Back in 2002 Shooter Cheney told Treasury Secretary Paul O'Neill "deficits don't matter". Later he clarified, between torture planning, "in a political not an economic context". And it was true for most of Emperor Bush's administration, constantly shifting from a bipartisan commitment to fiscal prudence that had held sway since the early 1990's and went back to running chronic deficits. As his obsession with the Iraqi war built the deficits built, but the economy grew (on war and housing). I found of interest, the true propaganda that had infiltrated our American mindset, that in 2008 when the financial crisis came it was NOT considered a crisis of government, but of mortgages and Wall Street. Paulson was able to steal over $500 billion to prop up Wall Street until its demise, after the election, yet was part of the very group that de-regulated Wall Street years earlier.
Regardless of the past politics it is important to note that America was not concerned then about the deficits, yet became concerned as soon as the "Democrats" began spending money. We will soon have the greatest budget shortfall since World War II, where the the GDP will be short a minimum of 11.2% to cover our debt.
In the 1980's economists believed that deficits topping 3% of GDP would bring economic pain. Then came Reagan, who raised deficits above 4% for 5 straight years (in other words, INCREASED our DEBT), and interest rates fell and the economy boomed. It was from this thinking that Shooter Cheney, or economists that "poo poo" deficits, were made.
The key is in this is how we borrow. For years the U.S Treasury Bill and Bond have been the safety and kingpin of economic safety. Solid credit, solid growth, and the U.S. was able to constantly "roll over" it's debt in securities, secured by Japan, China and other countries that were SELLING us product, and still are.
Interest rates rose when foreign countries began to shy from Treasuries in the years that accumulation of deficits approached 50% of GDP. Ross Perot gave us great charts during that time, and interest rates were skyrocketing.
The tech and web boom came, Clinton wisely brought the deficit to 0 in good times, and along came a shift in our priorities with Bush.
The point to this is simple:
1. As long as other countries are willing to finance our debt the charade can go on endlessly. It has in every other country as they developed, or held steady. Money is not real.
2. If countries begin to believe our deficits are not reasonable to our production, that the U.S. is no longer a consumer, there will be hesitancy.
3. As Michael Moore shows in his new film Capitalism: A Love Story a comedic, true portrait of the greed that permeates the implementation of capitalism. Read that carefully. Floyd does not believe capitalism has ever historically worked with equity, but only inequity, which always breeds "a cause and effect" (just like the stock market).
4. Deficits and big government can be the answer. We need to rebuild our country's infrastructure, and clean up our environment, and our impact. We need to put a control in on the rising cost of health care, including the "socialistic medicaire" that is already considered " a right" by our populace.
5. Obama's job is not to reduce the deficit, but to expand our stimulus to stop the capitalism that we let destroy us. Capitalism breeds greed, good or bad, and usually the majority do not gain in a capitalistic cycle.
It is both our misunderstanding of what democracy and socialism mean, and our lack of understanding as a people is appalling. Sure the Fed debt is now at 7.6 trillion, is above 50% of GDP, and is rising.
Sure, we have a bankrupt Social Security and Medicare commitment (debt) that actually is larger than the Federal debt.
6. Little of this happened in the last 8 months.
We had bankrupted our own nation, and for whatever reason and whomever to blame, as Obama took office financially we had hit our moral bottom, and stimulus was the only answer. The capitalists had done it again, and had to bailed out of their own mess, in a specfic sector.
So when you go to "Johnny's Pub" for a beer, a locally owned famlly pub, remember his success is only 1 in 5 small businesses, and that he is the employer of those that spend our money, and allow us life.
