trough of self-benefit and their principles are in the mud.

        Yet, every now and then, the sun peeks through and we see glimpses of courage and honesty. Here is such a man.


      6. Elect more Democrats ? (-; Speaking of which…I’m going to sneak this little piece of good news in right here: “Democrats continued a streak of special election wins with a victory along the Gulf Coast of Florida on Tuesday, the 36th red-to-blue switch in a state legislative race since the 2016 election.

        Democrat Margaret Good triumphed by seven points in the Sarasota-based 72nd District, defeating Republican candidate James Buchanan in an area that backed Donald Trump for president in 2016 by more than four points.”

        Granted this is a state race, but state legislatures draw election districts….One by one, Dems are making their mark. I’m so proud of all the regular folks who have stepped up and run for office. Democracy in action! Democrats are United.


  8. Doug Muder’s Weekly Sift column this week discusses the Federal deficit, which has had a long thread below.


    It’s pretty good; one quibble is he isn’t all that clear on German hyperinflation. Germany was required to pay reparations in gold to the Allies after WWI. Germany’s mines were not capable of producing gold (no blood in that turnip) and its economy, devastated by war and depression, was incapable of producing a trade surplus. Money-printing to buy gold was the only alternative. That was never going to work and it didn’t. But the hyperinflation that followed was a result of the economic devastation, not a cause.

    1. I am not an economist, but think I understand the politics at play here. My economic question is it makes sense to prime the pump when times are bad, but we just primed a portion of our population that were already sitting on a LOT of coin. What happens when you prime the pump but there is already plenty (more than enough +some) cash in the system? What do corporations and the wealthy do with the additional windfall….conversely what is available for operating the largest military power in the world?

      1. People who already have a bunch of money will bid up the price of high-end real estate, and assets like stocks. Not many new jobs there. Or they will try to lend us the money so we can bid up the price of suburban real estate and college educations. Not many jobs there either. I don’t expect much other than that as a result of the tax cuts. We have a spending deal that increases both military and social spending. The generals will figure out how to spend the military budget, who knows how the social spending will fall out. Apparently the infrastructure plan contains no new Federal spending, the scheduled $200B will be cut from somewhere else, so that’s a wash.

      2. Here’s a hint about how health care will fare under T’s budget (in full awareness of Congress’ recently passed budget). Who was it who stated America doesn’t have a spending problem, it has a revenue problem? Using Ex. Orders and regulations, a great deal has already been accomplished in cuts to the safety net. Obviously, T is not done there and Congress clearly is willing to support him in doing more. So, two posts – the first specific to the cuts to entitlements in the T budget; the second a look at how the split electorate might influence a serious Congressional effort to justify the $1.5 T deficit (and growing) by pillaging the largest pots of revenue out there – and complete their scam…. Snake oil tactics. Will the people of America understand what is happening?



      3. Basically correct. I might add that since so much additional money will be floating around, it will tend be invested in high risk, non-productive areas, that offer high returns. This will then tend to create speculative bubbles. Bubbles always pop. When they pop, the common people tend to pay the price in recessions (if we are lucky), unemployment and a static economy.

      4. Actually folks, I think you are not quite right. There is not truly additional money floating around, not unless the Fed cranks up the presses, which does not seem to be the case, yet.

        This latest theft was more a transfer of wealth from the poor and middle class to the rich. I would even go as far to say that the more money would have been in play if it was in the hands of the non-rich and the government instead of the rich. Those two groups spend what they have, increasing the velocity of money (not the same as inflation), while the rich will hoard, keeping it out of the economy.

        If anything, there will be “less money” floating around in the economy, being spent and re-spent. The only way the tax cuts to the rich and giga-corps actually work is if the giga-corps actually invest in infrastructure (ie plants, training, new employees) in the country, and that will simply not happen.

      5. >] “Basically correct. I might add that since so much additional money will be floating around, it will tend be invested in high risk, non-productive areas, that offer high returns. This will then tend to create speculative bubbles. Bubbles always pop. When they pop, the common people tend to pay the price in recessions (if we are lucky), unemployment and a static economy.

        Either that or our insane fiscal situation leads to hyperinflation – not to say we’re going to become Zimbabwe, but if we don’t get our house in order, our debt-to-GDP ratio will exceed the entire economy in about ten years. Once we hit that critical marker (or sooner, quite possibly), if the Chinese lose their faith in our ability to pay back our debts and decide to jack up interest rates, the pain they’ll inflict on us will be no joke.

        Needless to say, that’s *only* on our present course. Depending on what else the self-proclaimed “King of Debt” and his enablers in Congress do before we can force some sanity back into Washington, we could be staring into the proverbial abyss even sooner than that.

        Scary stuff.

      6. Depends. If the bubble is financed with private debt, absolutely. Asset prices crash but the debt remains behind. In 2009 we had many people owning $200,000 houses with a $400,000 mortgage. Such a person has two choices: forgo a whole lot of consumption to pay off the mortgage , or mail the keys to the bank. In that case, the the banks $400,000 asset (the mortgage) turns into a $200,000 asset, which after costs might convert to a $150,000 sale. Too many of the first and spending/GDP falls. Too many of the second and the banking system is in trouble.

        Financial crises are always caused by private debt promises that can’t or won’t be kept. Banking regulations are by and large aimed at preventing the banking system from accepting promises that can’t be kept, even if the banks expect to make a profit from accepting those promises.

      7. Good analysis, Creigh. And, Republicans (and their banking industry lobbyists) are working as fast as they can to gut the Dodd-Frank Bill. The changes that offer greater flexibility to smaller banks seem reasonable but the huge conglomerate banks, need regulatory constraints.

      8. Related is this story about the efforts of T and the GOP to expand the work requirements for any who receive subsidized assistance…which, on its face sounds reasonable, but is it? We’re talking housing, SNAP, Medicaid, etc. – the whole ballywick. Productivity presumes a level of personal and financial stability. It also presumes one has a safe place to live where they can shower, sufficient food so they are healthy “enough” to work, transportation so they can get to work, have access to necessary health care , have access to skills and educations that are market relevant. These basic needs are universal but despite conservative lamentations asserting that they are “universally accessible” if one simply “works hard enough”, we know that argument is seriously flawed.


    1. Even though logically I oppose a balanced budget amendment to the US Constitution, I sometimes think it would serve a good purpose in that it might serve to keep the Republican Party from exploding the deficit every time they get in power.

      In a previous post, I stated that the R’s were the party of “tax the ‘hoi polloi’, borrow and spend”. Every time they get in power the taxes on the rich get cut, total taxes (payroll, state and local) on the earned income classes increase, services for the earned income classes get cut, spending increases exponentially (defense and other R favored items) and borrowing sky rockets. Generally speaking infrastructure spending also decreases. Despite the $1.5 trillion plan, I suspect that will ultimately be true. After all R’s dislike infrastructure unless it creates a revenue stream for the wealthy and corporations. The Trump Administration is determined to prove all this to be true.

  9. This feels like the biggest news to go relatively uncommented on the usual social networks:


    It wasn’t front page news, but it feels like it should be. Basically as I interpret this article (I am not a lawyer — others can help me understand it better), the federal government issues guidances on laws in order to be able to sue when those laws are broken, effectively saying, ” We are going to sue in these cases,” and then if a company breaks a law the federal government can say, “We told you, right here, that we would sue in this case, so we are going to sue now.”

    The administration has revoked those guidances, which means if a company breaks a law — like a health, environmental, commercial, or civil rights law — and the government Sue’s, the company can simply shrug and say, “You didn’t tell us that’s what the law covers.”

    Or tl;dr: the Justice Department has essentially informed companies that it won’t sue for the duration of this administration. It’s regulatory open season.

    The person who issued this memo does so right before stepping down to go work for Walmart’s legal department. Swamp effectively drained, amirite?

