Friday, May 15, 2009

Wow! Even the Spender in Chief is starting to get it

"We can’t keep on just borrowing. . . We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”

What a shocking statement! And what's even more shocking is that it wasn't made by some dreary economist or some boring anal-retentive accountant. It was made by none other than President Barack Obama, the Spender in Chief, the Guns and Butter Guy, the Damn the Torpedoes, Full Spend Ahead Guy. And he made that statement a few days after he signed the largest deficit spending budget in all of recorded time.


And double duh!

Last year the man promised not to increase taxes on anyone earning less than $250,000. And he promised expensive goodies to every special interest group this side of Pluto. And 53% of you all elected him on those promises. And here we are, less than four months into his time in office, and now he tells us that chickens have an unfortunate tendency to come home to roost, to borrow a colorful phrase.

Here's a news bulletin for you. President Obama can tax every penny that the rich earn and it won't pay for more than a small down payment on the trillions and trillions of new spending bills that Nancy Pelosi and her pals in congress passed and that he quickly signed into law, breaking another one of his promises, which was that his new Hope and Change administration would post all new laws on the internet so everybody could see what he was doing.

The government can only pay for its spending in three ways. It can tax, it can borrow, or it can print money. It's already taxing at near the limit of what it can without dipping into the pockets of the middle class and the working class for a lot bigger chunk of their earnings. It's already borrowing at about the limit of what it can without causing those pesky foreigners to demand higher interest payments on the already existing huge government bond debt. And it's already printing at the rate of about a hundred billion per month.

For now the Obama economy appears to be working; but it's working like an old car whose radiator is overheating while it's driving on the level. The minute the world economy begins to recover from the recession interest rates are going to shoot up fast and high. That will choke off the recovery. Google stagflation if you have time to learn a little about economics and rational expectations and negative feedback.

Meanwhile, you can read all about President Obama's sudden discovery of basic economics in the Bloomberg article I've linked to below.

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