Apparently not all of us live in the same universe. For those of us in objective reality (and if you think there is no objective reality, please do not waste your time telling me so), it is a bad idea to make a habit of spending more than you make, and borrowing should only be done in emergencies or for the most prudent of investments.
Then there are the people in La-la Land, the entrance to which requires that you abandon common sense and become a “progressive economist.” These people claim things like, “It’s perfectly all right to borrow as long as creditors are willing to lend to you,” or, “Deficits don’t matter.” I’ve already posted how Paul Krugman of the New York Times is upset that the federal government hasn’t “gotten serious” about stimulating the economy through deficit spending over the last couple of years.
Now we learn that James Galbraith at UT-Austin’s Lyndon B. Johnson School of Public Affairs is telling Congress that the size of the federal deficit is not a big problem. You see, it’s all because of the “collapse in tax revenues” since 2008 and can be easily solved by “getting banks lending again.” In other words, he wants to restore the illusion of fiscal responsibility to the government by forcing banks to abandon their new-found fiscal responsibility. It’s not like levels of private debt in this country are anything to worry about, right? Or that the size of the federal budget was a problem before 2008? No, sir, America was a model of financial prudence during the housing bubble!
The fallacies promoted by the Galbraith family are multi-generational (see Papa Galbraith’s “classic” The Affluent Society), and the promoters of their ideology are scared witless that there might be a cut somewhere, sometime in the federal budget. They’re sanguine about the building pressure on the dollar and have no solution to the long-term entitlement problem other than to raise taxes more and more on “the rich” and to inflate the obligations away. Becoming a banana republic is acceptable as long as everyone is “equal,” right?
(Thanks again to my wife for forwarding me this article.)