What if this summer’s blockbuster event—the Debt Ceiling Debate—was the crisis that wasn’t? What if the threat of weapons of mass debt are just as non-existent as Saddam’s weapons of mass destruction?
Why do most economists say another stimulus is needed, not spending cuts? Makes you wonder, especially after checking out two stories from Time Magazine and the PBS Newshour.
In Default by Debt Ceiling? ‘Complete Nonsense’, the Newshour’s Paul Solman explores why the math doesn’t add up to anything resembling “the end of the world as we owe it.”
“An investment, a security is only as good as your best alternative,” explains a US bond trader. “And, frankly, there are no real alternatives in the world to U.S. government debt.”
Translation: America’s house may not in order, but we’re still number one, we’re still number one! And that’s grading on the curve or not!
In the U.S. Is Not Drowning In Debt, Time Magazine’s Zachary Karabell further explains that while the debt may seem large, looks can be deceiving.
“ … large numbers are not the problem. The U.S. has a large economy. And, crucially, we have very low interest rates, [which means] the amount the U.S. pays to service its debt is, relative to the size of the economy, less than it was paying throughout the boom years of the 1980s and 1990s and for most of the last decade.”
Translation: Objects appear larger when looking at them through a rear-view mirror.