    1. Whats isn’t news is that Walmart has gotten into healthcare by expanding off of their pharmacy services to create small targeted in house clinic services subject to FDA and medicare/medicaid guidance rules from the Feds (shops where they can make diagnosis and issue prescriptions for drugs and equipment they can dispense)…which is where Ms. Brand had a good deal of oversight while at DOJ. Now she is Walmart’s General Counsel and has eliminated their largest oversight liability before her tenure at DOJ ends. Here in the city the expression is “Gurl gonna get paid!”


      Why isn’t there any oversight? What is Congress doing?

  10. As part of the plan to devastate government control of the country, economically or socially, are we looking at the libertarian’s wet dream of infrastructure spending, or lack thereof?

    I have to hand it to the guy. The puppet tyrant may be a buffoon and psychopath, but if he manages to spearhead such a massive policy shift and rams it through, that is actually an impressive achievement.

    It is of course a policy that is horribly wrong-headed and lethal to the long-term health of the country (who am I kidding, a ton of other things done in the past year are far more dangerous), but would be a serious political achievement, not like the other crap the puppet tyrant takes credit for.

    Are we going to see the giga-corps filling that void of owning the infrastructure of the country? Given the success (apparently) of SpaceX, are Musk’s 100% privately funded superfast underground eggs going to be part of the infrastructure future?

    The irony of this whole “let the market decide” on infrastructure is that the puppet tyrant’s core voting base will, once again, be left out in the cold as the giga-corps focus on investing only in the densely populated and profitable parts of the country.


  11. I think Mark Blyth blew up supply side Republican gibberish brilliantly in his testimony before the House Budget Committee in 2015. Basically it shakes down to “you don’t have a spending problem…you have a revenue problem”. We got this nonsense in the 80’s and again in the early 2000’s. They blow a hole in the budget with tax cuts and leave the clean up to Democrats who end up increasing revenue behind screams of “there they go again tax and spend Democrats” due to us killing revenue to demand an end to entitlements.


    1. Yes! The NYT article I just posted speaks exactly to that point. Of course, Ryan doesn’t plan to stop with the cuts he’s already passed. Next up are the entitlements – Medicare, Medicaid, Social Security. Cut off federal subsidy to these big cost centers and, voila! You’ve just solved your revenue problem! (without having to retract hefty tax cut rates – permanent ones, that is. As we all know, the tax cuts for mere mortals will end – they are “not” permanent.)

    2. This is nothing new. The Republicans have been using the same play book since 1981. Cut taxes for the wealthy and corporations, spend billions on the military and favored constituents such as for disaster relief, and borrow. The Republicans are truly the tax the hoi polloi, spend and borrow party.

    3. That was interesting testimony from Prof. Blyth. He correctly points out that with respect to budget balance a nation or society can’t be compared to a firm or household. But he never explains convincingly why that is. If he really understood what money is, how it is created, and how it works in the economy, the difference between a monetarily sovereign nation (money creator) and firms and households (money users) and why “budget balance” is never the goal would be obvious.

      I have taken macroeconomics courses, read economic textbooks, and taken courses in Money and Banking. These courses and textbooks describe what money does (medium of exchange, unit of account, store of value) but never tell you what money is or why it works the way it does. That continues to astonish me, and frankly it’s a huge blind spot for economics, even at a very high level as demonstrated by Prof. Blyth.

  12. So basically this is an inept kleptocratic administration doing everything in explicit contradiction to the mechanisms of managing an economy, thus resulting in an encouragement, rather than discouragement, of exploitative ‘get rich quick’ schemes.

    The first thing that comes to mind is the cryptocurrency craze.

    1. Actually, they are not that inept. Their figurehead is a bufffoon, bully, liar, and a general psychopath. But if you start looking at all the things that they have “accomplished”, this regime can check off a lot of boxes on their list of ways to destroy the country’s democratic institutions and remold it into that kleptocracy.

      Case in point: The puppet tyrant wins again. Two more potential adversaries in the FBI gone today:


      1. And the fascists keep on winning. The puppet tyrant, in a real shocker, decides that the Democratic rebuttal to the Nunes lies contains too many sensitive and classified items to be released.

        In no surprise to anyone, when a ruthless group has absolute power, this is what happens.

      2. The more significant news tonight is that of Rachel Brand’s resignation. The #3 DOJ official, she is right behind Rob Rosenstein. Rachel Maddow reporting. Grave implications for Mueller investigation if Rosenstein fired and the Solicitor General, Noel Francisco would move up, and as noted in the Newsweek link below, he could (and it is felt “would”) fire Mueller, at T’s request.

        (The Solicitor General, who has offices in the Supreme Court Building as well as the Department of Justice Headquarters, has been called the “tenth justice”[3] as a result of the close relationship between the justices and the Solicitor General (and their respective staffs of clerks and deputies). As the most frequent advocate before the Court, the Office of the Solicitor General generally argues dozens of times each term. As a result, the Solicitor General tends to remain particularly comfortable during oral arguments that other advocates would find intimidating.) Wiki


      3. I agree Mary. I could not keep up with all the wins for the fascists in the past 24 hours. People talk about the Saturday night massacre, while we are witnessing a far larger purge, just over a longer time.

        But so few people understand what is happening, or worse, care.

    1. While we’re talking about Republicans jumping ship, where’s the constituency for a sane conservative party? Insofar as I remember, Chris talked about how that could only come from a split in the current Democratic coalition, but I haven’t read anyone else talking about it.

      Perhaps there might be some hope in appealing to idea-driven Millennials, but given their disgust with the GOP, that seems like a far-reaching strategy that could take quite a while.

      Anyone else out there talking about any actual plans as to how to deal with all this?

      1. Dins has offered a couple of ideas (-;

        What I recall Chris saying (and other rational Republicans) is that the current Republican Party has to be crushed and then started anew. If I am wrong, I hope he will weigh in.

      2. EJ

        How many “sane conservatives” are there? Are the numbers viable for them to be electorally useful, and are they willing to vote that line rather than according to their other beliefs?

        Even if there’s a small number, acting as a “kingmaker” faction within a larger party can be very powerful?

  13. Do we miss Obama yet? (or, even GW Bush?) You mentioned the $2T hit to our budget deficit. I have read it is almost double that….dependimg upon the accountingmethod you use, and we’re barely into Year# 2 of the Trump term. Even if $2T is correct, that is not a healthy fiscal situation given how the money is being distributed, and certainly not an ideal framework within which I’d want to be negotiating a new budget agreement that will certainly exceed the budget cap agreement…Add to that a new infrastructure plan, assured costs from cutting health care under new Medicaid changes, expanding the war in Afghanistan, Syria, and, BTW, war with North Korea? (Here’s an excellent article from VOX in which experts – real experts…Michelle Flournoy – #3 official under Obama in the Pentagon/point person on N.Korea and retired Navy Adm. James Stavridis whose 37-year military career included a stint running NATO) – share deep concerns about the growing likelihood of war between the US and N. Korea…


    Banks are hitting new highs (or were before the last 4 trading sessions) absent the check from neutered financial regulations, the Consumer Finance Protection Bureau is now another puppet organization of the executive branch, amid an official market correction at the end of trading today, and why wouldn’t the great majority of American people be concerned? For that matter, why wouldn’t foreign investors continue to invest in American treasuries and markets?

    All of this would be challenging enough for most to contemplate, but given the crew that is running things in the White House and Congress’ refusal to exert its fiscal and ethical responsibility, why wouldn’t people finally start to ask if the emperor has any clothes? Especially because he has been naked for so long.

  14. Every Middle Class Family Should Have Money Set Aside For An Unexpected Emergency Like Republicans Having A Majority In Congress


    “It can be very daunting to start saving money if you are one of the millions of Americans who live paycheck to paycheck, but you can just never predict when a populist groundswell will sweep Republicans into Congress, allowing them to pass a tax bill that will provide financial relief to billionaires by increasing taxes on the American worker, so it’s best to start as soon as possible. Even if you can only tuck a little away at a time, you will thank yourself in the event a calamity like the House and Senate being run by plutocratic legislators dead set on widening the gulf between the middle class and the wealthy happens to you.”

