America on “Meth”

To borrow or tax within your economic system stimulates no economic growth, since there is both a negative and positive force at work in the economy. The private sector experiences the negative and the public a positive. What it does accomplish is reshaping the economy around public spending. But it drives things forward no more than blowing on your own sail to move your ship. On the other hand when the borrowing comes from outside the system, it is highly stimulative. It moves tomorrow’s activity into today, and since we confuse activity through the GDP report with economic health, we let the government chalk up a success every time they borrow and spend us out of a recession. The illusion disappears when we begin to pay back those we owe. The GDP report would become a useful indicator of sustainable economic expansion if we would subtract the total net increase in debt (public, corporate, and private) from the total economic activity summarized in it, until then, it is a very good tool used by economists to deceive the public.

In the past ten years we have been treading economic water, just keeping our noses above the surface, in spite of massive government stimulus. The debt is an anvil around our collective economic neck, but it is a weight offset as long as we add to it. When we stop adding to it, and stop we must, only then will we feel its full weight. Since direct government spending at all levels is around 46% of GDP, our total dependence on it is far greater since 46% just measure the initial direct spending and not the extended economic impact. The amount of creative destruction necessary to move us to a sustainable economic model is staggering, but like weaning off”meth”, it must be done, or we are toast. It is time to take the DTs in order to avoid the trip to the morgue. I pray that the addict breaks free from her federal Kevorkians, and once again embraces life with dignity, restraint, responsibility, and liberty.

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