This article was emailed to me by Dan K. I would have preferred that he write it up & just let me link to his blog but oh well.
As Dan pointed out to me, it's by "John Taylor, a respected Stanford economist." So there you go, his bona fides are established.
I believe the risk posed by this debt is systemic and could do more damage to the economy than the recent financial crisis. To understand the size of the risk, take a look at the numbers that Standard and Poor’s considers. The deficit in 2019 is expected by the CBO to be $1,200bn (€859bn, £754bn). Income tax revenues are expected to be about $2,000bn that year, so a permanent 60 per cent across-the-board tax increase would be required to balance the budget. Clearly this will not and should not happen. So how else can debt service payments be brought down as a share of GDP?
The mistake Taylor and other responsible economic types make with regards to Obama and his policy is that they believe that he is a responsible actor. To believe this, they have to ignore the whole of what he has done and said he intends to do.
He effectively runs America's financial sector. He wants a 'systemic risk regulator' or some other such. He runs GM and Chrysler. He wants to run the whole of American health care. He wants to establish a cap & trade system which will create a whole new regulatory apparatus to, again, allow him to run that aspect of the American economy too.
He does not care what all of this might cost or how it puts the most successful economy in world history at risk. And when I say at risk, I mean of ever being what it once was. It is part of his overarching plan to remake America into a liberal utopia that all of these things happen.
Radical levels of inflation and other economic woes simply give the man pretext to control more and more.
For those of us who do not like the direction this country is going, we can at least enjoy one delicious little irony (I read this somewhere but I can't remember where to give credit): One of the chief criticisms of the Bush administration was that he used "fear" as a way to push through a conservative agenda. (Nevermind that many Democrats--including current leadership--collaborated and voted on things like the Patriot Act, authorization and funding for Iraq, Afghanistan, wiretapping, military courts, etc. You'll also have to forget that, of course, Obama has continued all of these Bush Admin. policies.)
Well, now their boy is doing exactly what they accused Bush of doing. Do the hypocrites have a problem with this? Of course not. Because it achieves their policy goals. Winning at any cost is part of the fabric of liberalism. Notice that when Republican presidents (Reagan with Bork; Bush 41 with Thomas; Bush 43 with Roberts & Alito) nominated judges for the Supreme Court, liberal groups full court attacked these men. Nothing was off limits. It was personal and it was nasty.
This is standard operating procedure for liberals. They wouldn't have it any other way. Its why, when they argue with you, and they start to lose (as, inevitably, they will) they begin to attack you personally and question your motives. They are unable to debate an issue on its merits.
Anyway, compare Democrats experience with Republican nominees to Republican treatment of Democrat nominees. Compare Bork, Thomas, et al to what you will soon see with Sotomayor and the Republican Senate. She'll get tough questions, but she won't be subjected to the "politics of personal destruction" or "a high tech lynching."
Back to the earlier point of this post: Every policy put forward by the Obama administration has been about re-shaping this nation and moving it towards a liberal dystopia. Inflation and continued economic turbulence aid him in this process and thus, are actually helpful to his cause.
John Taylor's and others' warnings fall on deaf ears in Washington DC. The only ones with ears to hear are either in the desert politically or forced to fall into line with Obama, Reid, and Pelosi.
UPDATE 29 May 11:21am BST: Ah, division of labor & specialization: Dan didn't write about the original article he sent me, but he did write about some sweet econ stuff--specifically, about his Q&A with the UK head of Islamic finance at PWC:
his explanation of the current financial crisis was the best I've heard yet, and I've heard and read many. No politicizing, no finger-pointing, clear, complete, and understandable. I've heard an interview with a journalist recently and he admitted that he and most journalists/news commentators have no idea what they are talking about when it comes to the matter of economics and finance. But since people are demanding answers, they pretend and make it up as they go. Mohammad Amin knew what he was talking about, and he knew better than most, and I'm not easily impressed.
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