    In all seriousness, I wish I had some dry powder right now to take advantage of new discounts in the equities sales section. But alas, I just went back to freelancing after a two-year job and so am trying to keep savings to three-to-six-months cost-of-living.

    As for all the ‘economy slowing down’ indicators of last year, a lot of them have to do with the context of being at a plateau point of a peak. It’s hard to have higher GDP growth when you’re GDP is already staggering, more employment when unemployment is rock bottom, and race faster than the rest of the world when the rest of the world is only now catching up to the trail you blazed. Not to underplay Obama’s stewardship of the economy, for which he was excellent, but he did get inaugurated two months before the literal bottom of the second worst bear market in US history, meaning he rode historically anomalous regrowth to the top. He could have messed it up, and maybe he could have made it even better, but doing ‘first year’ comparisons between a president that started at the trough and a president that started at a peak is going to yield false analysis.

    That’s not to defend 45’s economic policies, if you want to call it them. The reason I posted the Clickhole article is because it does seem like contemporary economic history is merely a series of Democrats fixing the messes the ‘fiscally responsible party’ keeps making.

    1. There are many people for whom saving is extremely difficult. Those who work hourly, lack benefits, have families, a car that is on its last legs…and the elderly, whose ability to go back into the job market is difficult. There is no assurance that the investments will return to former levels meaning that that money may simply be “gone”….not good news regardless of age but deeply worrying for seniors and those approaching retirement or their children’s college years…

      Even though we always saved, many people are struggling to survive day to day. What honestly concerns me more than money lost is that the people making decisions that impact events are not competent. On a day when the DJI busts into correction territory, all the news is about a guy named Porter who never received his security clearance (because…) yet handled every piece of sensitive paper that crossed T’s desk and worked closely with the #2 senior official in the cabinet who we assume saw even more than T…and, he probably read it.

      These are very unsettling times. Again, the authors of “How Democracies Die” have laid it all out in advance for us….what happens when bad and incompetent people are in charge of government and when the checks and balance of our Democratic institutions don’t work.


  15. I think you’re discounting unemployment/underemployment. I’ll worry about a tight labor market when I see wages start to rise. Beyond that, a recent downturn in the savings rate is a concern, and of course student loan debt puts a shadow on future demand growth. Public debt is never the problem, because the Federal Government can always keep its promise (the promise backing the dollar: the Government will accept it as payment of tax liabilities.) Private debt is always the problem; promises to pay in Government dollars can’t always be kept by private parties. And a decrease in the (private) savings rate means less cushion for keeping those promises when times get tough.

    To make a larger point though, Trumponomics is just basic Republican supply side practice we’ve seen for 40 years. Nothing new there, it was designed to create inequality and it did.

    1. “Public debt is never the problem, because the Federal Government can always keep its promise (the promise backing the dollar: the Government will accept it as payment of tax liabilities.)”

      Public debt becomes a problem when the Federal Government has to keep its promise at the expense of services and administration of the nation’s well-being.

      Right now we’re pretty well off: “Last year, Washington’s total interest payments to service the national debt was just under $225 billion. At the same time, the federal government pulled in nearly $3.2 trillion in total revenues last year. So the federal government’s debt obligations represented just 7% of its income last year, down from 17% in 1995.”


      It’s nice that debt servicing is so low, but $225billion could certainly be put to better use in the US economy.

      Ideally you want the deficit to grow less slowly than inflation, so that smaller numbers of dollars borrowed today are more easily paid off with larger numbers of dollars tomorrow, and you want the federal debt to grow more slowly than GDP. But these things should be counter-cyclical: during periods of higher employment, less people need less services, so it’s good to spend the money servicing the debt so that when there are periods of high unemployment and more people need more services, you have more room to borrow. If you borrow during high points in the economy, the debt you borrow is both more expensive to pay back (because it’s at a higher interest rate) and less effective at providing services.

      It’s easy to dismiss the consequences when you’re in a strong economic position as the US is, but it won’t be there forever (rising China; less global dependency as a result of decoupling if 45’s approaches become standard 2nd party practice), and examples of national debt screwing over citizens of the nation readily exist in the real world: Japan for long term stagnation, Greece for sudden and chaotic collapse.

      If we don’t want to have that happen here, we should at least recognize that the debt isn’t a blank check — it’s a very useful intergenerational wealth-management tool, provided you work within certain parameters analyzed mostly by wonky mathy types with thick glasses and less alarmist things to say than some Kentucky libertarian or New York con artist.

      1. I’m definitely not as smart in finance as you guys are, but I’ve got this much figured out: Print as many dollars as you want – someday, someone is going to have to pay for them. Also, when the dollars you print are disproportionally distributed to the wealthiest members of society, people who are the working/erstwhile consumer class simply can’t participate in this wonderful non-trickle down economy. Sooner or later, this is going to be a problem for our country. Printing presses aside, I think debt matters – debt that average people used to help pay for. Not so much anymore, and that’s a problem for our society.

      2. “Public debt becomes a problem when the Federal Government has to keep its promise at the expense of services and administration of the nation’s well-being.”

        A promise to accept one’s own currency as tax payment is *always* keepable. And that promise does not keep the Government from printing more and spending it on other projects. Any constraint will come from lack of real resources (labor, materials, technical knowhow) not money.

        “Ideally you want the deficit to grow less slowly than inflation, so that smaller numbers of dollars borrowed today are more easily paid off with larger numbers of dollars tomorrow, and you want the federal debt to grow more slowly than GDP.”

        The number of dollars today or tomorrow are precisely equal to the number of dollars that the Government wishes there to be, and subsequently prints. Whether that’s for spending, or redeeming Treasury debt, or whatever.

        Ideally you want the deficit to be such that the total combined government and private sector spending is neither too much (resulting in inflation) nor too little (resulting in unemployment). That’s the only thing that should matter.

        “If we don’t want [Japan or Greece} to happen here, we should at least recognize that the debt isn’t a blank check — it’s a very useful intergenerational wealth-management tool”

        From the viewpoint of a nation, there is no such thing as an intergenerational wealth management tool. Everyone alive today is consuming things produced today (or very recently*). Everyone alive in the future will be consuming things produced at that time (or very near). While financial savings are very useful for individuals, and I highly recommend them, financial savings are completely useless as a way for a society to prepare for its future. Our national debt or surplus will mean absolutely nothing to our children and grandchildren, just as our parent’s and grandparent’s debt has meant absolutely nothing to us. Our descendant’s ability to provide for themselves will be the sole determinant of their wealth.

        *Housing and certain durable items are somewhat of an exception, but food and medical care for example have virtually no shelf life.

      3. Well we never really said anything about printing money, that’s a separate but related issue. It’s true that the economic aphorism “there is no free lunch” refers to fact that any shift in economic equilibrium in one direction comes necessarily at the expense of something else in the equilibrium: everything has an inversely correllated thing connected to it.

        In the case of printing money, print too little and each individual dollar becomes scarce, increasing demand and thus its value. The problem is that then people don’t spend it, bringing down demand in the market, which then brings down production, which brings down employment, causing a deflationary spiral. Print too much money and each individual dollar becomes less valuable, requiring people to need more dollars to buy anything of any use, reducing demand, which reduces production, causing an inflationary spiral. Deflation is great for savers but terrible for employment; inflation is great for people paying off debts, but terrible for consumers.

        That’s just one example of how there is no free lunch. The free lunch issue Creigh and I are talking about is that debt is a great way to increase spending and therefore demand, which then leads to more production to meet the demand and thus employment to produce enough, but the larger the debt is and the higher the interest rates on that debt, the harder it is to pay off, eventually crippling spending and therefore demand, which then leads to less production and more unemployment.

        Where this could be related to printing money is that if inflation is higher than the interest on debt, you can assume you’ll have more money to pay off the debt than the debt will be worth in the future. But if the source of the inflation is money being printed rather than additional production and employment in the marketplace, you’re paying off the debt at the expense of consumer and capital spending.

