Scholars at Brookings, Cato, Hoover, along with adjacent pundits, have been promising a “crisis” related to the national debt for decades. Despite so many of the wise so routinely and confidently predicting terrible things in the “future,” the value of Treasury income streams has conistently risen alongside increasingly alarmist rhetoric.
Whom to believe: the experts or the marketplace itself? Smart as they surely are at the top think tanks, the markets are much smarter than they simply because experts bring narrow knowledge to any discussion versus markets that reflect all known knowledge.
At the very least, the endless scholarly predictions of looming Armageddon related to the national debt call into question what is and is not a crisis. And it raises a question about whether those promising something awful ahead really understand what the problem is. Thought of another way, is it possible the crisis has long been with us, though in economy and progress-sapping unseen fashion? Not contemplated enough is the growth-and-freedom crushing meaning of $39 trillion worth of national debt…
The experts at Cato, Brookings, Hoover et al yet again keep telling us about something truly cruel that awaits, but this glosses over a two-pronged crisis in the here and now. For one, where’s all the outrage from the wise and scholarly about the fact that there’s $39 trillion in debt with no negative market impact in the form of soaring Treasury yields? How interesting if occasionally the experts would address just this, as in how substantially overtaxed the top 1 percent in the U.S. must be (now and in the future) so that Treasury markets could express such breezy confidence about the future.
It’s not just that the rich frequently got that way through remarkable enterprise, it’s that the rich uniquely have the funds to invest in the health, transportation, and technological advances that will make the present and future so much grander than the present. But as evidenced by no evident worry in the marketplace about $39 trillion worth of debt, we can see that information-pregnant markets aren’t much worried that the tax burden on 1 percenters will in any way abate 1, 10, and 30 years down the line. Where are the experts on this, on the present-day meaning of so much debt?
Once again, the debt right now represents a substantial tax burden on the rich, with the penalization of the world's most intrepid investors signaling a huge crisis that can only reveal itself in unseen fashion. How to wring one's hands about spectacular progress not taking place thanks to the rich having so much crucial wealth taken from them? Do the experts even grasp this point?
Next, $39 trillion worth of debt is an effect not just of enormous tax collections in the past, but market expectations of much bigger collections ahead. Stop and think about all the advances that will never see the light of day given broad acceptance within the scholarly class that one of the primary ways to deal with what they yet again deem a future crisis is to get more money flowing into the Treasury to pay for all the borrowing. Except that it’s a truth as old as debt markets that borrowing entities known to take in lots of revenue can borrow even great amounts with ease...And our Treasury has consistently done just that.
Hopefully readers see the challenge here, though one glossed over by the experts regardless of ideology. Debt is an effect of confidence in future incomings, which means the U.S. Treasury has $39 trillion worth debt because its incomings are expected to soar in the future due to excessive taxation of those most capable of investing.
Say it repeatedly that the real debt crisis is that there isn’t a debt crisis. Just don’t expect the experts to agree, or even be willing to debate the notion.
