Home > Uncategorized > Government Debt Isn’t Free

Government Debt Isn’t Free

Below is a reply I sent to one of my Twitter Followers:

Government Debt Isn't Free

The Real Cost of Government Debt

Yes, it is frightening what is happening to small business, corporations, etc. seeking to finance operations.

Financing government debt through auctions isn't cost free. Each choice made is to the exclusion of some other choice. To use a cliche – there is no free lunch.

I fear we are at, or past, the tipping point where our economy can no longer sustain the debt. Karl Denninger of the Market Ticker believes the following:

"In this case we're now to the point where restoring fiscal balance across the credit system requires a roughly 60% contraction in both outstanding credit and the size of the Federal Government (in terms of dollars.)  That in turn will contract GDP by 40%."

That's scary stuff. Meanwhile we argue about other issues that, while important, aren't of the first order. We have to restrain the federal government and cut its size dramatically.

If we would, I think people would be shocked at the economic prosperity that would be unleashed.

I also believe that some would be surprised how generous economically free individuals would be to those who are in need – especially if our pocket books weren't being picked by bloated government.

We would be able to take care of our families, children, parents, and still have money to take care of others outside our immediate family circle. It would be wonderful.

Will it happen? I don't know, but I'm the optimistic type who believes it is possible if we have the courage to act.

We're past the finger pointing stage and the two-card Monty scam being played in Washington.

Either we pull together and save the ship of state, or we argue while the ship goes down and those that ruined it get on life boats, leaving the rest of us to drown in the wake of the disaster they created and we were too timid to prevent.

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