        What 45 and his merry band of conmen want to do is increase capital spending. Easy way to do that is make sure the companies have more money by reducing the amount taxed from them. But lower revenues means higher debt — no free lunch. And so 45 and his merry band of conmen are effectively trying to take out more debt WHILE increasing the cost of it. Their argument is that capital spending will increase faster than deficits and interest on debt, largely because that capital spending will go to more wages for consumers in the form of additional job positions and higher wages. That would be great except that productivity seems to be slowing down rather than expanding, and the labor pool is near full employment. So basically they’re banking on higher wages. As it stands, big firms don’t really need additional cash to increase wages — as you said, they’re already sitting on plenty of it. So the likelihood of their gamble ‘paying off’ is slim.

        As every professional, credible economist has stated, but 45 and his merry band of conmen don’t listen to credible professionals, they make them feel bad by using big words and such, implying that 45 and his merry band of conmen don’t brain good.

        So anyway, none of that is visible in near terms until we bring in another ‘no free lunch’ thing going on. That is, when inflation is high, the Federal Reserve tries to increase interest rates to compensate. This is so that debts attained today are paid back at a reasonable value later — too low, and the debt ends up losing the lender money, too high, and the borrower can’t pay it off. So now that wage growth is starting to happen, inflation is starting to happen, so interest rates should rise.

        But if wages and inflation rise, then the return of real value on stocks starts to go down for two reasons: one, wages rising means less returns for shareholders; two, inflation cuts down the amount that revenue is worth relative to the economy. Meanwhile, if the Federal Reserve raises interest rates to combat inflation, that means lending money guarantees a higher rate of return. So if stocks are becoming less valuable and bonds are becoming more, then the conscientious investor would start moving their investments from stocks to bonds. It only follows.

        And that’s the ‘market correction’ we’re seeing, where investors are jumping from stocks to bonds. This correction is inflected (made more pronounced) by the less conscientious investors (the stupid money) who don’t follow how all this works, and who are only seeing the market the way 45 and his merry band of conmen, and every idiot who votes for these idiots, sees the market: as losing monetary value, and thus something to flee from. So they’re jumping out and losing money.

        The likelihood is this won’t turn into a recession because the institutional investors aren’t seeing value disappearing — they’re just seeing it move somewhere else. It’s when a bunch of value is proven to not actually be backed by anything real that a ‘bubble’ bursts, as opposed to a correction. If this correction unearths a bubble, then there’ll be trouble.

        But there’s actually little chance of that at this stage. Largely because the economy has been growing over nine years in a relatively contained, solid pace, closely plotted to fundamentals. When you have a merry band of conmen, however, they want higher growth, which is easiest represented in big ol’ bulging numbers. So the easiest ways to make numbers mighty big is to detach them from productivity, that slow plodding boring thing that creates real value. By definition, the economy becomes more bubbly, and so we’ll see what neat big’ol numbers they inflate just to look good, which invariably will destroy a lot of money — leading to deflation and then to unemployment and then lower consumption and then recession.

      4. “Our national debt or surplus will mean absolutely nothing to our children and grandchildren, just as our parent’s and grandparent’s debt has meant absolutely nothing to us.”

        Many of the points of your argument are really premised around this one assumption, as it underlines other things like how much money the government deems fit to print (versus how much actual productivity there is in the economy), which is also how much that money is ‘worth’ when accepted for tax payments, and so forth. So it branches out from there.

        Now the counterpoint to that premise is that my grandparent’s national debt is costing my nation $255billion a year to service, or, if we don’t want to get too fussy about the floating quality of fiat currency, 5% of taxed revenues. That 5% could be put into other services or goods for the American people. It’s a real number that absolutely affects us. It’s just not, currently, a bad one.

        Debt costs real money, even if it’s affordable. The issue with that ‘if’ is that it can cease to be. You keep insisting that it will always be affordable because the nation accepts its own currency as tax payments.

        But the more taxes the government asks, the less individual consumers have to spend, decreasing demand and thus production and causing recession. And if those taxes are only going toward servicing debt, they’re not going toward receiving services to help those same individuals get through the recession. The people of the nation suffer as a result of high debts.

        Or, if the government just prints money, then the citizens’ money is devalued and they can’t buy as much stuff, decreasing demand and thus production and causing recession.

        This isn’t theoretical. It’s happened in the real world. Spain and Greece and Japan are places where governments are sending tax dollars into servicing debt rather than providing services, causing depressed economic outlook for their youth and increasing suffering of their people. Venezuela, South Sudan, and the Democratic Republic of Congo have high inflation, causing depressed economic outlook for their youth and increasing suffering of their people.


        Governments do default. Ecuador, Jamaica, Belize and Argentina have. This resulted in depressed economic outlook for their youth and increased suffering of their people.

        tl;dr: government debt does matter, and intergenerationally. It’s just that the United States debt isn’t currently alarming YET. It could be, however, if it’s ignored.

        If you disagree with that, then I’d like to hear why 45, or any POTUS really, shouldn’t just increase military and domestic spending to $50trillion and just shrug off the naysayers.

      5. It seems the fiscal hawks in the House are nervous about all the spending and the trillion dollar deficit. Those among us who have been anticipating this problem can now say, “Yep”.

        From the lips of Ryan’s spokeswoman comes this response, “AshLee Strong, a spokeswoman for Ryan, said that it is spending on other programs, such as Medicare and Medicaid, that drive “our long-term debt problem.”

        She said spending on programs like these will “continue to be the problem that [Ryan] hopes Washington will finally address.”

        Bingo! Deficit solved! The solution has been sitting there waiting for us.


      6. That’s a lot of stuff, Aaron, and I do disagree with much of it. But let me just address your last question first, why 45 doesn’t just increase spending to $50T. It’s not because the Government couldn’t print $50T, it’s because the economy only produces about $19T worth of goods and services per year. Spending $50T on $19T worth of stuff would obviously be inflationary.

        But that’s not what’s happening. Inflation has barely cracked 1% recently.

        Also, your examples are not applicable. Venezuela, South Sudan, and Congo do not have functioning economies. Spain and Greece cannot print their own money, they use Euros. Ecuador’s currency is pegged to the dollar, which they cannot print. Argentina’s debt problems arose because they borrowed dollars and must repay in dollars, which they cannot print. None of this applies to a government that prints its own currency and has no debt in currencies that it does not print (that’s us). Japan prints its own currency but is doing just fine considering its aging population is never going to require an expanding economy.

        What happens here is that the Government first prints up some things they call dollars, out of thin air. They offer these dollars to the private sector as payment for goods and services of all kinds. They motivate us to accept the dollars by requiring us to pay our taxes with these dollars. And there are severe consequences if we refuse.

        This model of money-ridiculously simplified but 100% accurate- immediately leads to some conclusions; the Government can’t be forced into default (it can’t “run out” of money), and if it chooses to sell bonds it can dictate the interest rates. Since we do choose to sell bonds we can (and do) pay them off by printing more money.

        There is no law of economics or accounting that requires such a Government to collect (and destroy) the same amount of money in taxes as it (creates and) spends. Any money it creates and spends but does not collect and destroy remains in the private sector, where it facilitates economic transactions in the private sector and supplies a demand for risk-free financial savings. This is an essential monetary function for a modern economy, and argues for an ongoing deficit in a growing economy.

        It is possible to mismanage fiscal policy to create inflation or unemployment. Generally we do the latter, not the former. We do this by having a deficit that is generally too small.

        Finally, let’s talk about the intergenerational thing. Imagine a situation where all of us have retired with healthy IRAs and decent Social Security, with the exception of one young person who is still working. That one person would have to supply all the food, shelter, energy, medical care, etc. for the rest of us. That this situation is unworkable demonstrates why intergenerational transfers can’t work on a societal level, although they do work on an individual level.

      7. Mary, those of us who now say “Yep” are falling for the lie that Paul Ryan and the deficit hawks are telling, and are acting as Paul Ryan’s useful idiots in his ongoing schemes to cut Social Security and Medicare/Medicaid.

