The end days are upon us

Everyone’s favorite economist, Paul Krugman, is now in favor of the “Trillion – dollar coin” illusion. As predicted, the question of out of control federal spending has disappeared and been replaced by discussion of this pesky debt ceiling that’s crimping our style. Their solution, one that was intended as parody just a few months ago and is now considered conventional wisdom, is the trillion-dollar coin. The Secretary of the Treasury is supposed to deposit a trillion imaginary dollars into the vault and then continue issuing debt, now backed by this chimera.

Federal government spending is based first on revenue and when spending exceeds revenue, then borrowing. When borrowing becomes impossible either we curtail spending or borrow more, using as collateral a handful of magic beans: in this case, a phantom trillion-dollar coin made of platinum but really, it could just as easily be a huge pile of dog feces.

So the dunk drinks up his cash at the local bar, turns to running a tab, and when the proprietor, patience exhausted, finally cuts him off, the drunk goes home, piles up a load of …anything, in his basement and returns to the bar, offering script backed by whatever he says is in his basement. Unless he’s been indulging in his own wares the proprietor won’t fall for such insanity. Our country, on the other hand, seem ready to play the game. Anything to avoid reality and stretch out this doomed scenario for as long as possible.

 

11 Comments

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11 responses to “The end days are upon us

  1. Anon

    As Krugman’s name has been bandied about to replace Geithner as Treasury Secretary, this tweet
    @RyuSpaeth: Paul Krugman humbly declines to lead Treasury: “Does anyone doubt that the White House pays attention to what I write?” http://t.co/A4Ba5FmY

  2. Peg

    Amazing how so many can delude themselves for so long – eh? As I did with the very intelligent and successful addicts/alcoholics I have known, I kept on thinking, “They are too smart to let themselves fall so far.” Alas; I knew the person but I did not understand addiction.

    So it seems to be with our nation. We don’t want to live through the pain of giving up our drugs of fantasy money and spending… so we don’t. One day, however, all the wishin’ and hopin’ won’t wash away the fact that we are broke – and everyone else realizes it and cuts us off. It will be vastly more difficult to face reality THEN than deal with it now. But – that’s the nature of addiction.

    Hope I am wrong. Hope America figures it out sooner rather than later…..

  3. Al Dente

    “Now don’t say you can’t swear off drinking; it’s easy. I’ve done it a thousand times.” – W. C. Fields

  4. Anonymous

    We are past the point of no return. We can carry the current debtload because interest rates are at historically low levels. The average fed funds rate in recent decades has been over 6%. As rates inevitablly rise, borrowing costs will exceed $1T per year. When this administration is done, the current debt will exceed $20T, and the interest costs alone will make up approx 50% of all federal revenues. There will be no money left for anything else. Unfortunately, it’s too late and there’s nothing that can be done.

    • You forget the liberal’s response to that argument, Anonymous, as so eloquently repeated here ad nauseum by Dollar Bill: the root of all evil is our defense budget and the rich. Eliminate both and paradise will be complete. And if debt payments still swallow up everything, then just default on that debt and start again. It’s worked well in Argentina, hasn’t it?

  5. Anonymous

    wait till the gubmint nationalizes oil.

    that’s when it’s really game over.

    don’t think obama hasn’t thought of doing it, either.

  6. Balzac

    In Obama’s world, government spending=growth, and individual success= unfairness.
    These pseudo-ideas are what passes for intellect at Harvard Law School where Obama was a leader.
    Scary.

  7. Anonymous

    So…either that is one very large coin (last i checked Platinum trades at $1,550/ounce) or they’re gonna make that coin out of something other than platinum…maybe it is a Magic Coin. I like magic. I want to live in the world of make believe like Mr. Krugman. Unfortunately we live in the “Real” world…and everyone should be forced to read “Fiat Money Inflation in France”. It is free. It was written ages ago, but the economics don’t change. I will give you the punchline…INFLATION…BIG TIME.

  8. AJ

    .The Fall of Rome and Modern Parallels — worth watching: the parallels are astounding.

    .

  9. Anonymous

    “Hope I am wrong. Hope America figures it out sooner rather than later…..”

    Peg, it’s already later. Think of this period as living in the bottom of a snowy valley and hearing a distant rumbling on high. The avalanche cometh, it can be seen, and our “leaders” are arguing about the 18″ 5 hp snowblower that they can’t afford, in the dealership window.

    Once it arrives our leaders will then discuss how to tax snow. So buy a shovel, digging the village out will be up to you, because you know 50% of your fellow americans will be waiting for FEMA to do it, in tee-shirts and shorts.

  10. Peg

    Anon – all my life I’ve been one of those who has to clean up the mess. Royal pain in the butt – yet – honestly, I feel lucky that I’ve got a brain and energy where I can do it.

    All that being said – my God it gets weary after a while!!