So I watched this interview on Yahoo’s Tech Ticker today….
I disagreed with a lot of what this guy said. Granted, The US is not Greece, I can get that such sentiment is an oversimplification that overlooks key points that he mentioned. Ben Bernanke can’t waive an inflation wand, I can get behind that too, although I think he and his cronies can control it more than Srinivas Thiruvadanthai, (the guest on the segment) believes.
I have a hard time believing the rest. Why? When you make a broad stroke and say that ‘everyone’s’ debt has been contracting by 5 quarters is unprecedented but then lump citizen and private sector savings into the gross overspending of the government, That my friends is not apples to apples. Companies and individuals seem to be able to learn from and change their bad behavior (maybe temporarily) government obviously cannot.
He then goes on to state that Social Security is a pay-as-you-go system. True. However, by that exact definition, I am paying for a system that has a snow-ball’s chance in Hell of being around when I get to retirement age, much less when my son gets to retirement age. Do you know how many taxes and tax hikes we will pay to keep the baby-boomers’ checks coming? How is that not punishing future Americans by making them pay for an unsustainable system? Fiscal rectitude today will keep social security solvent so that I get back something of what I put in.
Last, I don’t know where he’s looking but debt crushes growth when you have higher and higher interest payments on the mounting debt ( especially when short-term rates do inevitably rise) and that means less government sponsored grants for innovation, but more importantly, higher taxes on businesses. That means less money for R&D, which is where innovation comes from. Less innovation means fewer jobs created by new industry. Creating new industries, which grows our economy and gives us something to sell to the world has been what kept this country ahead of the curve. Take that away, and we lose our competitive edge. No matter how hard we work, the Chinese will always be able to do the same work cheaper.