        The deficit is too big if it causes inflation. If there’s no inflation, the deficit is not too big. On the other hand if the deficit is too small it causes unemployment, and the numbers notwithstanding, I believe there’s massive underemployment in this country.

        People who don’t understand how money works continually predict that disaster will result from our public debt, and disaster continues not to happen. We last paid off our National Debt in 1835, and since 1836 people have been predicting disaster “just you wait!” Since 1836 they’ve been wrong, and they’re still wrong. And they are playing right into the hands of the Paul Ryans who hate the idea that the Government has a role to play in social insurance or public health, or really, anything beyond protecting individual property rights.

      8. “The deficit is too big if it causes inflation. If there’s no inflation, the deficit is not too big. On the other hand if the deficit is too small it causes unemployment,”

        I don’t really know what definitional confusion happened between us, but that’s exactly what I’m saying. There is such thing as too much or too little debt. You and I are also in agreement that currently we’re at neither. But ‘currently’ doesn’t always mean that we’ll always be. One way to prevent us from ever hitting a bad place is to manage it now. How to manage it is up for debate, and I wouldn’t presume a better solution than others. But I do agree that ‘fiscal hawks’ are largely exaggerating in order to cut benefits to poor people.

        To clean up another few things:

        “Imagine a situation where all of us have retired with healthy IRAs and decent Social Security, with the exception of one young person who is still working.”

        I don’t know what this has to do with anything I’m talking about. My intergenerational thing wasn’t really an economic point and wasn’t about social security. It was about using US government debt to spend on services and supports, such as education, that leads to better opportunities and a quality of life for generations — and about how, if today’s deficit causes tomorrow’s debt to be too high or too low, then tomorrow’s youth suffer the consequences of either too much inflation or too little employment.

        I cited examples of that, and you dismissed them as ‘not functioning economies.’ That’s a truism. “Here are examples of economies that failed.” “They don’t count because they’re failed economies.”

        Anyway you and I are on the same page that Paul Ryan and Rand Paul are liars and hypocrites.

      9. Aaron, I might be misunderstanding your concept of intergenerational wealth management. But I didn’t call all your examples failed economies (South Sudan’s could more accurately be called non-existent). I pointed out that several of those countries don’t print their own currency or have borrowed heavily and promised to repay in currencies they don’t print. There is a big difference between their situation and ours, given that we only owe something we can print at will.

      10. I’ll be the first to admit Creigh that I don’t “get” your explanation on debt. I do understand the message in this NYT article with which you may disagree. When financial principles and theory become too abstract, I fall into the group of people who simply zone out. For me it’s basic: be responsible, save as much as you can, live within or beneath your means; borrow as little as possible; make informed choices about debt you undertake; choose knowledgeable people to help you invest wisely; continue to learn by reading smart people and asking questions – even if you don’t always understand the answers…..which is where I am with this lofty discussion. I appreciate the discussion and the efforts of everyone to explain what I find obtuse, but I simply don’t understand how massive debt doesn’t bite you on the ass in the long run.

      11. At the risk of putting words into Creigh’s mouth, I think the economic theories he’s talking about are called Chartalism and Modern Monetary Theory (MMT) (correct me if I’m wrong, Creigh 🙂 ). FWIW, I subscribe to both theories as well. You can google both of them for more info, but be prepared for a bit of an Alice in Wonderland experience, especially with MMT, because it runs so counterintuitive to what we’ve traditionally been taught about macroeconomic policy.

        A really brief summary of both. First Chartalism states that the way a money / currency starts is that it becomes legal tender for taxes. Think of it this way. I can print my own stacks of paper bills, or pick up grains of sand, or sea shells, and call them “money”. No one will care. Why does no one treat my stuff as “money”, while they treat the Fed’s pieces of paper as “money”? Easy, because the Fed. government only accepts Federal Reserve Notes (i.e. dollars) as legal tender for tax.

        What’s so special about tax as opposed to other financial transactions? It’s the one financial transaction you have no choice in. By being under the rule of the Fed Govt, you can be as isolated from society as the Unabomber, and yet you will still have a tax liability with the Fed Govt. If the Fed. Govt says you must pay it dollars, you have no choice but to acquire dollars during the year, and turn them over on April 15th. That creates a need for dollars in the economic system, which in turn causes the rest of the economy to use dollars as well.

        Technically, there’s no reason why I still can’t trade my goats for my neighbor’s chicken, and use sea shells as our agreed-upon currency. But that transaction will be taxed in dollars, and come April 15th, the govt isn’t going to accept my sea shells like my neighbor does. So I *must* participate in the dollar economy at least partially, in order to acquire enough dollars to keep from being thrown in prison by the IRS on April 16th. Since it’s a hassle to carry out my daily transactions in multiple currencies, and since the dollar is a reasonably stable currency, I resign myself to using dollars for everything, even my private transactions.

        In some countries where the national currency isn’t so stable, plenty of private transactions get done in dollars, but even there, since tax must be submitted in the local currency, they have to participate at least a little bit in the local currency denominated economy, and thus that currency is still considered legit.

        Make sense so far? (BTW, this is why all those cryptocurrencies aren’t really currencies yet. Not until a govt accepts them as payment for tax liabilities, the one financial transaction you can’t escape. At best, until then, it’s a private transaction mechanism, and even then, it’s not, because it’s too volatile to be used as a medium of exchange. Imagine if dollars fluctuated in value by 100% every day. We all would use something else for our daily transactions).

        If you get that, MMT is even weirder: once a country establishes a sovereign currency based on its ability to impose taxes, there is *no limit* to its ability to create money and spend it. Simply put, it can print as much money as it wants, and buy whatever goods / services it wishes with that money. It doesn’t even need to impose taxes, or issue debt. It can simply print the money.

        Is there a limit to ability to spend? Yes. The limit is the ability of the rest of the economy to produce the goods the govt wishes to buy, i.e. its productive capacity. The govt can create as much money as it wants, but if the rest of the economy is already running on all cylinders and can’t produce any more, then dumping that money into the economy just creates inflation. OTOH, say if you’re in a recession with high unemployment, low factory utilization, etc., meaning there’s plenty of latent capacity in the economy that’s not being used, then the govt can spend a bunch of money buying stuff and not cause inflation. That’s why countercyclical spending by the govt during a recession is actually a good thing, and cyclical spending by the govt during good economic times (like what Trump’s doing) is a bad thing.

        So in a MMT system, what’s the point of taxes? Taxes are simply a way to redistribute income. Govt spending is not constrained by taxation. Taxes could go to zero and the govt can still spend as long as the economy can produce what it wants to buy. But if you want to redistribute income, e.g. to reduce income inequality by taking money from the rich and giving to the poor, or prioritize certain sectors by taking money from one industry sector and giving it to another, etc. you do that by taxes. So you can tax rich people, or heavy polluting industries, and give the money to poor people, or green technology. That’s the sole purpose of taxation.

        So what exactly is the national “debt” in an MMT system? It’s a balance sheet entity to essentially balance spending between the public and private sector. Every dollar of national “debt” is a dollar of “assets” held by private entities. So when a government increases its national debt, it increases the financial assets held by private entities. When it decreases its national debt (by collecting more in taxes than it spends), it decreases the financial assets held by private entities. Technically, there’s no need to run a deficit (you could tax as much as you spend), but if a government doesn’t, then there are no dollar assets available in the rest of the economy, severely constricting the money supply necessary for the private economy to grow.

        This is where the most counter-intuitive point of MMT occurs: when a government runs a surplus, it’s almost always followed by a recession. Because a govt surplus drains assets from the private economy (taxes take out more money than govt spending puts in). Thus, it’s actually *not* sound govt policy to run a surplus.

        There’s much, much more to it (and there are also detractors), but I’ll leave with one final point from MMT: the interest paid on the national debt (assuming it’s in their sovereign currency) is set purely by the govt. There is no need for a private market to set the interest rate. Because the central bank can buy assets at whatever price it wishes, it decides the interest rate on govt debt. That’s why after 2008, despite debt ballooning to 300% of GDP, Japan’s debt still yields basically 0%, and why Euro sovereign debt currently yields negative. It’s also why rates in the U.S. are now rising: The Fed wants them to, and announced 6 months ago that they would do it. It has very little to do with private markets.

      12. At what point is the balance between public and private debt a threat? When private interests no longer purchase public debt or when they ‘call’ their investments in T-bills? I’m trying to follow these theories and have always grasped the irrationality of balanced budgets in government (frankly in families if one includes mortgages and car payments, but, no one thinks of those in that manner), but have more difficulty understanding the tipping point. Assuming your theories hold to a “tipping point” concept.

      13. “Because the central bank can buy assets at whatever price it wishes, it decides the interest rate on govt debt. That’s why after 2008, despite debt ballooning to 300% of GDP, Japan’s debt still yields basically 0%, and why Euro sovereign debt currently yields negative.”

        WX or anyone, I remember reading about Japan’s PM Abe, trying to move Japan’s interest rate up and it not working. They would like some inflation to kick in.

        It’s funny how studying Economic theory helps one understand what’s happening until it doesn’t.

      14. Mary-
        So to answer the question about public vs private debt we have to be very precise in our definitions, because the short answer is, there is no difference: they’re merely 2 sides of the same coin. Every liability (i.e. debt) is someone else’s asset. The long answer depends on exactly what you define as public vs private, and what you define as a threat.

        But I don’t think you’re asking a question about the arcana of private / public balance sheets, and rather asking, in general, can debt levels ever get out of control? The short answer to that is yes, but not in the way people traditionally think about.

        The first way that deficit spending (whether it’s private or public, but let’s focus on govt spending for now) can get out of control, is if the spending is trying to buy more goods / services than the economy can supply. For example, if the economy is at full employment, and the government suddenly raises its deficit from $500bil to $1.5tril (a-la Trump this year), that’s an extra $1tril in goods & services that the economy must supply this year. If there’s no slack in the economy, that will lead to inflation, which must be counteracted by the Feds raising interest rates (which they’re now doing) to slow the private economy down and induce enough slack to accommodate the extra Govt spending. This will have the effect of also reducing asset prices (e.g. houses, whose prices are highly dependent on mortgage rates), and a whole host of ripple effects, which we’ll probably start seeing this year thanks to Trump.

        Inflation can also come from the opposite direction: if the govt. runs the same yearly deficit, but the economy’s productive capacity declines suddenly (e.g. a war destroys most of your factories and kills most of your working-age population), then the same amount of govt deficits can now induce runaway inflation. This is what happened e.g. in Zimbabwe, where they famously started printing trillion dollar notes (Zimbabwe dollars that is 🙂 ) because when Robert Mugabe got elected, he confiscated all the farms from their white owners, but the political cronies he handed the land to didn’t know how to farm, and so the agricultural output of the economy declined. Thus, the same govt budgets all of a sudden led to an inflationary crisis.

        So that’s one “tipping point”: if private + govt spending on goods & services exceeds the ability of the economy to supply it, inflation will rise. That’s why govt fiscal policy should generally be countercyclical: deficit spending during recessions, reduced spending during peak expansions, in order to balance out private demand.

        But as long as the economy’s productivity expands, govt debt and deficits should expand along with it (in the long-term; recessions / booms / other economic shocks should be balanced out in the near-term). That’s why most economists don’t look at total debt per se, but rather annual deficits as a percentage of GDP. If deficits grow at about the same rate as the GDP, the percentage will stay the same, and there will be no tipping point.

        Another tipping point is what’s known as currency revulsion. Recall that what makes a specific currency real “money” is the ability of the govt to impose taxes in that currency. Additionally, if people believe the govt is a responsible steward of the currency (i.e. maintains it as a reasonable store of value), they will use it for private transactions as well. If a govt. mismanages its currency, or its economy, then people will stop using its currency, reducing the govt’s control over its own economy.

        For example, in many poorly run countries, tax evasion is rampant. Therefore, the demand for local currency is reduced. Furthermore, most private transactions get done in a foreign currency (usually dollars or euros), because they don’t trust the government to manage the local currency. Imagine you’re the government in this country, and you wish to purchase your citizen’s goods & services with local currency, and they merely laugh at you and sell it instead to someone else for foreign currency. Your government is toast.

        This also happens frequently. You’ll hear about soldiers, govt workers, teachers, doctors refusing to work because the govt pays their wages in worthless local currency, which they can’t exchange for essentials like food. Sure, the govt could just print more money and give these workers “raises” but the workers don’t trust the currency any longer, and would rather sell their services to private players who can pay in a foreign currency. Thus, soldiers become mercenaries for the opposing rebels, govt workers require US$ bribes to do their work, teachers don’t show up in school and rather do private tutoring, and doctors in govt hospitals refuse service unless you can pay in dollars. And since tax collections are basically nil (you can bribe the local tax collector with a few dollars to look the other way; he’s a govt worker after all, getting paid in crappy local currency), there is no need for the local currency. In this situation of currency revulsion, the govt literally cannot buy the services they need (unless they also pay in dollars).

        Those are the two major ways in which a monetarily sovereign country can hit an economic tipping point. However, note that in both of these situations, the country still doesn’t go bankrupt. Technically they’re still paying their debts (at least the ones denominated in their local currency). But their economies might be in shambles. That’s why it’s just not true that a monetarily sovereign country can go bankrupt. It can always pay its debts. Sure the economy might be in a shambles, and it may be forced to use a foreign currency to purchase its essential services, but it can never be “bankrupt” in its local currency (talk about a pyrrhic victory :-).

        Another common belief that is *not* a tipping point: that we start running such high deficits that no one will buy our debt. You’ll hear this often stated as “what happens when the Chinese decide to stop buying our debt?” The answer is, the Federal Reserve will buy it. It is always the buyer of last resort. We don’t need the Chinese to buy our debt (it’s actually the other way around: due to the way trade works, as long as they run a trade surplus with us, they *have* to buy dollar assets, most of which they buy as treasury bonds, but some of it spills into real estate, stocks, etc).

        Let’s take another example: forget about the U.S. One of the biggest financial crises in 2008/2009 was Greece. They had unsustainable debts (because they are not monetarily sovereign; they don’t control the euro). No private investor would touch their debt with a ten foot pole. Who bought it? Greek banks, European banks, and the European Central Bank (ECB). Greek and European banks bought it because they could essentially park those toxic Greek bonds with the ECB, which means, essentially, that the ECB bought all those Greek bonds (the rigamarole of hiding the purchases through private banks was to satisfy politics, since the rest of Europe didn’t want to see their governments “bailing out” Greece; nevermind the bailout was actually of German banks; Greece didn’t see a penny of the money, which was literally routed from the ECB to the ledgers of German banks at the ECB, essentially never leaving the ECB’s skyscraper in Frankfurt. But that’s a topic for another day…).

        Similarly, Japan has a debt-to-GDP ratio of 240%, well above the next highest country, Greece at 180%. Who is buying all that Japanese debt? The Bank of Japan. The BOJ is actually buying >100% of Japan’s annual debt (the rest is stocks and other assets). There are days when not a single Japanese bond gets traded because there is literally no private market for JGBs. And yet their interest rates remain around 0%, and they haven’t hit any sort of debt crisis yet.

        So the question of who will buy our bonds is not relevant: as long as those bonds are denominated in our own currency, our central bank can buy them, and can decide what interest rate it will buy them at. (Of course, that interest rate isn’t random: it’s set at whatever the Fed Governors think is necessary to keep inflation at bay while maximizing economic growth).

        Does that answer your question? Macroeconomics is very different from microeconomics, which is why it can seem so counterintuitive at times.

      15. Your explanation (thank you) clearly helps me realize how little I know or can control the financial forces that run our world. It’s humbling and crazy at the same time. I think I would have been more secure in the period where I could barter a goat for grain….

      16. unarmed-
        Actually, Japan didn’t want to increase interest rates. It wanted to increase inflation. And you increase inflation by *decreasing* interest rates. Which is why the BOJ set its target rates for various Japanese bonds around 0%, with the hope that private lending rates would go down too. The BOJ also bought a staggering amount of Japanese bonds, in order to finance government deficit spending, another “arrow” in Abe’s quiver to get inflation going (The three arrows of Abenomics were monetary easing, i.e. lower interest rates, fiscal spending i.e. govt deficit spending, and structural reforms).

        So why didn’t that work? There’s debate about whether interest rates are a cause or effect of economic growth. That is, if you lower interest rates, does that automatically stimulate credit growth? The answer is probably no. Think of it this way: a company decides to build a new factory if it thinks there are enough customers that it can profitably sell all of its new widgets. If there are no customers, then even if it’s offered a loan at 0% (i.e. free money), it still won’t take it. OTOH if there are tons of customers begging for their product, you could probably charge 25% interest and they’d still take the loan and build the factory.

        On the margins, interest rates do have an effect: the cost of financing your factory does change the overall cost of your widgets and that does affect its overall demand / profitability. But this is just a marginal effect. The real effect comes from demand growth.

        That’s why people who advocate stimulus advocate giving that stimulus money to people who will actually spend that money, i.e. create demand. That’s the biggest driver of economic growth, not low interest rates, which, in the face of weak demand, is just used by already rich people to bid up assets. Which is exactly what you saw in the U.S.: very little stimulus reached poor / middle class, so economic growth was weak, while the low interest rates sparked a massive boom in assets like the stock market and real estate.

        In truth, traditional economists think there will be a crisis point if japan’s interest rates start rising, because the govt’s interest costs will balloon rapidly. They’ve been betting this will happen for years (decades). So many people have lost this bet though that the bet is commonly called The Widowmaker 🙂 They don’t seem to understand that the interest rate is set solely by the central bank, and there’s no way the central bank will set a rate that ruins the government (which they can’t anyway, because, again, interest costs can be paid by printing money to pay them; Japan doesn’t borrow in foreign currencies).

        Here’s a simple way to understand why these economists are wrong: the Bank of Japan owns ~50% of the Japanese government’s debt, and it returns any “profits” from interest payments on its holdings back to the govt (like the Fed does here). So if they raise the interest rate, this will lead to the govt paying higher interest payments to the BOJ, which will turn around and give those increased profits back to the govt. IOW, it’ll be a wash. Of the 50% of JGBs that are privately owned, most are owned by insurance companies, banks, and pension funds, which means the increased interest payments become another way to increase govt spending in the local economy to boost growth.

      17. Yes, I should have said inflation rather than interest rates. But why would they want higher inflation? So they could raise interest rates at some later time to control the economy the way the theory says it should work.

        And we should also say that the Japanese are savers. Bigly. Which probably has something to do with Japan being stuck where they are. So they were trying to increase consumption also.

      18. unarmed-
        Because deflation can kill an economy. So you actually want inflation, albeit at a low, predictable rate (most economists hope for 1-3%).

        Why is deflation so bad? First, if you know that prices will slowly decline, you will delay your purchases to the absolute latest. Think of how you buy a computer: you know prices will go down the longer you wait, so when your computer starts slowing down, you don’t go out right away and buy something new. You wait. And wait. And wait. Until your computer is literally steaming and won’t turn on, and then you finally go and buy a computer, and then instantly regret your purchase when, 2 weeks later, you see a lower price for the same machine. In contrast, if you know prices are going to go up, you get out there and buy sooner rather than later.

        So deflation turns consumers into savers, because it says a dollar tomorrow is worth more than a dollar today, so it incentivizes people to put off their purchases for as long as possible. This, of course, destroys an economy that’s based on consumption and consumer demand (like ours, or Japan’s).

        The second thing is that deflation can turn your society into a debtor’s prison. One of the nicest things about inflation is that your debts become more manageable over time. Again, if you took out a $1,000 loan in 1960, that was a big deal. But due to inflation, if you still have that loan today, it’s much easier to pay off. Imagine if that $1,000 loan in 1960, instead of being equivalent to $100 today, is equivalent to $10,000! You’ll be forced to pay more and more of your income to pay the debts you already incurred.

        If your society is based on credit (like ours), then deflation is your enemy: it makes debts a bigger and bigger burden on your society, crowding out spending on other stuff.

        Inflation is the opposite: it incentivizes people to spend their cash today (since it’ll be less valuable tomorrow), and to take on more debt today (because it will be manageable as time goes on).

        There is also a historical, psychological perspective involved: to this day, American economists learn their trade analyzing the Great Depression (massive deflation, leading to crushing debt burdens eventually leading to extensive bank failures and misery throughout all of society). So they always fear deflation. Japanese economists, now facing a Lost Decade that spans 20 years, also fear deflation. Thus the Fed and the BOJ tend be considered doves: they’d rather err on the side of too much inflation than too little.

        Ben Bernanke, considered one of the world’s foremost experts on the Great Depression, is nicknamed Helicopter Ben because he famously testified to Congress that if anything like the Great Depression was on the horizon, he’d literally get in a helicopter and start throwing cash out the window to prevent deflation (of course, in 2007/8, he only flew that helicopter over the southern tip of Manhattan, much to the consternation of the hoi polloi like us…).

        In contrast, German economists learn their trade by analyzing Germany’s experience with hyper-inflation during the post-War, Weimar years. For them, inflation is a bigger demon than deflation. Consequently, the ECB (which is essentially a German central bank), is considered an inflation hawk, willing to kill some economic growth rather than let inflation get anywhere close to out of control. You would never hear of a “helicopter” German central banker, and they were probably horrified by Bernanke’s statements 🙂

        A side note: the tug-of-war between inflation and deflation is also a proxy war between debtors vs creditors, which generally represents the poor vs the rich. Creditors, after all, love deflation, since it means they will be paid back with more valuable dollars in the future. And debtors, love inflation for the opposite reason.

        Much of the debate surrounding the Federal Reserve is because its dual mandates are conflicting: stable prices and full employment are incompatible. Stable prices imply high interest rates to tamp down inflation. Full employment implies low interest rates to drive economic growth.

        Indeed, William Jennings Bryan’s famous Cross speech (“Ye shall not crucify mankind upon a cross of gold!”) is about this very debate that was then raging: rich creditors wanted the country to remain on the gold standard (which is generally deflationary because the supply of gold generally rises less slowly than economic growth), while poor farmers wanted “bimetalism” i.e. the use of both gold and silver, which would increase the money supply, stoke inflation, expand the economy, and make their debts easier to manage. All anathema to rich people who would see their dollar holdings and the debts they owned reduced in value.

        Hopefully that adds some historical color to what’s otherwise so far been a dry economic discussion 🙂

      19. Mary-
        Life in the times of barter wasn’t that great. For all the criticisms of “fiat” currency (i.e. currency not backed by gold), the ability to control the money supply based on the needs of the economy, and not based on the luck of how much gold you mined this year, is a *huge* blessing.

        Yes, there’s much that could be improved by the likes of the Fed, and certainly by Congress and guys like the Treasury Sec’y, but it’s still a massive improvement over the gold standard.

        Part of the reason for the Great Depression was because due to our adherence to the gold standard, we didn’t have the tools to combat what was happening to the economy. If we were on the gold standard in 2007, we’d still be in a Great Depression, likely with a large portion of us homeless, and a larger portion jobless, hungry, and our futures forever diminished by our experience.

        I’ll take a few extra trillion dollars of national debt to escape such a fate. I’m betting so would most of our children and grandchildren.

        (Incidentally, gold is not always deflationary: when the Spanish Empire discovered gold in the New World, it started shipping so much gold back that the Spanish economy was destroyed by inflation, ultimately leading to the collapse of its empire. So gold can cut both ways.).

      20. I could live without the goat, but I’d be in trouble without my microwave (-; I’m hopeless where sophisticated financial concepts are concerned, but I am quite functional in my ability to maneuver within my economic environment. It’s challenging to grasp the concepts you, Creigh and Aaron have painstakingly presented but I have confidence in your assessment of the state of our economy. The one good thing I’ve learned from the smart comments and post is that America is ok. Our financial risk is far less than our political risks, it appears. You’ll have to promise me lots of notice if you see that changing!

    2. Creigh, please correct me if I’m wrong. The debt is what we owe to holders of treasury notes. Ignoring commitments to retirement funds and such. Even assuming we never have to repay this amount which makes sense because it’s like a rolling debt that gets refinanced as these notes come due. We have to pay the interest/discount on this amount. And that money comes from taxes. And if a dollar goes to interest, it doesn’t go to some other possibly worthwhile endeavor.

      Some debt may be absolutely necessary, but the above means we should decide whether a dollar is sent to those who hold treasury notes. Like the Chinese, Saudis, the Kuwaitis. And Americans. I know that a lot of citizens have retirements invested in these funds but there are a lot that do not. So if you pay taxes and work for a company that doesn’t have a retirement plan, you are subsidizing those that do.

      All this to say, i realize the American Conservatives are nutso on this also, but we can’t say debt doesn’t matter.

      If we had spent the money pissed onto the sand in the middleeast creating martyrs and future martyrs in other ways, say replacing lead pipes in water systems, or testing whether we are spending enough money in inner cities on education, I would gladly pay a premium on my taxes.

      Additionally, the rate of vigorish on our debt at this point is very low but it wasn’t in the past and there are no guarantees that it will be low in the future. Obviously. See below.

      I know, I know. Pete peterson.

      1. Unarmed, the so-called National Debt that everybody worries about is defined as the total of outstanding Treasury bonds. To me, this underestimates the total Government debt by about 25%, for the following reason:

        The US Government issues three fundamental kinds of money: coins and paper bills (walking around money), reserves (checking account money), and Treasury bonds (savings account money). All three kinds are liabilities (debts) of the US Government. Like any kind of money, they are promissory notes. When you accept one of these kinds of money, you’re accepting the US Government’s promise of some kind of future value worth x number of dollars.

        So how does the Government “repay” this debt? The Government issues currency and reserves with the promise that it will accept it in return as payment for tax liability. It issues bonds with the promise that it will exchange them for reserves at maturity. That is the only form of “repayment” that the Government promises, and it is one that the Government can *always* keep, regardless of how many of these promises it has issued in the past. And that makes the public debt completely harmless, from the point of view of default, burdening future generations, etc.

        Notice that this situation is completely different for private debtors. We promise to repay our creditors with US funds, which we are not always able to obtain because we can’t just create them. Incidentally, US state and local governments, and countries like Greece, are in the same boat.

        This is not to say that deficits have no effect. A deficit generally adds to aggregate demand (total spending by the public sector and the private sector combined) and can affect inflation and unemployment.

        Bottom line is, we need to decide politically what we want the public sector to do as far as establishing justice, providing common defense, ensuring domestic tranquility, and promoting the general welfare. Then, adjust the balance of spending and taxes as necessary to thread a path between inflation and unemployment.

        The surprising thing about that last statement is that the proper balance (deficit or surplus) that will thread that path makes reference only to current conditions: decisions about public and private spending made in the present and the condition of potential output in the present. There is no reference to past deficits or debts. This is why our parents’ and grandparents’ deficits have not “burdened” us, and why our deficits will not burden our children and grandchildren.

        (Specific remark on a comment you made; “We have to pay the interest/discount on this amount. And that money comes from taxes.” No, the money comes from the printing press. Taxes serve to give money value and control inflation. They don’t fund Government spending.)

        Incidentally, where Pete Peterson goes wrong is assuming that the Government needs to “borrow” (sell bonds) in the first place. That need does not derive from any economic consideration–the Government could just create reserves to cover its spending. The bond sales actually serve as an interest rate control mechanism for reserves, completely controlled by the Fed’s Board of Governors, not by any external actors or considerations.

        Finally, I highly recommend reading this short book “The Seven Deadly Innocent Frauds of Economic Policy,” free online here: http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

      2. Creigh – I ran across Mosler and read his book a few years back. I’ll have to read it again to refresh my memory.

        And I know all monetary systems that have a chimerical quality. But they have to keep to the understood parameters.

        Mosler’s first of 7 frauds says:
        “1. The government must raise funds through taxation or
        borrowing in order to spend. In other words, government
        spending is limited by its ability to tax or borrow.”

        It’s obvious that a government of any style or bent has the power to force citizens to build and work for any amount or nothing. It can also take and or distribute wealth.

        So you’re saying I can deduct 2.3 percent off my income tax this year?

      3. “It’s obvious that a government of any style or bent has the power to force citizens to build and work for any amount or nothing. It can also take and or distribute wealth.”

        Well yes, sort of. Our government does this through the money and taxation system, the primary purpose of which (from the point of view of the government) is to move real economic resources to the public sector from where they are created in the private sector.

        I wish I knew what you could deduct this year. I downloaded a 1040 from irs.gov the other day, and it has a big watermark across it saying “Draft As Of Jan 10 Do Not File.”

        One of the difficulties in coming around to a new idea is that old ideas are often so deeply embedded. The idea that deficits will burden our children and grandchildren is extremely powerful. It’s easy to understand and it appeals to common sense and personal experience. It’s also wrong, because it makes a false analogy between private and public debt.

        Rereading Mosler’s short book is worth doing, but it sometimes helps to come at a new idea from different directions. Here’s a short synopsis of what I try to teach in my money class:


        If you or anyone else troubles themselves to read that document, I’d very much welcome comments or suggestions sent to creigh.gordon at gmail

  16. Very good column Chris and basically following the standard Keynesian approach.

    I have two comments. The first of these is that I am concerned that some of the big money funds or banks may be speculating in cryptocurrencies. That is a market that is definitely in a bubble and could easily pop. If some of the big banks or money funds are speculating in that, when the bubble breaks, there could easily be secondary impacts. I do not know nor have I had time to research the topic, besides the information may not be available. This is an area about which I am concerned.

    Secondly, while waiting for an economic downturn for infrastructure investments makes sense from the standpoint of minimizing costs, the US has neglected infrastructure for almost 40 years and we are so far behind the eight ball, that making investments in infrastructure, I do not believe would have significant inflationary impacts, particularly if accompanied by some of the other dampening policies you suggested.

    1. The banks and funds are almost certainly speculating in the cryptocurrency market. A few weeks ago crypto had its own downturn, which may or may not have been a bubble popping. Crypto is brand new and wildly speculative, and has NEVER been stable, and won’t be for quite some time. Its unclear at this time how closely the global crypto market and the global equities markets are correlated, but time will tell.

      For some perspective though, the ENTIRE market capitalization of crypto (which isn’t how much $ has gone into the market – just its current valuation) is around $266B. The global equities market in the last week lost $4 trillion. It lost 15 times the entire crypto market in 7 days.

      There will be a time when crypto impacts global economies, but the time when it affects the US is not yet here.

    2. It appears that media are calling the Republicans out on their profligate spending. As they should (have long ago). This goes right back to an earlier post of Chris’ that basically tells Democrats to throw the GOP playbook at them.

      If we wait too long, there won’t be any money to throw!


  17. DFC

    Excellent column, Chris. Call me a cynic but instead of calling them lunatics I’m going to give the Trump side credit for this downturn as deliberate, cold policy with outcomes they want, not unintended consequences. One thing only seems to drive their thinking, and that’s advantage for the people at the very top. In their thinking, whatever wealth or success might have been created by the rest are ultimately to be trickled up, not kept by the people who generated it, not shared among the middle and lower classes. The more perfect union, the rising tide that lifts all boats, or whatever else you’d call this national prosperity serves no purpose in their minds but to promote dangerous equality. So they kill it, loot it, seize it; and then force the people to start all over. In their minds they’re doing us a favor by making us disciplined, self-reliant and fatalistic. And let’s face it, when you have three or four houses to staff, ten mil a year doesn’t go as far as it used to.

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